AIR 1980 SUPREME COURT 754 ::1980 TAX. L. R. 452 ::1980 SCC (Tax) 324 ::(1980) 7 Tax Law Rev 208 (SC) ::(1980) 16 CurTaxRep 198 ::1980 (3) SCC 475 ::123 ITR 429 ::1980 2 ITJ 180 ::(1980) 2 SCJ 202 ::(1980) 3 SCR 421 ::1980 UPTC 689 ::(1980) 3 Taxman 52 (SC) ::(1980) 3 Taxman 52 ::1980 57 Taxation 104 ::67 Taxation 104 ::(1980) 123 ITR 439

Supreme Court Of India

(From : Delhi)

Hon'ble Judge(s): N. L. Untwalia, R. S. Pathak, E. S. Venkataramiah , JJJ

Income-Tax Act (11 of 1922) , S.10(2)(xv)— Uttar Pradesh Sugarcane Cess Act (22 of 1956) , S.3(3)— Interest paid on cess under S. 3 (3) - Not a penalty - Assessee can claim it as deduction under S. 10 (2) (xv) of Income-tax Act. Decision of Delhi High Court Reversed. Interest on cess paid under S. 3 (3) of the Cess Act is not a penalty and the assessee is entitled to claim it as a deduction under S. 10 (2) (xv) of the Income tax Act. Decision of Delhi High Court, Reversed.(Para 12) The interest payable on an arrear of cess under section 3 (3) is in reality part and parcel of the liability to pay cess. It is as accretion to the cess. The arrear of cess "carries" interest; if the cess is not paid within the prescribed period a larger sum will become payable as cess. The enlargement of the cess liability is automatic under section 3 (3). No specific order is necessary in order that the obligation to pay interest should accrue. The liability to pay interest is as certain as the liability to pay cess. As soon as the prescribed date is crossed without payment of the cess, interest begins to accrue. It is no a penalty, for which provision has been separately made by Section 3 (5). Nor is it a penalty within the meaning of Sec. 4, which provides for a criminal liability and a criminal prosecution. The penalty payable und....