As 4 penalty and damages for non-compliance of law

Dear Experts and Friends,

An issue arose when I audited a company's books.

The company was not remitting Sales Tax, EPF and ESI and the books remained un-audited for some years.The amount payable under the above were quantified and been accounted for. When the first un-audited year was brought to audit, claims of the above departments of the amount due, interest thereon and penalty were brought to my notice. The company's appeal against those were set aside and the amount payable as interest and penalty were confirmed. Are the interest and penalty adjustable in the accounts of the year to which those pertains, considering AS 4 ? 

I am in a view that those are adjustable, as though in the year to which it pertains it is not quantified, it is quantifiable relying upon the provisions of the said laws on interest and penalty. 

Replies (3)

Can u be a bit more clear in your question ?  your final stanza ., is bit confusing...,

interest and Penalty should be booked only at the time of actual Payment.

as though in the year to which it pertains it is not quantified, it is quantifiable relying upon the provisions of the said laws on interest and penalty.

Read more at: /forum/as-4-penalty-and-damages-for-non-compliance-of-law-229209.asp#.ULcHOYFkHK4v
as though in the year to which it pertains it is not quantified, it is quantifiable relying upon the provisions of the said laws on interest and penalty.

Read more at: /forum/as-4-penalty-and-damages-for-non-compliance-of-law-229209.asp#.ULcHOYFkHK4
as though in the year to which it pertains it is not quantified, it is quantifiable relying upon the provisions of the said laws on interest and penalty.

Read more at: /forum/as-4-penalty-and-damages-for-non-compliance-of-law-229209.asp#.ULcHOYFkHK4
as though in the year to which it pertains it is not quantified, it is quantifiable relying upon the provisions of the said laws on interest and penalty.

Read more at: /forum/as-4-penalty-and-damages-for-non-compliance-of-law-229209.asp#.ULcHOYFkHK4
as though in the year to which it pertains it is not quantified, it is quantifiable relying upon the provisions of the said laws on interest and penalty.

Read more at: /forum/as-4-penalty-and-damages-for-non-compliance-of-law-229209.asp#.ULcHOYFkHK4
as though in the year to which it pertains it is not quantified, it is quantifiable relying upon the provisions of the said laws on interest and penalty.

Read more at: /forum/as-4-penalty-and-damages-for-non-compliance-of-law-229209.asp#.ULcHOYFkHK4
I am in a view that those are adjustable, as though in the year to which it pertains it is not quantified, it is quantifiable relying upon the provisions of the said laws on interest and penalty.

Read more at: /forum/as-4-penalty-and-damages-for-non-compliance-of-law-229209.asp#.ULcHOYFkHK4

Also., Please Ensure to Disallow that Penalty Portion for Income Tax Computation for the year in which it is Actually Paid.  As they are disallowed Expenditure U/s 37.

Jishnu, it can be provided for. It has to be provided for. though it was a contingent liability at the date of the balance sheet, we had evidence that the liability is cystalised. Hence, this need to be provided for in the books in that year's financials itself. Else, if that affects the financials badly, we can give it as a contingent liability and provide for in the year in which it was confirmed as a liability(appeal set aside and confirmed).

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