Circular No. 669 — Section 43B: Deduction to BE Allowed…

What this is

Circular No. 669 was issued by the Central Board of Direct Taxes on 25 October 1993. Its subject is Section 43B l Deduction to BE Allowed Only on Actual Payment.

This is a clarification. The Board is stating how it reads a provision. That reading binds the department; it does not bind a court, and where the section says otherwise the section wins.

What it does

Reopens the door to rectification where a section 43B deduction was disallowed only because proof of payment was not filed with the return. Circular No. 581 dated 28 September 1990 had said that a deduction disallowed as prima facie inadmissible for want of evidence under section 143(1)(a) could not later be allowed under section 154 even if the assessee then produced the evidence. On reconsideration the Board holds that where the sums covered by the first proviso to section 43B were in fact paid on or before the due dates in that proviso, and only the evidence was omitted from the return, the Assessing Officer can entertain an application under section 154 to rectify the intimation under section 143(1)(a) or the order under section 143(3) and decide it on merits. Circular No. 581 stands modified to that extent.

Why it was issued

The Board reconsidered the position it had taken in Circular No. 581 on evidence of payment of tax, duty and similar sums under section 43B.

Who it reaches

Assessees whose statutory dues were paid in time but whose proof was not filed with the return
Assessees served with an intimation under section 143(1)(a) making a prima facie disallowance
Assessing Officers deciding rectification applications on section 43B

The provisions it speaks to

Left, the provision of the Income-tax Act, 1961 as the instrument itself names it. Right, the section of the Income-tax Act, 2025 that the department’s own concordance maps it to — which is where the same ground is now covered.

Under the 1961 Act	Now
s.43B	s.2, s.37, s.66
s.143	s.270
s.154	s.287

The instrument, as the Board published it

The words below are the department’s own, reproduced from its published text. Where the department’s copy carried a publisher’s notes after the instrument, those are not reproduced.

SECTION 43B l DEDUCTION TO BE ALLOWED ONLY ON ACTUAL PAYMENT
Where sums referred to in first proviso to section 43B had in fact been paid on or before due dates mentioned therein, but evidence therefor had been omitted to be furnished along with return, Assessing Officer can entertain applications under section 154 for rectification of intimations under section 143(1)(a) or order under section 143(3), as the case may be, and decide same on merits
1. Attention is invited to Board’s Circular No. 581, dated 28-9-1990 [Clarification 1], wherein it was, inter alia, stated that where a deduction claimed is disallowed as, prima facie, inadmissible for want of evidence in support thereof under section 143(1)(a), it cannot be subsequently allowed by a rectification order under section 154 even if the assessee later on furnishes evidence in support thereof. This clarification was made especially with reference to the requirement of furnishing of evidence of payment of tax-duty, etc., along with the return, contained in section 43B.
2. The Board have reconsidered the matter and are of the opinion that where the sums referred to in the first proviso under section 43B had in fact been paid on or before the due dates mentioned therein, but the evidence therefor had been omitted to be furnished along with the return, the Assessing Officers can entertain applications under section 154 for rectification of the intimations under section 143(1)(a ) or orders under section 143(3), as the case may be, and decide the same on merits.
3. Circular No. 581, dated 28-9-1990 stands modified to the above extent.
Circular : No. 669, dated 25-10-1993.

What to watch

The relief is only for a payment actually made on or before the due date in the first proviso; a late payment is not helped by producing evidence later.
The remedy is a rectification application under section 154, which carries its own time limit.
The officer decides the application on merits, so the evidence still has to establish the payment and its date.
The prima facie adjustment machinery of section 143(1)(a) that the circular addresses has since been replaced, and section 43B has been amended more than once.

Where you meet it

An intimation under section 143(1)(a) disallowing provident fund or excise dues for want of a payment challan, and the section 154 application that follows.

On the same provision

Other instruments in this library that name the same provision of the 1961 Act. They are not necessarily still operative, and a later one may have replaced an earlier one without saying so.

Notification No. 34/2024 [F. No. 370142/3/2024-TPL]/ GSR 223(E) — 2 the Gazette of INDIA : Extraordinary [Part Ii—sec. 3(i)] 19 March 2024
Notification No. 80/2023 [F. No.370142/31/2023-TPL / SO 4193(E) — Ministry of Finance 22 September 2023
Circular No. 3/2017 — Circular No.- 3/2017 20 January 2017
Circular No. 7/2006 — 7/2006 dated 17 07 2006 17 July 2006
Circular No. 674 — Whether amount of sales tax liability converted into loans may be allowed as deduction in assessment for previous year i 29 December 1993
Circular No. 601 — 865. Prima facie adjustments under section 143(1)(a) in respect of disallowance under section 43B and nature of evidence 4 June 1991

← Circular No. 670 · Circular No. 668 →

A circular binds the department, not you and not a court. The Board issues a circular to its own officers. An assessee may hold the department to a circular that helps him; the department cannot hold an assessee to one that hurts him, and the Tribunal and the courts decide the law for themselves.

Source: the Income Tax Department’s own published text — its page for this instrument.