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2023 (10) TMI 298 - ITAT AHMEDABADAddition u/s 68 - Bogus share capital receipt by the appellant from two companies - addition on the basis of the statement made by the common Director - HELD THAT:- Upon perusal of the order impugned, we do not find any allegation of accommodation entry has been labelled against the assessee. Neither any involvement of any entry operator, on movement of cash or assessee’s money is being involved has been alleged by the authorities below while making addition by the Ld. AO or confirming such addition by the Ld. CIT(A). Neither any cogent documents is forthcoming from the Revenue in order to establish the observation of having the device to reduce its tax liability. The other judgments relied upon by the assessee were duly considered by us where it has been repeatedly decided that the amount of forfeited share application money transferred to warrant forfeiture account is a capital receipt only and cannot be taxed as income of the assessee either under Section 28(iv) or Section 41(1). Since, the assessee had not credited forfeited amount in its P&L account on the contrary credited the same in the capital reserve account, the same is to be treated as capital receipt and not to be taxed. In this particular case, after several reminders for payment of final call money, Mewad Tradelink Pvt. Ltd. and Jai Jeen Mata Marketing Pvt. Ltd. since not paid the final call money and the assessee company decided to forfeit the shares of Mewad Tradelink Pvt. Ltd. and Jai Jeen Mata Marketing Pvt. Ltd. which was decided by the Group of Members of assessee company mutually as the group of those investor group was not able to honour their commitment for funds. We further find from the observation made by the Ld. AO that the transaction entered into by the assessee company with those parties appears to be legally permissible but when seen in its entirety it becomes clear that the said transaction is merely a device to reduce its tax liability. Such observation, however, not found to be established by corroborative cogent evidence on the part of the Revenue. Source of documents as relied and furnished by the assessee before the authorities below are sufficient enough to come to a conclusion that the assessee has been able to prove the identity, creditworthiness and genuineness of the cash creditors. The three ingredients since being fulfilled, the addition under Section 68 of the Act is not found to be sustainable. Hence, with the above observation, we delete the addition made by the authorities below. Disallowance of interest on late payment of TDS u/s 37 - AO disallowed the same as expenses of TDS is not allowable in the Income Tax - The case of the assessee is as interest is not in the nature of penalty. Though penalty paid is not allowable under Section 37(1) of the Act, but interest paid for late payment prescribed under statute; on the other hand, the penalty is violation of any provision but paid the amount late but with interest, the same is allowable - HELD THAT:- As decided in Oriental Insurance Co. Ltd [2008 (10) TMI 230 - KARNATAKA HIGH COURT]herein it has been held that Section 201(1A) is a provision to levy interest for delayed remittance of the TDS. It is the practice of the revenue that for belated payment of tax for any reasonable cause, the assessee is liable to pay interest at the rate of 12 per cent per annum. Similarly, for refunds, the revenue pays interest to the assessee. Therefore, the levy of interest under section 201(1A) cannot, at any cost, be construed as penalty. We find that as the case of late payment of TDS is not in the nature of penalty, the same is allowable under Section 37 of the Act. In that view of the matter, the above disallowance made by the authorities below to the impugned amount of Rs. 2,19,170/- is hereby quashed. The addition is, therefore, deleted. Assessee appeal allowed.
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