Nippon Koei Co. Ltd. Vs ADIT (International Taxation) (ITAT Hyderabad)
ITAT Hyderabad held that interest paid on account of delayed remittance of TDS cannot be treated as business expenditure under section 37(1) of the Income Tax Act. Accordingly, order disallowing the same is upheld.
Facts- The assessee is a foreign company engaged in the business of engineering, consultancy, and electric power. The assessee filed its return of income for the Assessment Year 2021-22 declaring total income of Rs.6,27,12,098/- for its branch office in India. The case of the assessee was selected for scrutiny and accordingly, notice u/s. 143(2) of the Income Tax Act, 1961 was issued on 27.06.2022. As the assessee was an eligible assessee within the meaning of clause (b) of sub-section (15) of section 144C of the Act, AO passed a draft assessment order u/s. 144C(1) of the Act on 31.12.2022 proposing a total addition of Rs.3,47,02,323/-. Against the draft order of AO, the assessee filed its objections before Dispute Resolution Panel. DRP issued its directions u/s. 144C(5) of the Act on 28.09.2023.
Pursuant thereto, AO passed the final assessment order u/s. 143(3) r.w.s. 144C(13) of the Act on 31.10.2023, making the additions on account of Disallowance of interest paid u/s. 201(1A) of the Act of Rs.2,10,265/-, Disallowance of lead role expenditure of Rs.19,58,509/-, Disallowance of payment made to M/s. Antony Burchell of Rs. 3,08,08,089/-, Disallowance under section 44DA of the Act of Rs. 3,49,255/- and Disallowance u/s. 40(a) of the Act of Rs. 13,76,205/-. Accordingly, AO made a total addition of Rs. 3,47,02,323/- and assessed the total income of the assessee at Rs.9,74,14,421/-. Being aggrieved, the present appeal is filed.
