The Tax Publishers2020 TaxPub(DT) 3521 (Ind-Trib)

INCOME TAX ACT, 1961

Section 37(1)

AO had disallowed expenditure by relying on the judgment of Supreme Court in the case of Bharat Commerce And Industries Ltd. v. CIT (1998) 230 1TR 733 (SC) : 1998 TaxPub(DT) 1231 (SC) and issue before Supreme Court was regarding interest paid for delayed payment for advance tax, however, the issue in present case was related to payment made by assessee on account of delay in supply of books, therefore, disallowing the entire amount by AO was not justified and on account of interest on entry tax and TDS, Division Bench of this Tribunal in case of Naarayani Sons Pvt. Ltd. ITA No. 1796-1798/Kol/2017) decided the issue in favour of assessee.

Business expenditure - Allowability - Interest on delayed payment of entry tax and on account of Charges on delayed supply of books -

Assessee was engaged in business of offset printing. The company was running a printing press with the help of various sophisticated and high-tech equipment and printing units. A search action was carried out under section 132 and case of the assessee was centralized and a consolidated assessment order under section 153A read with section 143(3) for assessment years 2011-12 to 2017-18 was passed thereby for the assessment year under appeal an addition was made by AO on account of interest on TDS, interest on entry Tax and payment of penalty on delay in supply of printing material. Held: AO had disallowed expenditure by relying on the judgment of Supreme Court in the case of Bharat Commerce And Industries Ltd. v. CIT (1998) 230 1TR 733 (SC) : 1998 TaxPub(DT) 1231 (SC). The issue before Supreme Court was regarding interest paid for delayed payment for advance tax. However, the issue in present case was related to payment made by assessee on account of delay in supply of books. Therefore, disallowing the entire amount by AO was not justified. Hence, AO was directed to delete the addition made on account of disallowance of expenditure related to delay in supply of the books. Regarding interest on entry tax and TDS Division Bench of this Tribunal in the case of M/s Naarayani Sons Pvt. Ltd. in ITA No. 1796-1798/Kol/2017) decided the issue in favour of assessee.

Followed:Bharat Commerce And Industries Ltd. v. CIT (1998) 230 1TR 733 (SC) : 1998 TaxPub(DT) 1231 (SC), Mahalakshmi Sugar Mills Company v. CIT (1980) 123 ITR 429 (SC) : 1980 TaxPub(DT) 1047 (SC), Assttt. CIT v. Naaraayani Sons Pvt. Ltd. [ITA No. 1796-1798/Kol/2017, vide Order dated 21-8-2018] : 2018 TaxPub(DT) 5756 (Kol-Trib), M/s Choudhary Hammer Works Ltd. v. ACIT [ITA No: 4332/Del/2011, C.O. No: 359/Del/11, [ITA No: 4332/Del/2011), dt. 23-12-2011].

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2017-18

IN THE ITAT, INDORE BENCH

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