Section 43B allows deduction of unpaid sales tax paid before return due date, despite later statutory payment timing.

Section 43B did not permit disallowance of sales tax liability that was collected in the last quarter of the previous year but paid in the next accounting year before the due date for furnishing the return. Applying the Supreme Court's interpretation of the provision, as modified by the first proviso and retrospective Explanation 2, an amount actually paid within the return-filing due date could not be denied deduction merely because the statutory sales tax payment date fell later. The addition was therefore deleted in favour of the assessee.

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Issues: Whether the addition on account of unpaid sales tax was liable to be deleted under section 43B of the Income-tax Act, 1961.

Analysis: The liability related to sales tax collected in the last quarter of the previous year but statutorily payable in the subsequent year. In light of the Supreme Court's interpretation of section 43B, as modified by the first proviso and the retrospective clarification introduced by Explanation 2, a sum actually paid in the next accounting year before the due date for furnishing the return in respect of the year in which the liability was incurred could not be disallowed merely because the statutory payment date fell later.

Conclusion: The deletion of the addition was in law, and the question was answered in the affirmative in favour of the assessee and against the Revenue.

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