Deduction u/s 43B is allowable in case of interest paid on customs duty

Enkei Wheels India Ltd. Vs DCIT (ITAT Pune)

ITAT Pune held that interest paid on customs duty is allowable as deduction under section 43B of the Income Tax Act, 1961.

Facts- During the assessment proceedings AO observed that assessee had paid Rs.3,37,96,354/- on account payment of interest on custom duty on various dates. The assessee claimed said amount as deduction allowable under section 43B of the Act as being paid on or before due date of filing of return of income for the relevant assessment year. The AO disallowed the said amount stating that it is not allowable deduction under section 43B of the Act. CIT(A) upheld the disallowance.

Conclusion- In the case of Shankar Trading Co Pvt Ltd, the assessee company had paid interest on Sale tax. The AO had not allowed the said interest as deduction u/s 43B of the Act. However, the Hon’ble Delhi High Court held that it is an allowable deduction u/s 43B of the Act.

The facts of the Shankar trading Co P. Ltd and that of the assessee are identical. In the case of the assessee, the assessee has paid Interest on Customs Duty. In the case of the assessee the Interest on Customs Duty is automatic. Hence, the decision of Hon’ble Delhi High Court is applicable in the case of the assessee.

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