section 43B

Delay in payment of Employee Contribution to PF/ESI, etc. – In dilemma to claim or not?

CA, CS, CMA - Delay in payment of Employee Contribution to PF/ESI, etc. – In dilemma to claim or not? Section 2(24)(x) of the Income tax Act 1961 (‘Act’) while defining Income, includes the sum received by taxpayer/employer from employees as contribution towards PF, ESI or any other welfare schemes/fund. Once such sum is treated as Income in hand...

Read More

Disallowance of Employee Contribution to PF- Analysis of Case Laws

CA, CS, CMA - Article on Disallowance Of Employees’ Contribution To Provident Fund Or Superannuation Fund Or Gratuity Fund Or Any Other Fund For The Welfare Of Employees. Section 43B(b) r.w.s. 36(1)(va) of the Act....

Read More

Contribution of Land or Building in a partnership firm: Tax Impact

CA, CS, CMA - Many times it happens that a person contributes capital in a partnership firm in the form of land or building in order to become a partner. It has been noted that the tax consequence in such cases is not clear since two sections comes into play in such kind of transactions-Section 45(3) and Section 50C of the Income Tax Act, 1961. The afo...

Read More

Section 43B(f) deduction allowable only on actual payments : SC

CA, CS, CMA - Hon;ble SC has recently in Union of India vs. Exide Industries Ltd. upheld the constitutionality of section 43B(f) and has propounded that the deduction would be allowable only on actual payments....

Read More

Leave Encashment allowed on payment basis: SC Judgment Analysis

CA, CS, CMA - Leave Encashment is allowed on payment basis under Section 43B in Income Tax Act, 1961 – Analysis with Hon’ble Supreme Court recent decision in the case of Union of India & Ors. Vs Exide Industries Limited & Anr. In computation of income under the head Profits and gains of business or profession (PGBP), some of […]...

Read More

Section 36(1)(va) Increase Due date for crediting contribution of employees to due date of ROI

CA, CS, CMA - specified under the relevant legislation of the fund. The employees contribution credited to the employees account in the relevant fund after the due date specified under section 36(1)(va) are disallowed to the employer. Further, any payments made by the employer after the due date is also NOT allowed as a deduction in the year of payment...

Read More

Provision for Gratuity & Leave Encashment not Allowable

CA, CS, CMA - Before 2008-09, deduction towards leave encashment and gratuity was a controversial issue following a Calcutta High Court judgment in the case of Exide Industries. The court ruled in favour of Exide and against the revenue department, saying that such provisions whether paid or not were eligible for deductions on the basis of actuarial va...

Read More

Section 43B not applicable on electricity duty collected on behalf of Government

Paschimanchal Vidhyut Vitran Nigam Ltd. Vs DCIT (ITAT Delhi) - Paschimanchal Vidhyut Vitran Nigam Ltd. Vs DCIT (ITAT Delhi) AO noticed that assessee had made assessment of electricity duty of Rs. 5,52,98,00,000/- of which Rs. 3,44,22,00,000/- was adjusted from the subsidy and the balance amount of Rs.2,08,76,00,000/-was not paid by the assessee before filing th...

Read More

Excise Duty related to earlier years allowed under section 43B

DCIT Vs Adani Wilmar Ltd. (ITAT Ahmedabad) - In the instant case, the assessee in the year under consideration has claimed an expense under the head prior period item in its profit and loss account. Such prior period item was representing the excise duty with respect to waste i.e. Spent Earth generated during the manufacturing process. The ass...

Read More

Assessee can take a stand contrary to their TP study

LSI India Research & Development India Private Limited, [Erstwhile Broadcom Communications Technologies Private Ltd. since merged] Vs DCIT (ITAT Bangalore) - It is open to the parties in Transfer Pricing cases to take a stand contrary to their TP study, if they contend that the stand taken in the TP study is contrary to facts or was erroneous. Such a claim cannot be disregarded only on the basis that it is contrary to Assessee’s own stand in the TP stu...

Read More

Capital Gain u/s 50B applicable on sale of undertaking which covers Depreciable Assets forming part of Industrial Undertaking

DCIT Vs Accelerated Freeze Drying Co. Ltd. (ITAT Cochin) - whether sale of industrial unit as a whole as a continuing business with land, building, plant, machinery and all equipment as a going business with assets and liabilities taxable under section 50B as slump sale or not?...

Read More

Contribution to PNB Employees Pension Fund Trust allowed

Punjab National Bank Vs Add. CIT (ITAT Delhi) - Whether the disallowance of contribution made to PNB Employees Pension Fund Trust, which the assessee claims to be its legitimate business expenditure is justified in law?...

Read More

Chapter VIA deduction on enhanced profits after disallowance eligible

Circular No. 37/2016- Income Tax - (02/11/2016) - Disallowances made under sections 32, 40(a)(ia), 40A(3), 43B, etc. of the Act and other specific disallowances, related to the business activity against which the Chapter VI-A deduction has been claimed, result in enhancement of the profits of the eligible business, and that deduction under Chapter ...

Read More

Section 43B: CBDT clarifies Due date for payment of Employee Provident fund

Circular No. 22/2015-Income Tax - (17/12/2015) - Income Tax Circular No. 22/2015 W.c.f. 1.4.1988, the settled position is that if the assessee deposits any sum payable by it by way of tax, duty, ecss or fee by whatever name called under any law for the time being in force, or any sum payable by the assesse as an employer by way of contribution to ...

Read More

The liability to pay sales tax by instalments cannot be treated to be beyond the provisions of section 43B of the Act

Whether the liability has been deferred or not has to be considered not from the simplistic point of the term 'defer' but in context of the incentive scheme for deferral, as is evident from the circular issued by Central Board of Direct Taxes. The subject matter of Circular no.496 dated 25th Septemb...

