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TMI Blog2013 (7) TMI 1190X X X X Extracts X X X X X X X X Extracts X X X X ..... 004 declaring deficit of ₹ 17,17,20,050/- from purchase of oil seeds and sale of oil produce was assessed u/s 143(3) vide order dated 8.12.2006 at Rs. (-) 16,96,240/-. Later on, perusal of assessment record of the assessee, the AO found that as per computation of income, the assessee had claimed deduction u/s 43B towards the provident fund to the extent of ₹ 1,38,00,000/- out of total payment of ₹ 1,44,82,972/-. The total P.F. payment of ₹ 1,44,82,972/- includes both employees & employer's contribution. As per provision of section 43B r.w.s. 36(1)((iv) & 36(1)(v), if the employees contribution is not made within due date, the deduction cannot be allowed, however, employer's contribution can be made on or before the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions :- "12. I have carefully gone through the written submissions of the appellant and also the order u/s 154. There is no dispute as regards disallowance of ₹ 14,60,58,000/- as the same was admitted by the appellant itself during the course of assessment proceedings. As regards disallowance of interest payable to M.P. State Co-op. Bank Maryadit and Mandi Board, it is imperative to extract hereunder the provisions of section 43B : "SECTION 43B - CERTAIN DEDUCTIONS TO BE ONLY ON ACTUAL PAYMENT This section reads as under :- Certain deductions to be only on actual payment - Notwithstanding anything contained in any other provision of this Act, a deduction otherwise allowable under this Act in respect of - (a) Any sum payable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion (1) of section 139 in respect of the previous year in which the liability to pay such sum was incurred as aforesaid and the evidence of such payment is furnished by the assessee along with such return. Explanation 1 : For the removal of doubts, it is hereby declared that where a deduction in respect of any sum referred to in clause (a) or clause (b) of this section is allowed in computing the income referred to in section 28 of the previous year (being a previous year relevant to the assessment year commencing on the Ist day of April, 1983 or any earlier assessment year) in which the liability to pay such sum was incurred by the assessee, the assessee shall not be entitled to any deduction under this section in respect of such sum in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such sum in computing the income of the previous year in which the sum is actually paid by him. Explanation 3B : For the removal of doubts, it is hereby declared that where a deduction in respect of any sum referred to in clause (f) of this section is allowed in computing the income, referred to in section 28 of the previous eyar (being a previous year relevant to the assessment year commencing on the Ist day of April, 2001, or any earlier assessment year) in which the liability to pay such sum was incurred by the assessee, the assessee shall not be entitled to any deduction under this section in respect of such sum in computing the income of the previous year in which the sum is actually paid by him. Explanation 3C : For the removal of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. From the perusal of order u/s 154, it is seen that the AO has failed to prove that M.P. State Co-op. Bank Maryadit or Mandi Board falls in any of the clauses of Explanation 4 to section 43B. Thus, the disallowance of interest u/s 43B cannot be sustained. Accordingly, the disallowance of interest is deleted." 5. Against the above order of the CIT(A), the Revenue is in further appeal before the Tribunal. As per our considered view, M.P. State Cooperative Bank falls under Explanation 4 to section 43B, therefore, provisions with regard to section 43B are applicable to the interest payable to it. Thus, the CIT(A) was not justified in holding that the provisions of section 43B are not applicable to the interest payable to it. Interest payable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wise from the salary/wages of the employees, it will be treated as "income" at the hands of the assessee. It clearly follows therefrom that if the assessee does not deposit this contribution with PF/ESI authorities, it will be taxed as income at the hands of the assessee. However, on making deposit with the concerned authorities, the assessee becomes entitled to deduction under the provisionhs of s. 36(1)(va). Sec. 43B(b) however stipulates that such deduction would be permissible only on actual payment. This is the scheme of the Act for making an assessee entitled to get deduction from income insofar as employees' contyribution is concerned. Deletion of the second proviso has been treated as retrospective in nature and would not apply at a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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