Payment of Interest on late deposit of TDS is not a Deductible Expenditure: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Bangalore bench has held that the payment of interest on late deposit of TDS cannot be treated as a deductible expenditure under the Income Tax Act, 1961.

The assessee had paid interest under section 201(1A) of the Income Tax Act amounting to Rs.24,644 and claimed the same as allowable expenditure. The Assessing Officer, while considering the income tax return for the relevant assessment year, rejected the claim.

While considering an appeal filed by the assessee, Judicial Member George George K and Accountant Member B.R. Baskaran held that the claim is not acceptable.

“The Hon’ble Apex Court in the case of Bharat Commerce & Industry v. CIT reported in 230 ITR 733 had held that interest for late payment of direct taxes is not a deductible expenditure. In view of the clear dictum laid down by the Hon’ble Apex Court, the interest expenditure of RS.24,644 paid under section 201(1A) of the Income Tax Act cannot be allowed as a deduction, the bench said.

“In the result, the appeals filed by the assessee for assessment years 2013-2014 and 2015-2016 are allowed for statistical purposes and the appeal filed by the assessee for the assessment year 2014-2015 is dismissed,” bench added.

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