TMI Blog1995 (4) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... o Rs. 66,952 was not accepted but contested by the assessee. " 2. The facts, briefly stated, are that the State Electricity Board had raised a demand on the assessee, pertaining to some earlier years. The fact that it was a statutory liability is not in dispute. The assessee contested this levy but the court held against the assessee. However, the assessee took some time to pay the demand so crystallised and hence was charged interest of Rs. 79,003 for the delayed payment. The interest remained unpaid at the year end but made a provision thereof in the accounts and debited the sum to electricity power account. As the same had not been paid in the accounting year relevant to the assessment year under appeal, the Assessing Officer disallowe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nfirmed. 7. At the very first instance, we are unable to agree with the contentions made on behalf of the assessee. The jurisdictional High Court, in the case of CIT v. Udaipur Distillery [1986] 160 ITR 444 (Raj.) has clearly held that the liability of interest on delayed payment of sales-tax is a statutory obligation of the dealer and hence is a part of sales-tax. The Hon'ble High Court had based its decision following the rulings of the Hon'ble Supreme Court in several cases and in particular in the case of Mahalakshmi Sugar Mills Co. v. CIT [1980] 123 ITR 429 and that in the case of Haji Lal Mohd. Biri Works v. State of U.P. [1973] 32 STC 496. 8. At this juncture, it would be interesting to note that Shri Kalia also relied on the jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nditure. Hence, the reliance of the ld. counsel on this decision was not well-founded. 12. On the same analogy it follows that when a statutory liability has to be allowed as a deduction only on actual payment, the interest thereon for delayed payment of the liability also will have to be allowed on actual payment only. 13. The analogy so drawn sounds to be logical and, in our opinion, fits into the philosophy behind the provisions of section 43B. Some assessees used to provide for the liability and claim deduction, though actual payment may not have been made, thereby depriving the Government of its revenue from both the sides. When a statutory liability is not paid in time, interest would follow. This interest, is no doubt compensator ..... X X X X Extracts X X X X X X X X Extracts X X X X
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