Certain deductions to be only on actual payment 4 Notwithstanding anything contained in any other provision of this Act, a deduction other- wise allowable under this Act in respect of-
Ibid.
a 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, or
b 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, or
c any sum referred to in clause ii of sub- section 1 of section 36, or
d any sum payable by the assessee as interest on any loan or borrowing from any public financial institution or a State financial corporation or a State industrial investment corporation, in accordance with the terms and conditions of the agreement governing such loan or borrowing, shall be allowed irrespective of the previous year in which the liability to pay such sum was incurred by the assessee according to the method of accounting regularly employed by him only in computing the income referred to in section 28 of that previous year in which such sum is actually paid by him Provided that nothing contained in this section shall apply in relation to any sum referred to in clause a or clause c or clause d which is actually paid by the assessee on or before the due date applicable in his case for furnishing the return of income under sub- section 1 of section 139 in respect of the previous year in which the liability to pay such sum was incurred as aforesaid and the evidence of such payment is furnished by the assessee along with such return Provided further that no deduction shall, in respect of any sum referred to in clause b , be allowed unless such sum has actually been paid in cash or by issue of a cheque or draft or by any other mode on or, before the due date as defined in the Explanation below clause va of subsection 1 of section 36, and where such payment has been made otherwise than in cash, the sum has been realised within fifteen days from the due date. 1. Substituted by the Finance Act, 1988, w. e. f. 1- 4- 1989. Prior to the substitution, clause a read as under a any sum payable by the assessee by way of tax or duty under any law for the time being in force, or 2. Inserted by the Direct Tax Laws Amendment Act, 1987, w. e. f. 1- 4- 1989. 3. Ibid. 4. Inserted by the Finance Act, 1988, w. e. f. 1- 4- 1989. 5. Ibid. 6. Inserted by the Finance Act, 1990, w. e. f. 1- 4- 1991 7. Inserted by the Finance Act, 1987, w. e. f. 1- 4- 1988. 8. Inserted by the Direct Tax Laws Amendment Act, 1987, w. e. f. 1- 4- 1989. 9. Inserted by the Finance Act, 1988, w. e. f. 1- 4- 1989. 10. Substituted by the Finance Act, 1989, w. e. f. 1- 4- 1989. Prior to the substitution, the second proviso, as inserted by the Finance Act, 1987, w. e. f. 1- 4- 1988, read as under Provided further that no deduction shall, in respect of any sum referred to in clause b , be allowed unless such sum has actually been paid during the previous year on or before the due date as defined in the Explanation below clause va of sub- section 1 of section 36. Explanation 1.- For the removal of doubts, it is hereby declared that where a deduction in respect of any sum refer- red to in clause a or clause b of this section is allowed in computing the income referred to in section 28 of the previous year being a previous year relevant to the assessment year commencing on the 1st day of April, 1983 or any earlier assessment year in which the liability to pay such sum was incurred by the assessee, the assessee shall not be entitled to any deduction under this section in respect of such sum in computing the income of the previous year in which the sum is actually paid by him. Explanation 2.- For the purposes of clause a , as in force at all material times, any sum payable means a sum for which the assessee incurred liability in the previous year even though such sum might not have been payable within that year under the relevant law. Explanation 3.- For the removal of doubts it is hereby declared that where a deduction in respect of any sum referred to in clause c or clause d of this section is allowed in computing the income referred to in section 28 of the previous year being a previous year relevant to the assessment year commencing on the 1st day of April, 1988 , or any earlier assessment year in which the liability to pay such sum was incurred by the assessee, the assessee shall not be entitled to any deduction under this section in respect of such sum in computing the income of the previous year in which the sum is actually paid by him. Explanation 4.- For the purposes of this section,-
a public financial institution shall have the meaning assigned to it in section 4A of the Companies Act, 19567 1 of 1956
State financial corporation means a financial corporation established under section 3 or section 3A or an institution notified under section 46 of the State Financial Corporations Act, 1951 8 63 of 1951
State industrial investment corporation means a Government company within the meaning of section 617 of the Companies Act, 1956 9 1 of 1956 , engaged in the business of providing long- term finance for industrial projects and approved by the Central Government under clause viii of sub- section 1 of section 36. 1. Inserted by the Direct Act Laws Amendment Act, 1987, w. e. f. 1- 4- 1989. 2. Inserted by the Finance Act, 1989, w. r. e. f. 1- 4- 1984. 3. Inserted by the Direct Tax Laws Amendment Act, 1987, w. e. f. 1- 4- 1989. 4. Renumbered by the Finance Act, 1989, w. e. f. 1- 4- 1989. Explanations 3 and 4, since substituted should also have been renumbered w. r. e. f. 1- 4- 1984 as Explanation 2 was inserted with retrospective effect but section 9 c of the Finance Act, 1989 provides otherwise. 5. Inserted by the Finance Act, 1988, w. e. f. 1- 4- 1989. 6. Substituted by the Finance Act, 1990, w. e. f. 1- 4- 1991 Prior to the substitution, Explanation 4, as inserted by the Finance Act, 1989, w. e. f. 1- 4- 1988 and amended by the Finance Act, 1989, w. e. f. 1- 4- 1989, read as under Explanation 4.- For the purposes of this section, the expression public financial institution shall have the meaning assigned to it in section 4A of the Companies Act, 1956 1 of 1956 . 8. Ibid. 9. Ibid.