Read More

section 43B’s Popular Posts

Recent Posts in "section 43B"

Delay in payment of Employee Contribution to PF/ESI, etc. – In dilemma to claim or not?

Delay in payment of Employee Contribution to PF/ESI, etc. – In dilemma to claim or not? Section 2(24)(x) of the Income tax Act 1961 (‘Act’) while defining Income, includes the sum received by taxpayer/employer from employees as contribution towards PF, ESI or any other welfare schemes/fund. Once such sum is treated as Income in hand...

Read More
Posted Under: Income Tax |

Section 43B not applicable on electricity duty collected on behalf of Government

Paschimanchal Vidhyut Vitran Nigam Ltd. Vs DCIT (ITAT Delhi)

Paschimanchal Vidhyut Vitran Nigam Ltd. Vs DCIT (ITAT Delhi) AO noticed that assessee had made assessment of electricity duty of Rs. 5,52,98,00,000/- of which Rs. 3,44,22,00,000/- was adjusted from the subsidy and the balance amount of Rs.2,08,76,00,000/-was not paid by the assessee before filing the return of income. Assessee was asked t...

Read More

Excise Duty related to earlier years allowed under section 43B

DCIT Vs Adani Wilmar Ltd. (ITAT Ahmedabad)

In the instant case, the assessee in the year under consideration has claimed an expense under the head prior period item in its profit and loss account. Such prior period item was representing the excise duty with respect to waste i.e. Spent Earth generated during the manufacturing process. The assessee during the assessment proceedings ...

Read More

Assessee can take a stand contrary to their TP study

LSI India Research & Development India Private Limited, [Erstwhile Broadcom Communications Technologies Private Ltd. since merged] Vs DCIT (ITAT Bangalore)

It is open to the parties in Transfer Pricing cases to take a stand contrary to their TP study, if they contend that the stand taken in the TP study is contrary to facts or was erroneous. Such a claim cannot be disregarded only on the basis that it is contrary to Assessee’s own stand in the TP study....

Read More

Capital Gain u/s 50B applicable on sale of undertaking which covers Depreciable Assets forming part of Industrial Undertaking

DCIT Vs Accelerated Freeze Drying Co. Ltd. (ITAT Cochin)

whether sale of industrial unit as a whole as a continuing business with land, building, plant, machinery and all equipment as a going business with assets and liabilities taxable under section 50B as slump sale or not?...

Read More

Disallowance of Employee Contribution to PF- Analysis of Case Laws

Article on Disallowance Of Employees’ Contribution To Provident Fund Or Superannuation Fund Or Gratuity Fund Or Any Other Fund For The Welfare Of Employees. Section 43B(b) r.w.s. 36(1)(va) of the Act....

Read More
Posted Under: Income Tax |

Contribution of Land or Building in a partnership firm: Tax Impact

Many times it happens that a person contributes capital in a partnership firm in the form of land or building in order to become a partner. It has been noted that the tax consequence in such cases is not clear since two sections comes into play in such kind of transactions-Section 45(3) and Section 50C of the Income Tax Act, 1961. The afo...

Read More
Posted Under: Income Tax |

Contribution to PNB Employees Pension Fund Trust allowed

Punjab National Bank Vs Add. CIT (ITAT Delhi)

Whether the disallowance of contribution made to PNB Employees Pension Fund Trust, which the assessee claims to be its legitimate business expenditure is justified in law?...

Read More

Section 43B Not Applicable on RTO Registration Fees collected from Customers 

THAR Automobiles Pvt. Ltd. Vs ITO (ITAT Delhi)

The issue under consideration is regarding applicability of provision of section 43B on the registration fees collected from the customers on sale of the vehicles?...

Read More

Section 43B(f) deduction allowable only on actual payments : SC

Hon;ble SC has recently in Union of India vs. Exide Industries Ltd. upheld the constitutionality of section 43B(f) and has propounded that the deduction would be allowable only on actual payments....

Read More
Posted Under: Income Tax |

SC upheld constitutional validity of Section 43B(f) of Income Tax Act, 1961

Union of India & Ors. Vs Exide Industries Limited & Anr. (Supreme Court)

Union of India & Ors. Vs Exide Industries Limited & Anr. (Supreme Court) Before the judgment in Bharat Earth Movers (supra), various tribunals and High Courts across the country were treating the liability in lieu of leave encashment as a contingent liability. This did not go down well with the assessees following the mercantile a...

Read More

Leave Encashment allowed on payment basis: SC Judgment Analysis

Leave Encashment is allowed on payment basis under Section 43B in Income Tax Act, 1961 – Analysis with Hon’ble Supreme Court recent decision in the case of Union of India & Ors. Vs Exide Industries Limited & Anr. In computation of income under the head Profits and gains of business or profession (PGBP), some of […]...

Read More
Posted Under: Income Tax |

Treatment of Contribution towards Provident Fund under Income Tax Act, 1961

Contribution towards Provident Fund is one of the area, which requires due consideration of Auditor while conducting Tax Audit. In industry, there are some confusions regarding the treatment of Contribution towards Provident Fund. Through this Article, I am trying to interpret the intent of the Act with regard to these provisions. Employe...

Read More
Posted Under: Income Tax | ,

All about DEFERRED TAX and its entry in books

The word Deferred is derived from the word Deferments which means arranging for something to happen at a later date. Thus, deferred tax is the tax for those items which are accounted in Profit & Loss A/c but not accounted in taxable income which may be accounted in future taxable income & vice versa. The deferred tax may be a liability or...

