Disallowance

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Querist : Anonymous

Querist : Anonymous (Querist)

10 September 2011 Can interest on EPF ,ESI & VAT be disallowed?

Sumit G

Sumit G (Expert)
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10 September 2011 yes allowed as deduction

CA Hardik Bunha

CA Hardik Bunha (Expert)
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11 September 2011 ONLY INTEREST ON VAT IS ALLOWED.
INTEREST ON EPF AND ESIC NOT ALLOWED.

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Querist : Anonymous

Querist : Anonymous (Querist)

11 September 2011 why is it that only for VAT it is disallowed..when all the payments are statutory??

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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11 September 2011 1) Interest on PF is an allowable expenditure. CIT Vs. Mysore Electrical Industries Ltd. (1992) 196 ITR 884(Kar).
2) Interest on sales tax is an allowable expenditure. Lachmandas Mathuradas Vs.CIT (2002) 254 ITR 799(SC).Same analogy can be applied to VAT also.
3) Regarding interest on ESI, principal and interest constitutes assessee's liability and hence interest element is an allowable expenditure. Kamlapat Motilal's case reported in 105 ITR 783, though delivered in an different contest, can be relied upon.

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C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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13 September 2011 Interest paid for discharge of any statutory liability is not allowable. If you delay in payment of Income Tax or ESIC then the same is not allowable.

The expert Mr.Chackarpani has given you the case laws for other 2 allowable interest. I agree with him

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