LexCOMMISSIONER OF INCOME TAX, KERALA versus M/S. TRAVANCORE SUGAR AND CHEMICALS LTD.
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[2015] 6 S.C.R. 782 A COMMISSIONER OF INCOME TAX, KERALA B v. M/S. TRAVANCORE SUGAR AND CHEMICALS LTD. (Civil appeal No.2558 of 2005) May?,2015 [A.K. SIKRI AND ROHINTON FALi NARIMAN, JJ.] C Income Tax Act, 1961 - s. 43B(a) - Deduction under- Disallowance of - For the assessment of assessment year 1990-1991 - Propriety of- Held: The assessment year in question would attract amendment to s.438 by Finance Act, 1988 w.e.f. 1.4.1989- In view of the amendment even ifthe o vend fee paid by the assessee does not directly fall within the expression 'fee' contained in s.43B(a), it would be a 'fee' by 'whatever name called' - Hence disallowance of vend fee under s. 438 is correct since it was not paid before expiry of the relevant previous year. E Disposing of the appeal, the Court HELD: 1.Areading ofs. 438 of Income TaxAct, 1961 after it was substituted by Finance Act, 1988 with effect F from 01.04.1989 shows that sub clause (a) in Section 438 has been considerably widened by the amendment by the addition of the words "by whatever name called". It is clear, therefore, that to attract th:s section, any sum that is payable whether it is called tax, duty, cess or fee G 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. Therefore, even if the vend fee that is paid by the respondent to the H 782 COMM. OF INCOME TAX, KERALA v. TRAVANCORE 783 SUGAR & CHEMICALS LTD. State does not directly fall within the expression 'fee' A contained in Section 43B(a), it would be a 'fee' by 'whatever name called', that is even if the vend fee is called 'privilege' as has been held by the High Court in the judgment under appeal. The impugned judgment does not refer to the amendment made in Section 438 B with effectfrom 1.4.1989 at all. The assessment year in question i.e. 1990-1991 would clearly attract the amendment so made. [Paras 4, ?and 10] (786-E-F; 787- G; 789-H; 790-A] c 2. The Government of Kerala order dated 28.04.1988, shows that the vend fee collected from the three mills is, in fact, a fee in the classic sense of the term. It is clear, on a reading of this document, that the State compulsorily takes from the three mills, a vend D fee for the purpose of conferring a special benefit on the said three mills, viz., the repair and replacement of existing machinery and equipment. [Para 9] (789-D-G] Commissioner, Hindu Religious Endowments v. Sri E Lakshmindra Thirtha Swamiarof Sri Shirur Mutt 1954 SCR 1005- relied on. 3. In case, the respondent has actually paid the aforesaid fee in a previous year relevant to some other F assessment year, he will be entitled to claim the benefit of Section 438 for that particular assessment year in accordance with law. [Para 11] [790-C] Commissioner of Income Tax v. Sri Balaji and Co. 246 G ITR 750 - held inapplicable. 1954 SCR 1005 246 ITR 750 Case Law Reference relied on held inapplicable Para 9 Para 5 H 784 SUPREME COURT REPORTS [2015) 6 S.C.R. A CIVILAPPELLATE JURISDICTION: CIVIL APPEAL NO. 2558 of 2005. From the Judgment and Order dated 07.03.2003 of the High Court of Kerala at Bangalore in Income Tax Reference B No.180 of 1999. Arijit Prasad, Anil Katiyar, for the appellant. C. N. Sree Kumar, Amit Sharma for the respondents. c The Judgment of the Court was delivered by R. F. NARIMAN, J. 1. The respondent-assessee is engaged in the manufacture and sale of foreign liquor and sugar. The assessee filed its return of income for D assessment year 1990-1991 declaring an income of Rs. 15,84,398/-. The assessee had itself shown that a vend fee of Rs. 22,87,512/- was disallowable under Section 438 of the Income Tax Act (hereinafter referred to as 'Act') since it E was not actually paid before the expiry of the relevant previous year. 2. 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 F preferred an appeal before the Commissioner of Income Tax (Appeals), who, by his order dated 24.05.1993, deleted the disallowance under Section 438 and allowed the appeal of the respondent-assessee. Aggrieved by the said order, the G Revenue preferred an appeal before the Income Tax Appellate Tribunal, which confirmed the aforesaid order of the Commissioner (Appeals
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