Case Law Details
Mahalasa Exports Vs ITO (ITAT Bangalore)
ITAT Bangalore held that interest paid towards refund of excess claim of duty drawback is not in the nature of penalty or fine. Accordingly, provisions of Explanation 1 to section 37(1) of the I.T. Act not violated.
Facts- The AO observed from the computation of duty drawback & service tax, the assessee refunded in the relevant year Rs.38,95,350 being excess duty drawback claimed @ 1% instead 0.15%. Resultantly the assessee paid interest of Rs .3,30,674 on the excess amount of refund claimed. The AO noted that interest against duty drawback received is not correct as interest is not part of duty drawback and interest was paid for the period for which the assessee was benefited by the excess amount received. Thus by claiming interest against duty drawback, the assessee has shown less duty drawback by an amount of Rs.3,30,674 which cannot be adjusted towards duty drawback refund. Similarly assessee claimed deduction of Rs.8,200 being re-credit of duty drawback which was repaid on 27.2.2018 and since amount was recredited no deduction was to be claimed from the income. Accordingly, Rs.3,38,674 (3,30,674+8200) interest was added back to the total income of assessee.
CIT(A) confirmed the order of the AO on the addition of Rs.1,50,215. He further observed that interest payment of Rs.3,30,674 on excess refund received is not allowable expenditure u/s. 37 of the Act.
Being aggrieved, the present appeal is filed by the assessee.
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