TaxTMI 
TaxTMI 
2019 (1) TMI 1259
X X X X Extracts X X X X
X X X X Extracts X X X X
....nch. 1.2 Aggrieved by the order of Ld. Commissioner of Income Tax (Appeals)-7, Mumbai, [CIT(A)], Appeal No. CIT(A)-7/Addl.CIT-3(3)/IT- 137/11-12 dated 07/05/2012, the assessee is under appeal before us with following effective Grounds of Appeal: - 1. The Order u/s 250 dated 7th May, 2012, passed by the Commissioner of Income Tax (Appeals)-7, Mumbai, is bad in law, contrary to the facts of the case and evidence on record, to the extent of Ground No.2. 2. The learned CIT (A) erred in upholding the disallowance to the extent of Rs. 1,83,05,381 being interest charged u/s 234B; u/s 234C and 234D, being compensatory in nature for use of government dues, as business expenditure u/s 37 of the Income Tax Act, 1961. Ground Number-2 is a revised....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd claimed as business expenditure. The Ld. AO disallowed the same in terms of Section 40a(ii) and by relying upon various judicial pronouncements, which have already been discussed in para 7.1 of the quantum assessment order. The Ld. CIT(A) has confirmed the same on the premise that interest on tax was not allowable deduction u/s 37 as it was the part of tax itself and the payment of tax and interest thereon was the personal liability of the assessee. Aggrieved, the assessee is in further appeal before us. 3. The Ld. Authorized Representative for Assessee [AR], Shri Mahesh Mathur, drawing our attention to the documents placed in the paper-book submitted that the assessee was following cash method of accounting for several years. However, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e of interest payment u/s 234 is concerned, there could be no quarrel as to the nature thereof since it is settled legal position that the character of such interest payment is compensatory in nature in the sense that it is payable by the assessee to the revenue for delayed payment of its dues. The said proposition is clearly borne out of the following judicial pronouncements: - No. Case Title Judicial Authority Citation 1. Anjum M. H. Ghaswala & Others Hon'ble Supreme Court 252 ITR 1 2. CIT Vs Kotak Mahindra Finance Ltd. Hon'ble Bombay High Court 265 ITR 119 3. Raju Bhojwani Vs CIT Hon'ble Delhi High Court 13 Taxman 221 4. CIT Vs Anand Prakash Hon'ble Delhi High Court 316 ITR 141 4.2 Proceedings further,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s personal liability for the assessee and consequential interest paid thereupon for delay is part and parcel of the aforesaid payment only and retain the same color & character. This being the case, the deduction thereof u/s 37(1) could not be allowed to the assessee since it was personal expenditure in nature and the same could not be said to have been expanded wholly and exclusively for the purpose of assessee's business since payment of taxes or interest could, by no stretch of imagination, be said to be the assessee's business. For the same reason, the deduction thereof could not be allowed to assessee u/s 36(1)(iii) also which envisages amount of interest paid in respect of capital borrowed for the purposes of business or profession, w....