int on tds and vat allowable or not

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uttam (Querist)
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22 June 2016 hi experts i want to know interest paid on delayed deposit of TDS and vat is allowable in IT act or not if it is not then under which section thanx in advance

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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22 June 2016 Interest on TDS is levied under section 201(1A) of the Income tax Act,1961. The
said expenditure will not be allowed as a business expenditure.

Citation: Madras high court decision
in CIT V Chennai Properties & Investments Ltd reported in 239 ITR 435

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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22 June 2016 Interest on late payment of VAT is compensatory in nature and hence allowable as business expenditure.

In 'Lachmandas Mathuradas V. Commissioner of Income Tax' - 2008 -TMI - 6074 - Supreme Court the question before the apex court was whether interest paid on arrears of sales tax is penal or compensatory. The apex court held that the said amount was an allowable deduction since it was compensatory in nature.

Also refer the following article in this regard--

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

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uttam

uttam (Querist)
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22 June 2016 completely agree with u

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