Bad debt write-offs and electricity duty collections: section 43B applies only to sums payable in the relevant year.

Bad debt write-offs for dues from disconnected H.T. consumers were treated as genuine and commercially justified where only a small portion had been recovered and the balance had remained unrealised for several years. Electricity duty collected from consumers as a statutory collecting agent and remitted in the following year was treated as outside section 43B because the sum was not statutorily payable in the relevant accounting year. The note distinguishes electricity duty from sales tax and states that section 43B applies only to amounts payable in that year, not to collections held in a separate account and paid within the statutory period.

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Issues: (i) Whether the assessee was entitled to deduction of bad debts written off in respect of dues from H.T. consumers whose connections had been disconnected and who had become sick units. (ii) Whether the amount of electricity duty collected from consumers but paid to the Government in the subsequent year could be disallowed under section 43B of the Income-tax Act, 1961.

Issue (i): Whether the assessee was entitled to deduction of bad debts written off in respect of dues from H.T. consumers whose connections had been disconnected and who had become sick units.

Analysis: The facts were stated to be the same as in the immediately preceding year, and no distinguishing feature was shown. The subsequent position also supported the claim, as only a small part of the outstanding amount had been recovered and the balance had remained unrealised for several years. On this basis, the write-off was treated as genuine and commercially justified.

Conclusion: The issue was decided in favour of the assessee and the bad debt claim was allowed.

Issue (ii): Whether the amount of electricity duty collected from consumers but paid to the Government in the subsequent year could be disallowed under section 43B of the Income-tax Act, 1961.

Analysis: The assessee functioned only as a collecting agent under the Gujarat Electricity Duty Act, 1958, kept the collections in a separate account, and remitted them within the statutory period in the following year. The amount was not statutorily payable during the relevant accounting year, and the provision in section 43B was held to apply only where the sum was payable in that year. The distinction between electricity duty and sales tax was accepted, and the case law relied upon by the Revenue was found distinguishable.

Conclusion: The issue was decided in favour of the assessee and the addition under section 43B was deleted.

Final Conclusion: The appeal succeeded on the substantial dispute regarding bad debts and electricity duty, with the impugned addition under section 43B set aside.

Ratio Decidendi: Section 43B applies only to sums that are statutorily payable in the relevant accounting year, and it does not authorise disallowance of amounts merely held by the assessee as a collecting agent and remitted in accordance with the governing statute.

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