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2020 (9) TMI 760 - AT - Income TaxDelayed payment of certain Govt. dues - differential amount of tax (Normal rate – Concessional Rate) and interest on delayed payment of Sales Tax - non-submission of certain forms - HELD THAT:- Since the requisite forms could not be deposited by the assessee to the Sales Tax Department, therefore, the assessee company was required to deposit the sales tax amount at normal rate as against concessional rate of tax, resultantly, the differential amount was deposited by the assessee company. Such amount of tax deposited by the assessee company is certainly not in the nature of penalty for contravention of any law. It was only a tax which was paid by the assessee company as route of concessional rate of tax was blocked as the assessee was not able to deposit the requisite forms with the Sales Tax Department. In the case of Malwa Vanaspati & Chemicals Co [1996 (10) TMI 5 - SUPREME COURT] had held that where the assessee had to pay the amount of tax at actual rates instead of concessional rates and something more, then it comprises both the elements of compensation and penalty. Therefore, compensation insofar as payment of tax at full rate is obligatory and something more, is in the character of a penalty. Hence, the assessee shall be entitled to the deduction u/s 37(1) of the Act insofar as the payments partake the element of compensation i.e. upto 100% of the sales tax rate actually payable. We do not concur with the findings of the ld. CIT(A) and we are of the considered view that the differential amount of tax (Normal rate – Concessional Rate) and interest on delayed payment of Sales Tax amounting deposited by the assessee is not in the nature of penalty for contravention of any law. Therefore, the assessee is entitled for deduction of such amount u/s 37(1) - Decided in favour of assessee.
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