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ITAT held interest on delayed payment cannot be disallowed
ITAT held interest on delayed payment cannot be disallowed
AO made addition of Rs. 5.29 Crores on account of gain on settlement of Sales Tax Deferral Loan. AO ignored that Gabriel India Ltd had availed benefit u/s 43B (of Income Tax Act, 1961) in earlier years. AO disallowed interest paid on different accounts. CIT(A) deleted addition and confirmed disallowace. ITAT confirmed deletion and deleted disallowance holding that interest on delayed payment or excess credit cannot be disallowed as it is purely compensatory.-500628
1. AO made addition of Rs. 5.29 Crores on account of gain on settlement of Sales Tax Deferral Loan ignoring that Gabriel India Ltd had availed benefit u/s 43B (of Income Tax Act, 1961) in earlier years.
2. AO disallowed interest paid by assessee on different accounts.
3. CIT(A) deleted the addition, and confirmed the disallowace.
On appeal, the ITAT held as under:
4. The issue is now squarely covered by the decision of Hon'ble jurisdictional High Court.
5. Therefore, respectfully following the judicial precedence we confirm the order of the first appellate authority deleting the said addition.
6. We find that the natures of disallowance of interest are delayed payment on excise duty or delayed payment of sales-tax.
7. These are more or less compensatory in nature and cannot be held as any infraction or violation of any law.
8. Such a payment of interest on delayed payment or excess credit also cannot be disallowed as it is pure compensatory and accordingly, the order of the CIT(A) on this score is reversed.
Case Reference - Asst. Addl Commissioner of Vs. Gabriel India Ltd,
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH "G", MUMBAI
BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER
AND SHRI AMIT SHUKLA, JUDICIAL MEMBER
ITA No. : 4985/Mum/2011
(Assessment year :2007-08)
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