Disallowance u/s43B of the Incometax Act

[Gopalarathnam Muralidharan]

In our company, salestax, service tax, duties etc are routed through Balance sheet. But AO wants to disallow certain taxes which were beyond the stipulated date. We objected to saying that Sec43B has no application as the taxes etc are routed through Balance sheet. But AO wants to have Sec145A workings to find out taxes impact on Profit and Loss. Is it correct

[CA Rachit Agarwal]

At the time of Tax Audit, Form 3CD, Clause-12(b), we have to state the deviation and effect on Profit/Loss by the virtue of Section 145A.

Hence AO contenttion is right.

However there are guidelines which is enumerated in the "Guidance to Tax Audit" published by ICAI, in which your content could also be held right.

AI Summary

Disallowance under tax law: AO may require income-computation adjustments to assess tax impact on profit and loss. The assessing officer may require income-computation adjustments and supporting workings to determine the impact of taxes routed through the balance sheet on profit or loss; tax-audit reporting obligations require disclosure of deviations and their effect, and professional guidance may support alternative balance-sheet treatment but does not negate the need for such adjustments and disclosure.