Unpaid excise duty cannot be disallowed when the taxpayer never claimed it as a deduction, Supreme Court holds

29 October 2026

A sugar mill had kept an amount of excise duty in its books without paying it, and the tax officer added that amount back to its income.
The officer used the rule that certain statutory dues can be deducted only in the year in which they are actually paid.
The Supreme Court held that the rule was being applied to the wrong facts. The mill had never claimed the unpaid duty as a deduction at all.
If nothing was claimed, there is nothing to disallow. Adding the amount back would tax the company on money it never took out of its income.
The Court therefore read the provision as a check on a deduction already claimed, not as a licence to create income.
The appeal of the assessee was allowed on that reasoning.
Section 43B of the Income-tax Act, 1961 is the provision in question, and it makes deduction of certain dues depend on actual payment.