Actual payment under section 43B allows deduction for advance excise duty deposited under prescribed treasury procedure.

Disallowance under rule 6D was computed with reference to each employee or director's journey, and that issue was decided for the Department. Excise and customs duties were excluded from closing stock valuation where the governing principle treated such duties as not forming part of stock value, and that issue was decided for the assessee. Excise duty paid in advance qualified for deduction under section 43B because the amount was actually deposited with the treasury under the prescribed excise procedure before removal of goods, satisfying the actual-payment requirement; this issue was also decided for the assessee. The note records a mixed result and restates the principle that advance statutory duty payment is allowable when made in the manner required by law.

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Issues: (i) whether disallowance under rule 6D of the Income-tax Rules, 1962 was to be computed with reference to total journeys undertaken in a year or each journey undertaken by an employee or director; (ii) whether excise and customs duties paid were excludible from the value of closing stock; and (iii) whether excise duty paid in advance was deductible as business expenditure under section 43B of the Income-tax Act, 1961.

Issue (i): whether disallowance under rule 6D of the Income-tax Rules, 1962 was to be computed with reference to total journeys undertaken in a year or each journey undertaken by an employee or director.

Analysis: The first question was accepted as having been covered by the position adopted in later assessment years, and no contrary basis was pressed to sustain the assessee's stand on this issue.

Conclusion: The issue was answered in favour of the Department.

Issue (ii): whether excise and customs duties paid were excludible from the value of closing stock.

Analysis: The valuation issue was decided in the light of the governing principle that duties actually borne in stock valuation could not be included where the Supreme Court authority relied upon by the assessee supported exclusion.

Conclusion: The issue was answered in favour of the Assessee.

Issue (iii): whether excise duty paid in advance was deductible as business expenditure under section 43B of the Income-tax Act, 1961.

Analysis: Section 43B permits deduction only on actual payment, and the excise duty procedure under rule 173G of the Central Excise Rules, 1944 required advance deposit into the treasury before removal of goods. Since the duty stood paid to the State in advance and was not a mere book entry, the statutory mischief targeted by section 43B was satisfied.

Conclusion: The issue was answered in favour of the Assessee.

Final Conclusion: The appeal succeeded on one question for the Department and on the remaining questions for the Assessee, and the dispute was finally concluded with a mixed result.

Ratio Decidendi: For the purposes of section 43B, a statutory duty is allowable on actual payment when it is deposited in advance with the treasury under the prescribed excise procedure, even if adjustment against removal of goods follows later.

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