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Tuesday, November 27, 2012

CIT vs. Solar Exports - Proviso to Section - 43B - Supreme court recently in case C.I.T. vs. Solar Exports has held that Finance Act, 2003 is curative in nature & has retrospective operation from 1st April 1988

Once again Supreme court had settled he issue pertaining to the question of allowability of deduction of PF, ESI, etc being paid subsequent to the close of the accounting period but before the due date of filing of return in the case of Commissioner of Income Tax vs. Solar Exports. 

The term certain deductions be allowable only on actual payment related to provident fund payments as per section - 43B of the Income Tax Act, 1961 has been quite a topic in income tax litigation. This case relates to the assessment year 2000-01 and 2001-02. 

Supreme court held that this case was squarely covered by the decision of the Apex court in the case of CIT vs. Alom Extrusions Ltd. [2009] 319 ITR where it was held that the Finance Act, 2003 is curative in nature and that the same is applicable from 1st April 1988 when the proviso was first inserted. 

Held that, revenue has to accept the payment of ESI, PF etc, paid by the assessee and shall give deductions of that amount in favor of assessee as claimed in the income tax return. 

This special leave to appeal rose out of the judgment & order of Karnataka High Court.

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