expenses pertaining to earlier financial years

[paresh zatakia]

Dear Collegues,

TT PL ia company in India which is a 100% subsidiary of An Italian Company called TTE.

TTE supplies raw material to TTPL.

TTPL because of huge losses could not pay its’ import bills payable to TTE, since 2008.

TTE so far did not charge any interest to TTPL.

TTPL annual accounts for f.y.2014-15 have already been finalized.

Now TTE has sent debit note for interest for last four years i.e. from f.y.2011-12 to f.y.2014-15

Shall such interest expense allowed under Income tax act?

Kind regards,

c.a.paresh Zatakia

9833855518

AI Summary

Interest on Unpaid Import Bills: Allowable Expense Under Income Tax Act? Query on Profit & Loss Adjustment. A company in India, TTPL, a subsidiary of an Italian company, TTE, has been unable to pay import bills to TTE due to significant losses since 2008. TTE has not charged interest on these unpaid bills until now, issuing a debit note for interest covering financial years 2011-12 to 2014-15. The query seeks advice on whether this interest expense is allowable under the Income Tax Act. A response suggests that the interest may be incorporated into the Profit & Loss Adjustment account.