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Expense Allowable or not.

Vineet Kumar Sharma (Chartered Accountant) (316 Points)

03 September 2010

If any company has made the payment of ESI after the due date, whether it is allowable for deduction as expenses in Profit & Loss Account of the comapny under section 36.

I also want to know as in section 43, the expenses is allowable if payment is made in above example.

Please mail me any example on my mail:-
vineetksharma @ rocketmail.com

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7 Replies

CA Navin Jain (MANAGER (FINANCE & ACCOUNTS)) (11768 Points)
Replied 03 September 2010

yes u can claim expenses if ESI is deposited on or before the due date of filling of income tax return.

Ashish M (Chartered Accountant) (2731 Points)
Replied 03 September 2010

Two things are there. Employee's contribution & Employer's contribution.

In case of Employee's contribution, Sec.36(1)(va) shall apply, and accordingly the amt. must be paid to the relevant authority by the due date mentioned in the relevant Act. If it is paid after that due date but before filing of return, the same is not allowable as deduction because Sec.43B is not applicable here.

In case of Employer's contribution, Sec.43B shall apply and therefore, if payment is made before filing of return is allowable as deduction. [CIT Vs Madras Radiators & Pressing Ltd. [2003] 129 Taxmann 709 (Mad.)]

1 Like

Vicky (CA, LCS,MCOM,) (136 Points)
Replied 03 September 2010

CIT vs. AIMIL Limited (Delhi High Court...........as per this case law even employees cont paid before due date of filing ROI will be allowed as deduction

Sharad Saini (Student) (286 Points)
Replied 04 September 2010

i think employee's contribution shall be disallowed if not paid in time specified under the relevant walfare act.....

employer's contribution shall be allowed as deduction........

NIRMAL (article assistant) (34 Points)
Replied 04 September 2010

employee cont is allowable as expenses only when it is paid before due date...bt according to recent amendment as per tribunal Act it is allowable as expense even after it is paid after due date......nd employer contribution is allowed as expense whether it is paid before due date or after due date....