Liquidated damages recd by an assessee from the supplier for delay in supply machinery is treated as a Capital receipt.
BUT what will the treatment in the hands of the supplier who is paying it, whether it is allowable expenditure or not ??
Pls support ur ans wid relevant Income tax Act provision.
Thanks in advance.
Menu
Liquidated damages Treatment
Replies (2)
Any penalty or damages, if it is punitive in nature is not allowed, but if it compensatory in nature is allowed under income tax. So in this case, the damages paid will be allowed under sec 37(1) since it is compensatory in nature.
But in one hand if Govt is not treating it as an income (it is a capital receipt) then on the other hand why govt will allow it ?
Just need to confirm
Just need to confirm
Recent Topics :
- How to find a good CA
- Rcm on rent paid
- Clarify on GST Application
- Residential status for overseas students visitin
- Capital Gains Tax
- LTCG 112A and business loss
- FAST-DS 2026 applicability: foreign employee share
- NRI Property Sale in India: TDS Rates and Key Comp
- Clarification on September 2026 PF Calculation for
- DRC-03 interest paid under CGST/SGST instead of IG
Related Topics :
CAclubindia
