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2009 (12) TMI 1034 - AT - Income TaxInterest paid on late deposit of service-tax with Government account - AO treated above amount as a penalty and disallow the same - CIT(A) held that payment made was of compensatory nature and therefore, permissible as a business deduction, thus deleted the disallowance - HELD THAT:- Following the decision in the case of Mahalakshmi Sugar Mills.[1980 (4) TMI 1 - SUPREME COURT], examined the question whether interest paid on delayed payment of "cess" was a penalty. After considering relevant statutory provisions, it was held that it was compensatory and therefore, a permissible deduction. We have examined relevant provisions of section 75 and are of the view that interest paid for the delayed payment of service-tax is compensatory and has the same character as service-tax. There is no dispute that service-tax is a permissible deduction. In our opinion, the interest should also be allowed in the same manner. In the light of above discussion, we uphold the order of CIT(A) on ground No. 1. Nature of expenditure - Enduring benefit in acquiring logo - business deduction or not? - whether by making payment in question, the assessee has acquired any enduring benefit - HELD THAT:- It is quite evident from above that Messee Dusseldorf GmbH permitted the assessee the use of logo for limited period between 24th to 27th Sept., 2003 and between 5th Dec, 2003 to 9th Dec, 2003 at trade fairs held at Hyderabad. No enduring benefit was received by the assessee. Expenditure was incurred wholly and exclusively for purposes of business and was rightly allowed by the learned CIT(A) as a revenue deduction. We confirm his finding and dismiss the second ground of appeal also.
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