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section 43b

shubhy (article) (107 Points)

30 January 2010

can anyone tell me that if in a private co there is a statutory liability of Rs. 500000.00 standing unpaid as opening balance, will this liabilty will be included in his income for the current year

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8 Replies

ANIL A MALAVADE (Student ) (133 Points)
Replied 30 January 2010

No how can a liability treat it as income that to opening balances no not at all, if that amount is pending for last 3 years as the payable amount can be treat it as Income that to in future that crdit amount is not require to pay.

(Guest)

If the liability is in the form of tax, duty, cess or fee, by whatever name called, under any law for the time being in force, has been charged to Profit and loss a/c and is not paid before the due date of filing return then it shall be added back to profit for the purpose of computation of tax. If the liability has not entered the P/L a/c but stands in balance sheet then it shall not be added back to P/L a/c for the tax calculation.

ANIL A MALAVADE (Student ) (133 Points)
Replied 30 January 2010

oh i am sorry if it is statutory liability then as pr provsion they suppose to p[ay within the due date else add back to the P /L Account

shubhy (article) (107 Points)
Replied 30 January 2010

the stautory liabilty is for service tax not paid from 2007-08 .will it be added back to the income of 08-09 if it still not paid??? kindly explain with relavent section expalanation

Max Payne (employed) (2569 Points)
Replied 30 January 2010

Dear Shubhy,

1. Since it is opening balance, any statutory due would have been considered in tax computation of the year before that so dont disallow it this year.

2. Since the statutory due is service tax, it cannot be disallowed if it is not claimed as deduction thru P&L account. This view was expressed in "CIT Vs Noble & Hewitt India Pvt Ltd" by the HC of New Delhi. Chennai tribunal has also held that service tax cannot be disallowed since there is no expenditure concept, the assessee is only an agent for collection of the Govt. VAT also should be treated in the same way.

For the case law, pls see the link below

https://www.caclubindia.com/share_files/43b-18372.asp

(Guest)

Originally posted by : Uday Kiran

Sec 36(1) (iv) contribution made by employer to recognised PF Approved superannuation fund

Sec 36(1) (v) sum paid by employer towards an approved gratuity fund set up for the benefit of his employees

Sec 36(1) (va) sum received by assessee from his employees as contribution to PF or ESIF or superannuation fund or other welfare fund [first included in income u/s 2(24)(x)]

All the above Deductions are subject to Sec 43B. So these are expenditures you cannot include them as income. only thing is that you cannot claim them as expenditure unless you pay them. Where as in the case of 36(1)(va), the employees contributions will be included in income, and they continue to be included in income untill you discharge the liability.

My query is payment towards approved gratuity fund is not subject to sec 43b & hence deducted on accrual basis...so which other gratuity fund is subject to 43B?