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Section 43B is an over-ruling section and anything contained in other provisions of Income Tax Act, 1961 should not be applicable to the payments mentioned under this section.

Section 43B states that certain payment should be allowed to claim as an expense only in the year in which they have been actually paid and not in the year in which the liability to pay such sum was incurred. Thus, for the following expenses accrual concept of accounting should not be followed.

However, the provision of Section 43B shall not apply in relation to any sum which is actually paid by assessee on or before due date applicable in his case for furnishing his Income Tax Return under Section 139(1) in recpect of the previous year in which liability to pay such sum was incurred by the assessee and the evidence of such payment is furnished along with the Income Tax Return.

Payments for which Section 43B is applicable:
a) Payment of Taxes
any sum payable by the assessee by way of tax, duty, cess or fee, (by whatever name called, under any law for the time being in force);

b) Employer Contribution for benefit of Employee
any sum payable by the assessee as an employer by way of contribution to any provident fund or superannuation fund or gratuity fund or any other fund for the welfare of employees;

c) Bonus / Commission
any sum payable as bonus or commission to employee for services rendered;

d) Interest On Any Loan or Borrowing
any sum payable by the assessee as interest on any loan or advances from a scheduled bank in accordance with the terms and conditions of the agreement governing such loan or advanc­es;

e) Interest On Any Loan or Advances
any sum payable by the assessee as interest on any loan or advances from a scheduled bank in accordance with the terms and conditions of the agreement governing such loan or advanc­es;

f) Provision for Leave Encashment
any sum payable by the assessee as an employer in lieu of any leave at the credit of his em­ployee.

Other Relevant Points
For the removal of any doubts, it has been clarified that a deduction of any sum being interest payable under clause (d) and (e) of this Section, shall be allowed if such interest has been actually paid and any interest referred to in that clause which has been converted into a loan or borrowing shall not be deemed to have been actually paid.

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