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2022 (7) TMI 380 - AT - Income TaxAddition on account of interest income earned on grant and subsidy received from Govt. - HELD THAT:- The only basis of non-taxation of interest income in the hands of assessee, was the term or condition of the scheme under which subsidy or grant was received. If the term or condition dictates that the interest income shall form part of the subsidy or if an inference can be culled out from the scheme of subsidy that the interest income shall be expended over the project and liable for refund to the Govt. if not utilised or that the assessee is merely acting as an extended arm of the Govt., then only the interest income of Rs. 53,03,707/- earned by the assessee shall not be taxable and this is the precise contention of the Ld. CIT(A). Assessee has also submitted before the Ld. AO "as per the norms of the grant this amount too has to be expended over the Project itself and liable for refund in case of non-expended". However we observe that the assessee has not produced the scheme of subsidy or any documentary evidence before the lower authorities to support his submission. Even the Ld. CIT(A), though accepting the judgements, has also noted in his order that the assessee has not given any evidence. Therefore the lower authorities were not able to verify the contention of assessee or the applicability of judgements. In such circumstances, we feel it appropriate to give one more opportunity to the assessee to submit the relevant evidences to the Ld. AO so that the Ld. AO can ascertain the correct position and decide the issue properly in accordance with the judgements narrated above. Therefore, we remand this issue back to the file of Ld. AO. The Ground No. 2 is thus allowed for statistical purposes. Disallowance of interest expenditure on late payment of TDS - HELD THAT:- We are consciously aware that the decisions of Hon'ble High Courts would prevail over the decision of Hon'ble ITAT, Kolkata. Therefore, respectfully following the decisions of Hon'ble High Courts, we are inclined to hold that the interest on late payment of TDS is not allowable as business deduction and the lower authorities have rightly disallowed the same.
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