Section 43B disallowance not attracted where no deduction was claimed for separately maintained sales tax liability.

Section 43B does not apply where sales tax amounts were maintained separately by a commission agent and were not debited to the profit and loss account or claimed as a deduction in computing income. The provision is aimed at disallowing unpaid statutory liabilities only when the assessee seeks tax deduction for them; absent any such claim, no disallowance is warranted. On that basis, the disputed addition was deleted, and the consequential interest computation followed the reduced assessed income.

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Issues: Whether disallowance under section 43B of the Income-tax Act, 1961 was justified in respect of sales tax amounts which were not claimed as deduction in the profit and loss account and were maintained separately by the assessee as a commission agent.

Analysis: The assessee had not debited the disputed sales tax amount to the profit and loss account as a trading liability and had not claimed it as a deduction in computing income. The liability was maintained separately and, in the relevant year as well as in earlier and subsequent years, the assessee had not sought deduction of the amounts collected on behalf of principals. Section 43B was intended to curb allowance of unpaid statutory liabilities claimed as deductions; it was not attracted where no such deduction had been claimed. The interest under section 215 was dependent on the assessed income after deleting the disputed addition.

Conclusion: The disallowance under section 43B was not sustainable and the deletion of Rs. 66,084 was . The consequential direction regarding interest also survived only on the reduced income, and the revenue's appeal failed.

Final Conclusion: The order of the Commissioner (Appeals) was sustained and the revenue's challenge was rejected.

Ratio Decidendi: Section 43B applies to unpaid statutory liabilities only when the assessee seeks deduction of the liability in computing taxable income; if no deduction is claimed, disallowance under that provision is not warranted.

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