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

Under the Income-tax Act, 2025, Sharma & Sons claimed a deduction in the tax year 2026-27 for ₹3,00,000 of employer contribution to a gratuity fund, which was paid after year-end but before the return due date, and was allowed in 2026-27 under section 37(3). In 2027-28 the firm records the same ₹3,00,000 as actually paid in its books. What is the position for 2027-28?

The sum is not allowed again in 2027-28. Section 37(5) provides that where a deduction for a section 37(2) sum has already been allowed in the year the liability was incurred, no further deduction is given in a later year when the amount is paid.

  1. A₹3,00,000 is allowed again in 2027-28
  2. B₹1,50,000 is allowed in 2027-28
  3. CThe sum is not allowed again in 2027-28Correct
  4. DIt is allowed if the 2026-27 claim is withdrawn, which is mandatory

Explanation

Section 37(5) says that if a deduction for a sum payable under sub-section (2) has already been allowed in the year the liability was incurred, it is not allowed again in a later year when paid. The 2026-27 deduction under sub-section (3) therefore precludes any second claim.

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