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of <h1>Interest on Delayed Payments to Small Scale Industries Non-Deductible u/ss 37(1) & 57(iii) of Income-tax Act.</h1> The circular from the Central Board of Direct Taxes addresses the inadmissibility of certain interest payments as deductions under sections 37(1) and 57(iii) of the Income-tax Act, 1961. It references the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993, which mandates buyers to pay interest on delayed payments to suppliers from small scale and ancillary industrial undertakings. This interest, compounded monthly at a rate 5% above the highest minimum lending rates of scheduled banks, is not deductible for income computation under the Income-tax Act. Assessing Officers are instructed to disallow such interest claims from the 1993-94 assessment year onwards.
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