TaxTMI 
TaxTMI 
2022 (7) TMI 380
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....ther submitted that the assessee has moved an application for condonation of delay supported by an affidavit dated 21.06.2021 deposed by Ms. Uma Malviya, then Finance-in-charge and another affidavit dated 17.03.2022 deposed by Mr. Salabh Siyote, present Finance-in-charge. In both of these affidavits, the deponents have solemnly affirmed that one Mr. Basant Joshi was the Finance-in-charge of the assessee-society in March, 2016 and he received the order of Ld. CIT(A) against which the present appeal was to be filed. However, Mr. Basant Joshi kept the order in file and did not take any action. Thereafter, Mr. Basant Joshi retired from assessee on 31.12.2016 too. Hence the matter could not reach to the knowledge of management. Later in the last week of February, 2020 when the order was searched for making reply to the Govt., it was traced in the file of Mr. Basant Joshi. Promptly thereafter, the appeal was filed on 02.03.2020. Both of the deponents have also affirmed that they are not able to contact Mr. Basant Joshi despite several efforts. The Ld. AR submitted that the delay has occurred due to this reason alone and there was no malafide intention or deliberate attempt on the part of....
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....n confirming the disallowance of interest on TDS amounting to Rs. 2,13,093/- without considering the facts and circumstances of the case and submissions made in the matter. 5. We take up Ground No. 1. This Ground is general in nature and the assessee has not pressed. Hence this Ground does not require any adjudication. 6. In next Ground No. 2, the assessee has challenged the addition made by Ld. AO on account of interest income of Rs. 53,03,707/- earned on grant and subsidy received from Govt. 7. The assessee is a co-operative society registered under the provisions of M.P. Co-operative Society Act, 1960, engaged in the production and distribution of milk and milk-products for the benefit of public. The assessee receives grants and subsidies from Govt. which are held in bank deposits and interest income is earned. During the previous year relevant to the assessment-year under consideration, the assessee earned interest income of Rs. 53,03,707/-. The Ld. AO observed that the assessee has credited this interest income of Rs. 53,03,707/- to "Grand and Subsidy A/c" and not to P&L A/c. The Ld. AO asked the assessee to explain as to why the said interest income of Rs. 53,03,707/....
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....Guj) The Ld. AR argued that in all these cases, the Hon'ble Courts have held that the interest income earned on grant and subsidy received from Govt. is not taxable as income of assessee. The Ld. AR submitted that the present issue is well-covered by these judgements which are in favour of the assessee and therefore the addition made by Ld. AO is wrong and deserves to be deleted. 10. Per contra, the Ld. DR supported the orders of lower authorities and argued that though the assessee received subsidy and grant from Govt. but the moneys received therein were invested by the assessee and it is the assessee who earned interest income thereon and such interest belonged to the assessee and nobody else. According to the Ld. DR, every income earned by a person is taxable unless specifically exempted in the provisions of Income-tax Act. The Ld. DR, therefore, submitted that the assessee has not offered for taxation the interest income earned by it and therefore the Ld. AO has rightly made the addition, which needs to be upheld. 11. We have considered the rival submissions of both sides and perused the material held on record. Before proceeding further, we would like to analyse ....
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....present case is to be included as a part of the grant received from the Central Government." (iii) In CIT vs. Karnataka Urban Infrastructure (2006) 284 ITR 582 (Kar), the Hon'ble Karnataka High Court has noted the facts as under and thereby concluded that the interest income is not taxable: "2. Few facts leading to this appeal, are as under: ....... The tribunal looked into the guidelines which provided the background of the scheme. The Tribunal also looked into the terms of the scheme. Therefore, the Tribunal proceeded to hold that the assessee is nothing but trustee of funds entrusted to carry out the objects of the Government while implementing the scheme. The assessee in fact acted as an agent of the Governments of both the Central and the State for implementing the scheme of the Government, this being the factual position, the lower authorities committed serious error in treating the interest as income of the assessee and bringing the same to tax. Therefore, the Tribunal set aside the orders of the AO and the first appellate authority and the claim of the assessee was allowed. As noticed by us earlier, aggrieved by the said order the Revenue has ....
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....e 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. 13. Now we take up next Ground No. 3. During hearing, the Ld. AR has not pressed this ground and accepted as withdrawn. Therefore this Ground does not require any adjudication. 14. Now we take up the last Ground No. 4. The issue involved in this ground is the disallowance of interest expenditure on late payment of TDS amounting to Rs. 2,13,093/-. 15. During assessment proceeding, the Ld. AO observed that the assessee has made delay in payment of TDS and therefore paid interest of Rs. 2,13,093/- u/s. 201(1A) of the Act to the Income-tax Department. The assessee has debited this interest expenditure to P&L A/c and claimed as business-deduction u/s. 37(1) of the Act. The Ld. AO, however, observed that the interest has been paid on account of delay in payment of TDS deducted and therefore it is in the nature of fine and therefore not allowable as deduction. On this basis,....
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....he party on whose behalf the payment was deducted & paid to the Government Exchequer. Thus the TDS amount does not represent the tax of the assessee but it is the tax of the party which has been paid by the assessee. Thus any delay in the payment of TDS by the assessee cannot be linked to the income tax of the assessee and consequently the principles laid down by the Hon'ble Apex Court in the case of Bharat Commerce Industries Ltd. Vs. CIT reported in (1998) 230 ITR 733 cannot be applied to the case on hand. Thus, in our considered view, the principle laid down by the Hon'ble Supreme Court in the case of Bharat Commerce Industries Ltd. (supra) is not applicable in the instant facts of the case. Thus, we hold that the Assessing Officer in the instant case has wrongly applied the principle laid down by the Hon'ble Supreme Court in the case of Bharat Commerce Industries Ltd.(supra). We also find that the Hon'ble Supreme Court in the case of Lachmandas Mathura (Supra) has allowed the deduction on account of interest on late deposit of sales tax u/s. 37(1) of the Act. In view of the above, we conclude that the interest expenses claimed by the assessee on account....
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....99) 239 ITR 435 (Madras High Court): The Hon'ble High Court held thus: "8. The liability for deduction of 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....
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....aid on arrears of sugarcane cess. The payment of sugarcane cess, as it was observed by the court in the case of Bharat 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. 14. As already noticed the payment of interest takes colour from the nature of the levy with reference to which such interest is paid and the tax required to be but not paid in time, which rendered the assessee liable for payment of interest was in the nature of a direct tax and similar to the income-tax payable under the Income-tax Act. The interest paid under Section 201(1A) of the Act, therefore, would not assume the character of business expenditure and cannot be regarded as a compensatory payment as contended by learned counsel for the assessee." (ii) Ferro Alloys Corporation Ltd. Vs. CIT (1992) 196 ITR 406 (Bombay High Court): The Hon'ble Court held thus: "3. The point stands concluded against the assessee by the consistent view of this court right from A....