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| The Tax Publishers2020 TaxPub(DT) 3816 (Jp-Trib) : (2021) 187 ITD 0361 : (2020) 084 ITR (Trib) 0001 INCOME TAX ACT, 1961
Section 37(1)
Differential amount of sales tax deposited by assessee company was certainly not in the nature of penalty for contravention of any law. It was only a tax which was paid by assessee as route of concessional rate of tax was blocked as assessee was not able to deposit requisite forms with Sales Tax Department. Also, interest on delayed payment of Sales Tax deposited by assessee was not in the nature of penalty for contravention of any law. Therefore, assessee was entitled for deduction under section 37(1).
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Business expenditure - Differential amount of sales tax deposited by assessee on account of blocking of route of concessional rate of tax and interest on delayed payment of Sales Tax - -
As assessee company had not deposited requisite forms, it was not entitled to sales tax at concessional rate and normal rate of tax was made applicable on such transactions. Resultantly, assessee was required to deposit differential amount of sales tax on the transactions for which requisite forms could not be submitted. Also, assessee claimed deduction of interest on delayed payment of sales tax. AO disallowed deduction in view of Explanation to section 37(1). Held: Differential amount of sales tax deposited by assessee company was certainly not in the nature of penalty for contravention of any law. It was only a tax which was paid by assessee as route of concessional rate of tax was blocked as assessee was not able to deposit requisite forms with Sales Tax Department. Also, interest on delayed payment of Sales Tax deposited by assessee was not in the nature of penalty for contravention of any law. Therefore, assessee was entitled for deduction under section 37(1).
Relied:Udaipur Distillery (1986) 24 Taxman 282 (Raj) : 1986 TaxPub(DT) 0712 (Raj-HC)
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2016-17
IN THE ITAT, JAIPUR BENCH
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