1985 (5) TMI 44

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....visions of s. 16 of the Bengal Public Demands Recovery Act, the assessee was also required to pay interest of Rs. 7,217 which was paid in the accounting year relevant to the assessment year under reference. In its return as well as at the time of assessment proceedings, the assessee claimed deduction of Rs. 7,217 while computing its total income under the Act. The ITO disallowed the assessee's claim. The AAC accepted the assessee's claim for deduction of Rs. 7,217. The Tribunal, following the decision of the Gujarat High Court in the case of CIT v. Mihir Textiles Limited [1976] 104 ITR 167, held that such deduction was not allowable. At the hearing before us, it has been contended by the learned advocate for the assessee that the Tribunal ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....s' Provident Funds Act, 1952, have to be paid for an infraction of law and, in that sense, it is a penalty. An amount paid as damages for delay in making provident fund contributions is not deductible as business expenditure. In this case, the payment made by the assessee was not in respect of damages under s. 14B. The assessee paid interest under the Bengal Public Demands Recovery Act, 1913. The certificated demand carries interest under the provisions of the Public Demands Recovery Act. Thus, the interest is not paid because of any infraction of law but because of the delay in making the payment of the certificated debt. Section 16 of the Public Demands Recovery Act, inter alia, provides as follows: " There shall be recoverable, in the ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....the certificate. The interest payable under the said Act is in the nature of interest upon judgment. This interest is recoverable in view of the provisions of s. 16 of the said Act from the date of making, the certificate up to the date of realisation. This is not recoverable for infraction of law. It is not even a penalty. It may be that for non-payment of the provident fund contributions by the employer, the Provident Fund Commissioner has resorted to special procedure under the Public Demands Recovery Act which provides a speedy mode of realisation of dues. The interest payable under the said Act cannot., however, be equated with damages payable under s. 14B of the Employees' Provident Funds Act. Our attention has been drawn to the deci....