TMI Blog2019 (7) TMI 925X X X X Extracts X X X X X X X X Extracts X X X X ..... then no disallowance should be made. That being so, we decline to interfere in the order passed by the Ld. CIT(A), his order on this issue, is hereby upheld and grounds raised by the revenue is dismissed. Disallowance under the head interest on TDS, VAT, entry tax and professional tax - HELD THAT:- We note that the interest on VAT, TDS and interest on entry tax and interest on professional tax are allowable expenditure u/s 37(1) of the Act, as these expenses normally incurred by the assessee in doing the business. We also note that the interest on arrears of sales tax is compensatory in nature and therefore allowable expenditure u/s 37(1) as has been held by the Hon ble Supreme Court in the case of Lachmandas Mathurdas vs. CIT [ 1997 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. CIT(A) erred in deleting the disallowance made by the A.O. u/s 36(1)(va) read with 2(24)(x) under the head late payment of Employees Contribution to PF/ESI. 2. That on the facts and in the circumstances of the case the ld. CIT(A) erred in deleting addition / disallowances made by the A.O. under the head interest on TDS, VAT, Entry Tax and professional Tax. 3. That on the facts and in the circumstances of the case the ld. CIT(A) erred in deleting addition / disallowances made by the A.O. under the head interest on service tax and service tax RCM. 4. The appellant craves for leave to add, alter /or amend any of the grounds of appeal before or at the time of hearing. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record. We note that the assessee deposited employees contribution to PF ESI before the due date of filing of return of income u/s 139(1) of the Act. If the assessee deposits PF and ESI before the due date of filing of return of income then it would be considered sufficient compliance and no addition should be made on account of late payment of PF and ESI. For that we rely on the judgment of the Jurisdictional Hon ble Calcutta High Court in the case of Vijay Shree Ltd. in I.T.A. No. 245/Kol/2011, wherein it was held that if the assessee deposited PF and ESI within the due date prescribed it u/s 139(1) of the Act then no disallowance should be made. That being so, we decline to interfere in the order passed by the Ld. CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material available on record. We note that the interest on VAT, TDS and interest on entry tax and interest on professional tax are allowable expenditure u/s 37(1) of the Act, as these expenses normally incurred by the assessee in doing the business. We also note that the interest on arrears of sales tax is compensatory in nature and therefore allowable expenditure u/s 37(1) of the Act as has been held by the Hon ble Supreme Court in the case of Lachmandas Mathurdas vs. CIT reported in 254 ITR 799 (SC) wherein it was held as follows: In taking decision the High Court had placed reliance on its Full Bench's decision in Saraya Sugar Mills (P.) Ltd. v. CIT [1979] 116 ITR 387 (All.). The said judgment of the Full Bench had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eved by the order of the ld. CIT(A) the Revenue is in appeal before us. 17. The ld. DR has primarily reiterated the stands taken by the Assessing Officer which we have already noted in our earlier para and the same is not being repeated for the sake of brevity and on the other hand the ld. Counsel for the assessee has defended the order of the CIT(A). 18. We have heard the rival submissions and perused the material available on record. We note that interest on service tax is an allowable expenditure. Not only that interest on service tax is compensatory in nature and it is not in the nature of penalty therefore the same is allowable expenditure as held by the Hon ble Supreme Court in the case of Lachmandas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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