Trading receipts and section 43B: sales tax collections were not taxable where remittance due dates had not expired.

Sales tax collected by a dealer in the course of sales is treated as part of trading receipts under the governing sales tax principles. Although an assessee using the mercantile system would ordinarily claim deduction for accrued statutory liability, section 43B postpones deduction only when the tax or duty has become payable and remains unpaid. On the stated facts, the sales tax collections for the relevant period were not yet due for remittance before the accounting year ended, so section 43B did not apply and the amount could not be brought to tax in the assessee's hands for that assessment year.

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Issues: Whether the sales tax collections credited as a liability could be brought to tax as trading receipts, and whether section 43B of the Income-tax Act, 1961 applied when the due date for remittance had not expired by the end of the accounting year.

Analysis: The sales tax was collected by the assessee-dealer in the course of sales and, on the authorities governing sales tax collections, formed part of the trading receipts. The assessee followed the mercantile system of accounting and would ordinarily be entitled to deduction of accrued statutory liability, but section 43B postpones deduction of tax or duty to the year of actual payment only where the sum had become payable and remained unpaid. Here, the collections for July 1983 and up to 16-8-1983 were payable only on 20-8-1983 and 20-9-1983 under the State sales tax law, so the accounting year ended before the due dates for payment expired.

Conclusion: Section 43B did not apply on the facts, and the impugned sales tax amount could not be brought to tax in the assessee's hands for the assessment year under consideration.

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