COMMISSIONER OF INCOME-TAX VS DINESHKUMAR GORDHANLAL
1999 P T D 2116
[226 I T R 826]
[Madhya Pradesh High Court (India)]
Before A.R. Tiwari and N. K. Jain, JJ
COMMISSIONER OF INCOME-TAX
Versus
DINESHKUMAR GORDHANLAL
Miscellaneous Civil Case No.381 of 1992, decided on 23/03/1996.
Income-tax--
Business expenditure---Deduction only on actual payment- Word "fee" inserted in- S.43-B(a) with effect from 1-4-1989---Mandi fee is neither tax nor duty within the meaning of cl. (a) of S.43-B as it stood at relevant time---Indian Income Tax Act, 1961, S.43-B(a) [beforeamendment w.e.f. 1-4-1989].
Section 43-B was inserted in the Income Tax Act, 1961, with effect from April 1, 1984 and it was operative for the assessment year 1984-85. There was an outstanding balance of Rs. 5,978 in the assessee's mandi tax account. The Income-tax Officer held that since this amount had remained unpaid, the provisions of section 43-B of the Act were attracted to the case of the assessee and, therefore, he made an addition of that amount to the income of the assessee. The Commissioner (Appeals) held that the provisions of section 43-B, as it then stood were not applicable to mandi tax and, therefore, deleted the addition of Rs. 5,978. The Tribunal held that mandi tax fell outside the scope of taxes mentioned under section 43-B and such a fee came to be treated as a tax only with effect from April 1, 1989 when the provisions of section 43-B were amended, that, therefore, the mandi tax fee levied was neither a tax nor a duty under section 43-B as it stood at the relevant time:
Held, affirming the decision of the Tribunal, that mandi fee was not a tax ro)r a duty within the meaning of clause (a) of section 43-B of the Act.
CIT v. Mohansingh and Sons (1995) 216 ITR 432 (MP) and Srikakollu Subba Rao & Co. v. Union of India (1988) 173 ITR 708 (AP) ref.
D.D. Vyas for the Commissioner.
Nazir Singh for the Assessee.
JUDGMENT
A.R. TIWARI, J.---At the instance of the Department, the Tribunal has stated the case on application registered as R.A. No.385/Ind. of 1991 arising out of I.T.A. No.412/Ind. of 1989 and C.O. No.70/Ind. of 1989 and referred the under noted question of law for our consideration and opinion:
"Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that mandi fee was not a tax nor a duty within the meaning of clause (a) of section 43-B of the Income Tax Act, 1961?"
Briefly stated, the facts of the case are that the year of assessment is 1984-85. The accounting period ended on November 4, 1983. Section 43-B was inserted in the Act by the Finance Act, 1983, with effect from April 1, 1984. It was thus, operative for the assessment year 1984-85. There was an outstanding balance of Rs.5,978 in the mandi tax account. According to the Income-tax Officer, as this amount had remained unpaid, the provisions of section 43-B were attracted. He, therefore, made an addition of Rs.5,978. On appeal, the Commissioner of Income-tax (Appeals) held that the provisions of section 43-B of the Income Tax Act, 1961, as it then stood, were inapplicable to mandi tax. He, therefore, deleted the addition of Rs. 5,978. The Department then filed the appeal before the Tribunal. The Tribunal held that it was neither a mandi tax nor a duty, but a fee and the word "fee" was inserted in section 43-B(a) with effect from April 1, 1989. The Tribunal placed reliance on Srikakollu Subba Rao and Co. v. Union of India (1988) 173 ITR 708 (AP) and dismissed the appeal of the Department and allowed the cross-objection of the assessee pro tanto. The Department felt aggrieved and filed an application under section 256(1) of the Income Tax Act, 1961. On this application, the Tribunal stated the case and referred the aforesaid question of law for our consideration and opinion.
We have heard Shri D.D. Vyas, learned counsel for the applicant, and Shri Nazir Singh, learned counsel for the non-applicant.
Counsel for the non-applicant submitted that the point as projected stands concluded by the decisions in Srikakollu Subba Rao and Co. v. Union of India (1988) 173 ITR 708 (AP) and CIT v. Mohansingh and Sons (1995) 216 ITR 432 (MP).
The Tribunal considered the matter and took the decision as under
"As regards the mandi tax, in I.T.A. No.627/Ind. of 1986 decided on February 21, 1991, we have taken a view that mandi tax falls outside the scope of taxes mentioned under section 43-B of the Act and such a fee came to be treated as a tax only with effect from April 1, 1989, when the provisions of section 43-B were amended. Following the same view, we hold that the mandi fee levied is neither a tax nor a duty under section 43-B of the Act then existing at the relevant point of time. The decision of the Andhra Pradesh High Court in Srikakollu Subba Rao and Co. v. Union of India (1988) 173 ITR 708, also supports the same view. Therefore, the Revenue's appeal has no merit on this point."
We are satisfied with the correctness of the order and the refusal of the Tribunal to state the case. The Tribunal correctly appreciated the facts and applied the law. The point stands concluded.
In the result, we answer the question in the affirmative, i.e., in favour of the assessee and against the Department.
This miscellaneous civil case, thus, stands decided in terms indicated above, but without any order as to costs. Counsel fee is, however, fixed as Rs.750, if certified for each side.
A copy of this order be transmitted to the Tribunal immediately.
M.B.A./1964/FC Order accordingly.