Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2006 (4) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2006 (4) TMI 97 - HC - Income TaxDeduction on liability of interest - Not allowing the interest on delayed payment of sales tax payable considering it as 'tax' within the meaning of section 43B? - HELD THAT:- We are fortified in our view by the decision of this court in the case of Mewar Motors v. CIT [2002 (9) TMI 51 - RAJASTHAN HIGH COURT]. While considering the provisions of section 43B of the Act, this court opined that the object of section 43B of the Act of 1961 is to curb the activities of those taxpayers who do not discharge their statutory liability of payment of sales tax or excise duty for long periods, but claim deduction in that regard from the income on the ground that the liability to pay this amount has been incurred by them in the relevant previous year. The interest paid is part of the sales tax. The interest payable to the Sales Tax Department is also "tax" and the provisions of section 43B of the Act are applicable thereto. We are in respectful agreement with the aforesaid ratio. Therefore, if we look at the direct context in which the provision has been enacted, there is no difficulty in reaching the conclusion that if the principal liability of tax which is otherwise allowable u/s 37 of the Act of 1961 shall be allowed as deduction and interest thereon becomes part of it. We make it clear that it is not every liability that has been made subject to the provisions of section 43B. Section 43B is restricted to various liabilities in respect of which provision has been made. It is pertinent to notice that section 43B is not a charging section which has to be strictly construed. The restriction on claim to deduction envisaged u/s 43B is for computing the total taxable income and is part of the machinery provisions for effective implementation of the taxing statute. As the decision in Shantilal Mehta's case[1998 (5) TMI 25 - SUPREME COURT] was rendered in the context of the special provisions of the Act of 1992 for fixing priorities of certain liabilities, incurred during the specified period only, its ratio does not govern the case, where restriction on allowability of a claim to deduction which is otherwise allowable has been provided which is not confined to liability of tax for a specified period, but refers to taxes payable. In this connection, it is also apposite to note there that the provisions of section 11B of the Rajasthan Sales Tax Act, 1954, provide for charging interest on failure to pay tax, fee or penalty. Section 11M of the Act of 1954 provides that the penalty or interest payable under this Act shall be deemed to be tax under this Act. Apparently, the legal fiction for the purpose of collection and recovery of tax must be carried to its logical end to effectuate the object with which it has been enacted, viz., to remedy the mischief of gaining other advantages by defaulters in payment of tax, in the matter of using it as a vehicle for reducing tax liability on the one hand, but on the other hand not paying such taxes due to the public exchequer. There is a public element in it. Thus, we hold that interest accrued on delayed payment of tax which is otherwise allowable as deduction under the provisions of the Income-tax Act while computing the total income is part of tax within the meaning of section 43B. The appeal has therefore, no force and the same is hereby dismissed.
|