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2018 (6) TMI 1730 - AT - Income Tax


Issues:
Disallowance of interest payment on belated TDS payment without appreciating law and facts properly, disallowance of interest payment to unsecured creditor without provisions of S.194A, failure to consider decisions relied on by appellant, levy of interest under sections 234B and 234D being bad in law, and allowability of interest expenses on belated TDS payment.

Analysis:
The appeal was filed against the order of ld. CIT(A)-3, Bangalore for Assessment Year 2014-15. The grounds raised by the assessee included contentions regarding the disallowance of interest payment on belated TDS payment. The ld. AR of assessee relied on a Tribunal order in a similar case to support the argument that interest expenses on late TDS payment are compensatory in nature and allowable under section 37(1) of the IT Act. The Tribunal order cited judgments of the Hon'ble Apex Court to establish the compensatory nature of interest on delayed payments. The Tribunal held that interest expenses on delayed TDS payment are allowable u/s 37(1) of the Act, distinguishing the case from instances of delayed income tax payments.

The Tribunal referred to a previous case involving the allowability of interest on belated payment of service tax and TDS, where a similar issue was decided in favor of the assessee. By following the precedent set in that case, the Tribunal decided the issue in favor of the assessee in the present case as well. The Tribunal concluded that interest expenses on delayed TDS payment are allowable under section 37(1) of the Act, upholding the decision of the ld. CIT(A) and dismissing the Revenue's ground of appeal.

In summary, the Tribunal's decision was based on the compensatory nature of interest on delayed TDS payment, as established by previous judgments and legal principles. The Tribunal found that the interest expenses claimed by the assessee were allowable under section 37(1) of the IT Act, leading to the allowance of the appeal filed by the assessee.

 

 

 

 

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