Tds
This query is : Resolved
Sai Suryadevara
(Querist)
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?
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?
05 September 2014
it will be debited to p n l account but will be disallowed
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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--
https://www.taxmanagementindia.com/visitor/detail_article.asp?ArticleID=788
https://www.taxmanagementindia.com/visitor/detail_article.asp?ArticleID=788
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