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2022 (1) TMI 1327 - AT - Income TaxDisallowance of interest on delayed payment of TDS - assessee has claimed expenses on account of interest on TDS which is not an allowable expense under the provisions of the Income-tax Act, 1961 - HELD THAT:- We may refer to the decision of Lachmandas Mathuradas [1997 (12) TMI 16 - SUPREME COURT] wherein it was held that interest on arrears or on outstanding balance of sales tax is compensatory in nature and would be allowable as deduction in computing profits of a business. Referring to the same decision, ITAT in the case of Narayani Ispat (P) Ltd. [2017 (10) TMI 67 - ITAT KOLKATA] has held that interest expenses on account of delayed payment of service tax as well as TDS is an allowable expenditure. Similar proposition has been laid down in other case laws that such interest is compensatory in nature and is allowable expenditure. Appeal of the assessee stands allowed.
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