Read More
Posted Under: Income Tax | ,

Property tax reimbursed to licensor cannot be treated as tax for Section 43B

Areva India Pvt. Ltd. Vs ACIT (ITAT Mumbai)

Property tax levied by the Municipal Authority is a charge on the property. Undisputedly, the licensor is the owner of the property, hence, liable to pay the property tax. That being the case, the amount equivalent to the property tax reimbursed to the licensor cannot be treated as rate, tax, fee, cess, etc., as provided under section 43B...

Read More

Belated Service Tax payment allowable on actual payment basis

Wyzmindz Solutions Pvt. Ltd. Vs ITO (ITAT Bangalore)

Service tax collected by assessee and not paid to the Government exchequer before the due date of filing of return was to be disallowed under section 43B and the same should be allowed on actual payment in the assessment year in which it was actually paid. ...

Read More

No Service Tax Disallowance if same not forms part of Turnover- Section 43B

SDCE Projects (P) Ltd. Vs DCIT (ITAT Ahmedabad)

 Assessee not having routed service tax amount through profit and loss account, there was no question of making disallowance under section 43B on account of delayed payment of service-tax....

Read More

Withdrawal of Provident Fund and Its Taxability – Synopsis

PF withdrawal is taxable if a person has worked in the company for less than 5 years. Tax cannot be saved even by investing in any govt schemes / bonds. It just gets added to income from salaries, and then the taxability will depend upon the Gross Income of the assessee. ...

Read More
Posted Under: Income Tax |

Section 43B deduction not allowable for unutilized MODVAT credit: SC

Maruti Suzuki India Ltd. Vs CIT (Supreme Court)

Since unutilized credit in the MODVAT scheme without incurring the liability could not be treated as sum actually paid by assessee under section 43B  hence the unutilized credit under MODVAT scheme did not qualify for a deduction....

Read More

Section 43B covers both employees & employer’s contributions

CIT (Central) Vs Ghatge Patil Transports Ltd. (Bombay High Court)

We hold that both employees' and employer's contributions are covered under the amendment to Section 43B of I.T. Act and the Alom Extrusions judgment. Hence the Tribunal was right in holding that payments thereof are subject to benefits of Section 43B....

Read More

S. 43B deduction on payment for amount disallowed to insurance Cos

Allowing deduction for amount disallowed u/s 43B, to insurance companies on payment basis Section 44 of the Act provides that computation of profits and gains of any business of insurance, including any such business carried on by a mutual insurance company or a co-operative society shall be computed in accordance with the rules contained...

Read More
Posted Under: Income Tax |

Section 43B: PF & employees state insurance payment within Grace Period Allowable

CIT vs Bharat Hotels Ltd. (Delhi High Court)

Whether the payment of provident fund and employees state insurance (ESI) dues deposited by the Assessee within the grace period would qualify for deduction under Section 43B of the Income Tax Act, 1961?...

Read More

S. 43B Conversion of outstanding interest into loan not amount to payment

CIT Vs M/s Gujarat Cypromet Ltd. (Supreme Court of India)

CIT Vs. M/s Gujarat Cypromet Ltd. (Supreme Court of India) The conversion of outstanding interest into loan does not amount to actual payment of the interest in order to qualify for deduction in view of the retrospective insertion of Explanation 3C to Section 43B of Income Tax Act, 1961. FULL TEXT OF THE SUPREME COURT […]...

Read More

Disallowance of Contribution of PF, ESIC etc u/s 36(1)(va) – A Comparative Study between Section 36(1)(va) Vs. Section 43-B

Section 36(1)(va) Vs. Section 43-B If the assessee fails to deposit the PF, ESIC etc Contribution before the due dates as per the respective Acts. Effect of Section 43B on unpaid liability towards contributions to any provident fund or superannuation fund or any fund set up under the provisions of the Employees’ State Insurance Act,...

Read More
Posted Under: Income Tax |

Employee’s contribution for PF/ESI before due date of filing return of income is allowable expense

It is commonly seen that the assessees who have filed Income Tax Return along with Tax Audit Report are receiving notices from the Income Tax Department for making adjustment on the ground that payment of the employee’s contribution to specified funds made beyond the due date specified in the respective law and therefore would attra...

Read More
Posted Under: Income Tax |

Customary bonus not attract provision of section 36(1)(ii)

DCIT Vs. M/s. Enam Securities Pvt. Ltd (ITAT Mumbai)

DCIT Vs. M/s. Enam Securities Pvt. Ltd (ITAT Mumbai) it is duly noted that the assessee has submitted that the outstanding bonus was customary bonus and not filing u/s. 36(1)(ii) to come under the ambit of disallowance u/s. 43B(C). The assessee has quoted several case laws for the proposition that the customary bonus do not […]...

Read More

Employer/employees/contribution towards PF before due date of filing of return U/s. 139(1) allowable

A.T.E. Pvt. Ltd. Vs Assisstant Commissioner of Income Tax (Bombay High Court)

A.T.E. Pvt. Ltd. Vs ACIT (Bombay High Court) In this case, admittedly, the payments have been made beyond the due date as prescribed in the relevant Act, under which the aforesaid payments have been made. However, it is also undisputed that the payments have been made before the due date for fling the return of […]...

Read More

Section 43B does not contemplate liability to pay service tax before actual receipt

Principal CIT Vs Tops Security Ltd. (Bombay High Court)

Pr. CIT Vs Tops Security Ltd. (Bombay High Court) Section 43B does not contemplate liability to pay service tax before actual receipt of the funds in the account of the assessee. Hence the liability to pay service tax into the Treasury will arise only upon the assessee receiving the funds and not otherwise. Thus the […]...

Read More

Disallowance cannot be made for provision for gratuity for mere non-payment

Thiruvalla East Co-operative Bank Ltd. Vs ITO (ITAT Cochin)

Disallowance under section 43B could not be done  in respect of provision for gratuity made for the benefit of the employees for the reason that no actual payment was made....

