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2023 (1) TMI 1124 - AT - Income TaxDelay in depositing the Employees Contribution to Provident Fund and Employees State Insurance - Addition u/s 43B read with sections 2(24)(x) and 36(1)(va) - HELD THAT:- This issue have come to rest by the recent verdict of Checkmate Services Pvt. Ltd. [2022 (10) TMI 617 - SUPREME COURT] wherein it has been held that “deduction u/s 36(1)(va) in respect of delayed deposit of amount collected towards employees’ contribution to PF cannot be claimed when deposited within the due date of filing of return even when read with Section 43B of the Income-tax Act,1961 - Decided against assessee. Disallowance in respect of interest on delayed deposit of ‘taxes deducted at source’ (TDS) - AO observed that such payment of interest on delayed deposit of TDS was not an allowable deduction - HELD THAT:- Jurisdictional Calcutta High Court in the case of Martin & Harris (P) Ltd [1989 (7) TMI 342 - CALCUTTA HIGH COURT] held that the character and quality of interest payable for non- compliance with the provisions of the Act would be the same, whether it is levied for non-submission of return in time or non-payment of tax within the prescribed time or for any other reason and that it cannot be allowed as deduction in computing total income as essentially interest in such a case for non-compliance with the provisions of the Act is inextricably connected with the amount of income-tax. The Hon’ble High Court categorically held that where income-tax itself is not a deductible amount, be it compensation or be it penalty, payable in addition to the tax cannot be allowed as a deduction in computing total income. The findings arrived at by the Jurisdictional Calcutta High Court are, otherwise, binding on this Tribunal. In case Checkmate Services Pvt. Ltd. [2022 (10) TMI 617 - SUPREME COURT] held that If, such interpretation were to be adopted, the non-obstante clause under Section 43B or anything contained in that provision would not absolve the assessee from its liability to deposit the employee's contribution on or before the due date as a condition for deduction.This proposition laid down by the Hon’ble Supreme Court can be well applied in case of delayed deposit of TDS. TDS by deeming fiction has been made the tax liability of the deductor to ensure that the recipient of the payment cannot fade away without paying the due taxes on the income part of such receipts. Once, the deductee pays the due taxes, the deductor is absolved from the said tax liability but not of the interest liability on the delayed payment. Allowing of such interest payment on delayed deposit of TDS as deduction would defeat the very purpose of the TDS provisions ensuring the deduction of taxes from the income of the recipient and the payment/deposit thereof with the central Govt. within the due time. Thus we hold that the interest payment on delayed deposit of Income Tax, whether TDS or otherwise, is not an allowable expenditure. Appeal of the assessee is dismissed.
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