if an assessee collect Rs 10000 as sales tax and do not deposit the same within due date of filing of return.
then whether sec 43B is attracted or not? if yes then what isthe treatment.
as per section 43B Rs 10000 will be disallowed. but sales tax is a liability and assessee is not claiming any deduction of sales tax. then how sec 43 will be apply in this case.
| Originally posted by : srinivasan | ||
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The disallowance will happen only if the same is passed through the P&L. In the case of sales tax the amount does not pass through the P&L and need not be disallowed. |
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Suppose sale is of Rs 210000 including sales tax 10000 against purchase of Rs 50000.
In my trading acc*nt gp will be of RS 150000. and in balance sheet rs 10000 is standing as vat payable. in this case my income from pfbp will be rs 150000
and with same example .
suppose
Purchse 50000- Sales2100000
Gross profit 160000
Sales tax 10000
The net profi will be Rs 150000.
In this case sales tax is due so therefor 10000 will be dialoowd and my income from pgbo will be Rs 160000
here sec 43B is applicable generally dealer who opts for composition scheme, mean suppose in the state of andhra pradesh, dealer whose tournover is more than 7.5 lacks and less than 50 lacks opts for composition scheme, These type of dealer paid tax prescribed percentage on tournover on every quarter, these dealers are not eligible to took input tax credit so here payment of tournover tax (sales tax) is considered as expense. so sec 43B is applicable for these type of assesses.
As per Vat (dealers whose tournover is more than 50 lacs) , dealer eligible for input tax credit, so vat payment is not treated as expense and same is not debited to profit and loss account, so sec 43B not applicable in this case.
Mr saurbh, i aggre with chatinaya
Dear Saurav,
In my opinion as per section 145A of Income tax act "for the purposes of determining the income chargeable under the head PGBP the sales should include the amount of any tax, duty, cess or fee paid or incurred by the assessee". Therefore, as per this section, you will have to pass the receipt and payment through the P&L Account and will have to claim the deduction u/s 43B, which will be based upon the actual payment made.
Would like to know other views please!
It will be add back in profit ..while computing the income pf PGBP
It will be consider as income while computing Income form PGPB.
Same As Service TAx not Deposited till filling of ITR.
refer in Section 43B of income tax any tax , duty
The dedcution u/s 43B is allowed only when it is passed through P&L. Pl. refer the recent judgement of ITAT Bangalore in the case of State Bank of Mysore vs. CIT reported in TIOL.
with regard to the query of adjustment of profit u.s 145A. It is a different provision altogether to measure whether there is any increase or decrease in the profits of the assessee if the taxes and duties are assumed to be passed through the P&L. It cannot have a bearing on 145A, the only exception would be excise duty on fishished goods not removed from the factory because the provision for the ED is passed through the P&L.
More.over teh sec. 43B starts with a nothwithstanding clause and therefore it should be read separately without considering the other sections or provisions of the Act.
Agreed with Mr. D C. Bansal.
for determination of profit and loss from B&P Sec. 145A says that Notwithstanding anything to the contrary contained in section 145, the valuation of purchase and sale of goods and inventory for the purposes of determining the income chargeable under the head "Profits and gains of business or profession" shall be - (a) In accordance with the method of accounting regularly employed by the assessee; and
(b) Further adjusted to include the amount of any tax, duty, cess or fee (by whatever name called) actually paid or incurred by the assessee to bring the goods to the place of its location and condition as on the date of valuation.
Explanation : For the purposes of this section, any tax, duty, cess or fee (by whatever name called) under any law for the time being in force, shall include all such payment notwithstanding any right arising as a consequence to such payment (i.e, whether any credit available or not).
Since sales tax is included in calculation of Profit and loss hence Non payment of tax up to filing of return will attract sec 43B.
Further views are invited....!!
i agree with D.C bansal and ca gopal somani
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