Dear All,
Wheather Interest on TDS paid is deductible or not ?
7 Replies
C.A SHASHANK GOYAL
(Chartered Accountant)
(362 Points)
Replied 13 September 2011
Hi , yes I am of the opinion that it will be deductible , because chargeability of interest is not the penalty for infringement of law and also interest on income tax refund received is being included in income from other sources so tds interest should also be made deductible.
Sumit Grover
(Chartered Accountant )
(3652 Points)
Replied 13 September 2011
It is disallowed..............
the following link can also be seen 4 cross-verifying d same..
/experts/dis-allowance-of-interest-on-tds-and-interest-on-service-tax-485530.asp
Sumit Grover
(Chartered Accountant )
(3652 Points)
Replied 13 September 2011
COMMISSIONER OF INCOME TAX vs. CHENNAI PROPERTIES & INVESTMENT LTD.
HIGH COURT OF
R. Jayasimha Babu & N.V. Balasubramanian, JJ.
Tax Case No. 468 of 1986
20th April, 1998
(1999) 239 ITR 435 (MAD) : (1999) 105 TAXMAN 346 (MAD)
Legislation referred to
Sections 201(1A), 37,
Case pertains to
Asst. Year 1981-82
Decision in favour of
Revenue
Business expenditure—Interest paid on agricultural loans—Interest under s. 201(1A)—Interest paid for period of delay takes colour from the nature of principal amount required to be paid but not paid within time—Principal amount here would be income-tax and interest is payable for failure to pay the tax deducted at source—The fact that income-tax required to be remitted was not income-tax payable by assessee but on behalf of another does not in any manner after the character of payment—Income-tax is not allowable as business expenditure—Amount not deducted and remitted has the character of tax—Therefore, interest paid under s. 201(1A) cannot assume the character of business expenditure and is not allowable as deduction.
Conclusion
Interest paid under s. 201(1A) cannot assume the character of business expenditure and is not allowable as deduction as the liability to pay interest is directly related to the failure to deduct or remit the tax deducted at source.
Nitin Singhal
(Gaining knowledge...)
(320 Points)
Replied 13 September 2011
It is not deductible. Any interest or penalty paid under Income Tax Act is not deductible. Except in section 234A/B/C and that too in circumstances as had been explained in case of Dr. Prannoy Roy (SC).
CA Rakesh Soni
(chartered accountant)
(24 Points)
Replied 14 September 2011
Interest paid on delayed tds payment is not allowed as deduction in the nature of business expenditure as i think...
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