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2018 (4) TMI 565 - AT - Income TaxDisallowance on account of foreign travel expenditure - Held that - It is noticed that the assessee failed to furnish any details of expenditure nor explained business exigency to visit South Africa before both the authorities below. It is noticed from the order of CITA that he specifically asked to provide supporting evidence regarding the urgency of foreign travel. We find no details were filed except making a submission that the visit was to negotiate with supplier in South Africa for purchase of new machinery. We find no such evidence is before us also. CIT-A was correct in confirming the impugned disallowance made by the AO and it is justified. - Decided against assessee Addition on account of interest paid on late deposit of TDS - Held that - Interest paid on delayed deposit of TDS is an allowable deduction by placing reliance on the decisions of Bharat Commerce Industries Ltd Vs. CIT reported in (1998 (3) TMI 2 - SUPREME Court). - Decided in favour of assessee.
Issues:
1. Disallowance of foreign travel expenditure 2. Disallowance of interest on late deposit of TDS Issue 1: Disallowance of Foreign Travel Expenditure The appellant's appeal was against the Commissioner of Income Tax (Appeals) order for the A.Y 2011-12. The appellant decided not to press ground no. 3. Ground no. 1 concerned the disallowance of &8377; 4,45,975/- for foreign travel expenditure. The Assessing Officer disallowed this amount due to lack of evidence regarding the business exigency for the travel. The CIT-A upheld this disallowance as the appellant failed to provide any supporting evidence. The appellant claimed the visit was to negotiate with suppliers in South Africa for new machinery but failed to provide substantial evidence. Both the AO and CIT-A found the expenditure not related to business. The ITAT Kolkata upheld the CIT-A's decision, dismissing ground no. 1. Issue 2: Disallowance of Interest on Late Deposit of TDS Ground no. 2 was related to the disallowance of &8377; 1230/- by the AO for interest paid on late TDS deposit. The AO and CIT-A disallowed this deduction. The appellant argued citing a Co-ordinate bench order that interest on delayed TDS deposit is an allowable expense under section 37(1) of the Act. The ITAT Kolkata found in favor of the appellant, citing Supreme Court decisions that support the deductibility of interest on late tax payments. The Tribunal concluded that the interest expenses on delayed TDS deposit are allowable deductions under section 37(1) of the Act. The CIT-A's decision was set aside, directing the AO to allow the deduction. Consequently, ground no. 2 raised by the appellant was allowed. In conclusion, the ITAT Kolkata partially allowed the appeal of the assessee, upholding the disallowance of foreign travel expenditure but allowing the deduction for interest on late TDS deposit. The judgment was pronounced on 06-04-2018.
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