Law:

Section:

SECTION 43B OF THE INCOME-TAX ACT, 1961 - BUSINESS DISALLOWANCE - CERTAIN DEDUCTIONS TO BE ALLOWED ON ACTUAL PAYMENT Where while adjudicating issue as to whether addition could be made under section 43B for delay in deposit of EPF contribution when assessee had deposited said contribution before due date of submission of returns under section 139(1), Tribunal had not considered matter in proper perspective, matter was to be remitted to it to adjudicate issue keeping in view of Supreme Court in Allied Motor's case and Circular No. 7 of 2003, dated 5-9-2003 [Assessment year 1998-99] [Case remanded] Sudhir Kumar Agarwala v. CIT [2009] 226 CTR (Ori.) 621 The first proviso added in section 43B by the Finance Act of 1987 makes it clear that the section will not apply in relation to any sum which is actually paid by the assessee in the next accounting year if it is paid on or before the due date for furnishing the return of income in respect of the previous year in which the liability to pay such sum was incurred and the evidence of such payment is furnished by the assessee along with the return. However, 'any sum payable' in clause (a) of section 43B was open to the interpretation that any amount payable in a particular year should also be statutorily payable under the relevant statute in the same year. Explanation 2 was, therefore, added by the Finance Act, 1989, with retrospective effect from 1-4-1984, for the purpose of removing any ambiguity about the term 'any sum payable' under clause (a) of section 43B. Section 43B(a), the first proviso to section 43B, and Explanation 2 have to be read together as giving effect to the true intention of section 43B.Explanation 2 being retrospective, the first proviso has also to be so construed. Without the first proviso, Explanation 2 would not obviate the hardship or the unintended consequences of section 43B. The proviso supplies an obvious omission. But for this proviso the ambit of section 43B becomes unduly wide bringing within its scope those payments which were not intended to be prohibited from the category of permissible deductions. The first proviso to section 43B, therefore, has to be treated as retrospective. Where…

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