Payment of interest not made towards any infraction of law is allowable u/s 37

DCIT Vs Sayaji Hotels Ltd (ITAT Ahmedabad) ITAT Ahmedabad held that payment of interest towards ‘compromise agreement’ was not made towards any infraction of law and therefore, the same is allowable under section 37 of the Income Tax Act. Facts-  During the course of assessment, the AO disallowed a sum of Rs. 1, 62, 00, 000/- as interest on the ground that the same was penal in nature and hence not allowable under section 37 of the Act. Based on the submissions made by the assessee, CIT(A) deleted the addition. Being aggrieved, the revenue has preferred the present appeal. Conclusion- The...