Is this disallowable ?

A combined reading of section 36(1)iii) and 43B says interest PAID on the capital borrowed for the purpose of business is allowed as deduction . so if interest is paid to nationlized banks , shedulded banks deduction is allowed on payment basis (not just providing in books of accounts but actually paying it also) under 43B even with out applying  the provisions of TDS as interest paid to banks does not come under 194A. if interest is PAID OR PROVIDED to others . the capital borrowed must be used for the purpose of business only, in the previous year in which interest is PAID OR PROVIDED, i think there is nothing to disallowe the interest you have asked for subject to full fillment of above conditions and if interest is paid to others TDS provisions are also to be kept in mind.

This is a purchase we made in 2007-08 and payment made delay our vendor charge interest on delay payment in 2007-08 but we close business with them now we want to start business again and want to pay interest . so is this allowable ?

this interest is not for capital expenses it is a revenue nature

Curreant year this interest is not allowed as expenses

You have to deducted TDS @ 10 % on interest for the same

even if section 36(1)(iii) can not be applied under section 37 the interest can be claimed as it is incurred in the previous year and also exclusively for the purpose of business. it is not a penalty of fine also under any law so incase it is for purchase delayed payment interest it can be allowed under section 37. as you are making payment for increasing business it can be definalty said that it is incurred exclusivley for business but subject to provisions of 40a ia i.e tds is to be deducted before fiing return to claim that interesr as expenditure

thanks for information mr NIMIT