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TAXAP/1899/2009 2/ 2 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX
APPEAL No. 1899 of 2009
=========================================================
COMMISSIONER
OF INCOME TAX-IV - Appellant(s)
Versus
SARIKA
PAINTS LTD - Opponent(s)
=========================================================
Appearance
:
MR
Manish R Bhatt Sr Advocate with Ms Mauna M Bhatt for Appellant
None
for
Opponent
=========================================================
CORAM
:
HONOURABLE
MR.JUSTICE AKIL KURESHI
and
HONOURABLE
MS JUSTICE SONIA GOKANI 5th April 2011
ORAL
ORDER
(Per
: HONOURABLE MR.JUSTICE AKIL KURESHI)
Revenue
is in Appeal against the judgment of the Tribunal dated 7th
November 2008, raising following question for our consideration :-
[1] “Whether
the Appellate Tribunal is right in law and on facts in confirming the
order passed by CIT [A] deleting the interest expenses of Rs.
39,629/= on account of late payment of excise duty, sales tax, etc.,
added by the Assessing Officer as on allowable ?”
[2] “Whether
the Appellate Tribunal is right in law and on facts in confirming the
order passed by CIT [A] deleting the disallowance of interest
expenses made by the Assessing Officer ?”
With
respect to Question No. 1, we find that the CIT [A] as well as the
Tribunal – both have found that the expenses are interest on delayed
payment of statutory dues of excise duty, sales tax, etc., by the
assessee which are are compensatory and not penal in nature. We find
that the assessee had to pay interest
on delayed payment of Excise Duty, Sales Tax, etc. When such payments
are not penal in nature, disallowance thereof was solely not
justified and it was confirmed by the CIT [A] as well as the
Tribunal.
With
respect to the Question No.2, we find that the assessee had advanced
only a sum of Rs. 17,500/= to one Matchwell Enterprise during the
year in question. The rest of the amount of Rs. 12,00,451/= was
advanced in the earlier years for the purpose of business. Recovery
of such advance had become doubtful. In that view of the matter,
assessee did not account interest on such amount in his books of
account. The Tribunal also found that the assessee had its own funds
of nearly Rs. 5.5 Crores and the Assessing Officer had not proved
that the interest bearing loans are diverted to its sister concern.
In
view of above factual findings, we see no substantial question of law
arising. Tax Appeal is therefore dismissed.
{Akil
Kureshi, J.}
{Ms.
Sonia Gokani, J.}
Prakash*
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