9911796707
TMI Blog1983 (10) TMI 81X X X X Extracts X X X X X X X X Extracts X X X X ..... pay an amount which was treated as interest. In respect of the contributions for the period from July to October 1977, the interest payable amounted to Rs. 21,109. This was claimed as a deduction in computing the income for the assessment year 1978-79. In respect of the period from July 1977 to April 1978, the assessee had to pay a sum of Rs. 53,950 by way of interest. This was claimed as a deduction in computing the income for the assessment year 1979-80. 3. We may mention that the assessee-company had a discussion with the Regional Provident Fund Commissioner with reference to the dues from the assessee. By their letter, dated 21-2-1978, the Provident Fund Commissioner directed the assessee to furnish bank guarantee for the amount in ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tio laid down by the Supreme Court in the case of Mahalakshmi Sugar Mills Co. v. CIT [1980] 123 ITR 429 would be applicable to the facts of the case. So long as the payment is not by way of penalty for any breach or infringement of law, it was only part and parcel of the dues. He then submitted that the decision of the Allahabad High Court relied on by the Commissioner (Appeals) is impliedly overruled by the Supreme Court because the Allahabad High Court had relied on one of its earlier decisions which was expressly reversed by the Supreme Court. With regard to the point that there is no special provision for levy of penalty in the Provident Fund Act, he submitted that the test is not whether there is a separate provision for penalty. The t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest' is not used. Secondly, if it has been of the nature of interest, it would be a percentage of the arrears. But, what is prescribed in the section is an amount to be determined at the discretion of the Provident Fund Commissioner. It could even be equivalent to the arrears itself. Further, the amount of damages is not payable automatically. It is only when an order to that effect is passed by the Provident Fund Commissioner that damages become payable. We have already noted that there is a provision for giving an opportunity of being heard. This also indicates that the liability is not automatic. Considering all these aspects, we must hold that the levy is in the nature of a breach of statutory duty. Under these circumstances, it is pen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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