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TMI Blog2020 (9) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... ting to Rs. 50256/- u/s 37(1) of the Income Tax Act,1961 and therefore the same be allowed and addition made be deleted. 5. That the appellant craves leave to add, amend, alter substitute, modify or withdraw any of the above ground(s) at the time of hearing of the appeal." 2. The facts giving rise to the present appeal are that the assessee is a company engaged in the business of offset printing. The company is running a printing press with the help of various sophisticated and high tech equipment and printing units. A search action was carried out u/s 132 of the Income Tax Act, 1961(hereinafter referred as 'the Act'). The case of the assessee was centralized and a consolidated assessment order u/s 153A r.w.s. 143(3) of the Act for A.Ys. 2011-12 to 2017-18 was passed vide order dated 28.12.2018, thereby for the assessment year under appeal an addition of Rs. 52,873/- was made by the Assessing Officer on account of interest on TDS, interest on entry Tax and payment of penalty on delay in supply of printing material. 3. Aggrieved against this the assessee preferred an appeal before Ld. CIT(A), who also sustained the addition. 4. Now the assessee is in appeal before this Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of M/s Naaraayani Sons Pvt. Limited, in ITA No. 1796-1798/Kol/2017, vide order dated 21.08.2018 the Hon'ble Tribunal held that interest expense on late deposit of VAT, service tax, TDS etc are allowable expenditure under section 37(1) of the Act. the observation are as under : In view of the above judgement, there remains no doubt that the interest expense on the delayed payment of service tax is allowable deduction. The above principles can be applied to the interest expenses levied on account of delayed payment of TDS as it relates to the expenses claimed by the assessee which are subject to the TDS provisions. The ass essee claims the specified expenses of certain amount in its profit & loss account and thereafter the assessee from the payment to the party deducts certain percentage as specified under the Act as TDS and pays to the Government Exchequer. The amount of TDS represents the amount of income tax of the party on whose behalf the payment was deducted & paid to the Government Exchequer. Thus the TDS amount does not represent the tax of the assessee but it is the tax of the party which has been paid by the ass essee. Thus any delay in the payment of TDS by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee for supply of books as per the tender terms and conditions. The payment is not in the nature of penalty. It is also not paid for any infraction of law. The deductions of Rs. 50,256 made from the supply of bills are fully deductible u/s 37(1) of the Act. Reliance is placed on Chaudhary Hammer Works Ltd., Vs. Department of Income Tax ITA No: 4332/Del/2011 ITAT Delhi. True Copy of Profit and loss & account and ledger account is marked as Annexure (W/1) True copy of tender agreement Clause Nos. 29 & 33 is marked as Annexure (W/2) It is submitted that the expenditure has been disallowed on wrong premise quoting the judgment of Hon'ble Supreme Court in the case of Bharat Commerce and Industries Ltd. vs. Commissioner of Income Tax (1998) 98 Taxman 151 (SC) which does not relate to the issue under consideration i.e. charges on delay in supply. In that case, the issue was whether the interest paid for delayed payment for advance income tax is deductible or not. Thus, the action of the LD subordinate authorities in disallowing the expenditure is without cogent reasons and basis and deserves to be quashed." 5. Ld. Senior Departmental Representative (DR), Shri Ashish Porwal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT (Supra). The issue before Hon'ble Supreme Court was regarding interest paid for delayed payment for advance tax. However, the issue in present case is related to payment made by the assessee on account of delay in supply of books. Therefore, disallowing the entire amount by the Assessing Officer was not justified. Hence, the Assessing Officer is directed to delete the addition made on account of disallowance of expenditure related to delay in supply of the books. Regarding interest on entry tax and TDS division bench of this Tribunal in the case of M/s Naarayani Sons Pvt. Ltd. in ITAN0.1796-1798/Kol/2017, after considering the judgment of Hon'ble Supreme Court in the case of Bharat Commerce and Industries Ltd. vs. CIT (Supra) decided the issue in favour of the assessee. The relevant contents of the said decision are reproduced as under: In view of the above judgment, there remains no doubt that the interest expense on the delayed payment of service tax is allowable deduction. The above principles can be applied to the interest expenses levied on account of delayed payment of TDS as it relates to the expenses claimed by the assessee which are subject to the TDS provi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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