TMI Blog2003 (4) TMI 576X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the Assessing Officer assessed the income of the assessee appellant under section 143 of the Income-tax Act, 1961. As the assessee could not deposit the amount of income tax within the time fixed, he was charged with the interest of ₹ 18,984 over the non-payment of the income-tax. The assessee claimed exemption of ₹ 18,984 for the assessment year 1991-92 of the interest paid because of the non-payment of income tax in due time as business expenditure. The assessing authority refused exemption to the appellant assessee. Aggrieved by the said order, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals), Dibrugarh. The Appellate Authority allowed the appeal of the assessee holding that the interest pai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 56 there was a provision for payment of interest on the arrears of cess payable on the entry of sugar cane into the factory for use, consumption or sale therein. Under these circumstances when the cess is not paid it was made liable to pay interest thereon. It was held by the Apex Court that the interest paid over non-payment of the cess amount is business expenditure, thus the assessee is entitled to deduction. The judgment runs on the premises that the interest was required to be paid by the assessee on non-payment of cess, which was required to be paid by the assessee on entry of sugar cane into the factory for use, consumption or sale during the course of his business. As he has not paid the cess within time, he was required to pay inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specified in the notice. Section 220 of the Act requires that any amount so specified, except the advance tax, shall be paid within 30 days of the service of the notice at the place and to the person mentioned in the notice. If the amount specified in the notice of demand is not paid within 30 days then that will carry the interest over it. Section 40 of the Act provides that notwithstanding anything to the contrary (sections 30 to 38), the following amounts shall not be deducted in computing the income chargeable under the head Profit and gains of business or profession . Sub-clause (ii) of clause (a) of section 40 of the Act reads as under : (ii) any sum paid on account of any rate or tax levied on the profits or gains of any busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the Income-tax Act are not deductible as an expenditure under section 37 of the Act. In our view also the interest, which was required to be paid by the assessee on account of delayed payment on the demand of income tax, partakes the character of the income tax itself, it being the accretion to the income-tax on account of default made by the assessee in payment of the tax demanded and the interest being payable under section 220 of the Income-tax Act. It being the part and parcel of the income-tax, deduction is not permissible under the provisions of section 40(a)( ii) read with section 2(43 ) of the Income-tax Act, 1961. 7. For the aforesaid reasons, the question is answered in the affirmative in favour of the revenue and we hold t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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