Query on income tax disallowance

You're referring to a situation where: - Interest paid on a business loan is ₹1 crore - No TDS was deducted under Section 194A - ₹30 lakhs is disallowed under Section 40(a)(ia) - Only ₹70 lakhs is shown as interest paid in the Profit & Loss (P&L) statement - The remaining ₹30 lakhs is written off to the capital account In this case, you are still liable to disallow 30% on the ₹70 lakhs shown in the P&L statement, as per Section 40(a)(ia). The disallowance is calculated on the interest expense claimed in the P&L statement, which is ₹70 lakhs. Therefore, the disallowance would be ₹21 lakhs (30% of ₹70 lakhs). The fact that you have written off the remaining ₹30 lakhs to the capital account does not impact the disallowance calculation. Please note that this is a complex area of taxation, and it's always best to consult a tax professional or chartered accountant for personalized advice.