PCIT vs. M. J. Exports Pvt. Ltd (Bombay High Court)

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
INCOME TAX APPEAL NO. 809 OF 2017
Pr. Commissioner of Income Tax 3-Mumbai .. Appellant
Vs
M/s. M. J. Exports Pvt. Ltd. .. Respondent
Mr. Sham Walve a/w Pritish Chatterjee, for the Appellant.
Mr.K.Shivram, Senior Advocate with Mr.Rahul Hakani and Shashank
Dundu, for the Respondent.
CORAM : M.S.SANKLECHA &
NITIN JAMDAR, JJ.
Date : 27 August, 2019.
P.C. :
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 17
th 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) Mr.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.
(NITIN JAMDAR, J.) (M.S.SANKLECHA, J.)
::: Uploaded on – 30/08/2019 ::: Downloaded on – 06/09/2019 13:31:22 :::