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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, Verma Enterprises has a liability for a cess levied under law that was not payable within the tax year under the relevant law, though the firm incurred the liability in that year. For section 37(2)(a), what does 'the sum payable' mean?

It means a sum for which the assessee incurred liability in the tax year, even if the relevant law did not make it payable within that year. Section 37(8) gives this definition for section 37(2)(a), so the liability's incurrence, not its due date, is what matters.

  1. AOnly sums legally due for payment within that tax year
  2. BA sum for which liability was incurred in the tax year, even if not payable within that year under the relevant lawCorrect
  3. COnly sums actually paid in that tax year
  4. DOnly sums assessed by the assessing officer

Explanation

Section 37(8) defines 'the sum payable' for clause (2)(a) as a sum for which the assessee has incurred liability in the tax year, even though it might not have been payable within that year under the relevant law. Hence the due date under the other law does not matter for this purpose.

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