03 September 2016
in income tax int on late payment of TDS sales tax, service tax is allowed as deduction or not....
demand of income tax ,sales tax ,TDS is allowed or not....please help me ...thanks
04 September 2016
Interest on TDS is levied under section 201(1A) of the Income tax Act,1961. The said expenditure will not be allowed as a business expenditure.
Citation: Madras high court decision in CIT V Chennai Properties & Investments Ltd reported in 239 ITR 435
04 September 2016
Interest on late payment of VAT is compensatory in nature and hence allowable as business expenditure.
In 'Lachmandas Mathuradas V. Commissioner of Income Tax' - 2008 -TMI - 6074 - Supreme Court the question before the apex court was whether interest paid on arrears of sales tax is penal or compensatory. The apex court held that the said amount was an allowable deduction since it was compensatory in nature.
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