VAT Payment Delays: Liquidated Damages and Interest Not Tax Deductible, Explanation 1 to Section 37(1) Not Applicable.

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....Disallowance of payment of liquidated damages and interest on delayed payment of Value Added Tax (VAT) as deduction - any payment made for breach of contractual obligation in the form of liquidated damages, cannot be construed as penal in nature. Hence the provisions of Explanation 1 to section 37(1) of the Act cannot be brought into operation at all in the facts of the instant case. - AT....