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Issues Involved:
The judgment involves two main issues: 1. Whether expenses on repairs and insurance for motor cars are disallowable under section 37(3A) of the Income-tax Act, 1961. 2. Whether unpaid amounts under the Cement (Control) Order, 1967, and the Water (Prevention and Control of Pollution) Cess Act, 1977, are subject to the provisions of section 43B of the Income-tax Act, 1961. Issue 1 - Expenses on Repairs and Insurance for Motor Cars: The Tribunal upheld the order of the Commissioner of Income-tax (Appeals) stating that such expenses are not disallowable under section 37(3A) of the Income-tax Act, 1961. This decision was supported by a previous court ruling in CIT v. Tungabhadra Industries Ltd. [1994] 207 ITR 553, which was delivered on November 28, 1991. Issue 2 - Unpaid Amounts under Cement (Control) Order, 1967, and Water Cess Act, 1977: Regarding the liability under the Cement (Control) Order, 1967, the Commissioner of Income-tax (Appeals) and the Tribunal found that the amount payable did not qualify as tax or duty and thus was not subject to section 43B of the Income-tax Act, 1961. This decision was based on the specific provisions of the Cement (Control) Order, 1967, which outlined the purpose and utilization of the amount collected, indicating it was not for general revenue. However, concerning the unpaid amount under the Water (Prevention and Control of Pollution) Cess Act, 1977, the Assessing Officer disallowed the outstanding amount under section 43B. The Commissioner of Income-tax (Appeals) and the Tribunal reasoned that the cess levied under this Act was for the water consumed by the industry and had a direct relation to the supply of water, thus not falling under tax or duty as per section 43B. The High Court noted that an amendment to section 43B now includes cess or fee, making it applicable to such payments. The Court held that the unpaid amount under the Water (Prevention and Control of Pollution) Cess Act, 1977, was indeed covered by section 43B, contrary to the Tribunal's decision. Therefore, the Court ruled in favor of the assessee for the unpaid amount under the Cement (Control) Order, 1967, and against the assessee for the unpaid cess under the Water (Prevention and Control of Pollution) Cess Act, 1977. Conclusion: The High Court upheld the decision regarding the expenses on repairs and insurance for motor cars and ruled in favor of the assessee for the unpaid amount under the Cement (Control) Order, 1967. However, the Court ruled against the assessee for the unpaid cess under the Water (Prevention and Control of Pollution) Cess Act, 1977, stating that it was subject to section 43B of the Income-tax Act, 1961.
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