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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.
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.
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 arise.
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 return.
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.
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 as a percentage of an employee’s salary,
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.
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 Provident Fund of employees’ contribution.
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.
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.
