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TMI Blog2023 (3) TMI 1153X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal in M/s. M L Reality [ 2021 (9) TMI 877 - ITAT MUMBAI] and the Tribunal in M/S. M.L. REALTY VERSUS ACIT 22 (2) , MUMBAI [ 2021 (9) TMI 877 - ITAT MUMBAI] held that interest paid on late payment of TDS is compensatory in nature and is an allowable deduction under section 37(1) of the Act - Decided in favour of assessee. Disallowance paid towards arrears for contribution to provident fund - AO made the impugned disallowance for the sole reason that challans evidencing payment were not submitted - HELD THAT:- After hearing all and finding that the assessee has established that the payment was made for PF arrears and documents were brought on record, we hold that the impugned disallowance is not sustainable. It is, therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of interest paid on delayed payment of TDS holding it to be a penalty for violation of law. 4. The Learned Assessing Officer grossly erred, in fact and in law, in disallowing of Rs. 94,662 in respect of interest paid on late payment of TDS on the ground that such interest relates to earlier year although the payment of such interest is allowable in the year of payment in terms of section 43B of Income-tax Act, 1961. 5. The Learned Assessing Officer grossly erred, in fact and in law, in disallowing of Rs 26,465 paid towards arrears for contribution to provident fund on the ground that the challans for payment was not produced although the payment is reflected in the bank statement. 6. The Learned Assessing Officer gross ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (5) of the Act on 20.09.2019 wherein the DRP directed the Ld. AO to delete the addition of Rs. 4,86,90,234/-; Rs. 13,71,42,440/- and Rs. 12,83,016/-. Regarding disallowance of Rs. 1,28,605/- under section 43B, the DRP directed the Ld. AO to examine the evidence and allow to the extent supported by the evidence. The Ld. AO gave effect to the directions of the DRP and completed the assessment on total loss of Rs. 13,28,20,730/- on 30.10.2019 under section 143(3) r.w. section 144C of the Act. The Ld. AO, however maintained the disallowance of interest of Rs. 94,662/- paid on late payment of TDS and Rs. 26,465/- being PF arrear payments as challans in support were not filed. It is against the aforesaid disallowances maintained by the Ld. AO in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. Representative of the parties and perused the records. The Ld. AO had proposed the impugned disallowance under section 43B which allows deduction of statutory dues in the year of actual payment irrespective of the year in which the liability was incurred. The case of the assessee all along has been that the impugned interest has been paid in AY 2015-16 and therefore it is an allowable deduction. However, after receipt of the direction of the DRP to verify the evidence of payment and allow the same as deduction, the Ld. AO made the impugned disallowance under section 37(1) of the Act assigning the reason that impugned interest liability is penal in nature. Impugned disallowance for the reason assigned now is also not sustainable. Identi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be construed as compensatory in nature or penal in nature. We find that the payment of interest is provided separately in the statute which is a permissible payment and accordingly compensatory in nature. Apart from this, the statute also provides for payment of penalty which is penal in nature. Hence the legislature in its wisdom had enacted separate provisions for payment of interest and penalty separately. Hence payment of interest on delayed remittance of TDS could not be construed as penal in nature. We find that the reliance in this regard has been rightly placed on the co- ordinate bench decision of Kolkata Tribunal in the case of DCIT vs Rungta Mines Ltd in ITA No. 1531/Kol/2017 dated 5.10.2018 which dealt with the similar issue o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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