GK
TAXES IN INDIA
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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In case the assessee follows mercantile system of accounting, bonus or commission to the employee are allowed as deduction on:
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Due basis but subject to section 43B
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Payment basis
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Due basis
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None of these
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Explanation:
Detailed explanation-1: -The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has held that any sum paid to an employee as a bonus or commission for services rendered has to be allowed as a deduction.
Detailed explanation-2: -As per the income tax act, 1961 Section 43B states that only certain payments can be claimed as an expense in the year which they have been paid and not in the year in which the liability to pay such sum was incurred. This means that certain statutory expenses are allowed to be claimed in the year of payment only.
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