Allowed expenditures
This query is : Resolved
08 May 2009
Sir,
Is interest or penalty on account of late payment or late filing of return of any statutory payments like Excise, PT, Service Tax, Income Tax, FBT, VAT, ESI, EPF, TDS.... an allowed expenditure for Income Tax purpose?
Pls clarify...
Regards,
Girish
Is interest or penalty on account of late payment or late filing of return of any statutory payments like Excise, PT, Service Tax, Income Tax, FBT, VAT, ESI, EPF, TDS.... an allowed expenditure for Income Tax purpose?
Pls clarify...
Regards,
Girish
CA MEENAKSHI MANGLA
(Expert)
08 May 2009
IT THINK IT IS ALLOWABLE EXP BCZ WE GOTHROUGH SECTION 37 OF INCOME TAX ACT THEN IT TELL DISALLOWABLE EXP LIKE WHICH HAS BEEN INCURRED FOR THE PURPOSE WHICH IS AN OFFENCE OR IS PROHIBITED IN ANY LAW, DELAY DEPOSIT OF STATUTORY PAYMENTS ARE NOT OFFENCE OR NOT PROHIBITED
08 May 2009
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.
Citation:- 1)Malwa Vanaspati and Chemicals Co 225 ITR 383.
2)Swadeshi Cotton Mills Ltd 233 ITR 199(SC).
Citation:- 1)Malwa Vanaspati and Chemicals Co 225 ITR 383.
2)Swadeshi Cotton Mills Ltd 233 ITR 199(SC).
CA.Tarun Maheshwari
(Expert)
08 May 2009
I agree with Warrier sir. Penalties are not allowable expenditure.
CA Nitin Wadhwani
(Expert)
09 May 2009
Also, interest on direct taxes(Income tax, Advance tax, TDS and FBT) are not allowable
CA MEENAKSHI MANGLA
(Expert)
09 May 2009
Sorry Friends for wrong reply,
1.Expenditure incuured due to failure to deduct TDS is not allowable as business expense.
Indian Aluminium Co. Ltd.
2. Interest paid in respect of delayed paymnet of income tax is not deductible.
3. Any Interest/penalty paid under Direct Tax Law is not Deductiable.
1.Expenditure incuured due to failure to deduct TDS is not allowable as business expense.
Indian Aluminium Co. Ltd.
2. Interest paid in respect of delayed paymnet of income tax is not deductible.
3. Any Interest/penalty paid under Direct Tax Law is not Deductiable.
CA MEENAKSHI MANGLA
(Expert)
09 May 2009
Sorry Friends for wrong reply,
1.Expenditure incuured due to failure to deduct TDS is not allowable as business expense.
Indian Aluminium Co. Ltd.
2. Interest paid in respect of delayed paymnet of income tax is not deductible.
3. Any Interest/penalty paid under Direct Tax Law is not Deductiable.
1.Expenditure incuured due to failure to deduct TDS is not allowable as business expense.
Indian Aluminium Co. Ltd.
2. Interest paid in respect of delayed paymnet of income tax is not deductible.
3. Any Interest/penalty paid under Direct Tax Law is not Deductiable.
Message likes :
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taxindiaconnect
(Expert)
09 May 2009
Since any interest paid on delayed payment of direct tax becomes part of taxes payabke, hence are not deductible. The penalty for contravention of any law is not deductible.
CA Nitin Wadhwani
(Expert)
09 May 2009
The answers are correct.
Read them properly.
Read them properly.
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