Interest whether allowed as expenditure

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Nikhil Dureja (Querist)
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11 September 2010 interest on late payment of Service Tax wether allowed as deduction or will it be disallowed at the time of computing income.......????

Pls. refer section 40(a),as it was written that interest on "Income Tax" , "Wealth Tax" and "FBT" is not allowed as deduction but interest under any other law is allowed.

CA. BIJENDER KR. BANSAL

CA. BIJENDER KR. BANSAL (Expert)
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11 September 2010 Interest on late payment of service is allowed because it is compensatory nature, not penal nature.

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Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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11 September 2010 But rule 7C of the Service tax Rules,1994 has used a word penalty ,once in the 3rd proviso thereto ,which may lead to a dispute regarding allowability.

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Nikhil Dureja

Nikhil Dureja (Querist)
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11 September 2010 sir,correct me if i m wrong...

rule 7C of the service tax rules,1994 is all about late filling of "Service tax Return"

and Section 75 of service tax says interest on delayed payment of service tax...

pls,give ur views as it will help me in clearing my concepts...

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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11 September 2010 Yes my observation is wrong. I stand corrected and support the view of Bansal Ji.

Nikhil Dureja

Nikhil Dureja (Querist)
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11 September 2010 great thanxs to

"Mr. Bijendra K. Bansal"

n
"Mr. B. Chackrapani "

but i need more views.......

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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11 September 2010 It is an allowable expenditure. Pl see the link https://www.taxindiaonline.com/RC2/print_story.php?newsid=10324

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