1984 (2) TMI 103

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....-80. The first contention raised by the assessee is in regard to disallowance of interest of Rs. 2,40,025 paid to the Income-tax Department on delayed payment of income-tax. The assessee admittedly delayed its payment of income-tax liability resulting in levy of interest as aforesaid under section 220(2) of the Income-tax Act, 1961 (' the Act '). The assessee claimed before the ITO that the said i....

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....pted to distinguish the said decision. His submission was that under section 80V of the Act an assessee was allowed deduction of interest on amounts borrowed for the purpose of payment of income-tax. Thus, though the income-tax is a personal liability, the interest payment, in respect of amount borrowed to meet the same was an allowable deduction. On parity of reasoning Shri Talati submitted that ....

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....ns. In our opinion, the contention raised by Shri Talati is wholly without substance, Section 80V is a special deduction provided for under Chapter VIA of the Act. These deductions come into play after the gross total income is determined. These deductions are not the part of normal expenditure allowable to an assessee in computing its income under various heads but a special type of relief provid....

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....iability arises only after the profits come into existence. Thus, unless there are profits, there cannot be any liability to tax. Therefore, a liability which comes into existence after the profits are determined cannot be allowed as a deduction in computing the business profits. Now if the income-tax payments are not allowable as a deduction in computing the business profits, it is difficult to a....