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2010 (11) TMI 95 - HC - Income TaxWhether the interest paid on the late payment of the provident fund can partake the character or nature of the provident fund - Whether the provisions of Section 43B of the Act are applicable on the interest paid by the assessee on the late payment of provident fund - . Plea of the assessee was that the interest amount is not in the nature of PF and therefore, Section 43B of the Act would not apply - Though this plea was rejected by the AO, the CIT (A) accepted this plea and allowed the appeal of the assessee - The CIT (A) relied upon the judgment of the Calcutta High Court in the case of Commissioner of Income-tax Vs. Padmavati Raje Cotton Mills Ltd. [1999 -TMI - 15973 - CALCUTTA High Court] holding that the interest on late payment was outside the scope of Section 43B of the Act and therefore, the rigour of that provision was not attracted - In the case of Mahalakshmi Sugar Mills Co. Vs. Commissioner of Income Tax, Delhi [1980 -TMI - 5833 - SUPREME Court] it was held that interest payable on arrears of cess is compensatory in nature - Having regard to the fact that it partakes the character of the provident dues itself, Section 43B of the Act would be attracted and unless this interest is actually paid the assessee would not be entitled to claim deduction in respect thereof - orders passed by the Tribunal are set aside and the disallowance made by the AO affirmed
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