Salary paid for last year as arrears.

Dear archana

when arrears amount is received, employees will get rebate under sec 89 and it will be allowed as deduction to the company as expenses made on salaries of employees. 

Regards

But Mr. Manoj. Will the payment be considered a prior year expenditure, because it relates to previous years.???

Dear please refer to case 

Cit vs Hindustan Times on 14 September, 2012

which says as following regarding Salary/wages arrears (when received due to revision made by the govt. in wages/salary)

"A careful analysis of the main provision would reveal that the nature of expenses, i.e. arrears of salary and other benefits payable to employees, is not covered by Section 43-B at all. Such liabilities are not contributions to provident fund, superannuation or any other fund or plan which the employer is obliged to extend to its employees to fulfill its statutory or contractual obligations. The character of the amounts in this case is pure and simple arrears of wages, which were directed to be paid as a result of wage revision exercise mandated by an award. There is no doubt that the liability arose during the year covered by the Assessment Year. However, the award itself required payment in installments. It is not as if the assessee voluntarily deposited the amounts, when they were not payable, or claimed it when no such liabilities existed as a matter of fact. Having regard to these facts, the Court is of opinion that the Tribunal was justified in holding that the liabilities arising out of the Monesana Wage Board award were justifiably deductible as expenditure, and not covered by Section 43-B. "

hence we can claim such expenses.

Regards

Thanks for the valuable reply. I have one more doubt.

For the purpose of actuarial valuation of employee benefits, is that appropriate to consider the salary without the provision.

Because the provision is adhoc amount and it cant be allocated to individual employees.