Law:

Section:

Section 43B of the Income-tax Act, 1961 - Business disallowance - Certain deductions to be allowed only on actual payment - Assessment year 1992-93 - Whether deduction under section 43B can be claimed only if interest has actually been paid to creditors during relevant previous year - Held, yes - Whether, therefore, deduction of interest which is payable to creditors, is not allowable - Held, yes FACTS The assessee claimed deduction of interest which was payable to the creditors. The Assessing Officer disallowed the deduction under section 43B because the assessee had not filed any proof of actual payment of interest to the creditors. He was of the view that the deduction under section 43B could be claimed only on actual proof of payment of interest to the creditors. On appeal, the Commissioner (Appeals) allowed the deduction placing reliance on the circular issued by the CBDT to the effect that actual proof of payment could be produced subsequent to the filing of the income-tax return provided the interest had actually been paid to the creditors. On further appeal, the Tribunal held that the law requires the assessee to furnish with its return evidence of actual payment of interest to the creditors before a deduction can be claimed under section 43B and that since the amount was shown in the return as payable to the creditors, such an adjustment could be made by the Assessing Officer by deleting the deduction claimed by the assessee. Accordingly, it restored the order passed by the Assessing Officer and set aside the order passed by the Commissioner (Appeals). On appeal to High Court: HELD Deduction under section 43B can be claimed only if the interest has actually been paid to the creditors during the previous year relevant to the assessment year. In the instant case, the assessee itself had shown in the return that the amount of interest was payable to the creditors. That being so, the Assessing Officer was justified in accepting the return as it was and making an adjustment under section 143(1)(a) by disallowing the deduction claimed by the assessee. Therefore, the Tribunal was right in upholding the order of the Assessing Officer. [Para 5] B.S. Gupta and…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492