Read More

Applicability of amended Section 43B on employees contribution to PF

High Volt Electricals (P.) Ltd. Vs ACIT (ITAT Mumbai)

Since both the employee’s and employer’s contribution to Provident Fund was covered under the amended provision of section 43B, therefore Employees contribution to Provident fund (EPF), beyond the due date stipulated under the Provident Fund Act but before the due date of filing return of income under section 139(1) could not be disal...

Read More

Delayed ESIC and PF payment before filing of IT Return allowable

DCIT Vs Andhra Prabha Publications Ltd. (ITAT Hyderabad)

Ifthe employees’ share of contribution is paid before the due date of filing the return u/s 139(1) of the Income-tax Act, 1961 then no disallowance can be made....

Read More

In-depth analysis of overriding effect of Section 43B of I.T. Act, 1961 

CA Gaurav Pahuja Background While the issue regarding the deduction of employer’s contribution made after due date, in funds set up for welfare of employees is well settled now, the practice of disallowing the claim of the assessee employer on account of delayed deposit of employee’s contribution is continued by the Income Tax Departm...

Read More
Posted Under: Income Tax |

Contribution to EPF & ESI deposited before Income Tax Return filing due date cannot be disallowed

Das & Sons Infracon Pvt. Ltd. Vs DCIT (ITAT Cuttack)

Das & Sons Infracon Pvt. Ltd. Vs DCIT (ITAT Cuttack) amount claimed on payment of PF and ESI having been deposited on or before due date of filing of returns, same could not be disallowed under section 43B or under section 36(1)(va). FULL TEXT OF THE ITAT JUDGMENT This is an appeal filed by the […]...

Read More

Conversion of unpaid interest into loan not amounts to deemed payment of interest U/s. 43B

Teesta Agro Industries Ltd. Vs. DCIT (ITAT Kolkata)

Interest can only be allowed when it is actually paid and conversion of unpaid interest into loan does not amount to deemed payment of interest in terms of section 43B....

Read More

Section 43B does not contemplate liability to pay service tax before actual receipt of the funds

PCIT Vs. Tops Security Limited (Bombay High Court)

When assessee did not receive any amount from its clients, on which services tax was payable, then, the amount claimed by the assessee being unpaid service tax as its liability could not be disallowed under section 43B, as liability to pay service tax in respect of consideration would arise only upon the assessee receiving funds and not o...

Read More

S. 43B Overdue interest converted into loan allowable only on payment

Teesta Agro Industries Ltd Vs DCIT (ITAT Kolkata)

Explanation 3C to section 43B provides that interest payable can only be allowed to an assessee when the same is actually paid and any interest which has been converted into a loan shall not be deemed to have been actually paid. ...

Read More

Disallowance of Service Tax U/s. 43B when payment not received from customer

PCIT Mumbai Vs. Tops Security Limited (Bombay High Court)

Service tax due not disallowed under section 43 if payment not received from the customer...

Read More

Deferred Tax- Simplified

As we are rushing towards the Tax audit due date, I thought its worthy to attempt a write-up on a concept that holds significant place in accounting of taxes of a business(i.e) Deferred Tax....

Read More
Posted Under: Income Tax |

No Deduction on failure to remit employees’ contribution to EPF within statutory due date

M/s. Popular Vehicles & Services Pvt. Ltd. Vs The Commissioner of Income Tax (Kerala High Court)

M/s. Popular Vehicles & Services Pvt. Ltd. Vs CIT (Kerala High Court) Sub-clause (va) of Section 36(1) takes care of the employee’s contribution, which stands unaffected by Section 43B as the restriction available in Section 43B is already available under the Explanation to the said clause, with a qualification of the payment be...

Read More

Tax Audit- Clause 26, Section 43B Most Important

All about Clause 26 of Form 3cd. 1. What does Clause 26 says:- In respect of any sum referred to in clause (a), (b), (c), (d), (e) or (f) of section 43B, the liability for which:- (A) Pre-existed on the first day of the previous year but was not allowed in the assessment of any […]...

Read More
Posted Under: Income Tax |

EPF Act 1952 vis-á-vis Income Tax Act – Tax Treatment of PF Dues

Employer’s contribution and Employees’ contribution in India are governed by EPF Act, 1952. The employees’ contributions are obtained by employer @12% and along with equal contribution are deposited with the PF trust or PF commissioner at the designated bank account by the latter....

Read More
Posted Under: Income Tax | ,

Section 43B – Deductions only on Actual Payments

In computation of income under the head Profits and gains of business or profes­sion (PGBP), some of the expenses are allowed under Income Tax Act 1961 and can be claimed by the assessee only in the year in which the payment is actually made....

Read More
Posted Under: Income Tax |

Deduction U/s. 80-IA allowable on amount disallowed U/s. 43B

Dy. CIT Vs TA Infra Projects Ltd. (ITAT Hyderabad)

As amount disallowed under section 43B would become profits of business in the computation of income under the head "Profits and gains of business or profession". Consequently, if the amounts disallowed were pertaining to the projects on which the claim under section 80-IA was made, the same had to be allowed as profits get increased to t...

Read More

Section 36(1)(va) Increase Due date for crediting contribution of employees to due date of ROI

specified under the relevant legislation of the fund. The employees contribution credited to the employees account in the relevant fund after the due date specified under section 36(1)(va) are disallowed to the employer. Further, any payments made by the employer after the due date is also NOT allowed as a deduction in the year of payment...

Read More
Posted Under: Income Tax |

Decoding tax issues on insolvency code

De-coding the tax implications upon insolvency Non-Performing Assets (NPAs) have become an abiding issue with the Indian banking industry impacting the credit quality of bank loans.  The state of the bankruptcy process, prior to introduction of the Insolvency and Bankruptcy Code, 2016 (IBC) was highly fragmented which posed a deterrent ...

