2025 (11) TMI 1870

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....e Tribunal, Cochin Bench in I.T.A. No.128/Coch/2017, as regards the assessment year 2012-13. 2. While processing the return of income filed by the assessee under Section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'), the Assessing Officer (AO) noticed that interest was paid by the assessee on Agricultural Income Tax (AIT) dues at Rs.94,00,179/- and disallowed the claim made by the assessee invoking the provisions of Section 40(a)(ii) of the Act, read with Rule 7A of the Income Tax Rules, 1962 (hereinafter referred to as 'the Rules') adding back 35% of the interest paid as above, amounting to Rs.32,90,063/-. The first appellate authority, while disposing of the appeal filed against the afore assessment, took th....

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....he deduction under Section 37 of the Act. He would rely on Pratibha Processors and Others v. Union of India and Others [(1996) 11 SCC 101], M/s. Mahalaxmi Sugar Mills Co. v. C.I.T., Delhi [(1980) 3 SCC 475], Consolidated Coffee Ltd. v. Agricultural Income Tax Officer, Madikeri and Others [(2001) 1 SCC 278], M/s. Prakash Cotton Mills Pvt. Ltd. v. Commissioner of Income Tax (Central), Bombay [(1993) 3 SCC 452] and Commissioner of Income Tax v. Dhanalakshmi Bank Ltd. [2003 (2) KLT 1076], in support of the above contentions. 6. Per contra, Sri. Jose Joseph, learned Standing Counsel for the revenue, would submit that the question as to whether the interest satisfied is "compensatory", or not, need not be considered at all, since what was disa....

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.... expended for the purposes of the business of the assessee. True, the liability to AIT has arisen on account of the business of the assessee. But this cannot be extended to the interest payable on account of the delayed payment of AIT. The Apex Court, in Bharat Commerce and Industries Ltd. v. Commissioner of Income-Tax [(1998) 230 ITR 7339 (SC)], has also held that the delayed payment of income tax can in no way be considered as an expenditure laid out wholly and exclusively for the purpose of business. When that be so, the assessee would not be entitled to any deduction with respect to the provisions of the Act. 10. The reliance placed by the learned counsel on Pratibha Processors (supra), does not appear to be apposite, insofar as it i....