Section 43B of the Income Tax Act, 1961 deals with certain deductions that can be allowed only on payment basis. This section has been a subject of various judicial interpretations, with the courts interpreting the scope of the section and its application in different cases. In this blog, we will discuss some of the important case laws on Section 43B of the Income Tax Act.
CIT v. Vinay Cement Ltd. (2007)
In this case, the Supreme Court held that the provisions of Section 43B are mandatory in nature and that any deduction claimed by an assessee under any of the provisions of the Income Tax Act must be allowed only if the payment has been made before the due date of filing the return of income.
Allied Motors (P) Ltd. v. CIT (1997)
In this case, the Delhi High Court held that the provisions of Section 43B do not apply to expenses that are not deductible under any other provision of the Income Tax Act. The court also held that the provision applies only to expenses that are allowed as a deduction under any other provision of the Act.
CIT v. Hindustan Coca-Cola Beverages Pvt. Ltd. (2007)
In this case, the Karnataka High Court held that the provisions of Section 43B are applicable only to expenses that are required to be paid by the assessee under any law, contract, or otherwise. The court held that if there is no such requirement, the provision cannot be applied.
CIT v. Walfort Share and Stock Brokers Pvt. Ltd. (2010)
In this case, the Supreme Court held that the provisions of Section 43B are applicable even if the liability has been disputed by the assessee. The court held that the liability must be an ascertained liability, and that mere provision for liability in the books of accounts does not amount to an ascertained liability.
CIT v. Gujarat Flourochemicals Ltd. (2013)
In this case, the Gujarat High Court held that the provisions of Section 43B are applicable to the deduction claimed by the assessee for the contribution to the Employee Provident Fund and that such deduction can be allowed only if the contribution has been made before the due date of filing the return of income.
CIT v. Alom Extrusions Ltd. (2009)
In this case, the Supreme Court held that the provisions of Section 43B are applicable to the deduction claimed by the assessee for the payment of sales tax, even if the same is paid after the due date prescribed under the relevant statute. The court held that the deduction can be allowed only if the payment has been made before the due date of filing the return of income.
CIT v. Indian Oil Corporation Ltd. (2010)
In this case, the Supreme Court held that the provisions of Section 43B are applicable to the deduction claimed by the assessee for the payment of excise duty. The court held that the deduction can be allowed only if the payment has been made before the due date of filing the return of income, even if the same is paid after the due date prescribed under the relevant statute.
CIT v. Bhilai Engineering Corporation Ltd. (2012)
In this case, the Chhattisgarh High Court held that the provisions of Section 43B are not applicable to the deduction claimed by the assessee for the payment of service tax, as the same was not in force at the relevant time. The court held that the deduction can be allowed on accrual basis, and not on payment basis.
CIT v. Punjab State Warehousing Corporation (2018)
In this case, the Punjab and Haryana High Court held that the provisions of Section 43B are applicable to the deduction claimed by the assessee for the payment of bonus, even if the same is paid after the due date prescribed under the relevant statute. The court held that the deduction can be allowed only if the payment has been made before the due date of filing the return of income.
Hindustan Unilever Ltd. v. CIT (2010)
In this case, the Bombay High Court held that the provisions of Section 43B are applicable to the deduction claimed by the assessee for the payment of interest on delayed payment of tax. The court held that the deduction can be allowed only if the payment has been made before the due date of filing the return of income.
Conclusion
In conclusion, the above-mentioned case laws provide a clear understanding of the interpretation and application of Section 43B of the Income Tax Act, 1961. It is important for taxpayers to comply with the provisions of this section to avoid any adverse consequences. The courts have emphasized the mandatory nature of the section and have strictly interpreted its provisions. It is therefore advisable for taxpayers to seek professional advice and ensure that they comply with the provisions of Section 43B to avoid any disputes with the tax authorities.
Read more useful content:
- section 234e of income tax act
- section 286 of income tax act
- section 90a of income tax act
- section 40a(7) of income tax act
- section 226(3) of income tax act
- section 24 of income tax act
Frequently Asked Questions (FAQs)
What is income tax?
Income tax is a tax levied by the government on the income earned by individuals, businesses, and other entities in India.
Who is liable to pay income tax?
Any individual, business, or other entity that earns income in India is liable to pay income tax. The tax liability is determined based on the income earned during the financial year.
What is the due date for filing income tax returns?
The due date for filing income tax returns in India is usually July 31st of the following financial year. However, the due date may be extended by the government in certain cases.
What are the different forms for filing income tax returns?
There are several forms for filing income tax returns in India, depending on the type of taxpayer and the type of income earned. The most commonly used forms are ITR-1, ITR-2, ITR-3, ITR-4, and ITR-5.
What are the tax slabs for individuals?
The tax slabs for individuals in India vary based on their income. For the financial year 2021-22, the tax slabs are as follows: up to Rs. 2.5 lakh – no tax, Rs. 2.5-5 lakh – 5%, Rs. 5-7.5 lakh – 10%, Rs. 7.5-10 lakh – 15%, Rs. 10-12.5 lakh – 20%, Rs. 12.5-15 lakh – 25%, and above Rs. 15 lakh – 30%.
What is TDS?
TDS or Tax Deducted at Source is a system of deducting tax at the source of income. It is applicable for various types of income, such as salary, interest, rent, commission, etc.
What is Advance Tax?
Advance tax is a system of paying tax in advance based on the estimated income for the financial year. It is applicable for individuals, businesses, and other entities with a tax liability of Rs. 10,000 or more.
What is the penalty for late filing of income tax returns?
The penalty for late filing of income tax returns in India is Rs. 5,000 if the return is filed after the due date but before December 31st of the relevant assessment year. The penalty increases to Rs. 10,000 if the return is filed after December 31st.
What is the difference between gross total income and taxable income?
Gross total income is the total income earned by an individual, business, or other entity during the financial year, including all sources of income. Taxable income, on the other hand, is the income on which tax is calculated after deductions and exemptions.
What is the difference between a tax deduction and a tax exemption?
A tax deduction reduces the taxable income of the taxpayer, which in turn reduces the tax liability. A tax exemption, on the other hand, completely exempts the income from tax, and the taxpayer does not have to pay any tax on that income.
