TMI Blog2015 (2) TMI 352X X X X Extracts X X X X X X X X Extracts X X X X ..... HIGH COURT] has clearly held that payment of interest on custom duty is not hit by explanation below section 37(1) of the Act and had decided the issue in favour of assessee. - interest payment on custom duty are expenses allowable under the provisions of the Act - Decided in favour of assesse. - I.T.A. No.2977 /Del/2013 - - - Dated:- 12-11-2014 - SHRI H. S. SIDHU AND SHRI T.S. KAPOOR, JJ. For the Appellant : Shri Piyush Kuashik, Adv. For the Respondent : Shri BRR Kumar, Sr. DR ORDER Per: T S Kapoor: This is an appeal filed by the assessee against the order of Ld. CIT(A) dated 18.02.2013. The only ground taken by the assessee in its appeal is the action of Ld. CIT(A) by which he had sustained disallowance on acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tible. In the case of Bharat Commerce and Industries Ltd., it was reaffirmed that any expenditure incurred for any purpose which is an offence or which is prohibited by law shall not be deemed to have been incurred for the purpose of business or profession. In the case of Jindal Industries Vs CIT, the deduction on account of additional income tax was not allowed. The interest on custom duty has the character of penalty. In view thereof, the addition of ₹ 55,92,254/- is confirmed. The ground of appeal is ruled against the appellant. 3. Aggrieved, the assessee is in appeal before us. 4. At the outset, the Ld. A.R. submitted that the payment was not in the form of penalty and rather it was in the nature of interest which is allowa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wable under the provisions of the Act. The Hon'ble Supreme Court in the case of Mahalaxmi Sugar Mills Co. has held as under: The interest payable on an arrear of cess under s. 3(3) of the U.P. Sugar Cane Act, 1956 is in reality part and parcel of the liability to pay cess. It is an accretion to the cess. The arrear of cess carries interest; if the cess is not paid within the prescribed period a larger sum will become payable as cess. The enlargement of the cess liability is automatic under s. 3(3). No specific order is necessary in order that the obligation to pay interest should accrue. As soon as the prescribed date is crossed without payment of the cess, interest begins to accrue. It is not a penalty, for which prov ..... X X X X Extracts X X X X X X X X Extracts X X X X
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