Section 43B relief, business travel expense allowance, and security deposits held not to be trading receipts.

Section 43B disallowance could not be sustained where sales-tax was paid within the time permitted under the relevant sales-tax law, as the 1987 and 1989 amendments were treated as clarificatory. Travelling-expense disallowance was also unwarranted because the expenditure was supported by business records, paid through cheques to travel agents, and its genuineness was not rebutted. Amounts credited to a taxi quota excise refund account were not taxable trading receipts where they were collected only as security deposits or as a conduit for refund and never became the assessee's trading income. The assessee was therefore entitled to relief on all three points.

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Issues: (i) Whether the disallowance under section 43B in respect of sales-tax payment made within the permissible time was sustainable; (ii) whether the disallowance out of travelling expenses was justified; (iii) whether the amount credited in the taxi quota excise refund account was a taxable trading receipt.

Issue (i): Whether the disallowance under section 43B in respect of sales-tax payment made within the permissible time was sustainable.

Analysis: The amount was paid within the time allowed under the relevant sales-tax law, and the legal position was governed by the view that the amendments to section 43B by the Finance Acts of 1987 and 1989 were clarificatory. Where sales-tax liability for the quarter did not remain actually payable within the accounting year under the relevant law, the disallowance could not be sustained.

Conclusion: The disallowance under section 43B was not justified and was rightly deleted in favour of the assessee.

Issue (ii): Whether the disallowance out of travelling expenses was justified.

Analysis: The expenses were supported by material showing business visits connected with the dealership, payments were made through cheques to travel agents, and the genuineness of the expenditure was not successfully rebutted. On the available record, no ground was made out to interfere with the finding that the expenditure was incurred for business purposes.

Conclusion: The disallowance out of travelling expenses was not justified and was correctly deleted in favour of the assessee.

Issue (iii): Whether the amount credited in the taxi quota excise refund account was a taxable trading receipt.

Analysis: The amount was treated as a security deposit collected in connection with taxi sales, the manufacturer was the person responsible for central excise, and the assessee acted only as a conduit for collection and subsequent refund. The amount did not acquire the character of the assessee's trading receipt merely because it was temporarily retained pending verification and refund.

Conclusion: The addition treating the amount as a trading receipt was not sustainable and was rightly deleted in favour of the assessee.

Final Conclusion: The Revenue failed on all the issues decided in the appeal, and the assessee's relief granted by the first appellate authority was maintained.

Ratio Decidendi: Where statutory amendments are clarificatory, payments made within the period allowed by the relevant law cannot be disallowed under section 43B, and amounts collected only as security deposits or as a conduit for onward refund do not become taxable trading receipts in the hands of the assessee.

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