Interest on esi and epf

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Querist : Anonymous

Querist : Anonymous (Querist)

19 September 2014 interest on ESI and EPF is allowable as per income TAX. while computing income Tax,

Nikhil Kaushik

Nikhil Kaushik (Expert)
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20 September 2014 it is in nature of compensatory payment and therefore is allowed as an expense

Nikhil Kaushik

Nikhil Kaushik (Expert)
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20 September 2014 it is in nature of compensatory payment and therefore is allowed as an expense

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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20 September 2014 Interest is compensatory in nature and hence allowable as business expenditure. Penalty is for contravention of the provisions of an act and,therefore, not allowable as a business expenditure. The Apex Court in 'Swadeshi Cotton Mills Co. Ltd., V. Commissioner of Income Tax' 2008 - Supreme Court was dealing with the question as to whether damages paid for delayed payment of employees contribution to employees' provident fund was compensatory or penal. The court following the judgment in 'Prakash Cotton Mills Ltd.,' - 2008 - Supreme Court remitted the matter to the High Court for reconsideration in the light of the observation made therein. Also refer the following article in this regard--

http://www.taxmanagementindia.com/visitor/detail_article.asp?ArticleID=788