The assessee claimed deduction of interest paid for delayed remittance of tax deducted at source. The Assessing Officer disallowed the amount by treating it as expenditure incurred for an infraction of law, and the CIT(A) upheld the disallowance. The Tribunal held that interest paid for delayed payment of TDS was compensatory in nature, as it compensated the exchequer for the delay in remittance, and could not be treated as a penalty or expenditure incurred for a purpose which was an offence or prohibited by law within the meaning of the Explanation to section 37(1). Following Mangal Keshav Securities Ltd. v. ACIT (46 ITR (Trib.) 458), the Tribunal set aside the order of the CIT(A) and directed the Assessing Officer to delete the disallowance of Rs. 1,86,85,749. The assessee’s ground was allowed. (A.Y. 2018-19) (ITA No. 5604/Mum/2025, dt. 24-08-2026)