Consequences of not compliances with Section 43B

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Subrahmanaya Kamala Prasad G (Querist)
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18 September 2010 Please answer my question

Section 43B says certain deductions are allowable on payment basis, coming to my question,
what is the consequence if we are not complied with provisions of Section 43B i.e., VAT payable has not been paid with in the filing of return of income u/s.139.
is that the amount of payable is disallowed for the purpose of Income tax ??

Aditya Maheshwari

Aditya Maheshwari (Expert)
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18 September 2010 yes that is the very purpose of the section.

Subrahmanaya Kamala Prasad G

Subrahmanaya Kamala Prasad G (Querist)
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19 September 2010 The payable component only disallowed to the computation of income ! irrespective of the fact that it is expenses or not !
am i correct !

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Aditya Maheshwari

Aditya Maheshwari (Expert)
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19 September 2010 If adjustment u/s 145A is made then purchase & sale becomes inclusive of tax and hence it becomes expenses and hence disallowabe u/s 43B.

Subrahmanaya Kamala Prasad G

Subrahmanaya Kamala Prasad G (Querist)
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19 September 2010 section 145A prescribed to follow in two ways i.e,
1)the balance sheet effect(in Current Liabilities) to the VAT account,
2)Nominal treatment (Inclusive effect)
now coming to my qtn, if i gave exclusive treatment of VAT from sales !den it will not form part of the P&L than is that provision is disallowed ??
but section 43B says "certain deductions are allowable only on payment basis" but it is not saying whether that is expense or not !
than how it should be termed ??
whether that payable amount is disallowed to income. which is not form part of the expense

Aditya Maheshwari

Aditya Maheshwari (Expert)
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19 September 2010 read the section along with the explanations.