Andhra HC (Pre-Telangana)
Gopi Krishna Granites India Ltd. vs Deputy Commissioner Of Income-Tax on 12 July, 2001
Equivalent citations: [2001]251ITR337(AP)
JUDGMENT S.R. Nayak, J.
1. This appeal preferred by the assesses under Section 260A of the Income-tax Act, 1961, for short "the Act", is directed against the order of the learned Income-tax Appellate Tribunal, Hyderabad Bench 'B', Hyderabad, dated December 10, 1999, for the assessment year 1996-97 in I. T. A. No. 195/Hyd/98 dismissing the appeal of the assessee and confirming the order of the Commissioner (Appeals)-II, Hyderabad, dated September 25, 1997.
2. The background facts leading to the filing of this appeal be stated briefly as under : The assessee filed its return of income declaring total loss of Rs. 3.25,74,046. The Assessing Officer, while processing the return under Section 143(1)(a) of the Act, has noticed that as per Form No. 3CD report, interest payments to financial institutions were debited to the profit and loss account but Rs. 89,90,523 remained unpaid. Since the assessee itself disallowed Rs. 55,90,832 on the account in the computation of income, the Assessing Officer has disallowed the remaining amount of Rs. 33,99,091 under Section 43B in the absence of any proof of payment. In the first appeal before the Commissioner of Income-tax (Appeals), for short "the CIT (A)", the assesses contested not only the correctness of the disallowance made by the Assessing Officer, but also questioned the permissibility of the said allowance, by way of adjustment while processing the return under Section 143(1)(a). On both the counts, the first appellate authority rejected the contentions of the assessee and confirmed the disallowance made by the Assessing Officer. The assessee being aggrieved by the order of the Commissioner of Income-tax (Appeals) dated September 25, 1997, preferred appeal before the learned Income-tax Appellate Tribunal (for short "the ITAT"), Hyderabad, Bench 'B'. Before the learned Tribunal, it was contended on behalf of the assessee that the interest payments have fallen due after the close of the accounting year and, therefore, were not payable in accordance with the terms and conditions of the agreement governing such loan between the financial institutions and the appellant as such, the same is not subject to the provisions of Section 43B of the Act. It was also contended on behalf of the assessco that the issue involved in any event is debatable in nature and therefore, no disallowance in that behalf can be made while processing the return under Section 143(1)(a) of the Act. The learned Tribunal considered the above contentions of the assessee and rejected the same by its order under appeal.
3. Before us, learned counsel for the appellant-assessee reiterated the same contentions which were put forth before the learned Tribunal. The only point that arose before the authorities below and the learned Tribunal and that arises before us is whether the assessing authority is justified in disallowing an amount of Rs. 33,99,601 claimed by the assessee as accrued interest under the provisions of the Act.
4. Before adverting to this question, it is pertinent to notice the relevant provisions of Section 43B of the Act.
"43B. Certain deductions to be only on actual payment.--Notwithstanding anything contained in any other provision of this Act, a deduction otherwise allowable under this Act in respect of- . .
(d) any sum payable by the assessee as interest on any loan or borrowing from any public financial institution (or a State Financial Corporation or a State Industrial Investment Corporation), in accordance with the terms and conditions of the agreement governing such loan or borrowing, shall be allowed (irrespective of the previous year in which the liability to pay such sum was incurred by the assessee according to the method of accounting regularly employed by him) only in computing the income referred to in Section 28 of that previous year in which such sum is actually paid by him :
Provided that nothing contained in this Section shall apply in relation to any sum referred to in clause (a) or clause (c) or clause (d) or clause
(e) or clause (f) which is actually paid by the assessee on or before the due date applicable in his case for furnishing the return of income under Sub-section (1) of Section 139 in respect of the previous year in which the liability to pay such sum was incurred as aforesaid and the evidence of such payment is furnished by the assessee along with such return ; . . .
Explanation 2.--For the purposes of clause (a), as in force at ail material times, 'any sum payable' means a sum for which the assessee incurred liability in the previous year even though such sum might not have been payable within that year under the relevant law."
5. The language used by Parliament in clause (d) of Section 43B of the Act is precise, clear and unambiguous. It does not admit more than one meaning. By force of the first proviso to Section 43B of the Act, it is abundantly clear, that unless the allowance claimed by the assessee is actually paid, is not liable for deduction under Section 43B of the Act. It is an admitted fact in this case that the interest amounts in question, in accordance with the terms and conditions of the agreement governing such loan between the financial institution and the assessee, are payable in the succeeding assessment year and not in the assessment year 1996-97. When by the said agreement, the assessee has not even incurred the liability in relation to the amounts of interest in question for the assessment year 1996-97, there is no basis for the appellant-assessee to claim that those interest amounts have accrued during the previous year under consideration. By force of the first proviso to Section 43B of the Act, it is abundantly clear that unless the allowance claimed by the assessee, is actually paid, is not liable for deduction under Section 43H of the Act.
6. In this case, admittedly, the appellant-assessee did not pay a sum of Rs. 33,99,601 to the financial institution. Therefore, the provisions of clause (d) of Section 43B arc not attracted. The claim of the assessee for the interest payment is clearly inadmissible on the basis of the material available on record and the unambiguous provisions of the Act and such disallowance is very much permissible as rightly held by the learned Tribunal, while processing the return under Section 143(1)(a) of the Act. Therefore, we do not find any error, factual or legal, in the orders of the income-tax authorities and the learned Tribunal. This appeal does not involve any question of law, much less a substantial question of law. The appeal is, accordingly, dismissed with no order as to costs.