https://www.taxtmi.com/caselaws?id=27123 Interest paid under section 16 of the Bengal Public Demands Recovery Act, 1913, on arrears recovered through certificate proceedings is compensatory, being charged for delayed payment of a certificated demand, and is therefore allowable as a business deduction. It is not a penal exaction because it arises from non-payment of an enforceable demand, not from breach of law. By contrast, damages under section 14B of the Employees' Provident Funds and Family Pension Fund Act, 1952, are imposed for statutory default and are penal in nature. The distinction between compensatory interest and penalty determines deductibility. en-us Mon, 13 May 1985 00:00:00 +0530 Wed, 10 Feb 2010 18:03:40 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=27123 Interest paid under section 16 of the Bengal Public Demands Recovery Act, 1913, on arrears recovered through certificate proceedings is compensatory, being charged for delayed payment of a certificated demand, and is therefore allowable as a business deduction. It is not a penal exaction because it arises from non-payment of an enforceable demand, not from breach of law. By contrast, damages under section 14B of the Employees' Provident Funds and Family Pension Fund Act, 1952, are imposed for statutory default and are penal in nature. The distinction between compensatory interest and penalty determines deductibility. Case-Laws Income Tax Mon, 13 May 1985 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=27123