Allowable or not?

The payment of Sales Tax / VAT / Service Tax is covered u/s 43B. Hence the payment of Sales Tax on demand notice is not treated as a Prior Period expense and is an allowable expenditure.

Regards,

Devendra K

As per sec 43B, if the payment is made..it would be allowed..

it is allowable as buisness expenditure if the liability to pay the sales tax accure arise in the year under consideration.

It is Allowable Expenditure.......

It is Allowed Expenditure............

Section 43B only stipulates a condition on which a deduction otherwise allowable under the Act can be allowed. It is not an enabling section unlike sections 30 to 36 - i.e. it does not prescribe the expenditure that can be allowed.  [Section 43B - Notwithstanding anything contained in any other provision of the Act, a deduction otherwise allowable under this Act, in respect of a) any tax, duty, cess or fee .... shall be allowed only in computing income under section 28 in PY in which such sum is actually paid]

As the sales tax is paid under a demand order, it would not have been brought into the books in the previous year - irrespective of method of accounting adopted. In the C.Y the entry would be passed as pior period expense. Prior period expenses are not 'otherwise allowable' under the Act. I believe that this would not be allowed.

What do you guys feel?

PS: This is my first post in CCI :)

allowed on payment basis.

It is allowable U/s. 43B

sales tax allowed on payment basis uner section 43A of income tax act 1961.

allowable according to payment