Prince Holdings Madras(P) Ltd, Chennai V. DCIT , CC 5(2), Chennai

ITA 524/CHNY/2021

• Counselvise Citation: [2022] 103 COUNSELVISE.COM (IT) 9168 (ITAT-CHENNAI)
• Duration Of Justice: 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-11-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 19-10-2022
• Assessment Year: 2017-2018
• Appeal Filed On: 23-11-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 37; 143(3); 37(1)

Judgement Text

आयकर अपीलीय अिधकरण, ‘सी’ ᭠यायपीठ, चे᳖ई IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH, CHENNAI Įी वी द ु गा[ राव,ÛयाǓयक सदèय एवं ᮰ी जी. मंजुनाथ, लेखा सद᭭य के समᭃ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.: 524/Chny/2021 िनधाᭅरण वषᭅ / Assessment Year: 2017-18 Prince Holdings Madras (P) Ltd., 827, Dhun Buildings, III Floor, Anna Salai, Chennai – 600 002. [PAN: AAACP-4357-L] v. Deputy Commissioner of Income Tax, Corporate Circle 5(2), Chennai – 600 034. (अपीलाथᱮ/Appellant) (ᮧ᭜यथᱮ/Respondent) अपीलाथᱮ कᳱ ओर से/Appellant by : None ᮧ᭜यथᱮ कᳱ ओर से/Respondent by : Shri. P. Sajit Kumar, JCIT स ु नवाई कȧ तारȣख/Date of Hearing : 20.10.2022 घोषणा कȧ तारȣख/Date of Pronouncement : 02.11.2022 आदेश /O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER: This appeal filed by the assessee is directed against the order passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 01.10.2021 and pertains to assessment year 2017-18. 2. The assessee raised the following grounds of appeal: 1.“The order of the Learned CIT (A) is contrary to law, facts and circumstances of the case. :-2-: ITA. No:524/Chny/2021 2. The learned CIT(A) erred in confirming the disallowance of Rs. 4,03,000 /made by AO. The amount of Rs.4,03,000/- being interest paid on service tax is compensatory in nature for delay in remittance of service tax and the same is allowable expenditure under section 37(1) of Income Tax Act. 3. For these and other grounds that may be adduced at the time of hearing it is prayed that the order of the learned CIT(A) may be set aside on this ground, and the appellant's claim of expenditure be allowed in full.” 3. The brief facts of the case are that the assessee is an investment company, whose main business is to invest in shares, immoveable property and also providing consultancy services. The assessee filed return of income for the assessment year 2017-18 on 30.10.2017 by admitting Nil total income. The assessment has been completed u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) on 16.12.2019 and made addition of Rs. 4,03,000/- towards interest on service tax u/s. 37 of the Act. The assessee carried the matter in appeal before the first appellant authority, but could not succeed. The Ld. CIT(A), NFAC for the reasons stated in their appellant order dated 01.10.2021, rejected arguments of the assessee and sustained the addition made towards disallowance of interest on service tax. 4. None appeared for the assessee. We have heard the Ld. DR and perused the relevant material available on record. We :-3-: ITA. No:524/Chny/2021 find that the AO has disallowed a sum of Rs. 4,03,000/- being interest on service tax relating to earlier years on the ground that the same is in the nature of penalty. We find that interest paid on belated payments of service tax is not a penalty, which can be disallowed u/s. 37(1) of the Act. Therefore, we are of the considered view that the Ld. CIT(A) has erred in sustaining addition made by the AO towards interest paid on service tax. Hence, we reverse the findings of the ld. CIT(A) and direct the AO to delete addition made towards disallowance of interest on service tax. 5. In the result, appeal filed by the assessee is allowed. Order pronounced in the court on 02 nd November, 2022 at Chennai. Sd/- (वी दुगाᭅ राव) (V. DURGA RAO) ÛयाǓयकसदèय/Judicial Member Sd/- (जी. मंजुनाथ) (G. MANJUNATHA) लेखासदèय/Accountant Member चे᳖ई/Chennai, ᳰदनांक/Dated: 02 nd November, 2022 JPV आदेश कᳱ ᮧितिलिप अᮕेिषत/Copy to: 1. अपीलाथᱮ/Appellant 2. ᮧ᭜यथᱮ/Respondent 3. आयकर आयुᲦ (अपील)/CIT(A) 4. आयकर आयुᲦ/CIT 5. िवभागीय ᮧितिनिध/DR 6. गाडᭅ फाईल/GF