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2014 (5) TMI 518 - HC - Income TaxDeduction under Section-43B of the Act - Provision for interest as it is a fictional liability – Held that:- The assessee has exported the spirit and I.M.F.L. to Delhi from U.P. - The duty is chargeable on the transactions but no excise duty was paid - the assessee has neither paid the duty nor interest, but enjoyed the deduction of Section 43B in the name of mercantile system of accounting - The AO has already allowed the deduction u/s 43B pertaining to the duty which has wrongly been done - the interest is nothing but an extended liability of the duty for the belated payment - It is compensatory in nature. The interest having accrued is a part of the main liability – Relying upon Dinesh Mill Ltd. COMMISSIONER OF INCOME TAX Versus DINESH MILLS LIMITED [2008 (2) TMI 190 - GUJARAT HIGH COURT] - the provision for the duty as well as for the interest is allowable u/s 43B only on the basis of actual payment and it is irrelevant that the assessee has followed the mercantile system of accounting - the object of Section 43B is to override to provision of mercantile system of accounting where the statutory liability was not actually discharged - The assessee is not entitled to claim the deduction u/s 43B pertaining to the interest payable during the AY – Decided in favour of Revenue.
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