- (1.) THIS is an application for confirmation of rule. The Tribunal allowed in this case a deduction of Rs. 65,653, which was interest payable by the assessee in respect of unpaid municipal rates due to the Calcutta Municipal Corporation. The Tribunal reversed the decision of the AO and the CIT(A).
(2.) IT is settled beyond dispute that interest on late payment of municipal rates is not in the nature of a payment of penalty, and is thus clearly deductible as a general business expenses under S. 37. The requirement of S. 43B that even for assessees following the mercantile system, payments by way of tax, duty, cess, etc. cannot be claimed as deductions unless actual payment has been made in the previous year, is also not applicable in this case, because the words of the section encompass the municipal rates but not interest thereon.
(3.) THERE are binding authorities for this proposition, so far as we are concerned CIT vs. Padmavate Raje Cotton Mills Ltd. (1999) 155 CTR (Cal) 540 : (1999) 239 ITR 355 (Cal) and Hindustan Motors Ltd. vs. CIT (1996) 132 CTR (Cal) 472 : (1996) 218 ITR 450 (Cal) : TC S19.2130. Confirmation of Rule would thus be an empty exercise. Rule is thus discharged.;