TaxTMI 
TaxTMI 
2021 (8) TMI 940
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....hile the same was duly submitted to him on the date of hearing itself after the close of the hearing along with the letter dated 29th November, 2016. 3. That the learned Commissioner of Income Tax (Appeals) has erred in confirming the disallowance of Rs. 1,28,233/- made by the Assessing Officer out of interest payment. 4. That the learned Commissioner of Income Tax (Appeals) has erred in not adjudicating upon Ground No.7 and 8 of the appeal in respect of charge of interest u/s 234B and 234C of the Income Tax Act, 1961, as the appellant denies its liability to charge of such interests holding the same to be only consequential in nature." 3. Brief facts of the case shows that the assessee is a company engaged in the business of manufacturing and sale of machinery. It filed its return of income on 28.09.2012 at Rs. 64,79,640/-. 4. During the course of assessment proceedings the ld AO disallowed interest paid by the assessee of Rs. 1,48,633/- on late deposit of taxes at the source, holding that it is not an allowable expenditure. He further disallowed a sum of Rs. 4,74,192/- being corporate social responsibility expenditure incurred by the assessee. He held that....
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.... expenditure is otherwise allowable to the assessee u/s 37(1) of the Act and because explanation added by Financial Act 2018 applicable from AY 2015-16 the disallowances is made. Therefore, it is imperative that even before the assessment year 2015-16 to get the deduction u/s 37(1) of the act of the corporate social responsibility expenditure assessee must satisfy the conditions envisaged u/s 37(1) of the Act. In view of this, we do not find any infirmity in the order of the ld CIT(A) in confirming the disallowances of Rs. 4,74,192/-. Ground No. 2 of the appeal is dismissed. 11. Ground No. 3 is in respect to disallowances of Rs. 1,28,233/- on account of interest paid for late deposit of TDS. This issue clearly covered against the assessee by the decision of the Hon'ble Madras High Court in case of Commissioner Of Income-Tax vs Chennai Properties dated 20 April, 1998 1999 239 ITR 435 Mad where in it has been held that :- 2. The assessee had, in the course of assessment proceedings for the assessment year 1981-82, claimed deduction of Rs. 10,542 which amount had been paid by it to the Income-tax Department as interest under Section 201(1A) of the Income-tax Act, 1961. The....
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.... tax arises by reason of the provisions of the Act. Under Section 201, the consequence of failure to comply with the same renders that person liable to be deemed as an assessee in default with all the consequences attached thereto. The liability to pay interest on the amount not deducted or deducted but not paid is directly related to the failure to deduct or remit the amount. The amount required to be deducted is the amount payable as income-tax. The interest paid for the period of delay takes colour from the nature of the principal amount required to be paid, but not paid within time. The principal amount here would be the income-tax and the interest payable for delayed payment is the consequence of failure to pay the tax and in the circumstances, in the nature of a penalty though not described as such in Sub-section (1A) of Section 201 of the Act. The fact that the income-tax required to be remitted was not income-tax payable by the assessee, but is ultimately for the benefit of and to the credit of the recipient of the income on whose behalf that tax is payable does not in any manner alter the character of the payment, namely, its character as income tax. 9. Learned co....
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....Commerce and Industries , is very much a part of the assessee's business expense and any interest on arrears of cess would, therefore, take colour from the cess which is payable, that it was an indirect tax which had to be paid in the course of carrying on business. 12. Learned counsel for the assessee placed reliance on the judgment of the apex court in the case of Mahalakshmi Sugar Mills Co. [1980] 123 ITR 429. As pointed out by the apex court in its later judgment in the case of Bharat Commerce and Industries [1998] 230 ITR 733, the cess which was considered in the case of Mahalakshmi Sugar Mills Co. [1980] 123 ITR 429 was an indirect tax payable in the course of the business of the assessee and the interest paid on the arrears of the cess took colour from the cess which was paid. 13. Learned counsel for the Revenue also referred to the decisions of the Bombay High Court in the case of Ferro Alloys Corporation Ltd. v. CIT [1992] 196 ITR 406 and the decision of the Calcutta High Court in the case of Martin and Harris Pvt. Ltd. v. CIT [1994] 73 Taxman 555. It was held in those cases that the interest paid under Section 201(1A) of the Act was not deductible as....