2007 (5) TMI 670 - HC - Income Tax

Summary

Issues involved: Interpretation of Section 43B of the Income Tax Act, 1961 regarding the deductibility of employer's contributions to Provident Fund, Family Pension, State Insurance, and Deposit Linked Insurance.

Judgment Summary:

Issue 1: Interpretation of Section 43B
The main issue in this case was whether the employer's contribution "payable, but not actually paid" is eligible for deduction under Section 43B of the Income Tax Act, 1961. The Tribunal relied on a decision of the Andhra Pradesh High Court, but it was found that the Tribunal misinterpreted the said decision.

Issue 2: Applicability of Deductions
The words of Section 43B clearly state that deductions are limited to actual payments. The Karnataka High Court's decision in the case of CIT v. Amco Batteries was cited, emphasizing that unless the sums are actually paid, the employer cannot claim deductions.

Conclusion
The High Court held that the Appellate Tribunal was incorrect in ruling that the employer's contributions to various funds were not disallowable under Section 43B. Contributions that were payable but not actually paid during the relevant year were deemed to be disallowable. The Court approved the decision of the Karnataka High Court regarding the interpretation of Section 43B. The reference was disposed of accordingly.