Dear Sunali,

If possible given me the text of those case law referred. I will update.

Thanks.

Sathya

undoubtedly not allowed

Originally posted by : Sathyanarayanan. CA Final
	Dear Sunali, If possible given me the text of those case law referred. I will update. Thanks. Sathya

Hi Sathya,

Though could not locate the exact text of earlier referred case laws, i have another case law supporting the same view:

COMMISSIONER OF INCOME TAX vs. CHENNAI PROPERTIES & INVESTMENT LTD.

HIGH COURT OF MADRAS

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 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.

I hope it will suffice.

Regards

Thanks Sunali.

Thanks for giving such valuable information.

Under PGBP all general deductions are discussed u/s 37, whereas sec 30 to 36 covers specific deducitons. Therefore as per sec 37 no penalty as u asked has been allowed. Hence not allowed at all.

Dr Deepak Bhardwaj

P.hd, ACA, MBA, CPA

not allowed as per sec.40

Originally posted by : Sunali
	Originally posted by : Sathyanarayanan. CA Final Dear Sunali, If possible given me the text of those case law referred. I will update. Thanks. Sathya Hi Sathya,   Though could not locate the exact text of earlier referred case laws, i have another case law supporting the same view:   COMMISSIONER OF INCOME TAX vs. CHENNAI PROPERTIES & INVESTMENT LTD. HIGH COURT OF MADRAS 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 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.   I hope it will suffice.   Regards

Dear Sunali 

After reading of the case you mentioned above if I am not wrong the reason of the disallwance of the interest on TDS is becuase TDS is not a business expediture hence the interest paid on such late payment of TDS is also not the business expenditure then

Why the interest paid on the late payment of  Sales Tax etc. is allowed under the act when Sale Tax is also not an expenditure but payment to the Goverment collected from the Sales made ( same as Tax{TDS} collected from the others and deposited in the Account of Goverment).

Please help me to clear the reason.

Regards 

Rahul