GMR Hyderabad International Airport Limited, Bangalore V. Deputy Commissioner of Income Tax, Bangalore

ITA 2189/BANG/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8173 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 13-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SUNIL JAIN
• Keywords: Business income; Business expenditure; Principle of natural justice; Revised return; Revenue expenditure; Capital expenditure; Set aside
• Section: 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI N.V VASUDEVAN, VICE PRESIDNET AND SHRI B.R BASKARAN, ACCOUNTANT MEMBER ITA NO.2189/BANG/2016 ASSESSMENT YEAR : 2009-10 GMR HYDERABAD INTERNATIONAL AIRPORT LTD., NO.25/1, SKIP HOUSE, MUSEUM ROAD, BANGALORE-560 025. PAN AABH 3448 M VS. THE COMMISSIONER OF INCOME-TAX, CIRCLE-11(3) (OLD RANGE) CENTRAL CIRCLE-2(2), BANGALORE APPELLANT RESPONDENT APPELLANT BY : SHRI SUNIL JAIN, C.A RESPONDENT BY : SHRI P.V PRADEEP KUMAR, CIT DATE OF HEARING : 06.06.2019 DATE OF PRONOUNCEMENT : .07.2019 O R D E R PER B.R BASKARAN, ACCOUNTANT MEMBER THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER 31/10/2016 PASSED BY LD CIT(A)-3, BENGALURU AND IT RELATES TO THE ASSESSMENT YEAR 2009-10. 2. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF OPERATING, MAINTAINING, DEVELOPING, DESIGNING, CONS TRUCTING, FINANCING AND MANAGING THE AIRPORT AND DEVELOPMENT OF RELATED INFRASTRUCTURE. THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION ITA NO.2189/BANG/2016 PAGE 2 OF 12 WAS COMPLETED BY THE AO BY MAKING VARIOUS ADDITIONS . THE ASSESSEE GOT PARTIAL RELIEF BEFORE LD CIT(A) AND H ENCE THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. 3. THE FIRST ISSUE RELATES TO DISALLOWANCE OF CLAIM OF EXPENDITURE ON REPAIRS AND MAINTENANCE OF BUILDING, PLANT AND MACHINERY. THE ASSESSEE HAD CLAIMED SUM OF RS.29.25 CRORE UNDER TH E HEAD REPAIRS AND MAINTENANCE. THE AO NOTICED THAT THE ABOVE SAID EXPENDITURE INCLUDED REPAIRS AND MAINTENANCE OF OFF ICE BUILDING AND HOTEL AMOUNTING TO RS.357.62 LAKHS. THE AO NOT ICED THAT THE ASSESSEE HAD COMMENCED OPERATIONS RELATING TO OPERA TING AND MAINTAINING AIRPORT OF HYDERABAD WITH EFFECT FROM 2 3/3/2008 ONLY. ACCORDINGLY, HE TOOK THE VIEW THAT THE EXPENDITURE INCURRED ON OFFICE BUILDING AND HOTEL IS CAPITAL IN NATURE, SIN CE THE SAME WOULD NOT QUALIFY AS CURRENT REPAIRS WITHIN THE MEANING O F SEC. 30/31 OF THE INCOME-TAX ACT. ACCORDINGLY HE DISALLOWED RS.3 57.62 LAKHS REFERRED ABOVE. THE LD CIT(A) TOOK THE VIEW THAT T HE ASSESSEE IS REQUIRED TO MAINTAIN THE PROPERTIES AND ACCORDINGLY HELD THAT 70% OF THE AMOUNT MAY BE CONSIDERED AS CAPITAL IN NATUR E AND REMAINING AMOUNT MAY BE CONSIDERED AS REVENUE IN NA TURE. ACCORDINGLY HE CONFIRMED THE DISALLOWANCE TO THE EX TENT OF RS.2.50 CRORES. 