Dear Friends and Sr. Professionals. Today's discussion is relating Fee for late deposit of Qtrly E tds return us 234E whether allowable as normal business expenditure us 37 of IT Act. Back Ground: Sec 234E was introduced in the Act w.e.f 1st June 2015 for charing Rs.200 as late fee per day of delay subject to maximum Tds deducted during the Qtr. The constituitional vslidity of this section 234E was held as valid by several High Courts. With this back ground pls consider the following . Whether Late Fee deposited us 234E is an allowable business expenditure under normals provisions of the Act and allowed us 37. ANSWER: YES. Late Fee paid us 234E is allowable as normal business expenditure. Late fee for filling qtrly e tds return levied us 234E is not penalty in nature as penalty for late deposit of Etds return imposed us 271H. As held by various High Courts while declaring Sec 234E is constitutionally valid held that " Fee levied by Sec 234E is to regularize Tds returns filed in late and it is a charge for extra services which department has to provide for regularising the Returns filed in late. Late fee levied under sec 234E does not take the color of Tax . Late fee levied us 234E is not punitive in nature but a fee which is a fixed charge for the extra service which the department has to provide due to late filling of Ets Return. Thus payment of late fee us 234E is neither penalty nor Tax hence could be claimed as Normal Business Expenditure and allowable us 37 of IT ACT. This view is fortified by the following Court Orders. Rashmikant Kundalia Vs. UOI Sree Narayana Guru Smarka Sangam Upper Primary School vs. UOI. SUMMARY: Late fee levied us 234E on account of late filling qtrly Etds Return is neither Penalty nor TAX is allowable as normal business expenditure us 37 of IT Act. Matter is described in easy language. Pls read and circulate.
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