Read More
Posted Under: Income Tax |

Amendment in sec 43B is curative in nature and applies retrospectively

M/s. Simbhauli Sugar Mills Ltd. Vs. Addl. CIT (Allahabad High court)

Hon'ble Allahabad High court has in the case of M/S Simbhauli Sugar Mills Ltd in ITA No 607 of 2011 has held that amendment is sec 43B is curative in nature and would apply retrospectively....

Read More

No deduction allowed U/s. 43B of amount standing in ‘Sales-tax Recoverable A/c‟

Maruti Udyog Ltd. Vs. CIT (Delhi High Court)

Whether the ITAT has committed an error of law in upholding the dis allowance of Rs. 3,08,79,171 in respect of Sales Tax Recoverable account, under Section 43B of the Income Tax Act?...

Read More

SC Allows Deduction of Excise Duty Paid in Advance in PLA

CIT Vs M/s Modipon Ltd. (Supreme Court of India)

CIT Vs M/s Modipon Ltd. (Supreme Court) Purpose of introduction of Section 43B of the Central Excise Act was to plug a loophole in the statute which permitted deductions on an accrual basis without the requisite obligation to deposit the tax with the State. Resultantly, on the basis of mere book entries an assessee was […]...

Read More

Section 43B: Municipal Tax Arrears allowable in the year of payment

ITO Vs. Sudhir Satnaniwala (ITAT Kolkata)

ITO Vs. Sudhir Satnaniwala (ITAT Kolkata) It is observed that the deduction claimed by the assessee on payment of municipal tax arrears was disallowed by the A.O. on the ground that the said expenditure pertained to the earlier years and the assessee was not liable to pay the same. Since the corresponding rental income received […]...

Read More

Sec. 43B: Amusement Tax paid before due date of Filing Income Tax Return is eligible for deduction

Ratan Saha Vs. ITO (ITAT Kolkata)

The Kolkata bench of Income Tax Appellate Tribunal recently ruled that Amusement Tax paid before the due date of filing of Income Tax Return is eligible for deduction under the Income tax Act, 1961. ...

Read More

Tax planning opportunity by SC?

CIT Vs. M/s Modipon Ltd. (Supreme Court of India)

The decision relates to deductibility of excise duty u/s 43B of the Income Tax Act, 1961. Section 43-B requires cumulative existence of following; The deduction claimed by the Assessee must be otherwise allowable under the other provisions of the Act....

Read More
Posted Under: Income Tax |

Advance payment of Duty in PLA account eligible for deduction: SC

CIT Vs. M/s Modipon Ltd. (Supreme Court of India)

Advance deposit of central excise duty constitutes actual payment of duty within the meaning of Section 43B of the Central Excise Act and, therefore, the assessee is entitled to the benefit of deduction of the said amount....

Read More

S.43B(f): provision for future leave encashment allowable in year of payment

M/s. Rashtriya Ispat Nigam Ltd. Vs. JCIT (OSD) (ITAT Visakhapatnam)

M/s. Rashtriya Ispat Nigam Ltd. Vs. JCIT (OSD) (ITAT Visakhapatnam) The assessee company has created a provision under the head ’Future Leave Encashment’. During the course of assessment proceedings, the assessee company was asked to explain how the amount debited towards the provision for future leave encashment can be allowed as ded...

Read More

Deduction u/s 43B for EPF / ESIC paid after due date

M.V.S Engineering Ltd Vs The CIT (Delhi High Court)

In this case high court held that payment of employees contribution under the Employees Provident Fund and Misc. Provision Act, 1952 and the Employees State Insurance Act, 1948 is allowable if paid before the due date of filing Income Tax Return or filing of Income Tax Return whichever is earlier even if the same is paid after the due da...

Read More

Provisions for gratuity actually accrued during the year is allowable

DCIT Vs M/s. Reliance Jute Mills International Ltd (ITAT Kolkata)

Provisions contained in section 40A(7)(b) that provision made by the assessee for the purpose of payment of any gratuity, that has become payable during the year is allowable which means that the liability which has actually accrued during the year is allowable....

Read More

Amount adjusted as duty from Security deposit is allowable expense

Pr. Commissioner of Income Tax Vs Praveen Saxena (Delhi High Court)

High Court held that that the disallowance of Rs. 70 lakhs paid by the assessee respondent as a condition pursuant to the order of this Court dated 01.02.2007 was liable as an expense as same was appropriated by the Customs authorities and it was covered by Section 43B of the Income Tax Act, 1961....

Read More

Chapter VIA deduction on enhanced profits after disallowance eligible

Circular No. 37/2016- Income Tax (02/11/2016)

Disallowances made under sections 32, 40(a)(ia), 40A(3), 43B, etc. of the Act and other specific disallowances, related to the business activity against which the Chapter VI-A deduction has been claimed, result in enhancement of the profits of the eligible business, and that deduction under Chapter VI-A is admissible on the profits so enh...

Read More

PF liability – Where to disclose in Tax Audit?

This article had been presented before you all with an intention to provide clarity in relation to correct disclosure in Tax Audit regarding Clause number for Provident Fund contribution and Due date to be mentioned in those clauses....

Read More
Posted Under: Income Tax |

Section 43B to include certain payments made to Railways

With a view to ensure the prompt payment of dues to Railways for use of the Railway assets, it is proposed to amend section 43B so as to expand its scope to include payments made to Indian Railways for use of Railway assets within its ambit....

