Interest on turnover tax is not "tax" under section 43B(a), so the disallowance does not apply.

Interest payable on turnover tax under the Bengal Finance (Sales Tax) Act, 1941, is treated as compensatory and distinct from the tax itself. Section 43B(a) of the Income-tax Act, 1961, applies only to sums payable by way of tax, duty, cess or fee, and the phrase "by way of" does not extend the disallowance to interest. Because the sales tax statute separately defines tax and does not include interest within that term, such interest is not covered by section 43B(a) unless the statute expressly provides otherwise. The disallowance was therefore deleted and the departmental challenge failed.

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Issues: Whether interest payable on turnover tax under the Bengal Finance (Sales Tax) Act, 1941, forms part of "tax" for the purpose of disallowance under section 43B(a) of the Income-tax Act, 1961.

Analysis: Section 43B(a) covers sums payable by way of tax, duty, cess or fee, and the expression "by way of" does not enlarge those categories to include interest. The provision is a restrictive fiscal enactment and therefore calls for strict construction in favour of the taxpayer. Under the Bengal Finance (Sales Tax) Act, 1941, "tax" is separately defined and does not include interest. The interest in question is compensatory in character and is distinct from the tax itself. Decisions dealing with interest on other levies support the view that interest is not automatically absorbed into the principal levy for section 43B purposes.

Conclusion: Interest on turnover tax is not part of "tax" within section 43B(a) and is not hit by that provision; the deletion of the disallowance was , and the departmental challenge failed.

Ratio Decidendi: For section 43B(a), only the specified levy itself falls within the disallowance provision, and compensatory interest that is separately treated under the taxing statute does not constitute "tax" unless the statute expressly so provides.

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