4. WE HEARD THE PARTIES AND PERUSED THE RECORD. TH E ASSESSEE PLACED RELIANCE ON VARIOUS CASE LAWS TO SUBMIT THAT THE EXPENDITURE INCURRED ON REPAIRS AND MAINTENANCE OF BUILDING & P LANT AND MACHINERY IS REVENUE IN NATURE. THE LD AR SUBMITTE D THAT THE ASSESSEE HAS FURNISHED DETAILS OF REPAIRS AND MAINT ENANCE BEFORE ITA NO.2189/BANG/2016 PAGE 3 OF 12 THE AO, BUT THE AO HAS CONFIRMED THE DISALLOWANCE W ITHOUT EXAMINING THE SAME. 5. THE LD DR SUBMITTED THAT THE ASSESSEE HAS FURNIS HED SIMPLY THE DETAILS OF EXPENDITURE WITHOUT SPECIFYING THE N ATURE OF WORK CARRIED OUT BY THE ASSESSEE. 6. HAVING HEARD THE RIVAL CONTENTIONS, WE ARE OF TH E VIEW THAT THIS ISSUE REQUIRES FRESH EXAMINATION AT THE END OF THE AO, SINCE THE NATURE OF WORK CARRIED ON BY THE ASSESSEE WOULD DET ERMINE THE CHARACTER OF THE EXPENDITURE. IF THE EXPENDITURE H AS RESULTED IN CREATIONS OF NEW ASSET, UNDISPUTEDLY THE SAME SHALL BE TREATED AS CAPITAL EXPENDITURE. ON THE CONTRARY, IF THE EXPEN DITURE HAS BEEN INCURRED TO MAINTAIN/REPLACE AN EXISTING ASSET, THE N THE SAME MAY BE TREATED AS REVENUE EXPENDITURE. WE NOTICE THAT T HE ASSESSEE HAS FURNISHED THE DETAILS OF EXPENDITURE, BUT DID NOT F URNISH THE DETAILS OF NATURE OF EXPENDITURE, WHICH SHALL DETERMINE THE CHARACTER OF EXPENDITURE. ACCORDINGLY, AS STATED EARLIER, THIS ISSUE REQUIRES TO BE EXAMINED AT THE END OF AO. ACCORDINGLY, WE SET ASI DE THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE AND RESTORE THE S AME TO THE FILE OF THE AO. SINCE THE REVENUE HAS NOT CHALLENGED THE D ECISION RENDERED BY THE LD CIT(A), THE RELIEF GRANTED BY TH E FIRST APPELLATE AUTHORITY SHALL REMAIN INTACT. 7. THE NEXT ISSUE RELATES TO REJECTION OF CLAIM OF THE ASSESSEE MADE BEFORE LD CIT(A) FOR SETTING OF LOSS SUFFERED IN PASSENGER SERVICE FEE/SERVICE COMPONENT AGAINST THE BUSINESS INCOME. ITA NO.2189/BANG/2016 PAGE 4 OF 12 8. THE FACTS RELATING TO THE ABOVE SAID ISSUE IS DI SCUSSED IN BRIEF:- THE ASSESSEE HAS COLLECTED PASSENGER SERVICE FEE ( SECURITY COMPONENT) FROM THE AIRLINES ON BEHALF OF GOVT. OF INDIA. ACCORDING TO THE ASSESSEE, THE AMOUNT SO COLLECTED IS HELD BY THE ASSESSEE IN FIDUCIARY CAPACITY AND IS USED BY IT FOR PRESCRIBED PURPOSES LIKE PAYMENT OF SALARY TO SECURITY PERSONNEL ETC. AFTER INCURRING PRESCRIBED EXPENDITURE OUT OF THE FUNDS