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2018 (7) TMI 1844 - AT - Income TaxAdditions u/s 41(1) on account of certain outstanding amounts - bogus liability - Held that:- As decided in assessee's own case for AY 2012-13 AO has treated the liability as bogus and at the same time, has treated the said liability as ceased to exist. Bogus liability does not come under the purview of 41(1) as held by the Co-ordinate Bench in the earlier year and therefore, if the liability is bogus, there does not arise any question of cessation of said liability. Disallowance on account of delay in deposit of employees' contribution towards ESI and PF - Held that:- Given that the contributions have been paid before the due date of filing of the return of income, following the decision of in case of CIT vs. Jaipur Vidyut Vitran Nigam Limited [2014 (1) TMI 1085 - RAJASTHAN HIGH COURT] the addition made by the AO is hereby deleted. Disallowance of interest on late payment of TDS u/s 201 and interest towards late payment of ESI - Held that:- As regards the interest on late deposit of ESI contribution is concerned, the Hon'ble Karnataka High Court in case of CIT vs. Mysore M/s Sand Plast India Limited, Alwar vs. DCIT, Alwar Electrical Industries Ltd. [1991 (3) TMI 30 - KARNATAKA HIGH COURT] has held that interest so paid by the assessee was not in the nature of penalty and therefore, allowable as deduction in the hands of the assessee. Respectively following the same, the interest of ₹ 721/- on late payment of ESI is hereby allowed. As far as interest on late payment of TDS u/s 201 (1A) is concerned, useful reference can be drawn to the decision of Hon'ble Bombay High Court in case of Ferro Alloys Corporation Ltd vs. CIT (1991 (12) TMI 39 - BOMBAY HIGH COURT) where interest payment u/s 201(1A) for failure to deduct or pay tax deducted at source was held not deductible. The contention regarding section 40(a)(ii) is also not tenable as the same is in context of taxes levied on the profits or gains of business and not in context of taxes by way of TDS on payments made by the assessee and in any case, the interest will partake the character of the principal which is not otherwise allowable. Interest on late deposit of TDS u/s 201(1A) cannot be allowed to the assessee and the same has rightly been disallowed by the AO. - Decided in favour of assessee partly allowed.
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