Arbitration interest
This query is : Resolved
08 October 2010
A Govt. contractor has received a arbitration compensation along with interest @ 18% in current year. The dispute relates to payment of year 1998.
My query is that whether this interest component to be taxed as Revenue receipt or it can be considered as capital receipt.
Secondly, is there any way to reduce the tax liability. I have referred case laws high court but decisions are conflecting with each other.
My query is that whether this interest component to be taxed as Revenue receipt or it can be considered as capital receipt.
Secondly, is there any way to reduce the tax liability. I have referred case laws high court but decisions are conflecting with each other.
09 October 2010
The nature of intrest will be depend on wether the contractor received the compensation against his capital assest or against his work contract. If he received that compansation against his work contract or an asset having revenue in nature than the intrest will be treated revenue receipt otherwise capital receipt and will be taxed accordingly
10 October 2010
The interest on delayed payment is a revenue receipt. Only way to reduce tax liability is to offer interest for taxation on accrual basis and allocate receipt year wise. Do consider element of interest for short payment of tax for your evaluation exercise.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Claiming exemption of perquisite for employee-owned car under New Tax Regime in ITR-2
- Section 194JA & JB Income which ITR Form to use
- Pass word to open justification report for Q1 for FY 2026-27
- Under construction property in ITR
- Scrutiny and reopening of past returns
- PPF interest-As Exempt Income disclosure
- Gift of mutual fund units to daughter
- Not able to file ITR
- Building tax payment deduction in rental Income
- Reporting of STCG on Property in ITR
- PF Taxable Income
- Clarification on Tax Audit Applicability and Reporting of F&O Transactions in ITR-3
- Interest credited in FY2025-2026 & TDS therein by EPFO does not reflect in AIS or Form 26AS
- 44ad eligble money lending interest
- Delisted shares sold in off market/ Rebate u/s87A
- In Exports Sales HSN details where to fill
- Opting out" of regime provided under subsection (1A) of Section 115BAC but Form 10IEA is not filed.
- Difference in tax comparison report
- Gst invoice numbering and delivery challan numbering
- Sales amount in Gstr1
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
