Does interest payable hold interest?
A COMPANY has not provided for interest payable to a scheduled bank in respect of a term loan, and accordingly has attracted qualification from the statutory auditor. How should the tax auditor deal with this? — Nithya Srinivasan, Kancheepuram The deductibility of interest due to a scheduled bank in respect of term loan is, among other things, governed by Section 43B. In terms of this section, such interest is not deductible while computing the income of the company for the year under review because it has not been paid (presumably) before the due date for filing of income-tax return. Therefore, such interest will become deductible only in the previous year in which it is actually paid. Strictly, the tax auditor need not therefore do anything. But he may bring out the fact that there is no occasion to invoke Section 43B, as the company has not claimed such interest as deduction in the first place. LTCG shelter CAN one utilise the tax shelter offered by Section 54EC in respect of long-
