2022 (8) TMI 1602

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....e preferred this appeal. 2. Brief facts of the case are that the assessee is a company engaged in the business of real estate and investment in various associated companies. They filed their return of income for the assessment year 2017-18 on 31/10/2017 declaring a loss of Rs. 6,59,366/- and claiming refund of Rs. 1,84,620/-. On 09/11/2017, there was a search and seizure operation under section 132 of the Income Tax Act, 1961 ("the Act"). Pursuant to the notice under section 153A of the Act, assessee filed the return of income on 11/07/2018 again declaring loss of Rs. 6,59,366/-. Assessment under section 143(3) read with section 153A of the Act was complete by order dated 28/12/2019 by making an addition of Rs. 25,05,255/- on account of ....

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.... Assessee is, therefore, aggrieved of such an action of the Ld. CIT(A) and filed this appeal before us stating that the expenditure is incurred wholly and exclusively for the purpose of business and therefore, allowable as business expenditure under section 37 of the Act. Learned AR further submitted that the interest paid for delay in making payment of TDS is not in the nature of penalty and does not tantamount to breach of law or an illegal act or prohibited act, and since the interest on TDS is compensatory in nature, but not penal, the same cannot be disallowable. Reliance is also placed on the decisions reported in Crustum Products P. Ltd., in ITA No. 946/Hyd/2019, Mercury Projects in ITA No. 440/Hyd/2018, Resolve Salvage & Fire India ....

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....thout the intervention of any order giving rise to the liability such enlargement, such additional amount will not be a penalty, but only compensatory in nature. In Oriental Insurance Company Ltd., (supra), the Hon'ble Karnataka High Court clearly held that section 201(1A) of the Act is a provision to levy interest for delayed remittance of TDS and it is the practice of the Revenue that for delayed payment of tax for any reasonable cause, the assessee is liable to pay interest at stipulated rate and also paying interest on the delayed payments to the assessee, and, therefore, interest paid for delayed deposit of TDS cannot be equated to penalty or breach of law. 9. In Crustum Products P. Ltd., (supra), a Co-ordinate Bench of this Tri....