TMI Blog2009 (5) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... le on late payment of bottling fees not covered by provisions of section 43B. - 3471, 3472 OF 2007 2939 of 2006 - - - Dated:- 8-5-2009 - IN THE SUPREME COURT OF <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" /> INDIA <?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /> Commissioner of Income Tax, Udaipur Rajasthan Versus Mcdowell Co. Ltd. Dr. ARIJIT PASAYAT and Dr. MUKUNDAKAM SHARMA, JJ. CIVIL APPEAL NO.3471 OF 2007 May 08, 2009 JUDGMENT Dr. ARIJIT PASAYAT, J. - Questioning correctness of the judgment rendered by a Division Bench of the Rajasthan High Court at Jodhpur this appeal has been filed. Originally following questions were framed for adjudication by order dated 24.5.2002: 1. Whether on the facts and in the circumstances of the case, the ITAT was justified in deleting the addition of Rs.5,61,462/- by holding that unpaid amount of bottling fee has, on furnishing of bank guarantee, to be treated as actual payment and accordingly the deduction in respect of the same cannot be deemed under section 43B of the IT Act, 1961? 2. Whether, on the facts and in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in short the 'Rules') and the interest chargeable for late payment of Rs.40,000/- does not amount to tax, duty and cess. The High Court held that such fees are not covered under the ambit of Section 43B. 7. The revenue is in appeal against the said view of the High Court which nevertheless held that furnishing of bank guarantee is not the same as making payment as stipulated in Section 43B of the Act. 8. We shall first deal with the question whether furnishing of bank guarantee amounts to actual payment and fulfils the conditions stipulated in section 43B of the Act. The requirement of Section 43B of the Act is the 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. By no stretch of imagination it can 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 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 28 of that previous year in which such sum is actually paid by him: Provided that nothing contained in this section shall apply in relation to any sum referred to in Clause (a) or Clause (c) or Clause (d) or Clause (e) or Clause (f) which is actually paid by the assessee on or before the due date applicable in his case for furnishing the return of income under Sub-section (1) of Section 139 in respect of the previous year in which the liability to pay such sum was incurred as aforesaid and the evidence of such payment is furnished by the assessee along with such return." 10. It would be pertinent to note that the expression now used in Section 43B (i)(a) is "Tax, Duty, Cess or fee or by whatever name called". It denotes that items enumerated constitute species of the same genus and the expression 'by whatever name called' which follows preceding words 'Tax', 'Duty', 'Cess' or 'fee' has been used ejusdem generis to confine the application of the provisions not on the basis of mere nomenclatures, but notwithstanding name, they must fall within the genus 'taxation' to which expression 'Tax', 'Duty', 'Cess' or 'Fee' as a. group of its specie belong vis. compulsory exaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss statutory authority. (iii) The term 'Tax' under Article 265 read with Article 366(28) includes imposts of every kind viz., tax, duty, cess or fees. (iv) As an incident of sovereignty and in the nature of compulsory exaction, a liability founded on principle of contract cannot be a "tax' in its technical sense as an impost, general, local or special. 16. This Court in the light of decisions starting from State of Bombay v. F.N. Balsara (AIR 1951 SC 318) held that the expression "fee" is not used in the State excise laws or rules in the technical sense of the expression. By 'licence fee' or 'fixed fee' under excise laws relating to potable liquors/intoxicant is meant the price or consideration which the Government charges to the licences for parting with its exclusive privilege and granting them to the licencees. There is no fundamental right to do trade or business in intoxicants. The State under its regulatory powers has the right to prohibit absolutely every form of activity in relation to intoxicants, its manufacture, storage, export, import, sale and possession in all their manifestations these rights are vested in the State. The decision was re-iterated in Har Shank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n furnishing of bank guarantee, to be treated as actual payment and accordingly the deduction in respect of the same cannot be denied U/s. 43B of the Income-tax Act, 1961? (2) Whether on the facts and in the circumstances of the case the ITAT was justified in deleting the addition of Rs. 38,442/-made by the Assessing Officer on account of disallowance of Research and Development expenses not covered U/s. 35(1)(iv) of the Income-tax Act, by wrongly relying on the decision in ITA No.1546/JP/95 dated 30.03.2001? (3) Whether on the facts and in the circumstances the ITAT is justified in allowing the depreciation on research Development assets which related to the closed business of Fast Food Division/unit of the assessee company and as such not used during the previous year?" (4) Whether in the facts and circumstances of the case bottling fees chargeable from the assessee under the Rajasthan Excise Act, 1950 and interest chargeable on late payment of bottling fees amount to tax, duty, cess or fees within the meaning of section 43B of I.T. Act, 1961 so as to attract the said provisions while considering allowability of deduction of such expenses? 3. 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