vinay (accounting) (165 Points)
29 November 2011Dear Member ,
While allowing Deduction of Leave Encashment in the Computation of Income Tax for AY 2011-12, our auditor has only considered leave encashment paid till July 2011, although information on leave encashment paid till Aug 2011 was provided. Why is that leave encashment paid during Aug 2011 out of provision as on 31st Mar 2011 is not allowed for deduction, while the Audit Report is dated 30th Sept 2011?
Thank you for your time.
Vinay
Giridhar S Karandikar
(Team Lead)
(7548 Points)
Replied 29 November 2011
I do not know why this has been done. The deduction shud be allowed for the amount paid upto the date of filing the return of Income.
The deduction under clause (f) of section 43B will only be disallowed if the leave encashment relates to the F.Y. 2000-01 as the provision relating to leave encashment was being enforced from F.Y.2001-02. But I don’t think that the provision made in the books of your concern would relate for the amounts of F.Y.2000-01.
Vikas
(CA)
(1135 Points)
Replied 29 November 2011
The Other Side of a CA
(XYZ)
(210 Points)
Replied 29 November 2011
Helloo Mr. Vinay
Section 43B(F) states that any sum payable by the assessee as an employer in lieu of any leave to the credit of his employee shall be allowed as deduction in computing PGBP, only if such sum has actually been PAID by the assesee, irrespective of method of accounting followed by the assesee.
further this section shall apply in relation to any sum which is actually paid by the assessee on or before the due date applicable in his case for furnishing the return of income under sub-section (1) of section 139 in respect of the previous year in which the liability to pay such sum was incurred as aforesaid and the evidence of such payment is furnished by the assessee along with such return
Assuming you or assessee is required to file return on or before 31st july, the AUDITOR is correct in taking the amount actually paid upto 31st july in computing income u/s 28 i.e PGBP
CAclubindia
