A B Kundu (Professional) (1422 Points)
29 September 2019Please clarify whether any penalty, late fee, additional fee, interest etc., by whatever name called, paid under any law (e.g.: late fee for filing TDS Return, Late fee U/s 234F, Late Fee and Interest paid under P.Tax Act, Penalty for violating Traffic rules, Late Fee & Interest paid under GST Act etc.) are disallowed fully U/s 37 of the Income Tax Act?
If possible, please give the reference for the same.
Kapadia Pravin
(17259 Points)
Replied 30 September 2019
A B Kundu
(Professional)
(1422 Points)
Replied 30 September 2019
| Originally posted by : Kapadia Pravin | ||
 |
Any expenditure incurred by an assessee which is an offence or which is prohibited by law shall not be deemed to have been incurred for the purpose of business or profession and no deduction or allowance shall be made in respect of such expenditure. |  |
This is the language of the Act that I have read several times. But what constitutes an offence or prohibitive by law?
As per my opinion Late Fee or Interest shall not be construed as an Offence unlike Penalty, it may be termed as delay payment charges. But, there are so many opinions regarding this I have come across which confuses me more, few are saying all these should be disallowed whereas few are saying only Penalty element should be disallowed.
If you have any analytical discussion regarding this issue please refer.
Thank you.
Kapadia Pravin
(17259 Points)
Replied 30 September 2019
A B Kundu
(Professional)
(1422 Points)
Replied 30 September 2019
| Originally posted by : Kapadia Pravin | ||
|
Certainly disallowed are -late fee for filing TDS Return, Late fee U/s 234F, Late Fee and Interest paid under P.Tax Act, Penalty for violating Traffic rules | |
Okay, but are you sure that Late Fee or Interest Paid would be construed as Offence?? If you don't mind, can you corroborate your logic referring any case or article or any other proof. Will be greatfull to you. Thanks
Kapadia Pravin
(17259 Points)
Replied 01 October 2019
CAclubindia
