Form - 3CD

This query is : Resolved

m kedia (Querist)
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27 June 2009 Clause 17A has been inserted towards amount inadmisible under section 23 of MSME Development Act, 2006.

opinion is required whether above interest is inadmisible and under which section of income tax act the same is disallowable.

Whether such interest can be treated as compensatory in nature & hence allowable even if it is penalty in nature in MSMED act

Santosh Mishra

Santosh Mishra (Expert)
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28 June 2009 Interest payable to SME'S are in the nature of penalty attracting voilation of MSME Development Act, 2006 and hence disallowable Under Proviso to Section 37

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vinod kumar lalwani

vinod kumar lalwani (Expert)
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28 June 2009 Dear

Yes the amount is inadmisible under income tax act and it is disallowable on a/c of MSME development act 2006.

it is like a penalty and penalties are specifically disallowable u/s 37.

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CA Nitin Wadhwani

CA Nitin Wadhwani (Expert)
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28 June 2009 In my opinion, it is disallowable u/s 40.

m kedia

m kedia (Querist)
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29 June 2009 Whether the Interest payable to SME'S (which is in the nature of penalty attracting voilation of MSME Development Act, 2006) can be treated as compensatory in nature & hence allowable.

CA Nitin Wadhwani

CA Nitin Wadhwani (Expert)
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29 June 2009 No.
It is expressely disallowed u/s 40.
So, it can't be treated as compensatory.