ITAT Kolkata: Appeal Partially Allowed on Foreign Travel Expenditure & Late TDS Interest

The ITAT Kolkata partially allowed the appeal, upholding the disallowance of foreign travel expenditure due to lack of evidence for business exigency. However, the deduction for interest on late TDS deposit was allowed, following Supreme Court decisions supporting such deductions. The appellant's appeal was partially successful, with the judgment pronounced on 06-04-2018.

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Issues:
1. Disallowance of foreign travel expenditure
2. Disallowance of interest on late deposit of TDS

Issue 1: Disallowance of Foreign Travel Expenditure

The appellant's appeal was against the Commissioner of Income Tax (Appeals) order for the A.Y 2011-12. The appellant decided not to press ground no. 3. Ground no. 1 concerned the disallowance of &8377; 4,45,975/- for foreign travel expenditure. The Assessing Officer disallowed this amount due to lack of evidence regarding the business exigency for the travel. The CIT-A upheld this disallowance as the appellant failed to provide any supporting evidence. The appellant claimed the visit was to negotiate with suppliers in South Africa for new machinery but failed to provide substantial evidence. Both the AO and CIT-A found the expenditure not related to business. The ITAT Kolkata upheld the CIT-A's decision, dismissing ground no. 1.

Issue 2: Disallowance of Interest on Late Deposit of TDS

Ground no. 2 was related to the disallowance of &8377; 1230/- by the AO for interest paid on late TDS deposit. The AO and CIT-A disallowed this deduction. The appellant argued citing a Co-ordinate bench order that interest on delayed TDS deposit is an allowable expense under section 37(1) of the Act. The ITAT Kolkata found in favor of the appellant, citing Supreme Court decisions that support the deductibility of interest on late tax payments. The Tribunal concluded that the interest expenses on delayed TDS deposit are allowable deductions under section 37(1) of the Act. The CIT-A's decision was set aside, directing the AO to allow the deduction. Consequently, ground no. 2 raised by the appellant was allowed.

In conclusion, the ITAT Kolkata partially allowed the appeal of the assessee, upholding the disallowance of foreign travel expenditure but allowing the deduction for interest on late TDS deposit. The judgment was pronounced on 06-04-2018.

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