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2019 (2) TMI 1734 - AT - Income TaxAddition u/s 40(a)(ia) - as argued obligation of the assessee to deduct tax at source has been fulfilled by M/s CKIL - HELD THAT:- It is noticed in appeal for Assessment Year 2008-09 that the payment by way of rent and repairs have been duly subjected to deduction of tax at source. The assessee has reimbursed the amount to M/s CKIL on which tax has already been deducted at source. Since the impugned payments have been made M/s CKIL on behalf of the assessee and the tax has been deducted at source there from by M/s CKIL, it should be construed that M/s CKIL has deducted tax at source also on behalf of the assessee. In this view of the matter, the obligation of the assessee to deduct tax at source has been fulfilled by M/s CKIL and hence I agree with the view taken by Ld CIT(A) that the provisions of sec. 40(a)(ia) would not get attracted in this factual matrix Disallowance of interest on delayed payment of service tax - HELD THAT:- The assessee has claimed to have paid the interest on delayed payment of service tax pertaining to Assessment Year 2008-09, 2009-10, 2010-11 & 2011-12. We have noted that the assessee has given bifurcation of interest paid for earlier Assessment Year. Considering the decision of Hon’ble Gujarat High Court in CIT vs. Kaypee Mechanical India (P.) Ltd. [2014 (4) TMI 829 - GUJARAT HIGH COURT] wherein it was held that the interest on service tax is to be recorded as payment made during the course of business wholly and exclusively for the purpose of business and the same is compensatory in nature and would not partake the character of penalty. Thus interest on delayed service tax is allowable deduction. Therefore, we restore the ground of appeal to the file of Assessing Officer to verify the fact about the payment of interest on delayed payment of service tax and pass appropriate order in accordance with law.
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