15 February 2010
My client paid a considerable sum by way of interest for late payment of service tax, sales tax and income tax. The accountant of the client insists that the Income Tax Act talks about the disallowance of interest on Income Tax & Wealth Tax only and not on other payments like service tax and hence, interest paid for the delayed payment of service tax and sales tax need not be disallowed. Can I have the considered opinion of the experts in this matter preferably with citations?
15 February 2010
Interest paid by the assessee to the Sales tax Department on arrears of sales tax is an admissible deduction under section 37(1) of the Income tax Act,1961. Citation:- Lachmandas Mathuradas Vs. CIT [2002] 254 ITR 799(SC).
15 February 2010
Interest paid by the assessee to the Sales tax Department on arrears of sales tax is an admissible deduction under section 37(1) of the Income tax Act,1961. Citation:- Lachmandas Mathuradas Vs. CIT [2002] 254 ITR 799(SC).
However if any payment is made for non compliance or violation of any law then it is disallowed expenditure. however it has been clarified that interest under income tax and wealth tax only therefore, it can be said that the other will bw allowed provided better justification is given by the assessee.
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