Actual payment and anti-double-disallowance principles govern bonus claims and MSMED interest adjustments in return processing.

Deduction of bonus expenditure under section 43B depends on proof of actual payment and supporting documents; where the record is incomplete, the matter must be verified by the assessing authority and the claim may be allowed on furnishing evidence. A further disallowance of interest under section 23 of the MSMED Act was held to be impermissible where the same amount had already been included in the assessee's own disallowance in the return, as that would create a double disallowance. The discussion therefore treats factual verification as essential for the bonus claim and rejects duplication of the same inadmissible expenditure in processing the return.

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Issues: (i) Whether the disallowance of bonus expenditure under section 43B required restoration for verification of actual payment and supporting evidence. (ii) Whether the disallowance of interest under section 23 of the MSMED Act, 2006 resulted in a double disallowance when the amount had already been disallowed by the assessee while filing the return.

Issue (i): Whether the disallowance of bonus expenditure under section 43B required restoration for verification of actual payment and supporting evidence.

Analysis: The bonus amount was stated to have been paid during the relevant previous year out of an opening liability, and an auditor's certificate was produced to explain the inadvertent description in the tax audit report. The entitlement to deduction depended on actual payment and the availability of supporting documentary evidence, so factual verification by the assessing authority was necessary.

Conclusion: The matter was restored to the assessing authority for verification, and the claim was to be allowed if the requisite evidence of payment was furnished. The issue was decided in favour of the assessee for statistical purposes.

Issue (ii): Whether the disallowance of interest under section 23 of the MSMED Act, 2006 resulted in a double disallowance when the amount had already been disallowed by the assessee while filing the return.

Analysis: The return computation showed that the impugned amount had already been included in the assessee's own disallowance under section 37, with a specific break-up reflecting the amount under inadmissible MSMED interest. In such a situation, a further adjustment by the processing authority would duplicate the same disallowance.

Conclusion: The further disallowance was held to be a double disallowance and was deleted. This issue was decided in favour of the assessee.

Final Conclusion: The appeal succeeded on the double disallowance issue and the bonus disallowance issue was sent back for verification, leaving the assessee with partial relief.

Ratio Decidendi: A deduction claim under section 43B turns on actual payment and supporting proof, while an adjustment that uplicates an amount already disallowed by the assessee is impermissible.

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