Allowance/disallowance - int. paid on late payment of tds

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Dear All,

May I know whether Interest paid on late payment of TDS is allowed as an expense while computing business Income. There are certain case laws which say that interest paid for deferrment of TDS payment is penal in nature therefore not allowable. 

But, these case laws are not directly related to what our subject matter is. It seems that such interest is compensatory in nature therefore to be allowed for computing business income. Please do suggest.

Keval

 

 

 

Replies (2)

As per Karnataka High Court in case of CIT v. Oriental Insurance Co Ltd [2009] 183 TAXMAN 186 held that it is deductible.

Interest on TDS is allowed but in case of any Penalty levied by the department is totally disallowed.


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