SO COLLECTE D, THE ASSESSEE SUFFERED A LOSS OF 77.18 LAKHS DURING THE YEAR UNDE R CONSIDERATION. THE ASSESSEE DID NOT CLAIM THE SAME AS DEDUCTION IN THE RETURN OF INCOME FILED BY IT AND HENCE THERE WAS NO OCCASION FOR THE AO TO EXAMINE THIS ASPECT. HOWEVER, BEFORE LD CIT(A), THE ASSESSEE CLAIMED THAT THE ABOVE SAID LOSS SHOULD BE ALLOWED AS DEDUCTION WHILE COMPUTING BUSINESS INCOME OF THE ASSESSEE. T HE LD CIT(A), HOWEVER, DISMISSED THE SAID CLAIM OF THE ASSESSEE B Y HOLDING THAT THE ASSESSEE COULD MAKE ADDITIONAL CLAIM ONLY BY FI LING REVISED RETURN OF INCOME AS HELD BY HONBLE SUPREME COURT I N THE CASE OF GOETZE (INDIA LTD.) VS. CIT (2006)(284 ITR 323). 9. WE HAVE HEARD THE PARTIES ON THIS ISSUE AND PERU SED THE RECORD. WE NOTICED THAT THE CLAIM OF THE ASSESSEE HAS NOT BEEN EXAMINED BY THE AO, SINCE THE SAID CLAIM WAS MADE F OR THE FIRST TIME BEFORE THE LD CIT(A) BY THE ASSESSEE. THOUGH THE DECISION RENDERED BY HONBLE SUPREME COURT IN THE CASE OF GO ETZE INDIA LTD., (SUPRA) STATED THAT THE ADDITIONAL CLAIM CAN BE MADE BY FILING A REVISED RETURN ONLY, YET THE HONBLE SUPREME COUR T HAS MADE IT CLEAR THAT THE SAME WILL NOT IMPINGE UPON THE POWER OF THE TRIBUNAL TO ADMIT ADDITIONAL CLAIMS. ACCORDINGLY, WE ADMIT THE CLAIM OF THE ITA NO.2189/BANG/2016 PAGE 5 OF 12 ASSESSEE. BEFORE US, THE LD AR FURNISHED A COPY OF ORDER PASSED BY MUMBAI BENCH OF TRIBUNAL IN THE CASE OF ADDL. CIT(A ) VS. MUMBAI INTERNATIONAL AIRPORT LTD., IN ITA NO.3232/MUMB/201 2, WHEREIN IT WAS HELD THAT THE SURPLUS ARISING IN PASSENGER SERV ICE FEE IS NOT LIABLE TO TAXED. THE LD AR SUBMITTED THAT, BY APPL YING THE SAME ANALOGY, THE ASSESSEE MAY NOT BE ENTITLED FOR DEDUC TION OF LOSS SUFFERED UNDER THIS HEAD, BUT SOUGHT AN OPPORTUNITY TO EXPLAIN ITS STAND BEFORE AO. SINCE THIS ISSUE HAS NOT BEEN EXA MINED BY THE AO, WE DEEM IT PROPER TO RESTORE IT TO THE FILE OF THE AO FOR EXAMINING IT AFRESH. ACCORDINGLY, WE SET ASIDE THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF THE AO. 10. THE NEXT ISSUE RELATES TO DISALLOWANCE OF COMMU NITY DEVELOPMENT EXPENSES OF RS.326.94 LAKHS. 11. THE AO, ON NOTICING THAT THE ASSESSEE HAD CLAIM ED RS.326.94 LAKHS TOWARDS COMMUNITY DEVELOPMENT EXPENSES, ASKED THE ASSESSEE TO EXPLAIN THE NATURE OF EXPENDITURE. IT WAS SUBMITTED THAT THE ASSESSEE HAS INCURRED A SUM OF RS.221.34 L AKHS THROUGH M/S GMR VARALASKHMI FOUNDATION AND THE REMAINING AM OUNT OF RS.101.31 LAKHS WAS INCURRED DIRECTLY. IT WAS SUBM ITTED THAT THESE EXPENSES WERE INCURRED ON COMMUNITY DEVELOPMENT OF NEARBY VILLAGES