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TMI Blog2013 (3) TMI 394X X X X Extracts X X X X X X X X Extracts X X X X ..... espectfully agree with the view of Andhra Pradesh High Court in Srikakollu Subba Rao and M.L. Agroproducts (Pvt) Ltd, [1990 (12) TMI 15 - ANDHRA PRADESH HIGH COURT] and Madhya Pradesh High Court in Mansukhlal Pranjibhai, and Dinesh Kumar Gordhan Lal (1996 (7) TMI 77 - MADHYA PRADESH HIGH COURT) - Decided in favor of assessee. - INCOME TAX APPEAL No. - 80 of 2003 - - - Dated:- 12-3-2013 - Prakash Krishna And Ram Surat Ram (Maurya),JJ. Petitioner Counsel :- Shambhu Chopra Respondent Counsel:- S.K. Garg JUDGMENT 1. The present appeal has been filed u/s 260-A, of the Income Tax Act, 1961 (hereinafter referred to as the Act) against the order dated 09.01.2003 passed by the Income Tax Appellate Tribunal, Lucknow Bench, Lucknow (hereinafter referred to as the Tribunal) in ITA No. 2466/Alld/1990. The appellant has proposed the following substantial questions of law in the memorandum of appeal: "1. Whether without pointing out any specific error in its original order dated 26.2.2002, can Income Tax Appellate Tribunal recall its order under section 254(2) of the Income Tax Act, 1961? 2. Whether on the facts and circumstances of the case, the Income Tax Appellate Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the present appeal is confined to the deduction of Rs. 11,05,123/- claimed by the assessee, which was payable by the sugar factory, towards 'market fee' levied under the Bihar Agricultural Produce Market Act, 1960 and the Bihar Agricultural Produce Market Rules, 1975, on the purchase of sugarcane and sale of sugar, while calculating his business income. The assessee stated that crushing season was started on 25.11.1985 and ended on 16.04.1986. Accounting period of the assessee ended on 31.07.1986. Total cane crushed in this year was 24,19,365 quintals and total sugar produced was 249275 quintals. Total sale of sugar was of Rs. 10,04,26,169/-. On the purchase of sugarcane and sale of sugar, it was alleged that an amount of Rs. 11,05,123/- was payable as 'market fee' as such this amount is liable to be deducted while calculating the business income. The assessee claimed that for the Assessment Year 1980-81, the Tribunal has allowed this benefit in it's order passed in ITA No. 598/Alld/1984. 3. The Assessing Officer by order dated 30.01.1990 held that Bihar Government imposed tax in the name of 'market fee' under the Bihar Agricultural Produce Market Act, 1960 and the Bihar Agri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 and fixed 09.01.2003 for further hearing. The Tribunal relying upon the order dated 21.12.2001 passed in ITA No. 2115/All/1989 and ITA No. 2129/All/1989 allowed the appeal of the assessee on 09.01.2003 and held that the assessee was entitled to deduction of 'market fee' and additions made by the Assessing Officer is illegal. 5. We heard Sri Shambhu Chopra, Senior Standing Counsel for the appellant and Sri S.K. Garg and Sri Ashish Bansal, for the assessee. Hearing of the appeal was started on 28.02.2013 and was adjourned for 01.03.2013 on the request of the counsel for the assessee. On 01.03.2013, Sri S.K Garg, relying upon some case law argued that order passed under Section 254 of the Act is appealable and as no appeal was filed from the order dated 29.08.2002 as such substantial questions of law No. 1 to 4 do not arise in this appeal. Then, on the request of Senior Standing Counsel, the hearing was adjourned for 04.03.2013 and again on 04.03.2013 hearing was adjourned for 05.03.2013 on his request. As the appellant has not challenged the order dated 29.08.2002 in this appeal and in stead of challenging the order dated 29.08.2002 appeared before the Tribunal and argued the mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d judgments of Madhya Pradesh High Court in CIT Vs. Mansukhlal Pranjibhai, (1997) 227 ITR 429, and CIT Vs. Dinesh Kumar Gordhan Lal, (1997) 226 ITR 826, in which it has been held that "market cess" or "market fee" are not tax as such Section 43B (prior to it's amendment in w.e.f 01.04.1989) is not applicable to it, submitted that Section 43B is not applicable to the assessee and the additions made by the Assessing Officer has been rightly deleted by the Tribunal. 8. In order to decide whether amendment made in Section 43B of the Act is retrospective, the relevant portion of Section 43B as enacted originally is quoted below: "43-B. Certain deductions to be only on actual payment. Notwithstanding anything contained in any other provision of this Act, a deduction otherwise allowable under this Act in respect of (a) any sum payable by the assessee by way of tax or duty under any law for the time being in force, or (b) any sum payable by the assessee as an employer by way of contribution to any provident fund or superannuation fund or gratuity fund or any other fund for the welfare of employees, shall be allowed (irrespective of the previous year in which the liability to pay s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he word "paid' as defined under Section 43 of the Act, neither the original Section 43B nor the amended Section 43B can be said to have retrospective application as legislation itself applied them prospectively i.e. Sections 43B was specifically applied with effect from 01.04.1984 and amendment made by Finance Act, 1988 was applied with effect from 01.04.1989. 12. The argument that "market fee" is also a tax and only nomenclature has been changed is also not liable to be accepted. Supreme Court in Kewal Krishan Puri (Supra) held that market fee is not tax. Again in Krishi Utpadan Mandi Samiti v. Ashok Kumar Dinesh Chandra, (1996) 10 SCC 100, in which "market fee" is levied under U.P. Krishi Utpadan mandi Samiti Adhiniyam, 1964, an enactment with pari materia of Bihar Agricultural Produce Market Act, 1960 held as follows : "It is thus well settled by numerous recent decisions of this Court that the traditional concept in a fee of quid pro quo is undergoing a transformation and that though the fee must have relation to the services rendered, or the advantages conferred, such relation need not be direct, a mere casual relation may be enough. It is not necessary to establish that t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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