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TMI Blog2002 (9) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... ur Bench, Jaipur (hereinafter referred to as "the ITAT"), has referred the following question for the opinion of this court which has arisen out of the order of the Tribunal in I. T. A. No. 2322/JP of 1994, dated April 30, 1996, in respect of the assessment year 1987-88: "Whether, on the facts and in the circumstances of the case, and proper interpretation of law, the Tribunal was legally justifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he sales tax outstanding as on March 31, 1987, amounted to Rs. 23,59,187. At the time of filing the return, the assessee claimed interest of Rs. 2,77,578 on the unpaid sales tax for which the necessary adjustment in the books of account was made on the mercantile system of accounting and as per the assessee's version the same was allowable under section 36(1)(iii). During the course of reassessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of section 43B as it stood before the amendment of the Finance Act, 1987, which provided disallowance of such liability. On appeal the Income-tax Appellate Tribunal analysing the provisions of section 43B and relying on the decision of this court in CIT v. Udaipur Distillery [1986] 160 ITR 444, held that interest paid is the part of the sales tax Accordingly, the Income-tax Appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness. Thus, the liability to pay interest is an allowable deduction. The object of section 43B is to curb the activities of those taxpayers who do not discharge their statutory liability of payment of sales tax or excise duty for long periods but claim deduction in that regard from the income on the ground that the liability to pay this amount had been incurred by them in relevant previous year. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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