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2021 (8) TMI 558 - ITAT DELHIDisallowances of the interest of late deposit of tax deducted at source - HELD THAT:- Assessee has deposited the tax deducted at source from various payees but has not deposited the same in time provided by the law. As it is deposited late the Assessee was liable to pay interest thereon. Firstly, the payment of the interest cannot be said to be an expenditure wholly and exclusively incurred for the purpose of the business. It is expenditure on which tax is deductible might be an expenditure incurred for the purpose of the business. But the interest on late deposit of tax deducted at source cannot be said to be an expenditure incurred wholly and exclusively for the purpose of the business. Such deduction cannot be allowed u/s 37(1) of the Act. Even otherwise late payment of TDS is infraction of law and therefore, any payment made for infraction of law cannot be considered as expenditure incurred by the Assessee wholly and exclusively for the purpose of the business. Here in this case the Assessee has been saddled with the statutory liability to deduct tax at source and deposit to the credit of the Govt of India in time. The Assessee has failed to pay his statutory dues in time and therefore, there is an interest liability. Therefore, such expenditure is not at all allowable to the Assessee as deduction u/s 37(1) Even otherwise this deduction is not allowable in any of the section u/s 30 to 36 of the Act. AO has correctly applied decision of the Hon’ble Madras High Court in CIT Vs. Chennai Properties [1998 (4) TMI 89 - MADRAS HIGH COURT] in making the disallowance. CIT(A) also correctly confirmed the same. Accordingly, ground No. 2 of the appeal is dismissed. Disallowance of consultancy charges - HELD THAT:- Liability to pay commission to this party arises on account of the assessee only at the time of receipt of the payment for equipment from the customers. Assessee received orders from Usha Martin Ltd for supply of the goods in the month of August and November 2010. Supplies were made from month of November 2010 to September 2012. Payments were received from 19 October 2010 till 20th of August 2014. Thus payments were also last received on 20 August 2014. Therefore on the date of the payment received by the assessee the liability to pay consultancy charges arises. In the present case the invoices were raised by the consultant on 31st of March 2014 for commission of ? 6,042,000. However as claimed by the assessed the liability to pay consultancy charges arises on receipt of the payment by the assessee which has happened from 19 October 2010 till 20th of August 2014. The assessee has claimed the complete amount of commission/consultancy charges of ₹ 6,042,000 during the year despite receipt of payment from the customers till 20th of August 201 - assessee is entitled to deduction of all the payments received till 31st of March 2014 from the customers and commission thereon is allowable to the assessee in assessment year 2014-15. Thus we find that out of the total commission of ₹ 6,042,000 claimed by the assessee during the year only the commission which relates to the payment received by the assessee from its customers till 31st of March 2014 assessee is entitled for deduction of commission/consultancy charges to that extent only. In view of this we set-aside the whole issue back to the file of the learned assessing officer with a direction to the assessee to submit the details of payment received till 31st of March 2014 and due commission thereon. The learned assessing officer may examine the same and granted deduction of consultancy charges to that extent. In the result ground number 3-4 are allowed with above directions.
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