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TMI Blog1993 (9) TMI 136X X X X Extracts X X X X X X X X Extracts X X X X ..... l Corporation (AMC). The addition was made by invoking the provisions of section 43B of the Income-tax Act, 1961. The assessee was not satisfied with this addition on the ground that the property tax payable to the AMC was not a tax but a fee and fee was not covered by the provisions of section 43B, which have been inserted for and from the assessment year 1984-85 pursuant to Finance Act, 1983. First appeal was preferred before the Appellate Commissioner, who agreed with the contentions raised before him and took a view that according to the provisions of section 129 of the Municipality Act, property tax comprises of three components, namely :--- (a) Water tax which is being charged for supply of water to the residents of the city, (b) Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed counsel for the assessee while relying on the reasonings and conclusion of the Appellate Commissioner given in the impugned order further submitted that water tax and conservancy tax which form part of the property tax levied by the AMC was fee and not tax; whereas the general tax which was also a component of the property tax was tax and the Appellate Commissioner, therefore, correctly appreciated the true facts and the legal position in this regard and the direction given by him requires to be upheld in this appeal. To support his case, the assessee's counsel relied on the speech of the Finance Minister as well as the explanatory notes issued in relation to the provisions of section 43B which found place in the statute book from 1-4-19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... particular levy is a tax or fee have been subject-matter of judicial interpretation and the matter has reached to the Apex Court in several cases. The concept of fee as distinct from that of a tax in the constitutional scheme has been considered in a series of pronouncements starting from the year 1954 in the case of Commissioner, Hindu Religious Endowments v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt AIR 1954 SC 282 up to case of Sri Krishna Das v. Town Area Committee [1990] 183 ITR 401 (SC). What emerges from these pronouncements is that if the essential character of the impost is that some special service is intended or envisaged as a quid pro quo to the class of citizens which is intended to be benefited by the service and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the class of payers of fee obtain in such a case is clearly not a benefit intended as special service to it but derived by it as part of the general public. Nor does the concept of a fee --- and this is important --- require for its sustenance the requirement that every member of the class on whom the fee is imposed, must receive a corresponding benefit or degree of benefit commensurate with or proportionate to the payment that he individually makes. It would be sufficient if the benefit of the special services is available to and received by the class as such. It is not necessary that every individual composing the class should be shown to have derived any direct benefit. A fee has also the element of a compulsory exaction which it shares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d indirectly be benefited by it. The power of any Legislature to levy a fee is conditioned by the fact that it must be 'by and large' a quid pro quo for the services rendered. However, correlationship between the levy and the services rendered expected is one of the general character and not of mathematical exactitude. All that is necessary is that there should be a 'reasonable relationship' between the levy of the fee and the services rendered." Therefore, there has been no quid pro quo given by the AMC to the assessee for the water tax and conservancy tax levied as part of the property tax. If the assessee fails to pay either the water tax or the conservancy tax or either of them to the AMC, then neither the assessee nor any member of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not a fee. Had property tax been a fee, then no deduction either under section 23(1) or under section 24 would be allowable to any assessee in computing the ALV from house property. The Hon'ble Supreme Court in the case of India Cement Ltd. v. State of Tamil Nadu [1991] 188 ITR 690 has held that royalty payable in respect of mining lease is a tax. When the Apex Court has taken as such enlarged and extended view even in respect of royalty payment, we are unable to persuade ourselves to take a view that the water tax and conservancy tax which are components of property tax is not a tax but a fee. We, therefore, reverse the finding and conclusion of the Appellate Commissioner in this regard and allow the revenue's appeal. X X X X Extracts X X X X X X X X Extracts X X X X
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