Kist payment to Government held outside section 43B, so disallowance was not sustainable under the Income-tax Act.

Unpaid kist payable to the Government was held to fall outside section 43B of the Income-tax Act, 1961, because it was not treated as the kind of liability contemplated by that provision. The Karnataka High Court followed its earlier decision on the same issue and held that even the changed provisions of the Karnataka Excise Act, 1965 did not alter the position. The result was that the kist amount could not be disallowed under section 43B, and the answer was in favour of the assessee.

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Issues: Whether the unpaid kist payable to the Government by the assessee was liable to disallowance under section 43B of the Income-tax Act, 1961.

Analysis: The question was treated as covered by the earlier decision of the Court on the same issue. On that view, the nature of the kist payment, even in the context of the changed provisions of the Karnataka Excise Act, 1965, did not bring it within the scope of section 43B.

Conclusion: The kist amount payable to the Government could not be brought within the purview of section 43B of the Income-tax Act, 1961, and the answer was therefore in favour of the assessee.

Ratio Decidendi: A kist payment to the Government, as considered in the case, was not a liability of the kind contemplated by section 43B and could not be disallowed under that provision.

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