AROUND AIRPORT AREA, WHICH NEEDS TO BE DEV ELOPED FOR THE PURPOSE OF DEVELOPMENT OF AIRPORT BUSINESS. ACCORD INGLY IT WAS CLAIMED THAT THE ABOVE SAID EXPENDITURE WAS ALLOWAB LE U/S 37(1) OF THE ACT. ITA NO.2189/BANG/2016 PAGE 6 OF 12 12. THE AO NOTICED THAT M/S GMR VARALASKHMI FOUNDAT ION IS A CHARITABLE ORGANIZATION REGISTERED UNDER THE INCOME -TAX ACT. THE AO TOOK THE VIEW THAT AN AMOUNT OF RS.221.34 LAKHS PAID TO GMR VARALASKHMI FOUNDATION IS IN THE NATURE OF DONATION AND ACCORDINGLY DISALLOWED THE SAME. THE AO ALSO DISAL LOWED THE REMAINING AMOUNT OF RS.105.60 LAKHS. CONSIDERING T HE SAME AS CAPITAL IN NATURE AND FURTHER HOLDING THAT THE SAME WAS NOT INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. THE LD CIT(A) CONFIRMED THE DISALLOWANCE BY HOLDING THAT A) THE AMOUNT SPENT BY THE ASSESSEE IS IN THE NATURE O F CORPORATE SOCIAL RESPONSIBILITY ACTIVITIES AND HENC E THE SAME IS IN THE NATURE OF APPLICATION OF INCOME. B) THE ASSESSEE HAS NOT FURNISHED ANY COGENT EVIDENCE TO SUBSTANTIATE ITS CLAIM THAT THE EXPENDITURE SO INCURRED HAS FACILITATED ITS BUSINESS OPERATIONS. C) THE AMOUNT OF RS.221.34 LAKHS PAID TO GMR VARALASKHMI FOUNDATION IS IN THE NATURE OF DONATI ON AND FURTHER NO DETAILS HAVE BEEN FURNISHED WITH REGARD TO ACTUAL UTILIZATION OF FUNDS BY THE ABOVE SAID FOUNDATION. D) THE NATURE OF UTILIZATION OF AMOUNT SPENT DIRECTLY BY THE ASSESSEE IS ALSO NOT CLEAR FROM THE DETAILS FURNISHED. 13. THE LD AR SUBMITTED THAT THE ASSESSEE HAS INCUR RED ALL THESE EXPENDITURE FOR DEVELOPMENT OF VILLAGES AROUND THE AIRPORT. THE DETAILS OF EXPENDITURE ARE FURNISHED AT PAGES 448 A ND 449 OF THE PAPER BOOK. THE LD AR FURTHER SUBMITTED THAT THE A SSESSEE HAD ITA NO.2189/BANG/2016 PAGE 7 OF 12 ENGAGED THE CHARITABLE ORGANIZATION NAMED GMR VARAL ASKHMI FOUNDATION TO CARRY OUT THE ACTIVITIES THROUGH IT. HENCE THE PAYMENT MADE TO THE ABOVE SAID CHARITABLE ORGANIZAT ION IS IN THE NATURE OF REIMBURSEMENT AND THE SAME CANNOT BE CONS IDERED AS DONATION PAID BY THE ASSESSEE TO THE ABOVE SAID ORG ANIZATION. THE LD AR SUBMITTED THAT THE CIT(A) HAS PLACED RELIANCE ON THE AMENDMENT BROUGHT OUT BY FINANCE ACT (NO.2 ACT 1998 ) W.E.F 1/4/2015 BY INSERTING EXPLANATION 2 TO SEC. 37, WHE REIN IT HAS BEEN PROVIDED THAT THE EXPENDITURE INCURRED BY THE ASSESSEE ON THE ACTIVITIES RELATING TO CORPORATE SOCIAL RESPONSIBIL ITY SHALL NOT BE DEEMED TO BE EXPENDITURE INCURRED BY THE ASSESSEE F OR THE PURPOSE OF BUSINESS. HE SUBMITTED THAT THE ABOVE SAID AMEN DMENT SHALL BE APPLICABLE FROM ASST. YEAR 2015-16 