TaxTMI 
TaxTMI 
2003 (10) TMI 9
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....ontended by the assessee that in respect of ESI contribution which was to be made on 21st of the next month and in respect of other heads it was to be made on 15th of the next month, the sum disallowed though not paid on or before the due date but was paid during the previous year. According to the assessee since the amounts have been paid before the end of the previous year, the same are allowable as deduction notwithstanding there were small delays in making payments on due date when such sums were payable under the relevant statute or settlement. As the assessee has not paid these dues during the previous year on the due date relevant to the assessment year in question, the Assessing Officer held that the same are not allowable as deduction in the assessment year 1992-93 merely because the liability has been discharged before the end of the previous year. On appeal, it was contended that though the contributions to the PF, EPF, DLI and ESI have been delayed from the due date but they have been paid during the relevant previous year, and therefore, the same are allowable. The Tribunal upheld the order of the Commissioner of Income-tax (Appeals). The relevant provision of secti....
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....s been made before closing of the previous year is of little relevance. The second proviso to section 43B was inserted, firstly, by the Act No. 11 of 1987 with effect from April 1, 1988 in the following terms: "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 during the previous year on or before the due date as defined in the Explanation below clause (va) of sub-section (1) of section 36." We may notice that section 43B was firstly inserted by the Finance Act, 1983, with effect from April 1, 1984, and at the relevant time both the provisos first and second had not been appended to the main provision and it had only two clauses i.e., clauses (a) and (b). For claiming deduction in respect of liabilities falling in the two clauses, the method of accounting, viz., mercantile or cash, lost its relevance. The sums mentioned in clauses (a) and (b) were to be allowed as deductions in terms of section 43B only while computing the income referred to in section 28 of the previous year in which a sum was actually paid by him. Apart from actual payment, it had no further conditions. Thus, expenses on....
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....as a proviso and to no other. A perusal of section 43B makes it clear that by generality of the provision, under the main enactment of section 43B the sums mentioned in different clauses of section 43B are to be allowed as deduction in computing the income in accordance with section 28 only in the previous year in which such sum has actually been paid by him. Thus, as per the generality of provisions, there is no room for allowing a deduction in respect of any sum, liability which has not been incurred in the previous year relevant to the assessment year in question that the sum has been paid after the end of the previous year. However, shortly thereafter the period was immaterial. It was also immaterial that the last date fixed for making such payment under the relevant statute fell after the end of the previous year and the payment has been made before the expiry of such date. In the context of the aforesaid generality of the provision, we may examine the two provisos. The first proviso makes an exception in respect of the payment referred to in clauses other than clause (b), where they have been actually paid after the end of the previous year. It envisaged, that certain sums ....
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....ned an exception to the general applicability of the main provision of clause (b) by making it further restrictive. It restricted further the provisions of section 43B requiring actual payment within the previous year to permit the deduction in respect of sums referred to in clause (b) only if they were paid as and when they become due to be paid, under the relevant statute or settlement, etc. We have noticed above, the provision which was originally introduced with effect from April 1, 1988, vide the Finance Act, 1987, and the second proviso which has been substituted by the Finance Act, 1989, with effect from April 1, 1989. Before coming to that change, it would be appropriate to refer to the "due date" as defined in the Explanation below clause (va) of sub-section (1) of section 36. Section 36 enumerates certain deductions to be allowed in respect of the matters dealt with therein in computing the income referred to in section 28 and defined in the Explanation below clause (va) of sub-section (1) of section 36 that any sum received by the assessee from any of his employees to which the provisions of sub-clause (x) of clause (24) of section 2 apply, if such sum is credited by ....
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...., and substituted in the present form with effect from April 1, 1989 to section 43B is that the deduction in respect of 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 the employees shall be allowed for the assessment year 1988-89 and subsequent assessment years only when they are paid on or before the due date as defined in the Explanation given below clause (va) of sub-section (1) of section 36 referred to above. In order to avail of the benefits of deduction in respect of contributions to the provident fund, superannuation fund and gratuity fund or any other funds for the welfare of the employees, the sum is not only to be actually paid before the end of the previous year but is further required to be paid within the time stipulated under the relevant statute or notification, standing order, award, contract of service or otherwise. If the payments have not been made within the stipulated time, the deduction cannot be claimed at any time thereafter. In the present case, the assessee has made the payments of his contributions towards different funds for the wel....