1991 (2) TMI 83

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....-Under section 256 (2) of the Income-tax Act, 1961, the Tribunal has referred the following question to this court: "Whether, on the facts and circumstances of the case, the Tribunal was tight in disallowing an amount of Rs. 32,235 claimed by the assessee to be deductible on account of payment of interest towards sales tax arrears ?" The assessee is a registered firm and the assessment year ....

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.... interest on tax remaining unpaid for the period commencing from February 1, 1964. Against this demand, the petitioner filed a writ petition in this court and obtained stay on August 3, 1970. Later, the writ petition was dismissed and the stay vacated. The petitioner obtained special leave to appeal to the Supreme Court on March 16, 1971. This court also stayed realisation of part of the interest ....

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....ecision lays down further that there is nothing in the language of section 8 (1 A) which stops the accrual of interest because of a stay order. It reiterates that liability to pay interest accrues by operation of statutory provisions and that it requires not even a notice of demand to make it payable. The main question in this case is whether the aforesaid amount of Rs. 32,992 paid towards inte....