Sales Tax paid for earlier years on demand notice from sales tax dept is allowble or not?
12 Replies
Devendra
(Chartered Accountant)
(4775 Points)
Replied 24 August 2011
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
Sunshine
(Helping All)
(10575 Points)
Replied 24 August 2011
As per sec 43B, if the payment is made..it would be allowed..
neeraj tyagi
(CA)
(33 Points)
Replied 24 August 2011
it is allowable as buisness expenditure if the liability to pay the sales tax accure arise in the year under consideration.
Sanket
(!..Live to Give..!)
(16427 Points)
Replied 24 August 2011
It is Allowable Expenditure.......
D VARA PRASADA RAO
(Student (Articles Completed))
(173 Points)
Replied 24 August 2011
It is Allowed Expenditure............
Pavan
(stundent)
(26 Points)
Replied 25 August 2011
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 :)
CA. Vikash Dwivedi
(Financial Planning & Analysis)
(3167 Points)
Replied 25 August 2011
allowed on payment basis.
Vandana Mulchandani
(Finance Manager )
(9227 Points)
Replied 25 August 2011
It is allowable U/s. 43B
ISUB KHAN
(Assistant Accountant)
(240 Points)
Replied 25 August 2011
sales tax allowed on payment basis uner section 43A of income tax act 1961.
.
sandeep kathayat
(accountant )
(36 Points)
Replied 27 October 2016
Dear sir in case we have no provision for that in book earlier due to lack of accounting fault even then allowed in current year.
M sadiq
(2 Points)
Replied 19 March 2019
Sales tax(due) is allowed as deduction while computing PGBP or not?
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