electricity charges for unauthorised use

[satbir singhwahi]

Charges has been levied by electricity board for unauthorised use of electricity. Whether these charges can be claimed as deductible under  Income Tax Act.

[CAGOPALJI AGRAWAL]

If it is in the nature of charges for consumption of electricity then deductible and in case penalty then not so.

AI Summary

Deductibility of electricity charges depends on whether the levy is consumption-based or a non-deductible penalty. Allowability of electricity board charges for unauthorised use depends on characterisation: if they are consumption charges they are deductible, but if they are penal in nature they are not deductible under the Income Tax Act.