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2022 (4) TMI 906 - AT - Income TaxBusiness expenditure - Interest on late payment of TDS - Bonafide claim of allowing deduction of interest on late payment of TDS from Total Income - HELD THAT:- We observe that Ld.CIT(A) has relied upon the decision of Ferro Alloys Corporation [1991 (12) TMI 39 - BOMBAY HIGH COURT] in which the Hon’ble High Court has not discussed anything on merit considering the fact that the case Bharat Commerce Industries Ltd. [1998 (3) TMI 2 - SUPREME COURT] was pending before Hon’ble Supreme Court and we observe that even in the case of Bharat Commerce Industries Ltd, the issue involved is relating to interest paid on late payment of advance-tax. Therefore, the issue involved in the present case is not relating to late remittance of advance-tax but late remittance of TDS. The issue involved is whether the interest paid by the assessee to the government can be termed as compensatory or penal in nature. In our considered view, the assessee has deducted the tax on behalf of the third party and failed to remit the same within the due date and the interest charged on such amount is only compensatory in nature. Here we notice that the co-ordinate bench of this Tribunal has already held the same view in the case of STUP Consultants Pvt Ltd [2019 (1) TMI 1259 - ITAT MUMBAI] interest expense on the delayed payment of service tax is allowable deduction.The above principles can be applied to the interest expenses levied on account of delayed payment of TDS as it relates to the expenses claimed by the assessee which are subject to the TDS provisions. Thus we hold that the interest paid on delayed payment of TDS u/s 201(1A) is an allowable deduction. We direct accordingly. Assessee succeeds in its appeal.
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