THE COMMISSIONER OF INCOME TAX vs. DATTA SHETKARI SAHAKARI KARKHANA LTD

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ITA/17/1999HC Bombay09 August 2005Bench: HON'BLE SHRI JUSTICE DR. S. RADHAKRISHNAN, HON'BLE SHRI JUSTICE J.H. BHATIA4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that there was no substantial question of law arising from the ITAT's order. Regarding the first issue, the Court noted the ITAT's finding that the Government Audit Fees payable by the co-operative society were an expenditure and not a duty cess or tax. The ITAT relied on decisions from the Patna High Court in Jamshedpur Motor Accessories (189 ITR 70) and Calcutta High Court in Jagannath Steel Corporation (191 ITR 676). For the second issue, the ITAT had remanded the matter to the Assessing Officer to verify payment dates for PF, FP, and administrative charges, allowing them if paid on or before the due date of filing the return. The ITAT's rejection of the reference application was based on the Supreme Court's decision in Allied Motors (P) Ltd. v. Commissioner of Income Tax (224 ITR 677), which covered the issue of payments made by the return filing date. The High Court found the ITAT's reasoning and the legal position to be sound.

What were the facts?

The Commissioner of Income Tax (Applicant) filed an application seeking a direction to the Income Tax Appellate Tribunal (ITAT) to state and refer questions of law arising from its order dated December 5, 1997. The ITAT had held that Government Audit Fees payable by the Respondent, Shri Datta Shetkari Sahakari Sakhar Karkhana Ltd., were an expenditure deductible from income, not a duty cess or tax under Section 43-B. The ITAT also remanded the matter to the Assessing Officer to verify the dates of payments for Provident Fund (PF), Family Pension (FP), and Administrative charges, allowing them if paid on or before the filing of the return. The ITAT later rejected the reference application, citing Supreme Court judgments. The Respondent was not represented.

What were the issues?

1. Whether, on the facts and in the circumstances of the case and in law, the ITAT was justified in holding that the Government Audit Fees payable by the Respondent is not a duty cess or Tax as envisaged in Section 43-B, when ultimately such payment goes to the State Treasury? 2. Whether, on the facts and in the circumstances of the case and in law, the Tribunal was justified in directing the Assessing Officer to allow the payment towards P.F., F.P., and Admn. charges under section 43-B if found made "or on or before the date of filing of return....", when the second proviso to Section 43-B read with section 36(1)(va) clearly requires disallowance of any payment made beyond due date of any payment under the relevant Act? Assessee's Contentions: The Applicant (Commissioner of Income Tax) argued that the Government Audit Fees, though paid to the State Treasury, should not be considered a duty cess or tax under Section 43-B. Regarding PF, FP, and administrative charges, the Applicant contended that Section 43-B, read with Section 36(1)(va), mandates disallowance if payments are made beyond the statutory due date, and the ITAT's direction to allow payments made by the return filing date was incorrect. Revenue's Contentions: No arguments were recorded for the Respondent (assessee).

Which sections of the Income-tax Act were involved?

Section 43-B,Section 36(1)(va)

AI-generated summary — verify with the full judgment below

: 1 : IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPLICATION NO.17 OF 1999 INCOME TAX APPLICATION NO.17 OF 1999 INCOME TAX APPLICATION NO.17 OF 1999 The Commissioner of Income Tax, ’Aayakar Bhavan’, 31-C/2, ’E’ Ward, Tarabai Park, Kolhapur. ...Applicants. V/s. Shri Datta Shetkari Sahakari Sakhar Karkhana Ltd., Shirol, Dist. Kolhapur ...Respondents. Dr.P.Daniel with G.Hariharan for the Applicants. None for the Respondent. CORAM: DR.S.RADHAKRISHNAN & CORAM: DR.S.RADHAKRISHNAN & CORAM: DR.S.RADHAKRISHNAN & J.H.BHATIA, JJ. J.H.BHATIA, JJ. J.H.BHATIA, JJ. DATE : 9th August, 2005. DATE : 9th August, 2005. DATE : 9th August, 2005. JUDGMENT: JUDGMENT: JUDGMENT: (Per J.H.Bhatia,J.) 1. By this Application, the Applicant seeks direction to the Income Tax Appellate Tribunal to state and refer following questions of law arising out of the order of the Tribunal dated 5.12.1997. (1)"Whether on the facts and in the circumstances of the case and in law, the I.T.A.T. was justified in holding that the Government Audit Fees payable by the Respondent is not a duty cess or Tax as envisaged in Section 43-B, when ultimately such CNR No : HCBM020003091999 Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 06:20:26

: 2 : payment goes to the State Treasury ?" (2)"Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in directing the Assessing Officer to allow the payment towards P.F., F.P., and Admn. charges under section 43-B if found made "or on or before the date of filing of return....", when second proviso to Section 43-B read with section 36(1)(va) clearly requires disallowance of any payment made beyond due date of any payment under the relevant Act ?" 2. Heard the learned counsel for the Applicant. We have carefully perused the order dated 5.12.97 passed by the Tribunal whereby the Tribunal held that the Government Audit Fees payable by the Respondent is an expenditure and is liable to be deducted from the income and the Tribunal remanded the matter back to the Assessing Officer to verify the dates of payments as far as payments towards P.F., F.P. and Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 06:20:26

: 3 : Administrative charges are concerned. The Respondent is the Co-operative Sugar Factory. The Government requires accounts of co-operative societies to be compulsorily audited by the Government Auditor and for that purpose, co-operative society has to make payment of certain fees. It is certainly not duty cess or tax. Therefore, the audit fee is liable to be deducted as expenses from the income. The Appellate Tribunal relied upon the authority of Patna High Court Patna High Court Patna High Court in the matter of Jamshedpur Motor Accessories (189 ITR Jamshedpur Motor Accessories (189 ITR Jamshedpur Motor Accessories (189 ITR 70) 70) 70) and Calcutta High Court in the matter of Jagannath Jagannath Jagannath Steel Corporation (191 ITR 676) Steel Corporation (191 ITR 676) Steel Corporation (191 ITR 676) and came to a conclusion that if the payments on account of Provident fund, Family Pension and Administrative charges are made within the prescribed time limit laid down under the relevant act or on or before the date of filing the returns of the respective years, such payments are allowable as deductions under section 43B of the Income Tax Act. In view of this, the Tribunal has restored the matter to the file of Assessing Officer with the direction to verify the dates of payments and to adjudicate the matter. By the order dated 10.8.98, the Income Tax Appellate Tribunal, while rejecting the Application for making reference to this Court, observed that its findings are now squarely covered by the judgments of the Supreme Court Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 06:20:26

: 4 : in Allied Motors (P) Ltd. v. Commissioner of Income Allied Motors (P) Ltd. v. Commissioner of Income Allied Motors (P) Ltd. v. Commissioner of Income Tax (224 ITR 677 - SC). Tax (224 ITR 677 - SC). Tax (224 ITR 677 - SC). 3. In view of the facts and legal position set out by the Appellate Tribunal in the aforesaid two orders, we do not find any substantial question of law. In the result, the Application stands dismissed. (DR.S.RADHAKRISHNAN,J.) (DR.S.RADHAKRISHNAN,J.) (DR.S.RADHAKRISHNAN,J.) (J.H.BHATIA, J.) (J.H.BHATIA, J.) (J.H.BHATIA, J.) Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 06:20:26 Powered by TCPDF (www.tcpdf.org)

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