ONLY. HE SUBMIT TED THAT THE JURISDICTIONAL HIGH COURT HAS HELD IN THE CASE OF C IT VS. INFOSYS TECHNOLOGIES LTD., (2014) 43 TAXMANN.COM 251 HAS HE LD THAT THE EXPENDITURE INCURRED BY ASSESSEE ON INSTALLATION OF TRAFFIC SIGNALS AT VARIOUS PARTS OF THE CITY IN ORDER TO SECURE FR EE MOVEMENT OF ITS EMPLOYEES SO THAT THEY REACH OFFICE IN TIME, SHALL BE ALLOWABLE AS BUSINESS EXPENDITURE, EVEN IF THE AMOUNT SO SPENT F ORMS PART OF ITS CORPORATE RESPONSIBILITY. HE FURTHER SUBMITTED THA T THE HONBLE KARNATAKA HIGH COURT HAS HELD IN THE CASE OF CIT VS . KARNATAKA FINANCIAL CORPORATION (2010) 326 ITR 355 THAT THE A MOUNT SPENT BY THE ASSESSEE TOWARDS MISC. EXPENSES ON DEVELOPME NT OF INFRASTRUCTURAL FACILITIES OF VILLAGES AND CONSTRUC TION OF A NEW MARKET TO ORGANIZE SOCIAL GROUP IS ALLOWABLE AS REV ENUE EXPENDITURE, AS THE ASSESSEE COULD LENT THE LOAN ON LY WHEN SUCH ESTABLISHMENTS WERE THERE IN THE VILLAGES. ITA NO.2189/BANG/2016 PAGE 8 OF 12 14. WE HEARD THE LD DR AND PERUSED THE RECORD. FRO M THE DETAILS FURNISHED BY THE ASSESSEE AT PAGE 448 AND 449 OF TH E PAPER BOOK, WE NOTICED THAT THE ASSESSEE HAS INCURRED VARIOUS E XPENSES FOR POLICE STATION LOCATED IN NEAR THE AIRPORT, DEVELOP MENT OF ELECTRICAL LINES, INSTALLATION OF ROAD TRAFFIC SIGNALS, CONSTR UCTION OF PEDESTAL AND COLUMN FOR STATUE, CONSTRUCTION OF URINALS AT B US STAND ETC. THESE EXPENSES HAVE BEEN INCURRED DIRECTLY. THE NAT URE OF EXPENDITURE INCURRED ON STATUE IS NOT FURNISHED. FU RTHER, A SUM OF RS.220.00 LAKHS HAS BEEN GIVEN TO GMR VARALASKHMI F OUNDATION. WE HAVE NOTICED THAT THE AO HAS MENTIONED THE AMOUN T PAID TO ABOVE SAID ORGANIZATION AS RS.221.36 LAKHS. HENCE, THERE APPEARS TO BE SOME OBSCURITY WITH REGARD TO THE PAYMENT MAD E TO GMR VARALAKSHMI FOUNDATION AND THIS DIFFERENCE NEEDS TO BE RECONCILED. HOWEVER, THE DETAILS OF EXPENDITURE INC URRED BY THE ABOVE SAID CHARITABLE ORGANIZATION WERE NOT FURNISH ED. WE HAVE NOTICED THAT THE TAX AUTHORITIES HAVE TAKEN THE VIE W THAT THE AMOUNT PAID TO THIS ORGANIZATION IS IN THE NATURE O F DONATION, WHILE THE ASSESSEE CLAIMS THE SAME TO BE REIMBURSEMENT. B EFORE US, THE LD A.R PLACED RELIANCE ON THE RESOLUTION PASSED BY BOARD OF DIRECTORS. HOWEVER, IN OUR VIEW, THE FINANCIAL STA TEMENTS OF M/S GMR VARALAKSHMI FOUNDATION MAY BE HELPFUL TO DETERM INE THE CHARACTER OF AMOUNT PAID TO IT BY THE ASSESSEE. HEN CE THE FINANCIAL STATEMENTS OF GMR VARALAKSHMI FOUNDATION ALSO REQUI RE EXAMINATION. THERE IS NO DISPUTE THAT THIS EXPEND ITURE HAS BEEN INCURRED UNDER THE HEAD CORPORATE