TMI Blog2021 (8) TMI 940X X X X Extracts X X X X X X X X Extracts X X X X ..... THAT:- As relying on CHENNAI PROPERTIES AND INVESTMENTS LIMITED [ 1998 (4) TMI 89 - MADRAS HIGH COURT] we confirm the action of the lower authorities in disallowing the interest expenditure for late deposit of TDS. - Decided against assessee. - ITA No. 213/Del/2017 - - - Dated:- 3-8-2021 - SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER Assessee by : None Revenue by : Ms. Anima Barnwal, Sr. DR ORDER PER PRASHANT MAHARISHI , A. M. 1. This appeal is filed by the assessee against the order of the ld CIT(A)-18, New Delhi dated 08.12.2016 for assessment year 2012-13. 2. The grounds of appeal raised by the assessee are as under:- 1. That the order of the learned Commissioner of Income Tax (Appeals) is bad in law and is against the facts and circumstances of the of the case. 2. That the learned Commissioner of Income Tax (Appeals) has erred in confirming the disallowance made by the Assessing Officer in an amount of ₹ 4,74,192/- being the expenses incurred by the Company as periphery expenses. 2.2 That the learned Commissioner of Income Tax (Appeals) has erred in observing that the details called for by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is aggrieved and has preferred this appeal before us. 6. Despite notice, none appeared on behalf of the assessee and therefore the issue is decided on the merits of the case. 7. The ld DR vehemently relied upon the orders of the lower authorities. 8. We have carefully considered the contentions of the ld DR and the orders of the lower authorities. 9. The first ground of appeal is general in nature and therefore same is dismissed. 10. The second ground is in relation to disallowances of ₹ 4,74,192/- being CSR expenditure incurred by the assessee and claimed as deductible expenditure. The fact shows that the assessee has incurred the above expenditure at the instances of Government of Odisha in pursuance of the direction dated 21.08.2004 referred to a letter dated 01.07.2011 for work carried out by large industry situated at Sundargarh district. Thus, the assessee claimed that these are incurred for the business activity of the company. The facts shows that the assessee is machine manufacturer and the expenditure incurred in Odisha has not been shown before the lower authorities that same are incurred for the purpose of the business. In view of this, it does no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uting the income of the recipient of the amount in respect of which the tax has been deducted, as the income of such recipient, and credit for the amount of the tax so deducted is to be given to such recipient under Section 199 of the Act. 5. Section 200 of the Act imposes a duty on the person deducting tax to pay within the prescribed time, the sum so deducted to the credit of the Central Government or as the Board directs. 6. The consequences of failure to deduct or failure to remit the amount deducted as required under the Act are set out in Section 201. 7. If the payer does not deduct or remit the tax, he would be deemed to be an assessee in default in respect of the tax. Such person, however, is not liable to a penalty under Section 221, if the Income-tax Officer is satisfied that the failure to deduct or remit was for good and sufficient reasons. Sub-section (1A) of Section 201 without prejudice to the provisions of Sub-section (1) provides the person who fails to deduct or remit the amount of deduction in the manner required under the Act is liable to pay interest at the rates specified in that Sub-section from the date on which tax was deductible to the date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rving or promoting the business of the assessee. . . The liability in the case of payment of income-tax and interest for delayed payment of income-tax or advance tax arises on the computation of the profits and gains of business . The court further held that (headnote) : Under the Income-tax Act, the payment of such interest is inextricably connected with the assessee's tax liability. If income-tax itself is not a permissible deduction under Section 37, any interest payable for default committed by the assessee in discharging his statutory obligation under the Income-tax Act, which is calculated with reference to the tax on income, cannot be allowed as deduction . 11. Before holding so, the court considered the decision of the apex court in the case of Mahalakshmi Sugar Mills Co. v. CIT [1980] 123 ITR 429, a decision rendered by three learned judges of the apex court and held that the ratio of that judgment had no application to the case before it in the case of Bharat Commerce and Industries Ltd. v. CIT [1998] 230 ITR 733. The assessee in the case of Mahalakskmi Sugar Mills Co. , had claimed deduction of interest paid on arrears of sugarcane cess. The payment of sugarcan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee in the course of its business and admissible as business expenditure. Further liability for interest which had been incurred by the assessee therein was regarded as compensatory in nature and allowable as business expenditure. 16. The ratio of those cases is not applicable here. Income-tax is not allowable as business expenditure. The amount deducted as tax is not an item of expenditure. The amount not deducted and remitted has the character of tax and has to be remitted to the State and cannot be utilised by the assessee for its own business. The Supreme Court in the case of Bharat Commerce and Industries [1998] 230 ITR 733, rejected the argument 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, namely, interest paid for the period of such retention would assume character of business expenditure. The court held that an assessee could not possibly claim that it was borrowing from the State, the amounts payable by it as income-tax, and utilising the same as capital in its business, to contend that the interest paid for the period of delay in payment of tax amounte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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