Tds

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Sai Suryadevara (Querist)
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05 September 2014 Hi all,

Can any one please let me know the treatment of interest on tds default payments in books?

can it be shown as expenditure? as it is disallowed as per IT Act,1961?

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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05 September 2014 it will be debited to p n l account but will be disallowed

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CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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05 September 2014 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. The Apex Court in 'Swadeshi Cotton Mills Co. Ltd., V. Commissioner of Income Tax' 2008 - Supreme Court was dealing with the question as to whether damages paid for delayed payment of employees contribution to employees' provident fund was compensatory or penal. The court following the judgment in 'Prakash Cotton Mills Ltd.,' - 2008 - Supreme Court remitted the matter to the High Court for reconsideration in the light of the observation made therein. Also refer the following article in this regard--
http://www.taxmanagementindia.com/visitor/detail_article.asp?ArticleID=788

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