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TMI Blog2024 (3) TMI 1117X X X X Extracts X X X X X X X X Extracts X X X X ..... ges Manufacturing Marketing Corporation Ltd. [ 2022 (1) TMI 184 - SUPREME COURT] wherein as approved the view taken by the Hon ble High Court of Kerala that as surcharge on sales tax is a tax , and Section 40(a)(iib) does not contemplate tax , and surcharge on sales tax is not a fee or a charge , therefore, no disallowance under the said statutory provision was called for in the hands of the assessee. Accordingly, finding no infirmity in the view taken by the CIT(Appeals), we uphold the same and the addition is vacated. Decided in favour of assesse. - Shri Ravish Sood, Judicial Member And Shri Arun Khodpia, Accountant Member For the Assessee : Shri Praveen Jain, CA For the Revenue : Shri Debashis Lahiri, CIT-DR ORDER PER ARUN KHODPIA, AM: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee was selected for complete scrutiny for the two issues, viz. (i) Refund claim'; and (ii) ICDS compliance and adjustment. 4. Assessment proceedings in the case of the assessee was completed by the A.O on 28.09.2022 u/s. 143(3) r.w.s. 144B of the Act wherein disallowance u/s. 40(a)(iib) of the Act of Rs. 95,03,71,530/-. Also, penalty on indirect tax u/s. 37 of the Act of Rs. 8339/- was imposed. 5. Aggrieved by the said disallowance/addition, the assessee preferred an appeal before the CIT(Appeals) wherein the CIT(Appeals) had accepted the contention of the assessee and held that the appeal of the assessee carried substance, therefore, disallowances made by the A.O are deleted and grounds of appeal raised by the assessee have been al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee. For the sake of clarity the relevant observations of the Hon ble Supreme Court are culled out as under: 16. For the aforesaid reasons, we hold that the gallonage fee, licence fee and shop rental (kist) with respect to FL-9 and FL-1 licenses granted to the appellant will, squarely fall within the purview of Section 40(a)(iib) of the Income tax Act, 1961. The surcharge on sales tax and turnover tax, is not a fee or charge coming within the scope of Section 40(a)(iib)(A) or 40(a)(iib)(B), as such same is not an amount which can be disallowed under the said provision and disallowance made in this regard is rightly set aside by the High Court. At this stage, we may herein observe, that in the case before the Hon ble Apex Court it was observe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anufacturing Marketing Corporation Ltd. Vs. ACIT, Circle- 1(1), Civil Appeal No.11 of 2022 (SC) dated 03.01.2022 could not have been brought within the realm of the disallowance contemplated u/s. 40(a)(iib) of the Act. 13. At this stage, we may herein observe, that as stated by the Ld. AR, and, rightly so, the reliance placed by the Pr. CIT on the judgment of the Hon ble High Court of Kerala in the case of Kerala State Beverages (Manufacturing and Marketing) Corporation Limited Vs. ACIT, Circle-1(i), Trivandrum (2020) 116 taxmann.com 555 (Kerala) is absolutely misconceived and in fact, misplaced in the context of the issue involved in the present case before us. In the case before the Hon ble High Court, it was observed that gallonage fee t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refrain from adverting to the other contentions that have been advanced by the Ld. AR qua the validity of the jurisdiction that was assumed by the Pr. CIT u/s. 263 of the Act, which, thus, are left open. 15. In the result, the appeal of the assessee in ITA No.38/RPR/2021 for the assessment year 2015-16 is allowed in terms our aforesaid observations. 8. As the facts and issues involved in the present case remains the same as were there before us in assessee's own case for the A.Ys.2015-16, 2016-17 and 2017-18 vide ITA Nos. 38, 39 40/RPR/2021 dated 12.12.2022, therefore, we respectfully follow the same. Accordingly, finding no infirmity in the view taken by the CIT(Appeals), we uphold the same and the addition of Rs. 95,03,71,530/- is va ..... X X X X Extracts X X X X X X X X Extracts X X X X
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