TMI Blog2021 (7) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... laid in the case of CIT vs. Chennai Properties and Investments Ltd. [ 1998 (4) TMI 89 - MADRAS HIGH COURT] wherein as clarified that Income Tax is not allowable as business expenditure and the amount deducted as tax is not an item of expenditure. Hon ble Madras High Court also referred to the judgment of Bharat Commerce Industries Ltd. v[ 1998 (3) TMI 2 - SUPREME COURT] wherein has rejected the arguments advanced by the assessee that retention of money payable to the State as tax or Income Tax would augment the capital of the assessee and the expenditure incurred towards the normal interest paid for the period of such retention would assume character of business expenditure and hold that an assessee could not possibly claim that it wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction. However, the Assessing Officer did not accept the contention of the assessee and added the amount of ₹ 1,78,707/- to the income of the assessee, thereby completing the assessment at an income of ₹ 1,99,72,840/-. 2.1 The assessee approached the Ld. First Appellant Authority against the addition. The Ld. CIT(A) upheld the action of the Assessing Officer and now the assessee has approached this Tribunal challenging the addition by raising the following grounds of appeal: 1. That the order of the Learned Commissioner of Income-tax (Appeals) is against facts and law. 2. That the learned Commissioner of Income-tax (Appeals) is not justified in confirming the disallowance ₹ 1,78,707/- being interest paid on de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terial on record. It is seen that ITAT Kolkata Bench in the case of DCIT vs. Narayani Ispat Pvt. Ltd. (supra) has held that interest paid on late deposit of TDS is compensatory in nature and is, therefore, allowable as deduction. Further, the Kolkata Bench came to the same conclusion in the case of M/s. Sai Food Products Pvt. Ltd. vs. DCIT in ITA No.1887/Kol/2016 vide order dated 06.04.2018 by following its earlier decision in DCIT vs. Narayani Ispat Pvt. Ltd. (supra). Similar decisions were given by the Kolkata Bench in the cases of DCIT vs. Rungta Mines Ltd. in ITA No.1531/Kol/2017 vide order dated 05.10.2018, DCIT vs. Bonai Industrial Company Ltd. in ITA No.1533/Kol/2017 vide order dated 10.10.2018, DCIT vs. V2 Retail Ltd. in ITA No.1794 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scipline demands that the decision of the Hon ble Madras High Court is to be followed. It is also worthwhile to mention that the Kolkata Bench of Tribunal in the case of Narayani Ispat Pvt. Ltd. (supra), which was cited by the Ld. Counsel for the assessee, did not consider or did not have an occasion to consider the decision of the Hon ble Madras High Court in the case of Chennai Properties and Investments Ltd. (supra). Under these circumstances, we follow the decision of the Hon ble Madras High Court and uphold the order of the Ld. CIT(A) in so far as on it relates to disallowance of interest on delayed remittance of tax deducted at source u/s 201(1A) of the Act. 5.2 Similarly, the Ahmedabad Bench of the ITAT in the case of MMR Infra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to this conclusion, we are guided by the ratio laid by the Hon ble Madras High Court in the case of CIT vs. Chennai Properties and Investments Ltd. (supra) wherein the Hon ble High Court of Madras has clarified that Income Tax is not allowable as business expenditure and the amount deducted as tax is not an item of expenditure. In the above said judgment, the Hon ble Madras High Court also referred to the judgment of the Hon ble Apex Court in the case of Bharat Commerce Industries Ltd. vs. CIT reported in [1998] 230 ITR 733 wherein the Hon ble Apex Court has rejected the arguments advanced by the assessee that retention of money payable to the State as tax or Income Tax would augment the capital of the assessee and the expenditure incurred ..... X X X X Extracts X X X X X X X X Extracts X X X X
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