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TMI Blog2024 (1) TMI 1027X X X X Extracts X X X X X X X X Extracts X X X X ..... /s. 201(1A) was allowable as an expenditure u/s. 36(1)(iii) or u/s. 37(1) of the Act. Both the lower authorities had failed to address the claim of the assessee that the aforementioned was never claimed as an expenditure but was in the nature of a back-to-back reimbursement from its member, viz. M/s. Barbarik Project Ltd. As view that as stated by the AR, and rightly so, now when the assessee JV had not claimed the amount as an expenditure in its profit and loss account, the A.O, thus, was not justified in disallowing the same on the premise that it was not allowable as a deduction per the mandate of law. Thus, in terms of aforesaid observation, not being able to concur with the view taken by the lower authorities, set-aside the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant. 3. That the assessee craves to add, amend or delete any of the above grounds of appeal during the course of hearing. 2. Succinctly stated, the assessee is a Joint venture entity ( JV for short) formed to procure the work contract of road construction in terms of tenders invited by the Ministry of Road Transport and Highways (North). The JV is a zero-profit entity wherein all the work/project undertaken by it was subcontracted to its members. The project undertaken by JV was executed by its members in their individual capacity including risks and resources and the corresponding revenue of the work was also shared on the basis of the work contribution made by the members. 3. The assessee had e-filed its return o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uctor u/s 201(1A) for the delay deposit of TDS one can conclude that such interest is not allowed as business expenditure either u/s. 36(1)(iii) or under section 37(1). Court have categorically held the unpaid TDS amount does not amount to borrowings and thus interest paid for delay in deposit of TDS cannot be allowed as deduction u/s 36(1)(iii) in these cases, Courts are reluctant to accept the contention that the unpaid TDS amounts to trade liability of the deductor. Albeit, it is consistently, held that such interest-is payable- as a consequence of failure to pay the expenditure incurred for the purpose of interest payment does not relate to the business of the assessee. Being the assessee in default inc.-paying the tax, the interest is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shek Mahawar, the Ld. Authorized Representative (for short AR ) for the assessee at the threshold submitted that the order passed by the A.O was based on misconceived facts. Elaborating on his aforesaid contention, it was submitted by the Ld. AR that as the assessee had not claimed the interest paid on delayed deposit of TDS u/s. 201(1A) of the Act as a deduction while computing its income for the year under consideration, therefore, there was no justification for the A.O to have disallowed the said amount while computing its income. Carrying his contention further, it was submitted by the Ld. AR that the assessee-JV had not claimed the interest expenditure in its profit and loss account and had debited the same to the account of the sub-c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee s counsel that the interest on delayed deposit of TDS was a back-to-back basis payment which was not claimed by the assessee as an expenditure in its profit and loss A/c. failed to rebut the same. 11. I have given a thoughtful consideration to the aforesaid issue, i.e., sustainability of the disallowance of interest on delayed deposit of TDS of Rs. 18,97,193/- (supra) by the assessee. Before adverting any further, it would be relevant to cull out the Profit and loss account of the assessee for the year under consideration, i.e., A.Y. 2018-2019, Page 5 of APB which reads as under: Admittedly, it is a matter of fact borne from record that the assessee- JV had not claimed/debited the amount of interest on delayed deposit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt was claimed by the assessee-JV as a deduction in the Profit and loss a/c. 13. At this stage, I may herein observe that though the assessee had brought the aforesaid factual position to the notice of both the lower authorities but they had failed to take cognizance of the same and had primarily focused more on the issue as to whether or not the interest on delayed deposit of TDS u/s. 201(1A) was allowable as an expenditure u/s. 36(1)(iii) or u/s. 37(1) of the Act. Both the lower authorities had failed to address the claim of the assessee that the aforementioned amount of Rs. 18,97,193/- (supra) was never claimed as an expenditure but was in the nature of a back-to-back reimbursement from its member, viz. M/s. Barbarik Project Ltd. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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