https://www.taxtmi.com/caselaws?id=787861 Whether interest on VAT arrears is deductible as a business expense was considered by the Tribunal, which applied the compensatory versus penal character test from binding precedent and concluded that where interest on tax arrears is compensatory it falls within expenditure incurred wholly and exclusively for business; accordingly the disallowance of interest was set aside and the Assessing Officer directed to allow the deduction. The decision relied on the principle in prior authority that compensatory tax-related interest qualifies as allowable business expenditure under the Income-tax Act, 1961. en-us Fri, 13 Feb 2026 00:00:00 +0530 Fri, 13 Mar 2026 08:36:43 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=787861 Whether interest on VAT arrears is deductible as a business expense was considered by the Tribunal, which applied the compensatory versus penal character test from binding precedent and concluded that where interest on tax arrears is compensatory it falls within expenditure incurred wholly and exclusively for business; accordingly the disallowance of interest was set aside and the Assessing Officer directed to allow the deduction. The decision relied on the principle in prior authority that compensatory tax-related interest qualifies as allowable business expenditure under the Income-tax Act, 1961. Case-Laws Income Tax Fri, 13 Feb 2026 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=787861