Praveen Sharma (Chartered Accountant) (2045 Points)
23 November 2009As per se. 43B, the amount actually paid is allowed as deduction on or before the due date of filing ITR.
the ques. is whether S. tax is disallowed as the same will be deposits as & when the payments recd.
we charge entry on mercantile basis as service tax payable in the books on 31.03.xx. so the same is disallowed as per I.T. act.
Regards
Harshal
(Article Assistant )
(182 Points)
Replied 23 November 2009
Dear Praveen,
Section 43B
CERTAIN DEDUCTIONS TO BE ONLY ON ACTUAL PAYMENT.
Notwithstanding anything contained in any other provision of this Act, a deduction otherwise allowable under this Act in respect of -
(a) Any sum payable by the assessee by way of tax, duty, cess or fee, by whatever name called, under any law for the time being in force,
(b) Any sum payable by the assessee as an employer by way of contribution to any provident fund or superannuation fund or gratuity fund or any other fund for the welfare of employees,
(c) Any sum referred to in clause (ii) of sub-section (1) of section 36,
(d) Any sum payable by the assessee as interest on any loan or borrowing from any public financial institution or a state financial corporation or a state industrial investment corporation, in accordance with the terms and conditions of the agreement [ 692c governing such loan or borrowing.
(e) Any sum payable by the assessee as interest on any term loan from a scheduled bank in accordance with the terms and conditions of the agreement governing such loan, shall be allowed (irrespective of the previous year in which the liability to pay such sum was incurred by the assessee according to the method of accounting regularly employed by him) only in computing the income referred to in section 28 of that previous year in which sum is actually paid by him.
Provided that nothing contained in this section shall apply in relation to any sum referred to in clause (a) or clause (c) or clause (d) or clause (e) 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 694a :
Provided further that no deduction shall, in respect of any sum referred to in clause (b), be allowed unless such sum has actually been paid in cash or by issue of a cheque or draft or by any other mode on or before the due date as defined in the Explanation below clause (va) of sub-section (1) of section 36 and where such payment has been made otherwise than in cash, the sum has been realised within fifteen days from the due date.
Explanation [1] : For the removal of doubts, it is hereby declared that where a deduction in respect of any sum referred to in clause (a) or clause (b) of this section is allowed in computing the income referred to in section 28 of the previous year (being a previous year relevant to the assessment year commencing on the 1st day of April, 1983 or any earlier assessment year) in which the liability to pay such sum was incurred by the assessee, the assessee shall not be entitled to any deduction under this section in respect of such sum in computing the income of the previous year in which the sum is actually paid by him.
Explanation 2 : For the purposes of clause (a), as in force at all material times, "any sum payable" means a sum for which the assessee incurred liability in the previous year even though such sum might not have been payable within that year under the relevant law.
As per Explanation 2 it is made clear that service tax liability is to be disallowed even though its payment is not due...
Hope this is enough for ur querry...
Harshal Sutaria
CA Abhiram Bharat.
(Assistant Manager Taxation)
(508 Points)
Replied 23 November 2009
yes sir.... actually 43B in its first clause(a) states....
(a) Any sum payable by the assessee by way of tax, duty, cess or fee, by whatever name called, under any law for the time being in force,
hence...
Narayanan.R
(Chartered Accountant)
(191 Points)
Replied 23 November 2009
| Originally posted by :CA. Praveen Sharma | ||
| " | As per se. 43B, the amount actually paid is allowed as deduction on or before the due date of filing ITR. the ques. is whether S. tax is disallowed as the same will be deposits as & when the payments recd. we charge entry on mercantile basis as service tax payable in the books on 31.03.xx. so the same is disallowed as per I.T. act. Regards |
" |
Any tax liability is not allowable as a deduction except BCTT, STT. As the tax is not allowable as a deduction .. we need not consider about the payment
Sandeep Pandey
(CA FINAL)
(1306 Points)
Replied 23 November 2009
Thank u Harshal ...........................for sharing your opinion.................
CA-ASPIRANT
(CA-STUDENT )
(650 Points)
Replied 24 November 2009
Service Tax liability raised in the books of account is not disallowable.
Because for the requrement of Section 43 B , expenses must be debited to the Profit & Loss account . In case of Service Tax it is not debited to the profit & Loss account. Hence not disallable.
Further, In a state level case law, it has already been decided that service tax liability shall not be disallowed. Refer Direct Taxes : Law & Practices Written by Dr. V.K.Singhania.
Thanks
Praveen Sharma
(Chartered Accountant)
(2045 Points)
Replied 24 November 2009
We have not yet receive any final conlusion with evidence in this regard.
Max Payne
(employed)
(2574 Points)
Replied 24 November 2009
| Originally posted by :CA. Praveen Sharma | ||
| " | We have not yet receive any final conlusion with evidence in this regard. |
" |
Sir,
Please find the attached file. There is no disallowance of service tax if you keep accounts on mercantile basis. Only if debited to P&L there is disallowance.
ca tarun sharma
(SERVICE)
(277 Points)
Replied 24 November 2009
as per sec 36(1)(va) deduction in respect of any sum received by employer as cont from his employee toward any welfare funf of such employee is allowed as deduction only if such sum is credited by d employer to d employees a/c in relevant fund on or before due date under such relevant law .
i want to ask whether employer claim emloyees cont as deduction in P/L A/c. if no how such amt can be disallowed even co is not claiming or say not debiting such amt in P/L a/c
but however it is added in total income of assessee if not paid before due date
i also want to know which tax, duty, cess is mentioned u/s 43B since i think most of indirect taxes r not debited in P/L a/c but charged to customer. if customer is registered dealer then he also not treated them as exp but if not reg. then charge them in relevant exp(purchase ,service charge etc.)& credit in d name of party.
direct tax such as income tax, FBT, Wealth Tax, STT (before) r not allowed u/s 40(a)
can i know please which type of duties & taxes r covered U/s 43B
it's urgent please
Kaushal
(Job)
(40 Points)
Replied 24 November 2009
Service tax liability even if not paid is not covered U/s 43 B.
I have attached a case law for the same, you can go through it.
CA-ASPIRANT
(CA-STUDENT )
(650 Points)
Replied 25 November 2009
I would like to answer Mr. Tarun Sharma
Your question about employee contribution ,
Dear Friend, By way of Salary expenses we debit our profit & loss account and create liability towards ESIC or PF etc.
ca tarun sharma
(SERVICE)
(277 Points)
Replied 25 November 2009
hello Aspirant first of all we never charge employee cont to Esi, Epf to P/l A/c but we deduct it from their salary & deposited under relevant fund on their behalf & employer cont to Esi, Epf is not covered u/s 36 rather covered u/s 43B
CA-ASPIRANT
(CA-STUDENT )
(650 Points)
Replied 25 November 2009
Dear Friend ,
Please Consider the following entry.
I am only discussing about employee contributionSalary Expenses Dr.
To Esic Employee Contribution
To PF Employee contribution
To Salary payable
Above entry clearly says that employee's contribution towards ESIC or PF are debited to the profit & loss account in the form of salary expenses.
Thanks
CAclubindia
