Held that the prior period expenses had in fact crystallised in the relevant previous year as bills were received only in the relevant previous year. The claim for prior period expenditure had to be allowed. That undisputedly, the provisions for expenses were in respect of expenditure relating to the month of March, for which bills were received in the month of April. Subsequently, the assessee had accounted for these expenses following the mercantile system of accounting. That the assessee was a wholly owned State Government undertaking set up for the generation of electricity. The assessee fulfilled most of the conditions for the purpose of the definition of the term \u201dState\u201d in article 12 of the Constitution. The assessee was a wholly owned Government enterprise and an instrumentality and agency of the State Government. The general fund created by the assessee was a notified fund created by the Government of West Bengal by notification in Official Gazette. The assessee was an authority having custody of the fund and was treated as Government by virtue of section\u00a08(2)\u00a0of the\u00a0Provident Funds Act, 1925. Therefore, the assessee maintained two accounts, i. e., the contributory fund which was under the control of the trust and the general fund which was under the control of Government. Part A of the Fourth Schedule to the Act contains provisions for recognised provident funds. Rule 1 thereof provides that, that part would not apply to any provident fund to which the Provident Funds Act, 1925 applied. Therefore, that part would not apply to the assessee\u2019s general fund. The provisions of section\u00a043B\u00a0of the Act would not be applicable to the assessee and even if the provisions of section\u00a043B\u00a0were to be applied, the contribution would be considered as paid as the account was maintained by the assessee which was an extended arm or instrumentality of the State Government. The same reasoning was applied to the disallowance of contributions under section\u00a036(1)(va)\u00a0of the Act and to provisions for gratuity under section\u00a040A(7). The computation of the disallowance was to be verified by the Assessing Officer and corrected. (AY. 2007-08, 2009-10, 2012-13, 2014-15)<\/p>\n","protected":false},"excerpt":{"rendered":"
S.37(1): Business expenditure Prior period expenditure-Expenditure crystallising only during relevant previous year when bills were received-Allowable as deduction-Provisions for expenses at end of previous year-Actually paid after end of previous year-Allowable as deduction-Contributions to provident Funds-Provision for gratuity-Government Provident Fund Established as Per Provident Funds Act, 1925-Allowable as deduction. [S. 36(1)(va) 40A(7) 145, Constitution, Art.12] <\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-43628","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-blG","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/43628","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=43628"}],"version-history":[{"count":1,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/43628\/revisions"}],"predecessor-version":[{"id":43629,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/43628\/revisions\/43629"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=43628"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=43628"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=43628"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}