Sir
If a company deduct Liqudity damage from his supplier due late supply of goods as per contracts terms & condtion.
Is taxble or not in the hands of the company.
Please spacify with case laws if any.
Thanks
Satyanarayan Pani (Accountant) (37 Points)
16 April 2012Sir
If a company deduct Liqudity damage from his supplier due late supply of goods as per contracts terms & condtion.
Is taxble or not in the hands of the company.
Please spacify with case laws if any.
Thanks
ARUL PRADEEP
(ARTICLE ASSISSTANT)
(175 Points)
Replied 25 August 2014
The Internal Revenue Service (IRS) treats liquidated damages as taxable income. Although damages for physical injuries and illnesses can be excluded from taxation, other lawsuit damage awards, including liquidated damages, are taxable, according to the Internal Revenue Code. The IRS requires recipients of liquidated damage awards to include them as income on their 1099-Miscellaneous Income forms.
Satyanarayan Pani
(Accountant)
(37 Points)
Replied 26 August 2014