Issues involved: Interpretation of section 43B of the Income-tax Act, 1961 regarding disallowance of provident fund payments.
Judgment Summary:
Factual Background: The Assessing Officer disallowed provident fund payments for the assessment year 1991-92 under section 43B of the Income-tax Act, 1961. The Commissioner of Income-tax (Appeals) held that the payments were not made within the allowed time periods. The Tribunal, however, held that the deduction should be allowed in the year of payment, irrespective of when the liability was incurred.
Legal Analysis: Section 43B mandates deductions only when sums are actually paid, regardless of when the liability was incurred. The Tribunal emphasized the importance of actual payments and the legislative intent behind the provision to prevent disputes over liabilities. The proviso in section 43B sets conditions for allowable deductions, including payment by the due date.
Interpretation of Proviso: The proviso in section 43B is an exception to the main provision, ensuring that deductions are only allowed for timely payments. The due date for payment is crucial, and any payments made beyond that date do not qualify for deductions. The Tribunal's view that payments made before the financial year's end qualify for deductions was deemed incorrect.
Conclusion: The Tribunal's decision was overturned, and the judgment favored the Revenue, stating that payments made beyond the due date do not qualify for deductions under section 43B. The proviso serves a specific purpose and must be adhered to for claiming deductions.
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