SOCIAL RESPONSIB ILITY. HOWEVER, WE NOTICED FROM THE DECISIONS RELIED ON BY THE ASSE SSEE TO SUPPORT ITS CLAIM THAT THE HONBLE HIGH COURT HAS APPRECIAT ED THE CONNECTION BETWEEN THE EXPENDITURE AND THE BUSINESS USE, I.E., ITA NO.2189/BANG/2016 PAGE 9 OF 12 THOSE ASSESSEES WERE ABLE TO DEMONSTRATE THE CONNEC TION BETWEEN THE EXPENDITURE INCURRED AND ITS USE FOR THE BUSINE SS OF THE ASSESSEE. IN THE INSTANT CASE, THOUGH THE ASSESSEE HAS FURNISHED DETAILS OF EXPENDITURE, IT HAS NOT DEMONSTRATED THE CONNECTION BETWEEN THE EXPENDITURE AND THE BUSINESS ADVANTAGE TO THE ASSESSEE. FURTHER, AS STATED EARLIER, THE NATURE O F PAYMENT AS WELL AS THE NATURE OF EXPENDITURE INCURRED BY GMR VARALA SKHMI FOUNDATION REQUIRE EXAMINATION. UNDER THESE SET OF FACTS, WE ARE OF THE VIEW THAT, IN THE INTEREST OF NATURAL JUSTICE, THE ASSESSEE MAY BE PROVIDED WITH ONE MORE OPPORTUNITY TO EXPLAIN IT S CASE BEFORE THE AO. ACCORDINGLY, WE SET ASIDE THE ORDER PASSED BY THE LD CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF T HE AO FOR EXAMINING THIS ISSUE AFRESH IN THE LIGHT OF THE DEC ISION RENDERED BY HONBLE KARNATAKA HIGH COURT REFERRED (SUPRA). 15. THE LAST ISSUE RELATES TO DISALLOWANCE OF PAYME NT MADE TOWARDS DELAYED DEPOSIT OF SERVICE TAX AND VAT BY T REATING THE SAME AS PENALTY IN NATURE. 16. THE ASSESSEE CLAIMED A SUM OF RS.8.63 LAKHS AS PENALTY BUT DID NOT DISALLOW THE SAME. THE AO EXAMINED THE DET AILS OF PENALTY EXPENSES AND NOTICED THAT THE SAME INCLUDED A SUM O F RS.1.44 LAKHS, BEING THE INTEREST PAID ON DELAYED DEPOSIT O F SERVICE TAX AND VAT. THE AO DISALLOWED THE SAME, APPARENTLY BY TRE ATING THE SAME AS PENALTY. THE LD CIT(A) CONFIRMED THE SAME BY FO LLOWING THE DECISION RENDERED BY HONBLE SUPREME COURT IN THE C ASE OF BHARATH COMMERCE & INDUSTRIES LTD., VS. CIT 230 ITR 733. ITA NO.2189/BANG/2016 PAGE 10 OF 12 17. BEFORE US, THE LD AR PLACED RELIANCE ON THE D ECISION RENDERED BY HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS . KAYPEE MECHANICAL INDIA PVT. LTD., 45 TAXMANN.COM 363 AND ALSO DECISION RENDERED BY HONBLE SUPREME COURT IN THE CASE OF LA KMANDAS MATURDAS VS. CIT 122 TAXMANN.COM 828 AND SUBMITTED THAT THE INTEREST PAID FOR DELAYED REMITTANCE OF SERVICE TAX IS COMPENSATORY IN NATURE AND HENCE ALLOWABLE AS DEDUCTION U/S 37(1 ) OF THE ACT. HE SUBMITTED THAT THE SIMILAR VIEW HAS BEEN TAKEN B Y THE DELHI BENCH OF TRIBUNAL IN THE CASE OF DCIT VS. MESSEE DU SSELDORF INDIA (P) LTD., PAGE (2010) 129 TTJ 81 (DELHI)/(UO). 