Interest on TDS is allowable expenditure

 

Dy. CIT v. Rungta Mines Ltd.

ITA No. 1531/Kol/2017

Decision:    In assessee’s favour.

Business expenditure–Interest on late deposit of TDS–Allowablity

Facts:

Assessee claimed deduction of interest on late deposits of TDS liability. AO disallowed deduction.

Held:

TDS amount did not represent tax of assessee but it was tax of party, on whose behalf it was deducted and paid to the Government Exchequer. Thus, any delay in payment of TDS by assessee could not be linked to income tax of assessee and consequently, interest expenses claimed by assessee on account of delayed deposit of TDS liability was allowable under section 37(1).