2004 PLP 2137 (PTD)
LACHMANDAS MATHURADAS Versus COMMISSIONER OF INCOME‑TAX
| Citation | 2004 PLP 2137 (PTD) |
| Forum / Court | 254 I T R 799 |
| Bench Members | S. C. Agrawal and G. T. Nanavati, JJ |
| Parties | LACHMANDAS MATHURADAS Versus COMMISSIONER OF INCOME‑TAX |
| Primary Law | Income‑tax‑‑‑ |
Q1: What are the key laws and sections cited in 2004 PLP 2137 (PTD)?
This judgment primarily cites: Income‑tax‑‑‑ as referenced in Pakistani case law index.
Q2: Which judicial bench decided the case 2004 PLP 2137 (PTD)?
The case was heard and decided by the 254 I T R 799 bench comprising: S. C. Agrawal and G. T. Nanavati, JJ.
Q3: What is the official citation format for this judgment on Pakistan Law Portal?
Cite this legal precedent as: 2004 PLP 2137 (PTD) (LACHMANDAS MATHURADAS Versus COMMISSIONER OF INCOME‑TAX). Read the full summary and cross-referenced laws free on Pakistan Law Portal.
Laws Cited
Representation
- Raja Ram Aggarwal, Senior Advocate (Ms. Aparna Rohatgi, K.B. Rohatgi and Bharat Aggarwal, Advocates) for Appellant.
- A. Raghuvir, Senior Advocate, Ms. Lakshmi Iyengar and B. Krishna Prasad, Advocates for Respondent.
Headnotes / Summary
(Appeal by special leave from the judgment and order, dated January 28, 1980, the Allahabad High Court in I.T.R. No.54 of 1978.) ‑‑‑‑Business expenditure‑‑‑Interest on arrears or on outstanding balance of sales‑tax‑‑‑Not penal‑‑‑Compensatory in nature‑‑‑Allowable as deduction‑‑‑Indian Income Tax Act, 1961, S.37‑‑‑[CIT v. Lachhman Das Mathura Das (1980) 124 ITR 411 reversed on this point]. CIT v. Lachhman Das Mathura Das (1980) 124 ITR 411 reversed on this point. Interest on arrears of sales tax or on the outstanding balance of sales tax is not penal: it is compensatory in nature‑and is an allowable deduction in computing the profits of a business. Triveni Engineering Works Ltd. v. CIT (1983) 144 ITR 732 (All.) approved. Saraya Sugar Mills (P.) Ltd. v. CIT (1979) 116 ITR 387 (All.) ref.
Judgment & Decree
Triveni Engineering Works Ltd. v. CIT (1983) 144 ITR 732 (All.) approved. Saraya Sugar Mills (P.) Ltd. v. CIT (1979) 116 ITR 387 (All.) ref. Raja Ram Aggarwal, Senior Advocate (Ms. Aparna Rohatgi, K.B. Rohatgi and Bharat Aggarwal, Advocates) for Appellant. A. Raghuvir, Senior Advocate, Ms. Lakshmi Iyengar and B. Krishna Prasad, Advocates for Respondent. This appeal arises out of the Income‑tax Reference No.54 of 1978 (see (1980) 124 ITR 411 (All.), wherein the Income‑tax Appellate Tribunal, Delhi Bench, had referred the following questions to the Allahabad High Court for opinion (page 413): "(1) Whether, the Tribunal was in law justified in allowing the assessee's claim in respect of interest on the arrears of sales tax in computing the assessee's income for the year under consideration? (2) Whether, the interest on the outstanding balance of sales tax was an allowable deduction under the Income‑tax Act? (3) Whether there was material on record justifying the Tribunal's finding that the liability of Rs.69,383 for damages had crystallized in the accounting period relevant to the assessment year under consideration? (4) Whether the claim of the assessee for damages could be held to be an allowable deduction computing the assessee's income liable to assessment for the years under consideration?" The Allahabad High Court by its impugned judgment, dated January 28, 1980, has answered the said questions against the assessee and in favour of the Revenue. Hence, this appeal. While granting special leave to appeal the appeal has been confined to Questions Nos.1 and 2 only. The High. Court has proceeded on the basis that the interest on arrears of sales tax is' penal in nature and has rejected the contention of the assessee that it is compensatory in nature. In taking the said view the High Court has placed reliance on its Full Bench decision in Saraya Sugar Mills (P.) Ltd. v. CIT (1979) 116 ITR 387 (All.) Learned counsel appearing for the appellant‑assessee states that the said judgment of the Full Bench has been reversed by the larger Bench of the High Court in Triveni Engineering Works Ltd. v. CIT (1933) 144 ITR 732 (All.), wherein it has been held that interest on arrears of tax is compensatory in nature and not penal. This question has also been considered by this Court in Civil Appeal No.830 of 1979 titled Saraya Sugar Mills (Pvt.) Ltd. v. CIT, decided on February 29, 1996. In that view of the matter, the appeal is allowed and Questions Nos. 1 and 2 are answered in favour of the assessee and against the Revenue. No order as to costs. M.B.A./1103/FC Appeal accepted.