Section 43B disallowance does not apply where sales tax collected was not claimed as a deduction.

Section 43B of the Income-tax Act did not apply to Central sales tax and State sales tax collected by the assessee where no deduction for those amounts had been claimed. The provision was treated as operating only when a statutory liability is sought to be deducted in computing income; absent any deduction claim, disallowance under section 43B could not be made. On those facts, the tax collections were outside the scope of section 43B, and the issue was answered in favour of the assessee.

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Issues: Whether section 43B of the Income-tax Act, 1961 was attracted to the Central sales tax and State sales tax collected by the assessee, where no deduction in respect of those amounts had been claimed.

Analysis: The assessee had collected Central sales tax and State sales tax during the assessment year but had not deposited the amounts by the time the return was filed. The central question was not whether the collections constituted trading receipts in a general sense, but whether section 43B could be invoked to disallow amounts in respect of which no deduction had been claimed. On the facts found, section 43B operates only where a deduction is claimed for the relevant statutory liability. Since the assessee had not claimed any deduction of the collected tax amounts, the provision was held to have no application.

Conclusion: Section 43B was not attracted, and the question was answered in favour of the assessee.

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