JAIPURIA SAMLA AMALGAMATED COLLIERIES LTD. ETC. versus COMMISSIONER OF INCOME TAX, WEST BENGAL

Citation: [1972] 1 S.C.R. 510 · Decided: 31-08-1971 · Supreme Court of India · Bench: K.S. HEGDE · Disposal: Case Partly allowed

Judgment (excerpt)

510 
JAIPURJA SAMLA AMALGAMATED 
ETC. 
v. 
COLLIEIUES LTD. 
COJ\IMISSIONER OF INCOME TAX, WEST BENGAL 
Augus~ 31, 1971 
[K. S. HEGDE AND A. N. GROVER, JJ.] 
Income Tax Act, 1922, s. 10(4)-Cesses imposed under-Bengal Cess 
Act, 1880 and Bengal (Rural) Primary Education Act, 1930 whether 
fall within mischief of section-Whether based on profits c.nd gains of 
business profession or vocation. 
The appellant was a public limited company. It carried on the busi-
ness of ruising coal from coal mines and selling the same. 
It had taken 
on lease several mines from the owners of the coal bearing lands. 
As 
lessee of the mines the, appellant incurred liability for payment of (i) Road 
and Public Works cess under the Bengal Cess Act of 1880; (ii) Educa-
tion Cess levied under the Bengal (Rural) Primary Education Act, 1930. 
The amounts payable by the assessee on account of the aforesaid cesses 
were claimed by it as a deduction under s. 10 of the Income-tax Act, 
1922. 
The Income-tax authorities disallowed that claim relying on 
s. I 0( 4) of the Act. 
The Tribunal and the High Court decided against 
the appellant. 
In appeal to this Court by special leave, the question for 
determination was whether the cesses levied under the aforesaid Bengal 
Acts fell within the mischief of s. 10( 4) of the Act. It was common 
ground that these cesses were not levied on the profits or gains of any 
business, profession, or vocation but it was claimed on behalf of the 
Revenue that the cesses were assessed on the basis of such profits and 
gains and therefore they would be covered by the said provision. 
HELD : (i) The words 'profits and gains of any business, profession, 
or vocation which are employed in s. 10( 4) can, in the context, have 
reference only to' profits or gains as determined under s. 10 and cannot 
cover the net p!rofits or gains arrived at ofcletermined in a manner other 
than that provided by s. 10. The whole purpose of enacting sub-s. (4) 
of s. 10 appears to be to exclude from the permissible deduction under 
els. (ix) and (xv) of sub-s. (2) such cess, rate or tax which is levied 
on the profits or gains of any business profession or vocation or is 
assessed at a proportion of or on the basis of such profits or gains. 
In 
other words sub-s. ( 4) was meant to exclude a tax or -a cess or a rate 
the asses·sment of which would follow the determination or assessment 
of profits or gains of ariy business, profession or vocation in accordance 
with s. 10 of the Act. [514 D-EJ 
(iii) The road cess and public works cess are to be assessed on the 
annual net profits under ss. 72 and 76 of the Cess Act 1880. The net 
annual profits have to be calculated on the average of the net profits for 
the last three years of the mine or the quarry and if the annual net 
profits of the property cannot be ascertained in the aforesaid manner then 
it is left to the Collector to determine the value of the property first in 
such manner as he considers expedient and determine 6 per cent on that 
\'alue which wguld be deemed to be the annual net profits. 
The Cess 
Act of 1930 follows the same pattern so far as the ascertainment of 
annual net profits is concerned. These profits arrived at according to the 
pro\isions of the two Cess Acts can by no stretch of reasoning be equated 
to the profit. which are determined under s. 10 of the ~Act. It is not 
possible to see, therefore, how s. 10( 4) could be applicable at all ill the 
A 
B 
c 
D 
E 
F 
G 
H 
A 
JAIPURIA COLLIERIES v. C.I.T., WEST BENGAL (Grover, /.)511 
present case. 
Thus on the language of the provisions both of the 
Act and the two Cess Acts the applicability of s. 10(4) cannot be 
attracted. (514 F-H] 
Commissioner of Income-tax, Bengal v. Gurupada Datta 14 I.T.R. 100, 
applied. 
B 
Simbholi Sugar Mills Ltd. v. Commissioner of Income-tax, U.P. cl Y.P. 
45 l.T.R. 125 and Commissioner of Inrome-tax, Delhi & Rajasthan v. 
Banarsi Dass & Sons, 61 l.T.R. 414, approved. 
Commissioner of Income-tax, West Bengal v. We~ Bengal Mining Co. 
67 I.T.R. 292, disapproved. 
CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 1910 to 
c 1912 and 2112 of 1968, amd 1102 to 1105 ot 1971. 
Appeals by certificate/special leave from the judgments and 
orders dated July 28, 1967, March 29, 1968, May 24, 1968 of the 
Calcutta High Court in Income-tax References Nos. 170 of 1963, 
40 of 1965 and 4 of 1967. 
D 
V. S. Desai, N. R. Khaitan, B. P. Maheshwari and Krishna Sen, 
E 
F 
for the appellants (in all th

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