Criteria for interest on delayed deposits on tax deducted at source

IN THE INCOME TAX APPELLATE TRIBUNAL
 DELHI BENCH ‘B’: NEW DELHI
 (Through Video Conferencing)

 BEFORE,
 SHRI R.K.PANDA, ACCOUNTANT MEMBER
 AND
 SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER

 I.T.A No.7548/Del/2017
 (ASSESSMENT YEAR-2014-15)

Iris Associates Pvt. Ltd.
4-LSC Pocket, C, 6 & 7
Vasant Kunj,
New Delhi-110 070
PAN–AAACI 7437G
(Appellant) 

Vs.

Add. CIT,
Special Range-4,
New Delhi.
(Respondent)

Appellant By Sh. P.C. Yadav, Adv.
Respondent by Ms. Nidhi Srivastava, CIT-DR

Date of Hearing 25.03.2021
Date of Pronouncement 21.06.2021

ORDER

 PER SUDHANSHU SRIVASTAVA, JM:

 This appeal is preferred by the assessee against order dated 12.09.2017 passed by the Learned Commissioner of Income Tax (Appeals)-35, New Delhi {CIT(A)} for Assessment Year: 2014-15.

2.0 The brief facts of the case are that during the year under consideration, the assessee company was carrying on the business of interior contractors. The case was selected for scrutiny and during the course of assessment proceeding, it was noticed that the assessee had debited an amount of Rs.1,78,707/- on account of interest on delayed deposits on tax deducted at source (TDS). The assessee was asked to substantiate its claim of allowability of this amount. It was the assessee submission before the Assessing Officer that the interest had been paid in-compliance with the provisions of Income Tax Act, 1961 (hereinafter called ‘the Act) and that such interest was compensatory in nature and was not penal in nature and was, therefore, an allowable deduction. However, the Assessing Officer did not accept the contention of the assessee and added the amount of Rs.1,78,707/- to the income of the assessee, thereby completing the assessment at an income of Rs.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 Rs.1,78,707/- being interest paid on delayed deposit of TDS. 3. That the Appellant may add, alter or withdraw any of the grounds at the time of the hearing.” 3.0 The Ld. Authorized Representative (AR) submitted that the issue was covered by order of ITAT in the case of DCIT vs. Narayani Ispat Pvt. Ltd. reported in [2018] ITR (Tribunal) 371 (Kolkata). The Ld. Authorized Representative drew our attention to the relevant paragraphs of the order of the ITAT and submitted that, in view of the order of the Co-ordinate Bench as cited above, there was no doubt that the interest expenditure on delayed payment of Income Tax was also an allowable deduction.

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