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TMI Blog2023 (3) TMI 1389X X X X Extracts X X X X X X X X Extracts X X X X ..... ble expenditure u/s 37(1). It is noted that the Service Tax Act itself provide for payment of interest to the Government-Treasury if there is delay in payment of Service Tax. And since the Service Tax Act itself allowed belated payment of the Tax along with interest, the Explanation-1 to 37 of the Act is not attracted. And therefore, ground is allowed. - SHRI ABY T. VARKEY, JM For the Petitioner : Ms. Mitali Gopani For the Respondent : Shri Anil Gupta ORDER PER ABY T. VARKEY, JM: This is an appeal preferred by the assessee against the order of the Ld. CIT(A)/NFAC, Delhi dated 04.11.2022 for AY. 2017-18. 2. At the outset, the Ld. AR of the assessee Ms. Mitali Gopani submitted that even though the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... February 2022, which gave another 3 months extended period. According to the Ld. AR, the ninety (90) days also was due to the mis-communication/misplacement of file. Therefore, the assessee should not be penalized taking into consideration the Force Majeure (Superior or irresistible force i.e. unforeseen happening beyond control). It is noted that the Ld. CIT(A) has not admitted the appeal of the assessee since the assessee failed to file application for condonation the delay. Since the delay caused for delayed filing of appeal was mainly due to the Pandemic/Covid-19 which brought the country to stand-still from March, 2020 to end of 2021 and since the AO has passed the order in Dec, 2019 and even though the assessee had directed the Ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee accepted the same as a mistake (claiming as expenditure) before the AO, there is no estoppel against law. Further according to the Ld. AR, the interest paid on late payment of service tax is compensatory in nature and cannot be held it to be penal in nature and cited the decision of Co-ordinate Bench decision in the case of M/s. Neelkamal Realtors Suburban Pvt. Ltd. Vs. ACIT (ITA. No. 86/Mum/2021 dated 28.04.2022) wherein the Tribunal inter-alia has decided ground no. 2 a similar issue wherein also that assessee (M/s. Neela kamal) has claimed interest expense on delayed payment of service tax amounting to Rs.1590/- and the Tribunal has held as under: - 08. Ground no. 2 is with respect to disallowance of ₹44,651/- under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laws allowed the belated payment along with interest. Therefore, those are not affected by explanation 1 to section 37(1) of the Act. In view of this ground no. 2 of the appeal is allowed. 7. It is noted that the assessee has claimed as expense the interest incurred to the tune of Rs. 3,27,026/- which was due to belated payment of service tax which has been disallowed by the AO holding it to be penal in nature, whereas it is noted that the interest paid by the assessee on delayed payment of service tax is compensatory in nature and is allowable expenditure u/s 37(1) of the Income Tax Act, 1961 (hereinafter the Act ). It is noted that the Service Tax Act itself provide for payment of interest to the Government-Treasury if there is dela ..... X X X X Extracts X X X X X X X X Extracts X X X X
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