TaxTMI 
TaxTMI 
2011 (6) TMI 49
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....g that conversion of overdue interest into funded interest by the financial institutions would constitute actual payment of interest under Section 43B?" 2. The assessee claimed deduction under Section 43 B of the Income Tax Act as regards the payment of interest on the loans taken from ICICI Bank and PIPDIC. Admittedly, the assessee, following the mercantile system of accounting, made only a provision in the profit and loss account as regards the payment of interest on the loan taken. However, the assessee placed reliance on Board's circular, which specifically exempted the requirement of payment of sales tax covered under the scheme framed by the State Government and submitted that having regard to the provision already made in t....
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....lpana Lamps and Components Ltd. V. Deputy Commissioner of Income-Tax), this Court had an occasion to consider the similar claim and pointed out that a mere postponement of liability to pay interest did not amount to discharge, whether actual or constructive. This Court further pointed out as follows: "Section 43B(a) deals with sums payable by the assessee by way of tax, duty, cess or fees under any law for the time being in force. Explanation 2 sets out that for the purposes of that clause, "any sum payable" means a sum for which the assessee has incurred liability in the previous year even though such sum might not have been payable within that year under the relevant law. The year in which the liability was incurred is taken as ....
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....ith effect from April 1, 1989, refers to any sum payable by the assessee by way of tax, duty or fee by whatever name called under any law for the time being in force. The basic requirement, therefore, is that the amount payable must be by way of tax, duty and cess under any law for the time being in force." 6. In the decision reported in 290 ITR 282 (Mugat Dyeing and Printing Mills A.C.I.T.) the Gujarat High Court pointed out that the expression employed in Section 43B of the Income Tax Act is "actually paid". The word "actual" hence, has to be understood as referrable to something real in opposition to constructive or speculative. Thus, going by the said phrase "actually paid" has to be construed as the assessee, in fact, making ....