18. WE HAVE HEARD LD DR AND PERUSED THE RECORD. WE NOTICED THAT THE LD CIT(A) HAS CONFIRMED THE DISALLOWANCE B Y FOLLOWING THE DECISION RENDERED BY HONBLE SUPREME COURT IN THE C ASE OF BHARAT COMMERCE AND INDUSTRIES LTD., (SUPRA). HOWEVER, A PERUSAL OF THE SAID DECISION WOULD SHOW THAT THE HONBLE SUPREME C OURT HAS DEALT WITH THE CASE OF PAYMENT OF INTEREST UNDER TH E INCOME-TAX ACT. IT WAS HELD THAT IF THE INCOME-TAX ITSELF IS NOT PERMISSIBLE DEDUCTION U/S 37, THEN ANY INTEREST PAID FOR DEFAUL T COMMITTED BY THE ASSESSEE IN DISCHARGING THE STATUTORY OBLIGATIO N UNDER THE INCOME-TAX ACT, WHICH IS CALCULATED WITH REFERENCE TO INCOME-TAX, CANNOT BE ALLOWED AS DEDUCTION. 19. THE ISSUE UNDER CONSIDERATION IS RELATED TO I NTEREST PAID DELAYED PAYMENT OF SERVICE TAX. THERE IS NO DISPUT E THAT THE AMOUNT PAID AS SERVICE TAX IS ALLOWABLE AS DEDUCTIO N. HENCE THE DECISION RENDERED BY HONBLE SUPREME COURT IN THE C ASE OF BHARATH COMMERCE AND INDUSTRIES LTD., (SUPRA), WILL NOT APPLY TO ITA NO.2189/BANG/2016 PAGE 11 OF 12 THE FACTS OF THE PRESENT CASE. ON THE CONTRARY, TH E CLAIM OF THE ASSESSEE GETS SUPPORT FROM DECISION RENDERED BY HON BLE SUPREME COURT IN THE CASE OF LAKMANDAS MATURDAS (SUPRA)) A ND HONBLE HIGH COURT IN THE CASE OF KAYPEE MECHANICAL INDIA PVT. LTD., (SUPRA). ACCORDINGLY, WE SET ASIDE THE ORDER PASSE D BY LD CIT(A) AND DIRECT THE AO TO DELETE THE DISALLOWANCE OF INT EREST PAID ON DELAYED REMITTANCE OF SERVICE TAX AND VAT. 20. IN THE RESULT, THE APPEAL FILED BY THE ASSES SEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH JULY, 2019. SD/ - (N.V VASUDEVAN) VICE PRESIDENT SD/ - (B.R BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED, 10 TH JULY, 2019. /VMS / COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3 . THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER A SST. REGISTRAR, ITAT, BANGALORE. ITA NO.2189/BANG/2016 PAGE 12 OF 12 1. DATE OF DICTATION 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO SR.P.S .. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER .. 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S. .. 6. DATE OF UPLOADING THE ORDER ON WEBSITE.. 7. IF NOT UPLOADED, FURNISH THE REASON FOR DOING SO .. 8. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. DICTATION PAD ENCLOSED . 9. DATE ON WHICH ORDER GOES FOR XEROX & ENDORSEMENT 10. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 11. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER . 12. THE DATE ON WHICH THE FILE GOES TO DISPATCH SEC TION FOR DISPATCH OF THE TRIBUNAL ORDER . 13. DATE OF DESPATCH OF ORDER. ..