TMI Blog2022 (7) TMI 380X X X X Extracts X X X X X X X X Extracts X X X X ..... Even the Ld. CIT(A), though accepting the judgements, has also noted in his order that the assessee has not given any evidence. Therefore the lower authorities were not able to verify the contention of assessee or the applicability of judgements. In such circumstances, we feel it appropriate to give one more opportunity to the assessee to submit the relevant evidences to the Ld. AO so that the Ld. AO can ascertain the correct position and decide the issue properly in accordance with the judgements narrated above. Therefore, we remand this issue back to the file of Ld. AO. The Ground No. 2 is thus allowed for statistical purposes. Disallowance of interest expenditure on late payment of TDS - HELD THAT:- We are consciously aware that the decisions of Hon'ble High Courts would prevail over the decision of Hon'ble ITAT, Kolkata. Therefore, respectfully following the decisions of Hon'ble High Courts, we are inclined to hold that the interest on late payment of TDS is not allowable as business deduction and the lower authorities have rightly disallowed the same. - ITA No. 128/Ind/2020 - - - Dated:- 28-6-2022 - SHRI MAHAVIR PRASAD , JUDICIAL MEMBER AND SHRI B. M. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 71, Improvement Trust, Ludhiana Civil Appeal No. 2395 of 2008 (SC), the Ld. AR prayed to condone the delay. We find sufficient strength in the submission of Ld. AR. We confronted the Ld. DR, who without demonstrating any objection, left the matter to the wisdom of the Bench. Taking into account that there was a sufficient cause of delay as explained by the assessee, having regard to the decision of Hon'ble Apex Court and in order to grant justice, we condoned the delay and proceeded for hearing of the appeal. 3. The assessee submitted return of income declaring a total income of Rs. 5,41,76,780/-. The Ld. AO selected case for scrutiny, issued statutory notices and finally completed assessment by passing order u/s. 143(3) of the Act whereby the total income had been assessed at Rs. 6,40,73,946/- after making following additions: Addition of interest income on grants and subsidy 53,03,707/- Disallowance of bad-debt claim 43,80,166/- Disallowance of interest on late payment of TDS 2,13,293/- Being aggrieved by the order of Ld. AO, the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pended over the Project itself and liable for refund in case of non-expended. The Ld. AO, however, did not accept the submission of assessee and made addition of Rs. 53,03,707/- by holding that the interest is a revenue receipt no norms can overrule the provisions of Income Tax Act. 8. Before Ld. CIT(A), the assessee repeated the submissions made before Ld. AO and relied upon certain judgements. However, the Ld. CIT(A) concurred with the Ld. AO and confirmed the addition by observing as under: 3.1 During appellate proceedings the appellant gave his submissions. The submissions are merely reiteration of the submissions given before the A.O. I have carefully considered the facts of the case and the submissions of the appellant. The appellant also relied on the decision in the case of High Court of Gujarat, Ahmedabad, Tax Appeal No. 855 of 2013, Commissioner of Income Tax II Versus SAR Infracon Pvt. Ltd., Date of Order/Pronouncement - 3rd October 2013. The facts of the present case in appeal can be distinguished from the decision cited by the appellant. In the present case the appellant has not produced any evidence wherein it is stated that the interest earned on the grant/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as under: 2.1 At the outset, it is required to noted and it is not disputed by Shri Sudhir Mehta, learned advocate appearing on behalf of the revenue that the issue involved in the present Tax Appeal and the proposed substantial questions of law in the present Tax Appeal is squarely covered against the revenue in view of the decision of the Division Bench of this Court in the case of General Motors India P. Ltd. v. Dy. CIT [2013] 354 ITR 244/[2012] 210 Taxman 20 (Mag.)