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2021 (12) TMI 391 - AT - Income TaxDisallowance of deduction claimed towards interest on delayed payment of tax deducted at source (TDS) - As per assessee interest paid on delayed payment of TDS is eligible for deduction as business expenditure u/s 37(1) - as per DR assessee has not remitted the TDS amount within the stipulated time AND interest paid for delayed payment of TDS is not eligible as deduction under section 37 - HELD THAT:- As the decision of the Hon’ble jurisdictional High Court in case of Ferro Alloys Corporation Ltd. [1991 (12) TMI 39 - BOMBAY HIGH COURT] and the decision case of CIT vs. Chennai Properties & Investment Ltd. [1998 (4) TMI 89 - MADRAS HIGH COURT] are not only directly on the issue but are in favour of the revenue. Therefore, respectfully following the aforesaid two decisions of the Hon’ble jurisdictional and Hon’ble Madras High Court, we hold that assessee’s claim of deduction under section 37(1) of the Act in respect of interest charged on delayed payment of TDS is not allowable. The issue can also be looked into from another angle. Admittedly, the assessee is collecting TDS on behalf of the Government. The TDS collected does not belong to the assessee and has to be remitted to the Government account within the prescribed time. By not depositing the TDS in time, the assessee is not only depriving the Government from utilizing the money for public purpose but also creating problem for the payee in getting timely credit of TDS. On the other hand, the assessee is utilizing the TDS amount for his own benefit. Thus, for the default in depositing the TDS amount in time, interest is levied. Therefore, allowing deduction of such interest under section 37 of the Act would amount to rewarding the assessee for a default committed. This, in our view, is unconscionable. Decided in favour of assessee.
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