Section 43B disallowance does not cover unpaid kist under an excise lease or licence arrangement.

Section 43B disallowance does not extend to unpaid kist or rental payable for an excise lease or licence, because that liability is statutory but not in the nature of tax, duty, cess or fee. Applying an earlier Division Bench view, the Karnataka High Court treated the power to grant leases and levy licence or privilege fee under the Karnataka Excise Act, 1965, as distinct from the liabilities covered by section 43B. The unpaid kist amount was therefore outside the disallowance provision, and the Tribunal's view was affirmed in favour of the assessee.

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Issues: Whether kist amount payable by the assessee to the State Government, though not actually paid, could be disallowed under section 43B of the Income-tax Act, 1961.

Analysis: The issue stood covered by an earlier Division Bench decision holding that section 43B applies only to statutory liabilities in the nature of tax, duty, cess or fee. Kist or rental payable for the grant of a lease or licence under the Karnataka Excise Act, 1965, is a statutory liability, but it is not a tax, duty, cess or fee. The power under sections 17 and 24 of the Karnataka Excise Act, 1965, to grant leases and levy licence or privilege fee was treated as distinct from liabilities falling within section 43B. Accordingly, unpaid kist amount could not be brought within the disallowance provision.

Conclusion: Section 43B was held inapplicable to the unpaid kist amount, and the Tribunal's view was affirmed in favour of the assessee.

Ratio Decidendi: Section 43B applies only to statutory liabilities that are in the nature of tax, duty, cess or fee, and does not extend to kist or rental payable under an excise lease or licence arrangement.

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