What the courts have decided on section 43B first proviso, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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Maruti Suzuki India Ltd v CIT
Supreme CourtHelps departmentNo later treatment found
Can I claim a deduction for unutilised MODVAT credit sitting in my books at the year end?
No. Unutilised credit is not a sum payable by you by way of tax, duty, cess or fee, so s.43B(a) has nothing to operate on. The duty on the inputs was payable by the supplier; what passed to you was the incidence, not the liability.
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CIT v Alom Extrusions Ltd
Supreme CourtHelps taxpayer
I paid the PF contribution after year end but before the return due date. Is the deduction gone?
No, for the employer's own contribution. The deletion of the second proviso to s.43B and the amendment of the first proviso by the Finance Act 2003 are curative and operate retrospectively from 1 April 1988, so employer's contributions to provident and other welfare funds paid before the return due date are deductible.
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Allied Motors P Ltd v CIT
Supreme CourtHelps taxpayer
I paid the sales tax after year-end but within the time the statute allows. Can the AO disallow it?
No. The first proviso to s.43B, inserted by the Finance Act 1987, is retrospective in operation. A statutory liability paid after the close of the previous year but within the time allowed by the relevant statute and before the return due date is deductible in the year it accrued.
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Frontier Information Tech Ltd v DCIT
High CourtHelps taxpayerNo later treatment found
My lender took equity shares against the outstanding interest. The Assessing Officer says there was no actual payment under section 43B. Is he right?
No. Where the liability to pay interest ceases to exist because shares have been issued to the lender, that is actual payment within section 43B, and Explanations 3C and 3D have nothing to bite on. The test the High Court applied is whether the liability to pay the interest stands extinguished.
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CBDT Circular 1/2024
CBDT Circulars & InstructionsHelps departmentSuperseded by amendment
I paid my MSME supplier late but before filing my return. Is the expense disallowed this year?
Yes, it is deferred. For a sum payable to a micro or small enterprise beyond the time limit in s.15 of the MSMED Act, the proviso to s.43B is expressly switched off, so paying before the return due date does not rescue the deduction. You get it only in the year you actually pay.
Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.
