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Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
<h1>Interest on overdue sales tax arrears: whether it is a penalty or compensation, appeal allowed for assessee</h1> Whether interest on arrears of sales tax is penal or compensatory for tax purposes was the dominant issue. The SC held that the HC erred in treating such ... Characterisation of interest on tax arrears as compensatory or penal - Allowability of interest on arrears of sales tax as deduction in computing incomeCharacterisation of interest on tax arrears as compensatory or penal - Whether interest on arrears of sales tax is compensatory in nature and not penal. - HELD THAT: - The High Court treated the interest on arrears of sales tax as penal and rejected the assessee's contention that it was compensatory. The Supreme Court examined the authorities relied upon by the High Court, noted that the Full Bench decision relied upon had been superseded by a later larger Bench decision, and observed that the question has also been considered by this Court. On that basis the Court concluded that the interest on arrears of sales tax is compensatory in nature and not penal.Interest on arrears of sales tax is compensatory in nature and not penal.Allowability of interest on arrears of sales tax as deduction in computing income - Whether interest on the outstanding balance of sales tax is an allowable deduction under the Income-tax Act. - HELD THAT: - Having held that the interest is compensatory rather than penal, the Court proceeded to allow the assessee's claim. The Supreme Court allowed the appeal on this question, answering in favour of the assessee and against the Revenue, thereby treating the interest as allowable in computing the assessee's income for the year under consideration.Interest on outstanding balance of sales tax is an allowable deduction in computing the assessee's income.Final Conclusion: The appeal is allowed; questions numbered 1 and 2 referred by the Tribunal are answered in favour of the assessee - the interest on arrears of sales tax is compensatory in nature and is allowable as a deduction; no order as to costs. The Supreme Court allowed the appeal regarding interest on arrears of sales tax, ruling in favor of the assessee based on the compensatory nature of the interest. The High Court's decision was overturned. (Case Citation: 1997 (12) TMI 16 - Supreme Court)
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