JUDGMENT :- Chitra Venkataraman, J. 1. This Tax Case Appeal is filed by the Revenue as against the order of the Tribunal relating to the assessment year 1995-96 raising the following substantial question of law: "Whether in the facts and in the circumstances of the case, the Tribunal was right in holding that conversion of overdue interest into funded interest by the financial institutions would constitute actual payment of interest under Section 43B?" 2. The assessee claimed deduction under Section 43 B of the Income Tax Act as regards the payment of interest on the loans taken from ICICI Bank and PIPDIC. Admittedly, the assessee, following the mercantile system of accounting, made only a provision in the profit and loss account as regards the payment of interest on the loan taken. However, the assessee placed reliance on Board's circular, which specifically exempted the requirement of payment of sales tax covered under the scheme framed by the State Government and submitted that having regard to the provision already made in the profit and loss account, the assessee was entitled to the claim deduction under Section 43 B of the Income Tax Act. The assessee also produced letters from M/s.ICICI dated 21.12.1994 and from M/s. PIPDIC dated 22.8.1995 that the overdue interest payable by the assessee was converted into loan amount. The Assessing Authority rejected the plea of the assessee, since as per Section 43B of the Income Tax Act, the deduction could be granted only on the actual payment of interest. The assessee filed an appeal before the Commissioner of Income Tax (Appeals), who confirmed the findings of the Assessing Authority. On a further appeal by the assessee before the Income Tax Appellate Tribunal, the assessee's appeal was allowed. In so allowing the appeal, the Tribunal seems to have followed the earlier view of the Tribunal in another assessee's case. However, the Tribunal pointed out that there was no actual payment of interest and it only made a provision in the profit and loss account for the payment of interest. Aggrieved by the decision, the Revenue is on appeal before this Court. 3. In spite of service of notice on the assessee, there is no representation for the assessee. Hence, after perusing the records and after hearing the arguments of the learned standing counsel appearing for the Revenue, the present order is passed. 4. Aggrieved by the decision, the Revenue is on appeal before this Court. 3. In spite of service of notice on the assessee, there is no representation for the assessee. Hence, after perusing the records and after hearing the arguments of the learned standing counsel appearing for the Revenue, the present order is passed. 4. As rightly pointed out by the learned standing counsel appearing for the Revenue that in the decision reported in (2001) 255 ITR 491 (Kalpana Lamps and Components Ltd. V. Deputy Commissioner of Income-Tax), this Court had an occasion to consider the similar claim and pointed out that a mere postponement of liability to pay interest did not amount to discharge, whether actual or constructive. This Court further pointed out as follows: "Section 43B(a) deals with sums payable by the assessee by way of tax, duty, cess or fees under any law for the time being in force. Explanation 2 sets out that for the purposes of that clause, "any sum payable" means a sum for which the assessee has incurred liability in the previous year even though such sum might not have been payable within that year under the relevant law. The year in which the liability was incurred is taken as the year in which the sum was paid. That provision is meant to aid the assessees who have received the deferral benefit under the schemes framed by the State Governments with regard to sales tax." 5. Learned standing counsel appearing for the Revenue further pointed out to the decision of the Supreme Court reported in (2009) 314 ITR 167 (SC) (CIT V. McDowell and Co.), wherein the Apex Court pointed out to the case of an assessee furnishing bank guarantee in respect of an amount payable on bottling fee account. The assessee claimed deduction under Section 43B. Referring to the statutory provisions under Section 43 B of the Income Tax Act, the Supreme Court held as follows: "The requirement of Section 43B of the Act is actual payment and not deemed payment as condition precedent for making the claim for deduction in respect of any of the expenditure incurred by the assessee during the relevant previous year specified in Section 43B. The furnishing of bank guarantee cannot be equated with actual payment which requires that money must flow from the assessee to the public exchequer as required under Section 43B. The furnishing of bank guarantee cannot be equated with actual payment which requires that money must flow from the assessee to the public exchequer as required under Section 43B. By no stretch of imagination can it be said that furnishing of bank guarantee is actual payment of tax or duty in cash. The bank guarantee is nothing but a guarantee for payment on some happening and that cannot be actual payment as required under Section 43B of Act for allowance as deduction in the computation of profits. Section 43B, after amendment with effect from April 1, 1989, refers to any sum payable by the assessee by way of tax, duty or fee by whatever name called under any law for the time being in force. The basic requirement, therefore, is that the amount payable must be by way of tax, duty and cess under any law for the time being in force." 6. In the decision reported in 290 ITR 282 (Mugat Dyeing and Printing Mills A.C.I.T.) the Gujarat High Court pointed out that the expression employed in Section 43B of the Income Tax Act is "actually paid". The word "actual" hence, has to be understood as referrable to something real in opposition to constructive or speculative. Thus, going by the said phrase "actually paid" has to be construed as the assessee, in fact, making the payment. Importing any other meaning, hence, would amount to doing violence to the plain meaning of the statute. 7. In the light of the above said decision of the Supreme Court reported in (2009) 314 ITR 167 (SC) (CIT V. McDowell and Co.) on the scope of Section 43 B of the Income Tax Act and this Court's decision reported in (2001) 255 ITR 491 (Kalpana Lamps and Components Ltd. V. Deputy Commissioner of Income-Tax) and on the admitted fact that all that the assessee had made as regards the claim was only by way of a provision in the profit and loss account and no actual payment was made by the assessee in respect of the interest payable, we have no hesitation to set aside the order of the Tribunal. Accordingly, the order of the Tribunal is set aside and the question is answered in favour of the Revenue. The Tax Case (Appeal) is allowed. No costs.