Section 43B(f) of the Income Tax Act
Income-tax Act, 2025: s.37
Section 43B(f) falls under section 43B of the Income-tax Act, 1961, which corresponds to section 37 (Certain deductions allowed on actual payment basis only) of the Income-tax Act, 2025.
Read section 37 of the 2025 Act
Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.
The decision most relied on for Section 43B(f) is Exide Industries Ltd. v. Union of India (292 ITR 470), cited in 320 of the 216 judgments on BharatTax that turn on this section.
Leading authorities on Section 43B(f)
The Calcutta High Court held that restricting deduction for leave encashment via Section 43B(f) was arbitrary and contrary to Supreme Court decisions. However, this judgment was later stayed by the Supreme Court.
When an assessee has both borrowed funds and sufficient interest-free own funds, and makes interest-free advances, it is presumed that the advances were made from the own funds, and no interest disallowance is made under Section 36(1)(iii) on the borrowed funds.
Where commission paid to a non-resident agent is not incurred in India, tax is not required to be deducted at source from such commission.
Payments made to non-resident agents for export business carried out outside India, where the agents do not have a permanent establishment in India, are not income deemed to accrue or arise in India. Consequently, Tax Deducted at Source (TDS) under Section 195 is not required.
Payments made to foreign agents for services rendered outside India are not subject to TDS in India if they are not characterized as Fees for Technical Services (FTS) or do not constitute income arising in India. The assessee can rely on CBDT circulars in force at the time of payment.
For the provisions of Section 43B to apply, not only must a liability to pay tax or duty be incurred in the accounting year, but the amount must also be statutorily "payable" in that year. A deduction is allowable for liabilities that have accrued but not yet become payable under the relevant law.
The Assessing Officer must first accept the arm's length price (ALP) declared by the assessee for international transactions with associated enterprises. Rejection of the declared ALP is an exception, requiring specific conditions to be met, such as those prescribed under section 92CA(3).
A revised return can only be filed under Section 139(5) if there is an omission or a wrong statement in the original return due to bona fide inadvertence or mistake.
The court considers the addition made in the hands of the assessee as business income based on advertisement and subscription revenue.
The definition of 'charitable purpose' under Section 2(15) includes advancement of any object of general public utility, and the scope of 'public utility' depends on the context of each situation.