Read More
Posted Under: Income Tax |

Electricity duty is not a tax, duty cess or fee, section 43B is not attracted in respect of electricity duty collected by MSEB

ACIT Vs M/s. Maharashtra State Electricity Distribution Co. Ltd. (ITAT Mumbai)

In the case of ACIT Vs. M/s. Maharashtra State Electricity Distribution Co. Ltd. ITAT adjudicated two appeals against the order of CIT (A) who allowed the appeal of assessee in part. Both revenue as well as assessee filed appeal against the order of CIT (A)....

Read More

No disallowance u/s 43B for unpaid sales tax liability shown as contingent liability

DCIT Vs M/s. Escorts Construction Equipment Ltd. (ITAT Delhi)

ITAT Delhi held In the case of DCIT vs. M/s. Escorts Construction Equipment Ltd. that we find that this amount represents unpaid sales tax liability and the same was disclosed itself by the assessee as a contingent liability....

Read More

Section 43B: CBDT clarifies Due date for payment of Employee Provident fund

Circular No. 22/2015-Income Tax (17/12/2015)

Income Tax Circular No. 22/2015 W.c.f. 1.4.1988, the settled position is that if the assessee deposits any sum payable by it by way of tax, duty, ecss or fee by whatever name called under any law for the time being in force, or any sum payable by the assesse as an employer by way of contribution to any provident fund or superannuation fun...

Read More

VAT collected but not paid is to be added to income even if amount has not routed through P&L Account

Munaf Ibrahim Memon Vs The Income Tax Officer (ITAT Pune)

VAT collected by the assessee was in respect of traded goods dealt in by the assessee and in view of the provisions of section 145A of the Act, the value of the VAT was to be included as part of sale consideration of the traded goods and once the same is to be included as part of the sale goods...

Read More

Payment of PF, ESI made belatedly but within due date of filing of Income Tax return, cannot be disallowed u/s 43B

The ACIT Vs M/s. Rajasthan Rajya Vidyut Utpadan Nigam Ltd. (ITAT Jaipur)

ACIT Vs. M/s. Rajasthan Rajya Vidyut Utpadan Nigam Ltd. (ITAT Jaipur)- he AO disallowed the payment on the ground that though the amount was paid by the assessee but was not paid within the due date as given under the respective Acts of GPF, CPF and ESI....

Read More

S. 43B No disallowance for Electricity duty collected on behalf of state government but not paid: HC

CESC Ltd. Vs CIT (Calcutta High Court)

Calcutta High Court held In the case of CESC Ltd. vs. CIT that Section 43B of the Income Tax Act is attracted to a case where payment is to be made to the State Government in the capacity of the State as a sovereign and not to a case where payment is to be made to the State Government in its capacity ...

Read More

Section 43B: Conversion of interest into shares amounts to payment

CIT Vs Rathi Graphics Technologies Ltd (Delhi High Court)

In the case of CIT vs Rathi Graphics Technologies Ltd. Delhi High Court inter-alia held that the conversion of a portion of interest into shares should be taken to be “actual payment” within the meaning of Section 43B of the IT Act....

Read More

Explanation 3C to section 43B will have retrospective effect for actual payments

CIT Vs Pennar Profiles Ltd. (Telangana and Andhra Pradesh High Court)

In the present facts of the Case the Hon’ble High Court held that Explanation 3C to section 43B is having retrospective effect from 01/04/1989. Therefore, conversion of interest amount into loan would not be actually deemed to be actual payment....

Read More

When interest was converted into loan or borrowing/advance, it shall not be deemed to have been actually paid

Rollatainers Ltd. Vs ACIT (ITAT Delhi)

In the cited case, ITAT inter-alia held in the light of the main provisions of section 43B read with Explanations 3C and 3D that the interest payable to banks and other financial institutions can be allowed as deduction only ‘if such interest has been actually paid...

Read More

Section 43B- Liability for services rendered but payment not received

CIT Vs Ovira Logistics Pvt Ltd. (Bombay High Court)

Section 43B does not contemplate liability to pay the service tax before actual receipt of the funds in the account of the assesee. Liability to pay service tax into the treasury will arise only upon the assessee receiving the funds and not otherwise. ...

Read More

Deduction for PF and ESI contribution cannot be disallowed if paid before due date of filing return

ITO Vs. M/s. M.L. Outsourcing P. Ltd. (ITAT Delhi)

ITAT held that (i) International recruitment service operations conducted from STPI, Noida are held to be eligible for benefit of deduction u/s 10A. (ii) The deduction of payment of employees’ contribution towards provident fund and ESI cannot be disallowed under section 43B...

Read More

Whether Furnishing Bank Guarantee amounts to Payment as Required U/s. 43B?

The Supreme Court in the case CIT v. McDowell & Co. Ltd. [2009] 180 Taxman 514 (SC), has held, on the facts and circumstances of the case, that furnishing of bank guarantee cannot be equated with actual payment....

Read More
Posted Under: Income Tax |

Audit Fees for Prior Period not allowable unless expenses gets crystallized in the year under consideration

M/s U.P. Co-operative Processing & Cold Storage Federation Ltd Vs A.C.I.T. (ITAT Lucknow)

Since the assessee is following mercantile system of accounting, the expenses of earlier year cannot be allowed in the present year because the assessee had not been able to furnish any evidence to show that the above expenses have crystallized in the present year....

Read More

Vend fee paid by assessee to Government, even if of the nature of ‘privilege fee’ falls within the expression ‘fee by whatever name called’

CIT, Kerala Vs M/s. Travancore Sugars & Chemicals Ltd. (Supreme Court of India)

The Assessee contented that the so-called vend fee in the present case is nothing but a consensual arrangement by which ultimately machinery and equipment used by sugar mills which were very old and which require urgent repair / replacement could be so repaired or replaced....

