Allowed or disallowed ?

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

28 September 2013 we (firm) have paid interest for late paid income tax and also for vat payment which is shown in P & L a/c

do it is disallowed and add in taxable amount

in which section ?

thanks

CA Pallav Singhania

CA Pallav Singhania (Expert)
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28 September 2013 Interest for the late payment of Income tax- Interest paid under section 220{2} for the late payment of income tax is not deductible as revenue expenditure.

Citation- CIT vs. Ashoka Mills Ltd. [1996] 88 Taxman 184/218 ITR 526 {Guj.}/

CIT vs. Raipur Manufacturing Co. Ltd. [1996] 135 CTR {Guj.} 248

However, Interest paid on Vat is allowable..

Querist : Anonymous

Querist : Anonymous (Querist)

28 September 2013 THANKS.

BUT WHILE FILING RETURN WHERE TO SHOW DISALLOWED AMOUNT ?

I.E. IN WHICH SECTION WHILE DOING COMPUTATION ?

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CA Pallav Singhania

CA Pallav Singhania (Expert)
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28 September 2013 The charging of interest on delayed the filing of tax returns and short/delayed payment of taxes are mandatory and there are no provisions for reduction or waiver of interest by the tax department (except in a very limited circumstances, as empowered to the chief commissioner of income tax) even if the tax payer provides a reasonable cause for such defaults.

This issue has been a subject matter of debate before various courts, including the Supreme Court of India, and time and again courts have held the constitutional validity of the mandatory charging of interest under sections 234A, 234B and 234C of the Act.

At the time of filing the tax returns, the tax payer has to compute the interest on the basis of his/her total income as disclosed in the tax returns, which later can be substituted by the tax officer with assessed..

Querist : Anonymous

Querist : Anonymous (Querist)

28 September 2013 again thanks,

but if we already count as disallowed and that interest amount include in taxable income and calculate on tax it.

so now where to show that amount which we count as disallowed or will be disallowed in future ?

thankssss