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TMI Blog2022 (2) TMI 335X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot be treated for the purpose of business - HELD THAT:- We find that the observation of the ld. CIT(A) is on a misplaced interpretation of the provisions of the Act. It is well settled principle that interest on late payment of Service Tax is not penal in nature. Since, it is compensatory in nature, it is eligible for deduction u/s. 37(1) of the Act as it can be termed to be expended wholly and exclusively for the business purpose and the payment of interest on late remittance of Service Tax is neither an offence nor prohibited by law. In the result, the appeal of the assessee on this ground is allowed. - ITA No. 452/Del/2017 - - - Dated:- 28-1-2022 - A.D. Jain, Vice President And Dr. B.R.R. Kumar, Member (A) For the Appellant : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the expenses pertain to gifts, hospitality, cash or monetary grants by the assessee company to the medical Practitioners or other professionals. 5. The assessee company has debited participation fee towards CME during the financial year 2009-10 amounting to ₹ 65,29,629/-. From the details of the ledger of these expenses filed by the assessee company on 20.12.2013, the AO noticed that the assessee has paid sponsorship fee to various persons, organization/institutions etc. under the head of participation fee towards CME. Details of such expenses as per ledger sample vouchers given by the assessee company noted by the AO and tabulated. 6. The AO noted that the Medical Council of India's (MCI) has amended Indian medical counci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovision of books to private hospitals and sponsorship of individual doctors were confirmed. 10. Thus, the ld. CIT(A) confirmed the addition to the tune of ₹ 19,66,600/- out of the total disallowance of ₹ 84,30,800/- made by the AO. 11. Heard the arguments of both the parties and perused the material available on record. 12. We have considered the reasoning of the AO as well as that of the ld. CIT(A), submissions of the assessee, the Regulations of MCI and also the Circular of the CBDT. We have noted that the MCI Regulations and the CBDT Circular were not applicable for the relevant year. Hence, the assessee gets remission for the instant Assessment Year. Appeal of the assessee on this ground is allowed. 13. Ground no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee company was required to show cause as to why the expenses of ₹ 1,24,440/- be not disallowed. In compliance thereto the assessee filed written reply as under: I wish to submit that the aforesaid expense was incurred towards interest on delay in deposit of service tax dues/return. The expense being compensatory in nature is eligible for deduction under section 37(1) of the Income tax act. I have considered all the facts of the case, plea of the assessee, and also expenses incurred assessee, and also expenses incurred as noted above and of the view that the assessee company has not complied with the provisions of law and also submitted wrong statement of sales tax returns. As evident from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted by the service provider from the recipient of the service at the time of receiving the payment for the service. 16. The service tax also belongs to the crown and has already been collected from someone else. Like TDS, Service tax is also not a tax liability of the deductor who only collects remits it to the Govt. This uncanny similarity between the TDS and the Service Tax implies that the treatment of the interest paid on delayed payment of either should be similarly treated. 17. The ld. CIT(A) thus held that similar to the interest paid on delayed payment of TDS, the interest paid on delayed payment of Service Tax also cannot be treated for the purpose of business. 18. We find that the observation of the ld. CIT(A) is on a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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