Section 43B

[BHARAT COKING COAL LIMITED]

A particular local levy was being challenged in the Hon'ble High Court by the buyers. On the instruction of the Hon'ble High Court, the same was being collected but not deposited. Since the issue was subjudice the non payment of the local levy was not being disallowed u/s 43B of Income Tax Act. However during FY 15-16, the Hon'ble High Court direct to deposit the local levy.

Now my query is whether the preexisting liability of the local levy not paid till 31.03.16 to be disallowed in the Tax Audit Report for FY 15-16. Say ₹ 200 was collected & only ₹ 140 could be paid upto 31.03.16 (Rs 60 not paid by the buyers who have challenged the levey). Whether ₹ 60 (Rs 200-140) to be disallowed as preexisting liability not paid.

As far treatment of current year local levy collected & paid upto Return Filing Date is concerned, it is not an issue...

Expecting an early reply..

AI Summary

Unpaid Levy Under Section 43B: Allowed if Paid Before Tax Audit Report Filing for FY 15-16 Despite Legal Dispute A local levy was being contested in the High Court, leading to its collection but not deposit. Under Section 43B of the Income Tax Act, non-payment was not disallowed due to the ongoing legal proceedings. However, the High Court later ordered the levy to be deposited. The query concerns whether the unpaid portion of the levy as of March 31, 2016, should be disallowed in the Tax Audit Report for FY 15-16. The response indicates that if the outstanding liability is paid before the tax audit report filing, it should be allowed.