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2022 (2) TMI 335 - AT - Income TaxDisallowance of CME & Free goods expenses - AO noticed that the most of the expenses pertain to gifts, hospitality, cash or monetary grants by the assessee company to the medical Practitioners or other professionals - HELD THAT:- Regulations of MCI and also the Circular of the CBDT were not applicable for the relevant year. Hence, the assessee gets remission for the instant Assessment Year. Appeal of the assessee on this ground is allowed. Disallowance interest on delayed payment of service tax - CIT(A) held that similar to the interest paid on delayed payment of TDS, the interest paid on delayed payment of Service Tax also cannot be treated for the purpose of business - HELD THAT:- We find that the observation of the ld. CIT(A) is on a misplaced interpretation of the provisions of the Act. It is well settled principle that interest on late payment of Service Tax is not penal in nature. Since, it is compensatory in nature, it is eligible for deduction u/s. 37(1) of the Act as it can be termed to be expended wholly and exclusively for the business purpose and the payment of interest on late remittance of Service Tax is neither an offence nor prohibited by law. In the result, the appeal of the assessee on this ground is allowed.
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