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Late return of income tax - disallowance of expenses

CA HAYEDAR SHAIKH (Practice ) (622 Points)

06 March 2015

Dear Sir,

One of our private limited company was not filed the Income Tax Return till date to whom the Tax audit is not applicable. Now the company wants to file the Income Tax Return.

The Company is also not paid the Service Tax dues till date.

My question are as follows

1. Whether same amount of Service Tax payable shall be treated as disallowed OR not in Income Tax Return?

2. If the amount of service tax payable is disallowed, then under which section of Income Tax Act?

3. In case of late filing of Income tax return, whether the service tax payable is allowed or disallowed?

I hope that you will solve the query.

Regards

From

Hayedar Shaikh

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2 Replies

Saurabh806 (Kanpur) (112 Points)
Replied 06 March 2015

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.

As per Section 43B

Notwithstanding anything contained in any other provision of this Act*, a deduction Sudame otherwise allowable under this Act in respect of—

a) any sum payable by the assessee by way of tax, duty, cess or fee, (by whatever name called, under any law for the time being in force);

b) any sum payable by the assessee as an employer by way of contribution to any provident fund or superannuation fund or gratuity fund or any other fund for the welfare of employees;

c) any sum payable as bonus or commission to employee for services rendered;

d) any sum payable by the assessee as interest on any loan or borrowing from any public financial institution or a State financial corporation or a State industrial investment corporation, in accordance with the terms and conditions of the agreement governing such loan or borrowing;

e) any sum payable by the assessee as interest on any loan or advances from a scheduled bank in accordance with the terms and conditions of the agreement governing such loan or advances;

f) any sum payable by the assessee as an employer in lieu of any leave at the credit of his employee.

shall be allowed as deduction only in the previous year in which such sum is actually paid. This is irrespective of the previous year in which the liability to pay such sum was incurred by the assessee.

service tax not paid till date cover under 43B clause (a) so according disallowed.