Read More

Repayment of interest on loan by conversion does not amount to actual payment u/s 43B

CIT, Delhi Vs M.M. Aqua Technologies Ltd (Delhi High Court)

That debentures are securities within the meaning of the expression understood in Section 2 (ac) and (h) of the Securities Contract Regulation Act, 1956 and freely tradable. The moment the debentures were issued to ICICI, the latter could realize the money value thereof. ...

Read More

No disallowance U/s. 43B for Service Tax not debited to Profit & Loss Account

Cit Vs Noble And Hewitt (I) (P) Ltd. (Delhi High Court)

In our opinion since the assessed did not debit the amount to the Profit & Loss Account as an expenditure nor did the assessed claim any deduction in respect of the amount and considering that the assessed is following the mercantile system of accounting, the question of disallowing the deduction under section 43B not claimed would not a...

Read More

Service Tax U/s. 43B not allowable as no expenditure claimed by assessee

ITO Vs Nafe Singh Gahalawat (ITAT Delhi)

Issue- On the facts and in the circumstances of the case, the Ld.CIT(Appeals) has erred on facts and in law in deleting the addition of Rs.10,83,555/- which was made by the Assessing Officer by invoking the provisions of section 43B of the Act as the service tax payable in the balance sheet was not deposited before due date of filing of r...

Read More

Employees' contribution to PF is eligible for Deduction U/s. 43B

ITO Vs Indore Steel and Iron Mills Ltd (ITAT Mumbai)

Whether the deposit by the assessee­ of the employee’s contribution to the Employees Provident Fund (EPF) or to the Employees State Insurance Corporation (ESIC), i.e., as an employer, after the respective due dates, i.e., under the respective Acts, where-under both the employee and the employer are obliged to contribute a sum, reckoned...

Read More

Employees contribution to PF allowable U/s. 43B if paid before IT return filing due date

Commissioner of Income Tax Vs M/s Hindustan Organics Chemicals Ltd. (Bombay High Court)

CIT v/s M/s Hindustan Organics Chemicals Ltd. (BOmbay High Court)- Supreme Court has expressly held that the amendments to section 43B that were brought about by the Finance Act, 2003 are retrospective in nature, we find that the ITAT was fully justified in deleting the addition of Rs.1,82,77,138/- on account of delayed payment of Provide...

Read More

S. 43B applies only to Statutory liability not to contractual liability

Oswal Agro Mills Ltd. Vs CIT (Delhi High Court)

Section 43B applies only in cases of statutory liability. By virtue of the said section, a statutory liability is not deductable in the year in which it accrues if the same remains unpaid. A deduction with respect to a statutory liability is allowed only on payment of the same....

Read More

If employers deposits employee’s PF before due date specified in section 43B, employer is eligible for deduction- HC

If employers deposits employee’s Provident fund contribution before due date as referred to in section 43B, employer is eligible for benefit under said section-High Court-Karnataka in case of COMMISSIONER OF INCOME TAX Versus M/s SPECTRUM CONSULTANTS INDIA PVT LTD....

Read More
Posted Under: Income Tax |

No S. 14A Disallowance without recording dissatisfaction over expense claimed by the Assessee

Commissioner of Income Tax, Central II Vs M/S. R.E.J. Agro Ltd. (Calcutta High Court)

The Assessing Officer also disallowed the expenditure under section 14A of the Income Tax Act, 1961 without first recording that he was not satisfied with the correctness of the claim as regards the claim that “no expenditure” was made by the assessee....

Read More

Employees’ contribution to PF paid before due date of ROI allowable

CIT Vs REI Agro Ltd. (ITAT Kolkata)

We find that the assessee has made payment on or before the due date of filing of return u/s. 139(1) of the Act and this issue is squarely covered by the decision of Hon’ble jurisdictional High Court in the case of Vijay Shree Limited, supra, wherein Hon’ble Calcutta High Court has held as under...

Read More

Section 43B and PF Contribution – Controversy snowballed

Section 43B of the Income-tax Act, 1961 allows certain expenses on the basis of actual payment made within the stipulated time period, i.e. before the due date of filing return of income. In other words, deduction of such expenses is allowed in the year of actual payment and not in the year in which the liability to pay the same gets incu...

Read More
Posted Under: Income Tax |

Employees’ PF/ ESI Contribution covered by S. 43B

CIT Vs Gujarat State Road Transport Corp (Gujarat High Court)

If the amount has been deposited on or before the due date of filing the return under Section 139 and admittedly it was deposited on or before the due date then the amount cannot be disallowed under Section 43B of the I.T. Act or under Section 36(1)(va) of the Act....

Read More

Employees’ PF/ ESI Contribution not covered by Section 43B

Commissioner of Income Tax II Vs Gujarat State Road Transport Corporation (Gujarat High Court at Ahmedabad): Tax Appeal No. 637 of 2013

Section 43B which permits a deduction for payments made upto the due date for filing the ROI applies only to the employer’s contribution to the provident fund etc. It does not apply to the employees’ contribution. ...

Read More

No disallowance u/s 43B if amount is deposited within grace period

The Commissioner of Income Tax Vs. Amoli Organics (P) Ltd (Gujarat High Court)

If the assessee was entitled to make payment within the grace period and if within that grace period, its employer contributions have been deposited by the assessee, it cannot be said that the assessee has not deposited the amount with the department within the due date as prescribed under the Provident Fund Act...

Read More

Deduction can be claimed in respect of a crystallized liability

Commissioner of Income Tax-II Vs M/s Bhagwati Corporation (Gujarat High Court at Ahmedabad)

Though the questions are multiple, issue is single, namely, the deduction of Rs.61,08,500/- claimed by the assessee towards expenditure being part of development charges. The assessee had paid such sum to Surat Municipal Corporation towards water connection charges....

