Held that   the interest on delayed payment of tax deducted at source was not penalty but compensatory in nature and it could not be classified as part of the Income-tax liability of the assessee. Therefore, the expenses were allowable under section 37 of the Act. CIT v. Oriental Insurance Co. Ltd. (2009) 315 ITR 102 (Karn.)(HC)  followed. Held that the Assessing Officer had not disputed the audited financials of the assessee-company but had proceeded to make an ad hoc disallowance at 10 per cent. of total expenses merely on the basis of surmises which was not sustainable in the eyes of law. The Commissioner (Appeals) had rightly deleted the disallowance treating it as the expenses incurred for the purpose of business. (AY. 2012-13)