2014 (6) TMI 108 - AT - Income Tax

Disallowance u/s 43B of the Act Scope of section 43B of the Act - Market cess tax or not - Held that - CBDT in order passed u/s 119 of the Act, had allowed the return and reports of audit in the case of companies and firms to be filed up to 15th of November 2007 instead of 31st October 2007 for A.Y. 07-08 - the year under appeal is A.Y. 07-08 and Assessee had electronically filed the Return of Income on 22.10.2007 the Assessee had deposited the market fees on 7th November 2007 which is well before the extended date of filing of return - since the Assessee has paid the amount before the due date of filing of return as per proviso to Section 43B, no disallowance u/s 43B can be made thus, there was no reason to interfere in the order of the CIT(A) Decided against Revenue.

Summary

Issues:
1. Disallowance of market cess under section 43B of the IT Act, 1961.

Analysis:
The appeal before the Appellate Tribunal ITAT Ahmedabad was filed by the Revenue against the order of CIT(A)-V, Baroda for the assessment year 2007-08. The primary issue revolved around the disallowance of market cess under section 43B of the IT Act, 1961. The Assessee, engaged in the business of ginning and pressing of cotton, had filed its return of income declaring a total income of Rs. 62,73,130/-. The assessment was framed under section 143(3) by the Assessing Officer, determining the total income at Rs. 88,86,320/-. The Revenue contended that the market cess paid by the Assessee should be disallowed under section 43B of the Act. The CIT(A) had granted partial relief to the Assessee, leading to the Revenue's appeal before the Tribunal.

The Revenue argued that the market cess should be considered a tax and covered under section 43B of the Act, thus justifying the disallowance made by the Assessing Officer. However, the CIT(A) held that market cess is not a tax but a payment made by the trader for utilizing market facilities and services, hence not falling under section 43B. The Tribunal noted that the Assessee had paid the market fees before the extended due date of filing the return, as permitted by the CBDT order dated 31st October 2007. Consequently, the Tribunal upheld the CIT(A)'s decision, dismissing the Revenue's appeal.

In conclusion, the Tribunal dismissed the appeal of the Revenue, emphasizing that the market cess paid by the Assessee was not covered under section 43B of the IT Act, 1961. The decision was based on the fact that the payment was made before the due date of filing the return, as extended by the CBDT order. The judgment highlighted the distinction between taxes and market cess, ultimately leading to the rejection of the Revenue's claim for disallowance under section 43B.