2003 (4) TMI 576

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....s - that the assessee appellant has filed his return of income on 9-12-1991 and the Assessing Officer assessed the income of the assessee appellant under section 143 of the Income-tax Act, 1961. As the assessee could not deposit the amount of income tax within the time fixed, he was charged with the interest of Rs. 18,984 over the non-payment of the income-tax. The assessee claimed exemption of Rs. 18,984 for the assessment year 1991-92 of the interest paid because of the non-payment of income tax in due time as business expenditure. The assessing authority refused exemption to the appellant assessee. Aggrieved by the said order, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals), Dibrugarh. The Appellate Autho....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....d to purchase sugarcane. Under section 3(3) of the U.P. Sugar Act, 1956 there was a provision for payment of interest on the arrears of cess payable on the entry of sugar cane into the factory for use, consumption or sale therein. Under these circumstances when the cess is not paid it was made liable to pay interest thereon. It was held by the Apex Court that the interest paid over non-payment of the cess amount is business expenditure, thus the assessee is entitled to deduction. The judgment runs on the premises that the interest was required to be paid by the assessee on non-payment of cess, which was required to be paid by the assessee on entry of sugar cane into the factory for use, consumption or sale during the course of his business.....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....lled upon to serve the assessee a notice of demand to pay the amount specified in the notice. Section 220 of the Act requires that any amount so specified, except the advance tax, shall be paid within 30 days of the service of the notice at the place and to the person mentioned in the notice. If the amount specified in the notice of demand is not paid within 30 days then that will carry the interest over it. Section 40 of the Act provides that notwithstanding anything to the contrary (sections 30 to 38), the following amounts shall not be deducted in computing the income chargeable under the head "Profit and gains of business or profession". Sub-clause (ii) of clause (a) of section 40 of the Act reads as under : "(ii) any sum paid ....