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TMI Blog2022 (4) TMI 906X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment of advance-tax. Therefore, the issue involved in the present case is not relating to late remittance of advance-tax but late remittance of TDS. The issue involved is whether the interest paid by the assessee to the government can be termed as compensatory or penal in nature. In our considered view, the assessee has deducted the tax on behalf of the third party and failed to remit the same within the due date and the interest charged on such amount is only compensatory in nature. Here we notice that the co-ordinate bench of this Tribunal has already held the same view in the case of STUP Consultants Pvt Ltd [ 2019 (1) TMI 1259 - ITAT MUMBAI] interest expense on the delayed payment of service tax is allowable deduction.The above pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. The Assessing Officer considered the submissions of the assessee and observed that the interest is not allowable as deduction since interest paid under section 201(1A) or under section 206C(7) is nothing but penal in nature. Further, he observed that based on the decision in the case of Goetze India Limited vs CIT 284 ITR 323 (SC), Hon ble Apex Court has held that assessing officer cannot entertain the claim made by the assessee otherwise than by filing a revised return. Accordingly, he rejected the submissions made by the assessee. Aggrieved, assessee preferred appeal before the CIT(A) and Ld.CIT(A) allowed the fresh claim made by the assessee considering the same as legal in nature; however, disallowed the same on merits relying upo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Co. vs ACIT (2010) 324 ITR 240 (Bom), relying on the decision of the Hon ble Supreme Court in Harshad Shantilal Mehta vs Custodian (1998) 231 ITR 871 (SC) held that interest u/s 220(2) is not disallowable. The Ld.AR has also relied upon the following decisions:- 1. DCIT VS Narayani Ispat Pvt Ltd ITA No.2127/Kol/2014 2. Sai Food Products Pvt Ltd vs DCIT ITA o.1887/Kol/2016 3. IDS Next Business Solutions Pvt Ltd vs ACIT ITA No.510/Bang/2018 4.DCIT vs Rungta Mines Ltd ITA 1531/Kol/2017 4. The Ld.DR, on the other hand, brought to our notice paragraph 6.2 of the assessment order and submitted that the issue involved in this appeal is whether the interest paid by the assessee is penal or compensatory in nature. In this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as under:- 7. We have heard the rival contentions of both the parties and perused the material available on record. In the instant case, AO has disallowed the interest expenses incurred by the assessee on account of late deposit of service tax and TDS after having reliance on the judgment of Hon'ble Supreme Court in the case of Bharat Commerce Industries Ltd. Vs. CIT (1998) (Supra). The relevant extract of the judgment reads as under:- FACTS During the year under consideration, the assessee failed to pay advance tax equivalent to 75 per cent of estimated tax. The Assessing Officer levied \ section 215 as well as under section 139. The assessee claimed that were payable were delayed, the assessee's financial resources ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection under the Act, which is calculated with reference to the tax on income, cannot be allowed as a deduction. Therefore, it was to be held that deduction of interest levied under sections 139 and 215 would not be allowable under section 37. In the above judgment, the claim of the assessee for interest expenses was denied as it defaulted to make the payment of advance tax as per the provisions of the Act. The advance tax is nothing but income tax only which the assessee has to pay on his income. In the instant case the default relates to the delay in the payment of advance tax and consequently interest was charged on the delayed payment of advance tax. In the above judgment the Hon'ble Apex Court held that as Income Tax paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by this Court in Civil Appeal No. 830 of 1979 titled Saraya Sugar Mills (P.) Ltd. v. CIT decided on 29-2-1996. In that view of the matter, the appeal is allowed and question Nos. 1 and 2 are answered in favour of the assessee and against the revenue. In view of the above judgment, there remains no doubt that the interest expense on the delayed payment of service tax is allowable deduction. The above principles can be applied to the interest expenses levied on account of delayed payment of TDS as it relates to the expenses claimed by the assessee which are subject to the TDS provisions. The assessee claims the specified expenses of certain amount in its profit loss account and thereafter the assessee from the payment to the part ..... X X X X Extracts X X X X X X X X Extracts X X X X
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