Case Law Details

Case Name : Pr. CIT Vs M/s. M. J. Exports Pvt. Ltd. (Bombay High Court)
Appeal Number : Income Tax Appeal No. 809 of 2017
Date of Judgement/Order : 27/08/2019
Related Assessment Year : 2007-08
Courts : All High Courts (5987) Bombay High Court (1056)

Pr. CIT Vs M/s. M. J. Exports Pvt. Ltd. (Bombay High Court)

HC held that impugned order of the Tribunal after recording that the issue stands covered by various decisions of the Supreme Court and the various High Courts cases observes ‘admittedly, there are contrary decisions where it is held that interest paid on delayed payments cannot be allowed as deduction in the assessment proceedings.’ The above statement in the impugned order led us to direct the counsel appearing for the parties to examine the law on this issue and to bring to our attention any decision contrary to the view taken by the Supreme Court in Mahalaxmi Sugar Mills (supra) and other High Courts decisions. We are now informed by Counsel for both sides that there are no decisions contrary to the view taken by the Hon’ble Supreme Court in Mahalaxmi Sugar Mills (supra) and the various High Court decisions referred to in the impugned order of the Tribunal. All this effort and time would have been saved if the Tribunal had made specific reference to contrary decisions or not stated so in the absence of referring to the citations. Therefore, we would request the Tribunal to be specific about the decisions and make a mention of the citation in the order and not make general observations as in this case.

FULL TEXT OF THE HIGH COURT ORDER / JUDGMENT

On 20 August 2019, we passed the following order :-

‘This Appeal under Section 260-A of the Income Tax Act, 1961 (the Act), challenges the order dated 17th May, 2016 passed by the Income Tax Appellate Tribunal (the Tribunal). The impugned order dated 17th May, 2016 is in respect of Assessment Year 2007-08.

2 Revenue urges the following questions of law, for our consideration:

“(a) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in allowing the claim of the Assessee for on account of payment of interest on delayed payment of Custom Duty and Penalty without appreciating the fact that such interest was penal in nature and hence not allowable u/s. 37 of the I.T. Act?

(b) Whether on the facts and in the circumstances of the present case and in law, the Tribunal was justified in allowing the claim of the Assessee for on account of payment of interest on delayed payment of Custom Duty and Penalty without appreciating the fact that such interest was not allowable u/s. 43B of the I.T. Act as the same did not form part of Tax Duty Cess or Fees as stipulated u/s. 43B of the I.T. Act?”

3 The impugned order of the Tribunal allowed the Respondent-Assessee’s appeal by holding that the Respondent is entitled to claim expenditure in respect of interest paid on delayed payment of customs duty under Section 37 of the Act. This by placing reliance upon the decision of Supreme Court in Mahalxmi Sugar Mills Co., v/s. CIT 123 ITR 429. The impugned order dated 17th May, 2016 also placed reliance upon Section 43B of the Act and held that even under the above provision, the Respondent would be entitled to claim the expenditure. In spite of having so held, the impugned order records that there are contrary decisions which have taken a view that the interest on delayed payment can not allowed. None of the contrary decisions have been referred to in the impugned order.

4 In the above view, Mr. Walve, learned Counsel for the Revenue seeks time to examine whether there are any decisions contrary to the view taken by the Apex Court in Mahalaxmi Sugar Mills Co. (supra) and various High Courts referred to in the order of the Tribunal.’

2. Regarding Question (a).

(a) Walve learned counsel appearing for the Revenue states that he was not able to file any decisions contrary to the view taken by the Honble Supreme Court in Mahalaxmi Sugar Mills (supra) and various High Court decisions relied upon in the impugned order.

(b) We find that the impugned order of the Tribunal after recording that the issue stands covered by various decisions of the Supreme Court and the various High Courts cases observes “admittedly, there are contrary decisions where it is held that interest paid on delayed payments cannot be allowed as deduction in the assessment proceedings.” The above statement in the impugned order led us to direct the counsel appearing for the parties to examine the law on this issue and to bring to our attention any decision contrary to the view taken by the Supreme Court in Mahalaxmi Sugar Mills (supra) and other High Courts decisions. We are now informed by Counsel for both sides that there are no decisions contrary to the view taken by the Hon’ble Supreme Court in Mahalaxmi Sugar Mills (supra) and the various High Court decisions referred to in the impugned order of the Tribunal. All this effort and time would have been saved if the Tribunal had made specific reference to contrary decisions or not stated so in the absence of referring to the citations. Therefore, we would request the Tribunal to be specific about the decisions and make a mention of the citation in the order and not make general observations as in this case.

(c) Thus this Question does not give rise to any substantial question of law as it follows the decisions of the Apex Court in Mahalaxmi Sugar Mills (supra). Thus not entertained.

3. Regarding Question No.(b).

(a) It is undisputed by the parties, that in view of our answer to Question (a) above, no substantial question (b) arises for our consideration.

(b) Thus not entertained.

4. Accordingly, appeal dismissed.

Download Judgment/Order

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