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2022 (12) TMI 925 - ITAT CHENNAIInterest paid on service tax as compensatory in nature for delay in remittance of service tax - allowable expenditure u/s 37(1) - AO has disallowed a sum being interest on service tax relating to earlier years on the ground that the same is in the nature of penalty - HELD THAT:- We find that interest paid on belated payments of service tax is not a penalty, which can be disallowed u/s. 37(1) - Therefore, we are of the considered view that the Ld. CIT(A) has erred in sustaining addition made by the AO towards interest paid on service tax. Hence, we reverse the findings of the ld. CIT(A) and direct the AO to delete addition made towards disallowance of interest on service tax. Appeal filed by the assessee is allowed.
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