Law:

Section:

Section 43B of the Income-tax Act, 1961 - Business disallowance - Certain deductions to be allowed only on actual payment - Assessment year 1986-87 - Whether where assessee collected excise duty and instead of paying same to Government, it kept separately in excise deposit account in books of account on ground that in dispute between assessee and Government, High Court had stayed its payment, provisions of section 43B were attracted - Held, yes FACTS The assessee was engaged in the business of manufacture of the textile machinery parts and accessories and the auto spare parts. During the course of the assessment proceedings for the assessment year 1986-87, the Assessing Officer noted that the assessee had collected the excise duty but had not paid the same to the Government. The assessee contended that since the excise duty was collected and kept separately in the excise deposit account in the books of account and as in the dispute between the assessee and the Government, the High Court had stayed its payment, provisions of section 43B were not attracted. The Assessing Officer did not accept the assessee's contention and held that the excise duty so collected was part of the trading receipt and as such, that should be part and parcel of the assessee's income. On appeal, the Commissioner (Appeals) held that the provisions of section 43B were very much applicable to the facts of the case. He, accordingly, confirmed the addition. On further appeal, the Tribunal, however, held that the provisions of section 43B were not attracted. On reference : HELD Deduction under section 43B would be available to the assessee in respect of any sum payable by the assessee by way of tax or duty under any law for the time being in force or any sum payable by the assessee as an employer by way of contribution to provident fund or superannuation fund or gratuity fund or any other fund for the welfare of the employees, only if the same is actually paid by him. If the same is not paid and is kept apart in some different account, then, the same does not make any difference because the amount is still in the hands of the trader/assessee. [Para 7] The assessee cannot be allowed to say…

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