Section 43B deduction for last-quarter sales tax allowed when paid before return-filing due date, despite year-end payment timing.

Sales tax for the last quarter, if actually paid before the due date for furnishing the return under section 139(1), remains deductible and is not disallowable under section 43B merely because payment was made after the close of the accounting year. The first proviso to section 43B was intended to remove hardship where statutory liabilities, including last-quarter sales tax, are discharged before return filing, and that legislative purpose is not defeated by the later insertion of Explanation 2. Reading the proviso and Explanation 2 harmoniously, the payment qualified for deduction and the disallowance was unsustainable.

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Issues: Whether sales tax relating to the last quarter, paid after the end of the accounting year but before the due date for furnishing the return, was disallowable under section 43B of the Income-tax Act, 1961.

Analysis: The amount represented sales tax for the last quarter and was paid by cheque within the time permitted under the Gujarat Sales Tax Rules. The object of section 43B is to deny deduction for statutory liabilities not discharged in time, and the first proviso to section 43B was introduced to remove the hardship caused by disallowance of last-quarter sales tax payments made before the return-filing due date. The later insertion of Explanation 2 by the Finance Act, 1989 did not negate that legislative intent. Reading the proviso and the explanation harmoniously, the allowance under the proviso applied to the assessee's payment.

Conclusion: The disallowance was not sustainable and the deduction was allowable in the assessee's favour.

Ratio Decidendi: Sales tax for the last quarter, if actually paid before the due date for furnishing the return under section 139(1), is deductible and cannot be disallowed under section 43B merely because it was paid after the close of the accounting year.

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