INCOME TAX ACT, 1961

Section 43B

Business disallowance under section 43B - Deduction on actual payment outstanding Electricity Duty liability - Assessee acting as collection agent of Government in respect of 'Electricity Duty' -

Assessee-State Government Undertaking was engaged in business of distribution of electricity. AO noticed that the assessee's statutory liability towards Electricity Duty was outstanding. Assessee explained that the Electricity Duty used to be billed to consumers on monthly basis and its liability was shown as payable to Government, which was a continuous process and the Electricity Duty was paid to the Government on collection basis, but not on the basis of bills raised to the consumers. However, declining the submission of the assessee, AO made addition under section 43B in respect of the Electricity duty. Held: Since assessee merely acted as agent of State Government for collection of Electricity Duty and paid the same to the State Government on collection, then, the assessee merely acted as a conduit and the Electricity Duty was not chargeable to the assessee. It was further concluded that the Electricity Duty not being a sum payable by the assessee as a primary liability by way of tax, duty, cess or fee, then provisions of section 43B were not attracted to the assessee in respect of the Electricity Duty collected by it for being passed on to the State Government. Hence, the addition made under section 43B in respect of the Electricity Duty would not be sustainable.

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2008-09 & 2011-12

INCOME TAX ACT, 1961

Section 43B

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