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TMI Blog2021 (7) TMI 686X X X X Extracts X X X X X X X X Extracts X X X X ..... law in deleting the addition of Rs. 54,31,041/- made by the AO without appreciating the fact that the amount has been paid by assessee was on account of infraction the basis of explanation to section 37 of the Act which says that any expenditure incurred by an assessee for any purpose which is an offence or which is prohibited by law shall not be deemed to have been incurred for the purpose of business or profession and no deduction or allowance shall be made in respect of such expenditure." 3. Facts of the case, in brief, are that the assessee is a company engaged in the business of human resources development. It filed its return of income on 30.11.2014 declaring loss of Rs. 75,71,378/-. During the course of assessment proceedings, the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e considered the rival arguments made by both the sides and perused the orders of the AO and the CIT(A). We have also considered the various decisions cited before us. We find, the AO, in the instant case, disallowed the amount of Rs. 54,31,041/- being interest paid on late payment of service tax holding the same to be not an allowable expenditure. We find, the ld.CIT(A) deleted the disallowance holding that the interest on late payment of service tax is compensatory in nature. While doing so, he relied on the decision of the coordinate Bench of the Tribunal in the case of Messee Dusseldorf India (P) Ltd. (supra). We do not find any infirmity in the order of the CIT(A) on this issue. We find, the coordinate Benches of the Tribunal are consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same is also a permissible deduction and should be allowed in the same manner. Reliance in this respect is placed on the decision of the Hon'ble Supreme Court in the case of Mahalaxmi Sugar Mills Co. v. CIT (1980) 123 ITR 429. Considering these facts, the impugned addition made by the Assessing Officer was unjustified and cannot be sustained. Accordingly, the addition of Rs. 15,50,903/- made by the Assessing Officer on account of disallowance of interest paid on service tax is deleted." The payment of interest on late deposit of service tax with the government account was compensatory in nature and as the same character i.e. of service tax. This aspect was rightly taken into account by the CIT(A) in its finding. Since, the service t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd section 36(1)(va) on account of payments to be made on or before the due date as prescribed under the law of such funds on account of employees' contribution towards Provident Fund or any other fund mentioned under section 2(24)(x). He, therefore, confronted the same to the assessee and asked the assessee to file the details. Rejecting the various explanations given by the assessee, the AO made addition of Rs. 8,90,53,240/- to the total income of the assessee by invoking the provisions of section 36(1)(va) r.w.s 2(24)(x) of the IT Act. 12.1 In appeal, the ld.CIT(A) deleted the addition made by the AO by observing as under:- "5.3. I have carefully considered the order passed by the AO and the written submissions filed by the Ld. AR. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, directed to delete the addition of Rs. 8,85,62,590/-. This ground is partly ruled in favour of the appellant." 13. Aggrieved with such order of the CIT(A), the assessee is in appeal before the Tribunal. 14. The ld. DR heavily relied on the order of the AO. 15. The ld. Counsel for the assessee, on the other hand, referring to the decision of the coordinate Bench of the Tribunal in the case of DCIT vs. Dee Development Engineers Ltd., ITA No.4959/Del/2016, order dated 08.04.2021, submitted that similar disallowance on account of delay in deposit of employees contribution to Provident Fund and ESI fund was deleted. Referring to the decision of the Hon'ble Delhi High Court in assessee's own case i.e., PCIT vs. Planman HR (P) Ltd., ITA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal ('ITAT') in ITA No. 5028/Del/2016 for the Assessment Year ('AY') 2013-14. 2. The question urged is as under: "Whether on facts and in the circumstances of the case Ld. ITAT was correct in a case in deleting the addition of Rs. 7,91,59,691/- made by the AO on account of late deposit of PF, ESI and professional tax ignoring the provisions of Section 36(l)(va) and Section 7(24)(x) of the Income-tax Act, 1961?" 3. Factually, it has been found by the Commissioner of Income Tax (Appeals) ['CIT(A)'] as well as by the ITAT, concurrently, that the payment by the Assessee employer towards the employees' contribution of the Provident Fund was made before the date of filing of the return by the Assessee and thus, in terms of the decision o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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