Law:

Section:

Section 43B of the Income-tax Act, 1961 - Business disallowance - Certain deductions to be allowed only on actual payment - Assessment year 1987-88 - Whether 'issue price' payable by assessee, holding licence under U.P. Excise Act, was neither a tax nor any amount payable by him in his capacity as an employer so as to fall in any categories covered by section 43B, as it stood during assessment year 1987-88 and, therefore, 'issue price' payable by assessee could not be disallowed under section 43B - Held, yes Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Year in which deductible - Assessment year 1987-88 - Assessee was a liquor contractor and was holding licence for wholesale and retail sale of country liquor - Assessee was required to pay sum as 'issue price' to Excise Department during assessment year 1987-88 - Assessee had claimed a rebate of certain sum from his aforesaid obligation, inter alia, on ground that for certain period, liquor shops had to remain closed on account of curfew during that year - Assessee did not pay said amount to Excise Department chargeable from him as a part of price under contract - It had claimed a deduction in respect of said amount, which had not actually been paid by him, but on basis of accrued liability, in computation of his taxable income - Tribunal allowed said amount as deduction in spite of fact that assessee had not accepted that amount as liability and contesting same - Whether Tribunal was justified in holding so - Held, yes FACTS The assessee was a liquor contractor and was holding licence for wholesale and retail sale of country liquor under the licence. The assessee was required to pay sum as 'issue price' to Excise Department during the assessment year 1987-88. That amount was payable by the assessee in 12 monthly instalments. The assessee had claimed a rebate of certain sum from his aforesaid obligation, inter alia, on the ground that for certain period, the liquor shops had to remain closed on account of curfew during that year. The assessee did not pay the said amount to the Excise Department chargeable from him as a part of price under the contract. It had claimed a deduction in respect…

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