TMI Blog2021 (12) TMI 391X X X X Extracts X X X X X X X X Extracts X X X X ..... tedly, the assessee is collecting TDS on behalf of the Government. The TDS collected does not belong to the assessee and has to be remitted to the Government account within the prescribed time. By not depositing the TDS in time, the assessee is not only depriving the Government from utilizing the money for public purpose but also creating problem for the payee in getting timely credit of TDS. On the other hand, the assessee is utilizing the TDS amount for his own benefit. Thus, for the default in depositing the TDS amount in time, interest is levied. Therefore, allowing deduction of such interest under section 37 of the Act would amount to rewarding the assessee for a default committed. This, in our view, is unconscionable. Decided in favour of assessee. - ITA No. 5884/MUM/2019 (Assessment Year: 2015-16) - - - Dated:- 31-8-2021 - SHRI SAKTIJIT DEY, JUDCIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER Assessee by : Shri Viswas Mehandale (AR) Revenue by : Shri Vijay Kumar Menon (DR) ORDER PER SAKTIJIT DEY, JM This is an appeal by the assessee against the order dated 11.07.2019 of learned Commissioner of Income Tax (Appeals)-7, Mumbai for the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. In rejoinder, learned Authorized Representative of the assessee submitted, the decisions relied upon by the learned Departmental Representative would not be applicable to assessee s case. Elaborating further, he submitted, the decision of the ITAT Bangalore Bench in case of Velankani Information Systems vs. DCIT (supra) would not be applicable as the nature and character of interest has not been properly appreciated. He submitted, in case of TDS, it is deducted from the gross expenditure paid/payable to the third parties. Whereas, the gross expenditure is eligible for deduction. He submitted, in that scenario, the interest amount would partake the character of principal amount, hence, will be a deductible expenditure. Therefore, he submitted, interest charged under section 201(1A) cannot be equated with interest charged under sections 215, 220, 234A, 234B and 234C, which are levied on personal tax. Further, he submitted, the ratio laid down in case of Bharat Commerce and Industries Ltd. vs. CIT, 230 ITR 733 (SC) would not be applicable to assessee s case as the decision was rendered in the context of interest charged under section 139, 215 of the Act. He submitted, on the cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. In case of CIT vs. Chennai Properties Investment Ltd. (supra), the Hon ble Madras High Court while considering identical issue of deduction claimed for interest paid for delayed remittance of TDS held that it couldn t be allowed as deduction under section 37(1) of the Act. The observations of the Hon ble Madras High Court are as under:- 14. As already noticed, the payment of interest which takes colour from the nature of the levy with reference to which such interest is paid and the tax required to be paid but not paid in time, which rendered (sic) the assessee liable for payment of interest, was in the nature of a direct tax and in settlement of the income-tax payable under the Income-tax Act. The interest paid under section 201(1A), therefore, would not assume the character of business expenditure and cannot be regarded as a compensatory payment as contended by the learned counsel for the assessee. 15. The counsel for the assessee in support of his submission that the interest paid by the assessee was merely compensatory in character besides relying on the case of Mahalakshmi Sugar Mills Co. (supra) also relied on the decisions of the Apex Court in the cases of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT (supra) 3. Mukand Ltd. vs. ITO (supra) 11. However, in none of these cases either the decision of the Hon ble Supreme Court in case of Bharat Commerce and Industries Ltd. vs. CIT (supra) was considered, or the decisions of the Hon ble jurisdictional High Court in case of Ferro Alloys Corporation Ltd. vs. CIT and the decision of Hon ble Madras High Court in case of CIT vs. Chennai Properties Investments Ltd. (supra) were considered. In fact, the decision of the Hon ble jurisdictional in case of Ferro Alloys Corporation Ltd. vs. CIT and that of the Hon ble Madras High Court in case of CIT vs. Chennai Properties Investment Ltd. are the only two decisions of the higher courts available, which are directly on the issue involved in the present appeal. 12. Pertinently, following the decision of the Hon ble Madras High Court in case of CIT vs. Chennai Properties Investment Ltd. (supra), the ITAT Bangalore Bench in case of Velankani Information Systems Ltd. vs. DCIT (supra) did not accept the view expressed by the co-ordinate Bench in case of DCIT vs. M/s Narayani Ispat Pvt. Ltd. (supra). 13. For the sake of completeness, at this stage, we consider it our duty to deal with ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
