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2018 (8) TMI 130 - AT - Income TaxDisallowance u/s 14A - Held that:- We direct the AO to delete the disallowance made u/s 14A r.w.r. 8D(2)(iii) as the disallowance u/s 14A cannot exceed the exempt income. Ground No. 2 is allowed. Disallowance u/s 43B - Held that:- Hon’ble Supreme Court in various decisions held that levy of interest on breach of the respective Act is compensatory in nature. The interest which is in the nature of breach of Act alone can be disallowed and in compensatory nature cannot be disallowed. Ld. CIT(A) has relied on case laws on sales tax. In those cases, it was held that sales tax is a statutory obligation. But, in the present case, the interest is levied on service tax, excise duty and ESI. These are compensatory in nature unlike sales tax Act. Therefore, the provisions of section 43B are not attracted. With regard to interest paid to HDFC Bank, in our view, HDFC Bank is not public financial institution. It is only private sector Bank. Interest paid to HDFC is outside the purview of section 43B. The amounts paid towards interest under the aforementioned heads, do not come under the provisions of section 43B, hence, the disallowance is hereby deleted. Accordingly ground No. 3 is allowed.
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