TMI Blog2019 (2) TMI 1734X X X X Extracts X X X X X X X X Extracts X X X X ..... g to Assessment Year 2008-09, 2009-10, 2010-11 2011-12. We have noted that the assessee has given bifurcation of interest paid for earlier Assessment Year. Considering the decision of Hon ble Gujarat High Court in CIT vs. Kaypee Mechanical India (P.) Ltd. [ 2014 (4) TMI 829 - GUJARAT HIGH COURT] wherein it was held that the interest on service tax is to be recorded as payment made during the course of business wholly and exclusively for the purpose of business and the same is compensatory in nature and would not partake the character of penalty. Thus interest on delayed service tax is allowable deduction. Therefore, we restore the ground of appeal to the file of Assessing Officer to verify the fact about the payment of interest on delayed payment of service tax and pass appropriate order in accordance with law. - ITA No. 689/Mum/2018 for Cross Objection No.55/Mum/2019 for (Assessment Year 2011-12) - - - Dated:- 14-2-2019 - Shri Shamim Yahya, Accountant Member And Shri Pawan Singh, Judicial Member Appellant by: Shri Chaudhary Arun Kumar Singh (DR) Respondent by: Shri R.R. Vora, Chetan Noval (AR) Pawan Singh, 1. This appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... delayed payment of service tax under Section 40(a)(ia) of the Income-tax Act, 1961 ('Act') On the facts and in the circumstances of the case the Hon'ble CIT(A) has: 4. erred in disallowing the interest paid on delayed payment of service tax without appreciating the fact that interest paid is compensatory in nature and not penal in nature and thus, the same is an allowable deduction as per the provisions of Section 37(1) of the Act; 3. At the outset of hearing, the ld. Authorized Representative (AR) of the assessee submits that the ground of appeal raised by revenue is covered in favour of assessee in assessee s own case for Assessment Year 2008-09 2012-13 in ITA No. 1175/Mum/2017 and in ITA No. 6151/Mum/2012 respectively. The ld. AR of the assessee also furnished the copy of decision of Tribunal for Assessment Year 2008-09 2012-13 dated 30.07.2018 and 11.09.2017 respectively. 4. On the other hand, the ld. Departmental Representative (DR) for the revenue after going through the order of Tribunal for Assessment Year 2008-09 2012-13 agreed that though the issue is covered in favour of assessee, however, the ld. DR relied upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d a finding that M/s CKIL has duly complied with TDS provisions at the time of making payments to the concerned payees. Thus, it is noticed that the payment by way of rent and repairs have been duly subjected to deduction of tax at source. The assessee has reimbursed the amount to M/s CKIL on which tax has already been deducted at source. Since the impugned payments have been made M/s CKIL on behalf of the assessee and the tax has been deducted at source there from by M/s CKIL, in my view, it should be construed that M/s CKIL has deducted tax at source also on behalf of the assessee. In this view of the matter, the obligation of the assessee to deduct tax at source has been fulfilled by M/s CKIL and hence I agree with the view taken by Ld CIT(A) that the provisions of sec. 40(a)(ia) would not get attracted in this factual matrix. Accordingly I uphold the decision taken by Ld CIT(A) on the above said reasoning. 6. We have further noted that by following the decision of Tribunal for Assessment Year 2012-13 similar disallowance was deleted by Tribunal in appeal for Assessment Year 2008-09 in ITA No. 6151/Mum/2012 dated 30.07.2018 by passing the following order: 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sked the assessee to furnish the details of General Expenses. The assessee filed its reply vide reply dated 03.02.2014. The reply of assessee was not accepted by Assessing Officer holding that the delayed payment of service tax is panel in nature and is not allowable under section 37 of the Act. On appeal before the ld. CIT(A), the action of Assessing Officer was confirmed. Thus, the assessee has raised ground of appeal while filing C.O. in appeal filed by revenue. 11. We have heard the submission of the parties and have gone through the orders of authorities below. The ld. ld. Authorised Representative (AR) of the assessee submits that assessee has paid interest on delayed payment of service tax of ₹ 17,85,282/- which relates to Assessment Year 2008-09, 2009-10, 2010-11 2011-12. The interest expenses were debited under the head General Expenses . The ld. AR of the assessee invited our attention to Explanation attached to section 37(1) and submits that only expenses incurred by assessee for any purpose which is offence or which is prohibited by law would not be deemed to have incurred for the purpose of business or profession and no deduction or allowance shall b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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