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| The Tax Publishers2021 TaxPub(DT) 6570 (Chen-Trib) INCOME TAX ACT, 1961
Section 43B(e)
Interest was admissible in the respective year to which it pertained, but same was deductible in the year in which such interest was paid to banks in view of specific provisions of section 43B(e). Since assessee paid interest to banks in financial year relevant to assessment year 2015-16, same was allowable as deduction on payment basis, even though assessee had not made any provision in books of account in respect of interest in the earlier year to which it relate.
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Business disallowance under section 43B(e) - Deduction on actual payment - Interest paid during the year disallowed on the ground of no provision made for interest payable in respective financial year on accrual basis -
Assessee claimed deduction for interest paid on loans borrowed from bank on payment basis in terms of section 43B. AO disallowed deduction on the ground that assessee had not made provision for interest payable to banks in respective financial year on accrual basis. Held: Interest was admissible in the respective year to which it pertained, but same was deductible in the year in which such interest was paid to banks in view of specific provisions of section 43B(e). Since assessee paid interest to banks in financial year relevant to assessment year 2015-16, same was allowable as deduction on payment basis, even though assessee had not made any provision in books of account in respect of interest in the earlier year to which it relate.
<>Relied:Associated Pigment Ltd. v. CIT (1998) 234 ITR 589 (Cal-HC) : 1998 TaxPub(DT) 1417 (Cal-HC) and Chemicals & Plastics India Ltd. v. CIT (2003) 260 ITR 193 (Mad-HC) : 2003 TaxPub(DT) 0462 (Mad-HC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2015-16
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