TMI Blog1984 (2) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... was not admissible as a deduction in computing its total income ? The facts, briefly stated, are as under: Rajasthan Central Stores (P.) Ltd., applicant herein ("the assessee"),is a trader. It had committed default in the payment of sales tax payable under the provisions of the Rajasthan Sales Tax Act, 1954 (" the Sales Tax Act "), and it was made liable to pay penal interest for its failure to remit the sales tax into the Government account within time. The assessee claimed a deduction of Rs. 5,050 as deductible expenditure in computing the total income on account of the amount paid by it towards interest on the sales tax dues in the assessment year 1968-69. The said deduction was disallowed by the ITO and the said disallowance was uph ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt in Mahalaxmi Sugar Mills Ltd.'s case [1972] 85 ITR 320. Shri Agarwal has also placed reliance on the decision of the Calcutta High Court in Balrampur Sugar Co. Ltd. v. CIT [1982] 135 ITR 227 and the Full Bench decision of the Allahabad High Court in Triveni Engg. Works Ltd. v. CIT [1983] 144 ITR 732. In Mahalakshmi Sugar Mills Co.'s case [1980] 123 ITR 429, the Supreme Court has construed the provisions of the UP Sugarcane Cess Act, 1956. Section 3(3) of the said Act provided that any arrear of cess not paid on the date prescribed under sub-s. (2) shall carry interest at 6 per cent. per annum from such date to the date of payment. The Supreme Court held that the interest that was paid under s. 3(3) of the Cess Act could not be descri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of the UP Sugar Cane (Purchase Tax) Act, 1961, with the UP Sugarcane Cess Act, 1956, has held that the same were in pari materia and the decision of the Supreme Court in Mahalakshmi Sugar Mills Co.'s case [1980] 123 ITR 429, was applicable. The Calcutta High Court has disagreed with the, decision of the Full Bench of the Allahabad High Court in Saraya Sugar Mills (P.) Ltd.'s case [1979] 116 ITR 387, and expressed the view that the said decision of the Full Bench of the Allahabad High Court was not correct because the interest paid is not for an infraction of law as such, but it is for the default for payment in time which is a kind of damage in default in the performance of an obligation. Thereafter, the matter was considered b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Provided further that no interest shall be payable under this section on such amount and for such period in respect of which interest is paid and under the provisions of sections 11 and 14. " A perusal of the aforesaid provisions contained in s. 11B of the Sales Tax Act shows that interest was payable automatically on the amount of tax payable if the amount of tax payable under sub-ss. (2) and (2A) of s. 7 was not paid within the period allowed or, if amount specified in any notice of demand, whether for tax, fee or penalty was not paid within the period specified in such notice, or in the absence of such specification within 30 days from the date of service of such notice. The aforesaid provisions contained in s.11B of the Sales Tax Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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