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TMI Blog2023 (3) TMI 1153X X X X Extracts X X X X X X X X Extracts X X X X ..... wing grounds of appeal:- " 1. The order of the Learned Assessing Officer (Ld. AO) passed u/s 143(3) read with section 144C(13) of the Income-tax Act, 1961 is bad in law to the extent of disallowance of Rs. 94,662 as it is in defiance of directions given by Hon'ble Dispute Resolution Panel vide its directions dated 20.09.2019 2. Without prejudice to ground 1 above, the Ld. AO grossly erred, in fact and in law, in making disallowance of Rs. 94,662 as the basis on which he has made such a disallowance is different from the basis on which the addition was made in the draft assessment order issued in pursuance of section 143(3) read with section 144C(1) of the Income Tax Act, 1961. 3. Without prejudice to ground 1 & 2 above, the Ld. AO g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t order on 18.12.2018 under section 143(3) r.w. section 92CA of the Act computing total income of Rs. 5,43,02,440/- including therein transfer pricing adjustment of Rs. 4,86,90,234/-; addition of Rs. 13,71,42,440/- under section 56(2)(viib) of the Act being share premium received by the assessee from domestic entities; disallowance of Rs. 12,83,016/- under section 37(1) of the Act being payment to PWC on behalf of IDFC Alternative Ltd. and disallowance of Rs. 1,28,605/- under section 43B being late payment towards statutory dues. 4. Aggrieved, the assessee preferred an application under section 144C(2) of the Act before the Dispute Resolution Panel ("DRP") objecting to the aforesaid additions/disallowances made by the Ld. Transfer Pricing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was found to be not satisfactory by the Ld. AO. According to him, the entire amount pertained to different AY(s) other than AY 2015-16 and thus cannot be allowed. Liability for interest being in the nature of penalty, the Ld. AO made the impugned disallowance under section 37(1) of the Act. 6. The Ld. AR submitted that the liability for interest incurred by the assessee is compensatory in nature and thus is admissible as business expenditure. He relied on the decision of the Hon'ble Supreme Court in Lachmandas Mathuradas vs. CIT 254 ITR 799 (SC), decision of Hon'ble Madras High Court in Chennai Properties and Investment Ltd. vs. CIT 239 ITR 435 (Mad) and the decisions of Mumbai, Calcutta and Jaipur Benches of the Tribunal. 7. The Ld. DR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest paid on late payment of TDS of Rs 1,87,125/- as deduction u/s 37(1) of the Act on the plea that the delay in remittance of TDS had suffered interest which is compensatory in nature. The ld AO however held to be penal in nature and by applying the Explanation to section 37(1) of the Act, disallowed the said sum of Rs 1,87,125/- in the assessment, which was also confirmed by the ld CITA. We find that the genuinity of the expenditure incurred is not in dispute. Admittedly the TDS was duly deducted and remitted with delay by the assessee and for the said delay , the assessee had suffered interest. The expenditure incurred by the assessee for the purpose of business is not doubted by the revenue. The only dispute involved is whether th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the grounds taken by the assessee and decide them in its favour. Consequently, the impugned disallowance is deleted. 10. Ground No. 5 relates to disallowance of Rs. 26,465/- paid towards arrears for contribution to provident fund. The Ld. AO made the impugned disallowance for the sole reason that challans evidencing payment were not submitted. The Ld. AR submitted that the assessee paid the arrears of provident fund on 26.12.2014 by issuing a demand draft in favour of EPF. The DRP had also accepted that the impugned payment is reflected in bank account statement. The Ld. DR had nothing to say. 11. After hearing the Ld. Representative of the parties and finding that the assessee has established that the payment was made for PF arrears a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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