Skip to content

CS Professional · Advanced Direct Tax Laws and Practice · Computation of Total Income, Tax Liability and Filing of Returns of various Entities excluding Companies

Sharma Industries, a firm, incurred a liability of ₹60,000 for a fee levied under law in tax year 2025-26 and claimed and was allowed the deduction in that year because it was paid before the return due date. It is shown as paid again in the books of 2026-27 on a different date. Which statement is correct under section 37?

The ₹60,000 is not allowed again in 2026-27. Section 37(5) bars a second deduction in a later year when the sum has already been allowed in the year the liability was incurred, so payment in the later year gives no further deduction.

  1. AThe ₹60,000 is allowed again in 2026-27 because payment occurred in that year
  2. BThe ₹60,000 is not allowed again in 2026-27, since it was already allowed in the year the liability was incurredCorrect
  3. CThe ₹60,000 is allowed in 2026-27 at 50%
  4. DThe ₹60,000 is allowed in 2026-27 only if the earlier deduction is withdrawn

Explanation

Section 37(5) provides that where a deduction for a sum payable under section 37(2) has already been allowed in the year the liability was incurred, it is not allowed again in a later year when paid. This prevents double deduction.

Did you get it right without looking?

One question tells you little. A timed set on Computation of Total Income, Tax Liability and Filing of Returns of various Entities excluding Companies shows your real accuracy, how long you take and where you lose marks.

Practise Computation of Total Income, Tax Liability and Filing of Returns of various Entities excluding CompaniesFree diagnostic mock

More Computation of Total Income, Tax Liability and Filing of Returns of various Entities excluding Companies questions