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2020 (7) TMI 456 - AT - Income TaxAdmissibility of interest paid to KSEB towards delayed payment of pole rental charges - Interest amount for the delayed payment of the pole rent payable by the assessee since 2002-03 - allowable expense - HELD THAT:- KSEB revised the demand which was accepted by the assessee in the year 2016-17. Thus, the entire dispute was finally settled based on mutual verifications conducted by the parties. This was due the serious anomalies in the apportionment of poles in the urban and in the rural areas. The assessee has placed a copy of the demand raised by KSEB on 28.09.2006 and copy of the order of High Court settling the dispute. In view of the fact that the demand had arisen and liability crystallized during the year, the statutory auditors had disclosed the expenditure under extraordinary item in the financial statements of the company in accordance with the provisions of AS-5 on net profit or loss for the year prior period items and changes in the accounting policies issued by the ICAI considering the largeness of the amount involved. There is no case for the department that the expenditure is in the nature of prior period expenses. The Chennai Bench of the Tribunal in the case of ITO(OSD) vs. Sicgil India Pvt. Ltd. [2009 (3) TMI 239 - ITAT MADRAS-C] dealt with a case wherein the contractual liability which was disputed arose in the year of settlement of dispute. In the instant case, the dispute involved was finally settled during the F.Y. 2006-07 relevant to the A.Y. 2007-08. - Decided against revenue. Difference between liability of interest due and penal interest which arose out of the demand by a competent authority - HELD THAT:- Supreme Court in the case of Mahalakshmi Sugar Mills Co. vs. CIT [1980 (4) TMI 1 - SUPREME COURT] where it was held that the interest for delayed payment of statutory dues is an allowable deduction u/s. 37(1). The same view was taken by Supreme Court in the case of Lachmandas Mathurdas vs. CIT [1997 (12) TMI 16 - SUPREME COURT]. Similarly, in the recent decision of the Cochin Bench of the Tribunal in the case of Lakshdweep Development Corporation Limited [2018 (10) TMI 283 - ITAT COCHIN]the Tribunal has held that interest on delayed payment of VAT and TDS is only compensatory and is not penal in nature. Therefore, the CIT(A) has correctly deleted the disallowance made for the interest expenditure claimed on delay payment of VAT and TDS. Thus, this ground of appeal of the Revenue is dismissed. Depreciation on Modem - @ 15% OR 60% - HELD THAT:- Special Bench of the ITAT, Mumbai has held in the case of Dy.CIT vs. Data Craft ndia Ltd. [2010 (7) TMI 642 - ITAT, MUMBAI] that definition of computer should not be restricted to Central Processing Unit of the computer but should also extend to all input and output devices which support computer in the receipt of input on outflow and output to and from the computer. Further, in the following decision of High Courts and Tribunals, it has been held that modem is an integral part of a computer eligible for high rate of depreciation of 60% - Decided against revenue.
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