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Commissioner of Income Tax, Kerala Versus M/s. Travancore Sugars & Chemicals Ltd.

2015 (5) TMI 397 - SUPREME COURT

Disallowance u/s 43B - vend fee outstanding as a liability payable to the Government of Kerala as on the last day of the accounting year - ITAT upholding deletion of disallownce - Held that:- Reading of the document, namely, a Government of Kerala order dated 28.04.1988 it is clear that the State compulsorily takes from the three mills, a vend fee for the purpose of conferring a special benefit on the said three mills, viz., the repair and replacement of existing machinery and equipment.

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gainst the Revenue by the High Court in Commissioner Of Income-Tax Versus Sri Balaji And Co. [2000 (1) TMI 17 - KARNATAKA High Court ] was not answered correctly.

We therefore, set aside the aforesaid judgment and allow the present appeal in favour of the Revenue. In case the respondent has actually paid the aforesaid fee in a previous year relevant to some other assessment year, he will be entitled to claim the benefit of Section 43B for that particular assessment year in accordance .....

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₹ 22,87,512/- was disallowable under Section 43B of the Income Tax Act (hereinafter referred to as 'Act') since it was not actually paid before the expiry of the relevant previous year. On 30.04.1993, the assessing officer completed the assessment for the year 1990-1991 and inter alia confirmed disallowance of the vend fee. Against this, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals), who, by his order dated 24.05.1993, deleted the disallowance und .....

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we are concerned with Question No. 2 which reads as follows: - 2. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in upholding the deletion of disallowance under S. 43B of the I.T. Act in respect of the vend fee of ₹ 22,87,512/- outstanding as a liability payable to the Government of Kerala as on the last day of the accounting year? Section 43B of the Income Tax Act allows certain deductions only to be on actual payment. Section 43B reads as follow .....

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ause (ii) of sub-section (1) of section 36, or (d) any sum payable by the assessee as interest on any loan or borrowing from any public financial institution or a State financial corporation or a State industrial investment corporation, in accordance with the terms and conditions of the agreement governing such loan or borrowing, or (e) any sum payable by the assessee as interest on any loan or advances from a scheduled bank in accordance with the terms and conditions of the agreement governing .....

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1988 with effect from 01.04.1989 shows that sub clause (a) in Section 43B has been considerably widened by the amendment by the addition of the words by whatever name called . It is clear, therefore, that to attract this section any sum that is payable whether it is called tax, duty, cess or fee or called by some other name, becomes a deduction allowable under the said Section provided that in the previous year, relevant to the assessment year, such sum should be actually paid by the assessee. S .....

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India or it is called by some other name would not make any difference. Further, he argued before us that reliance placed on a judgment of the Karnataka High Court reported in 246 ITR 750 in the year 2000 'Commissioner of Income Tax v. Sri Balaji and Co.' was also misplaced inasmuch as the Karnataka High Court, in holding that kist or rentals paid to the Government in respect of vending, toddy/ arracks is not a duty, tax, cess or fee so held only because this case pertains to a period pr .....

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d or replaced. According to him, the aforesaid vend fee not being a compulsory exaction by the State, would not, therefore, fall within any of the expressions used in Section 43B(a) of the Act. Having heard learned counsel for the parties, we think there is force in the submission made by Shri Arijit Prasad on behalf of the Revenue. First and foremost, he is correct in saying that the impugned judgment does not refer to the amendment made in Section 43B with effect from 1.4.1989 at all. The asse .....

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ection 17 of the Karnataka Excise Act, 1965, have referred to the power to grant lease of the right to manufacture. Section 24 has conferred the additional power on the State Government to accept payment of a sum or levy such licence fee or privilege fee as may be prescribed, in consideration of grant of lease or licence or both, by or under this Act. This power is in addition to any excise duty or countervailing duty leviable under sections 22 and 23. If the Legislature has used specific langua .....

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he provisions of section 43B cannot be attracted and as such we are of the view that the Tribunal was justified in law in holding that the kist amount payable to the Government by the assessee could not be brought within the purview of the provisions of section 43B of the Income Tax Act, 1961. It is a different matter that the licensees are not paying the rent in time for which it is only the Legislature which could intervene and not the courts. Shri Arijit Prasad also referred us to the Notes o .....

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hat cess or fees by whatever name called, which have been imposed by any statutory authority, including a local authority, will be allowed as a deduction only if these are actually paid. On a reading of the document on which Shri C. N. Sreekumar has placed reliance, namely, a Government of Kerala order dated 28.04.1988, what becomes clear is that the Government proposed to impose and then imposed a levy on three sugar mills by way of collecting of vend fee of ₹ 0.50 paisa per bulk litre of .....

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