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2018 (2) TMI 1805 - AT - Income TaxDisallowance in respect of payment made to retired partners - overriding title to the ex-partners or spouses of deceased partners (herein referred to as ‘retired partners’) as per partnership deed - Held that:- We find from the perusal of the partnership agreement of the assessee herein, the continuing partners cannot carry on business without making the payment to retired partners. Similarly there is no clause in the partnership agreement of the assessee which enables the continuing partners to carry on the business with majority partners consent. Hence it could be safely concluded that the decision of S.B.Billimoria [2008 (12) TMI 671 - ITAT MUMBAI] is factually distinguishable. Case of CCIT vs C.C.Chokshi & Co.[2008 (7) TMI 1055 - BOMBAY HIGH COURT] to be followed. No infirmity in the order of the CIT-A in this regard. Accordingly, the grounds raised by the revenue are dismissed. Disallowance of interest on TDS - belated payment of TDS - Held that:- Assessee had merely made belated payment of TDS belonging to the payees and not the assessee. Hence the said interest which was paid for delayed remittance of TDS is only compensatory in nature. The decision relied upon by the ld CITA was in the context of payment of interest on payment of direct taxes and since the direct tax payment is not an allowable expenditure, the interest paid thereon is also not an allowable deduction. But the assessee had only made payment of professional fees to third parties on which tax has been deducted at source and remittance was made belatedly to the account of the central government. Hence the TDS does not belong to the assessee and instead it belongs to the payee. Hence the said TDS / tax belongs to the payee. The assessee had merely made compensatory payment of interest on delayed remittance of TDS which is squarely an allowable deduction in the computation of income of the assessee firm.
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