Read More

S. 43B Employees contributions to EPF/ESIC beyond due dates specified in relevant statutes, but before due date of filing ROI allowable

The Commissioner of Income Tax Versus M/s Kichha Sugar Company Ltd. (Uttarakhand High Court at Nainital)

Due date referred to in section 36(1)(va) of the Act must be read in conjunction with section 43B(b) of the Act and a reading of the same would make it amply clear that the due date as mentioned in Section 36(1)(va), is the due date as mentioned in section 43B(b)...

Read More

Employees’ PF/ ESI Contribution allowable as a deduction u/s 36(1)(va) if paid by due date prescribed therein

ITO Vs. LKP Securities Ltd (ITAT Mumbai)

The decisions by the apex court in the case of Vinay Cement Ltd. (supra) and Alom Extrusions Ltd. (supra) are admittedly with reference to section 43B and, further, qua the scope of the amendments thereto. The deductibility of the employee’s contribution is not regulated by section 43B....

Read More

EPF / ESI contributions allowable, if paid before due date of filing I-T return

Gobindpada Bhanja Chowdhury Vs Income-tax Officer (ITAT Cuttack)

Amounts whether employees' contribution or the employer's contribution are not being shown as payable as on the last date of the Assessment Year cannot be brought to tax if the same has been paid before the due date of filing of the return....

Read More

Service tax liability, for which there was no receipt by assessee by year end, could not be disallowed U/s. 43B

Dy. Commissioner of Income Tax – 8(2) Vs. M/s Ovira Logistics Pvt. Ltd. (ITAT Mumbai)

Facts are not in dispute inasmuch as it is also not in dispute that the assessee has paid the amount of service tax of Rs. 41,97,663/- before the due date of filing of return, therefore, the ld. CIT(A) has rightly deleted the said disallowance. As regards other disallowance of service tax payable Rs. 48,10,998/- we find merit in the plea ...

Read More

Dues of EPF, ESIC, etc., if deposited before due date of filing return, is allowable

Tara Jewels Export (P.) Ltd. Vs Assistant Commissioner of Income-tax, 8(3) (ITAT Mumbai)

After considering the rival submissions and perusing the relevant material on record it is observed that the due date for filing the return of income by the assessee under section 139(1) for the relevant year is 30.11.2006. The AO has drawn a chart at page-4 of the assessment order showing the dates of actual deposits and due dates for th...

Read More

No disallowance U/s. 43B for Interest payable on deep discount bond

The D. C. I. T. Vs. Gujarat Road & Infrastructure Co. Ltd. (ITAT Ahmedabad)

In the instant case, the interest is payable in respect of amounts deposited by financial institutions with the assessee by subscribing to the bonds issued by the assessee. The interest is payable in respect of certain deposits received by the assessee and not in respect of any loans, advances or borrowings made by the assessee. For the s...

Read More

Non-payment of interest to co-operative bank would not attract disallowance u/s. 43B

Commissioner of Income-tax - 2 Vs Upendra T. Kapadia (Bombay High Court)

Section 43B of the Act is applicable only in respect of any amount paid as interest to a scheduled bank. A scheduled bank as defined in Explanation 4 to Section 43B of the Act would have the same meaning as contained in the Explanation to Section 11(5) (iii) of the Act....

Read More

Employee & Employer’s contribution to PF /ESI fund allowable if Paid before Due Date of ROI

Commissioner of Income-tax, Shimla Vs Nipso Polyfabriks Ltd. (Himachal Pradesh High Court)

We are dealing with cases where though the amount was not deposited by the due date under the Welfare Acts, it was definitely deposited before furnishing the returns. We see no reason to make any distinction between the employees' contribution or the employers' contribution....

Read More

Tax Payment allowable on payment basis irrespective of year of accrual

Commissioner of Income Tax Vs Maruti Suzuki India Ltd. (Delhi High Court)

For the purpose of claiming benefit of deduction of the sum paid against the liability of tax, duty, cess, fee, etc., the year of payment is relevant and is only to be taken into account. The year in which the assessee incurred the liability to pay such tax, duty, etc., has no relevance and cannot be linked with the matter of giving benef...

Read More

Arrears of salary not covered by section 43B of Income Tax Act

Commissioner of Income-tax Vs Hindustan Times (Delhi High Court)

Arrears of salary and other benefits payable to employees, is not covered by Section 43-B at all. Such liabilities are not contributions to provident fund, superannuation or any other fund or plan which the employer is obliged to extend to its employees to fulfill its statutory or contractual obligations. The character of the amounts in t...

Read More

Interest paid on sales tax under amnesty scheme is allowable as business expenditure

Deepak Nitrite Ltd. Vs Deputy Commissioner of Income-tax (ITAT Ahmedabad)

The issue before us is whether the interest paid on sales tax under the amnesty scheme is an allowable deduction as business expenditure. The law is well settled that the interest paid on sales tax is not of penal in nature and is therefore allowable as business expenditure. Therefore, in our opinion the interest on sales tax is an allowa...

Read More

S. 43B Depositing bonus in separate bank account not amount to payment

Thanjavur Textiles Ltd. Vs Joint Commissioner of Income-tax, Special Range-I (Madras High Court)

Deemed payment could not be treated as actual payment to qualify for deduction under Section 43B of the Income Tax Act, we do not agree with the submission of the learned counsel appearing for the assessee herein that depositing the amount in a bank, even if it be in a separate account, would satisfy the provisions of Section 43 B as actu...

Read More

Browse All Categories

CA, CS, CMA (5,046)
Company Law (6,712)
Custom Duty (8,081)
DGFT (4,388)
Excise Duty (4,406)
Fema / RBI (4,435)
Finance (4,694)
Income Tax (35,093)
SEBI (3,754)
Service Tax (3,626)

Search Posts by Date

November 2020
M T W T F S S
 1
2345678
9101112131415
16171819202122
23242526272829
30