2001 (7) TMI 54 - HC - Income Tax

Summary

Issues involved:
The judgment involves the interpretation of section 43B of the Income-tax Act, 1961 regarding the disallowance of outstanding Government audit fees for the assessment year 1990-91.

Facts:
The Assessing Officer disallowed outstanding Government audit fees under section 43B. The Commissioner of Income-tax (Appeals) upheld this decision, but the Income-tax Appellate Tribunal allowed the claim based on a previous decision. The appeal challenges this Tribunal decision.

Submissions:
The appellant argued that audit fees should be considered as "fees" under section 43B, while the respondents contended that the charges were payable under rule 74 of the Maharashtra Co-operative Societies Act, not falling under the section's purview.

Statutory provisions:
Section 43B of the Income-tax Act 1961 mandates deductions only upon actual payment of sums like tax, duty, cess, or fee. The Maharashtra Co-operative Societies Act and Rules outline the audit requirements and charges for societies.

Findings:
The court analyzed the definition of "tax," "duty," "cess," and "fees" in legal contexts, emphasizing the distinction between compulsory taxes and payments for services rendered. It concluded that audit charges are not akin to the "fees" contemplated in section 43B, as they represent payment for professional services, not statutory levies. Therefore, the disallowance of outstanding audit fees was deemed unjustified.

Conclusions:
The court ruled in favor of the assessee, determining that Government audit charges do not fall under the scope of section 43B. The appeal was dismissed with no costs awarded.