Allowability of Payment u/s 43B of I.T. Act.

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This query is : Resolved

CA Sanjay Baheti (Querist)

22 July 2011 One of My client being an Individual has unpaid Service tax Liability of Rs.7573/- as on 31.03.2010 & the same has been added in to income u/s 43B of I.T.Act for the Relevant Asst.year 2010-11 though He is not covered under Tax Audit.

Now He has paid the same along with Interest & Penalty in July 2011 but proir to filing of his ITR for Asstt Year 2011.12 i.e. on or before 31.07.2011 the due date of filing of I.T Return.

Whether he can claim the same as admiisible u/s 43 B of I.T.Act or not.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

22 July 2011 1. Please go through the case law to check whether the facts are similar.

Business disallowance Certain deductions to be made only on actual payment.

A service provider acts as an agent of the Government and is not entitled to claim deduction on account of service tax.

For applicability of S. 43B, claim should be first preferred by assessee, and the same should be disallowed for reason of failure to make payment.

In the instant case, assessee had not even preferred a claim towards service tax Whether on this account alone, addition u/s. 43B could not have been made, and

CIT (A) had correctly deleted addition so made Held, Yes.

ACIT v. Real Image Media Technologies (P) Ltd. 114 ITD 573 (Mad.)
.
Any unpaid tax liability can be claimed on payment basis in the previous year of actual payment.

So it can be claimed in the AY 2012-13 only i.e relevant to F Y in which the payment is made.

Return filing date of an AY is relevant only in a case where such tax liability pertains to
the FY (Say FY 2010-11) relevant to the concerned AY( AY 2011-12).

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