/25 taxmann.com 364 (Guj.) as well as another decision of this Court in the case of Sar lnfracon (P.) Ltd. (Supra). In the identical facts and circumstances of the case, the Division Bench of this Court in the case of Gujarat Power Corpn. Ltd. Vs. ITO [2013] 354 ITR 201/210 Taxman 366/25 taxmann.com 14 (Guj.) as well as in the case of Sar Infracon (P.) Ltd. (Supra) have held that the interest temporarily earned on the grant received from the Government and that too as per the instructions given by the State Government cannot be included in the income of the assessee. Under the circumstances, while passing the impugned order, the learned tribunal has followed the decision of the Division Bench of this Court in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest income was not taxable: 6.1 ... The Hon'ble Tribunal on considering the letter of the Central Government while sanctioning the grant in favour of the assessee, more particularly the condition that the interest earned on the central grant already released would form part of the central grant limit of Rs. 50 crores and considering the decision of the Hon'ble Gujrat High Court in the case of Gujrat Municipal Finance Board Vs. Dy. CIT reported at (1996) 221 ITR 317 as well as in the case of Gujrat Power Corporation Ltd. Vs. ITO reported at (2013) 354 ITR 201 (Guj), the Tribunal has allowed the appeal by deleting the addition of Rs. 1,25,44,938/- made by the AO. The Hon'ble Jurisdictional High Court affirmed the view taken by the Tribunal. 12. From a careful reading of all these judgements, it is quite clear that the only basis of non-taxation of interest income in the hands of assessee, was the term or condition of the scheme under which subsidy or grant was received. If the term or condition dictates that the interest income shall form part of the subsidy or if an inference can be culled out from the scheme of subsidy that the interest income shall be e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. M/s. Rungta Mines Ltd. ITA No. 1531/Kol/2017 order dated 05.10.2018 for assessment-year 2014-15, which is again based on ITA No. 1887/Kol/2016 for assessment-year 2011-12 in the case of very same assessee. The relevant paras relied upon by the Ld. AR are reproduced below: The issue of delay in the payment of service tax is directly covered by the judgment of Hon'ble Apex Court in the case of Lachmandas Mathura Vs. CIT reported in 254 ITR 799 in favour of assessee. The relevant extract of the judgment is reproduced below: The High Court has proceeded on the basis that the interest on arrears of sales tax is penal in nature and has rejected the contention of the assessee that it is compensatory in nature. In taking the said view the High Court has placed reliance on its Full Bench's decision in Saraya Sugar Mills (P.) Ltd. v. CIT [1979] 116 ITR 387 (All.) The learned counsel appearing for the appellant-assessee states that the said judgment of the Full Bench has been reversed by the larger Bench of the High Court in Triveni Engg. Works Ltd. v. CIT [1983] 144 ITR 732 (All.) (FB), wherein it has been held that interest on arrears of tax is compensatory in nature a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue is dismissed. Relying upon this decision, the Ld. AR argued that the interest on late payment of TDS is allowable as business-deduction as held by Hon'ble ITAT, Kolkata and therefore the lower authorities have wrongly disallowed the deduction claimed by the assessee. 18. The Ld. DR supported the orders of lower authorities and argued that the TDS once deducted, becomes money of the exchequer and by delayed payment of the same, the exchequer is deprived of getting its money in time. Hence the interest levied u/s. 201(1A) is certainly in the nature of fine or penalty and not deductible in computing taxable income. Therefore, the Ld. AO has rightly disallowed the deduction. 19. We have considered the rival submission of both sides. We observe that in M/s. Rungta Mines Ltd. (supra) cited by Ld. AR, the Hon'ble ITAT Kolkata has given preference to the decision of Hon'ble Apex Court in Lachmandas Mathura Vs. CIT 254 ITR 799 wherein the deduction of interest on late payment of sales-tax was allowed as business deduction, as compared to the decision of Hon'ble Apex Court in Bharat Commerce Industries Ltd. Vs. CIT (1998) 230 ITR 733 wherein the deduction of int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merce and Industries Ltd. v. CIT [1998] 230 ITR 733, that payments required to be made by way of income-tax under the Income-tax Act are not deductible as expenditure and the further amounts which a person may be required to pay by a reason of failure to comply with the provisions requiring the payments of the tax are also amounts which cannot be regarded as deductible expenditure under Section 37 of the Act. 10. In that case the question considered was as to whether interest paid on delayed payment of income-tax and surtax by way of instalments, on income voluntarily disclosed under the Voluntary Disclosure of Income and Wealth Act, 1976, is not in any way an expense incurred wholly or exclusively for the purpose of the assessee's business. The court held that (headnote) : When interest is paid for committing a default in respect of the statutory liability to pay advance tax, the amount paid and the expenditure incurred in that connection is not in any way connected with preserving 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
