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TMI Blog1991 (12) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... 31-3-1984. The assessee carries on business in running a flour mill where it manufactures wheat products such as atta, suji, maida, etc., out of wheat. The factory of the assessee is situated at Kadhar in the State of Bihar and its registered office is at Calcutta. 3 to 16. [These paras are not reproduced here as the involve minor issues.] 17. This takes us to the assessee's appeal in ITA No. 1658 (Cal.)/89 which is directed against the order of the CIT, WB-IV, Calcutta dated 3-3-1989 passed under section 263 of the Income-tax Act, 1961. By this order, the CIT considered the assessment order passed by the ITO on 27-3-1987 as erroneous insofar as it was prejudicial to the interests of the revenue, since the Assessing Officer had omitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. The CIT, therefore, held that the market fee realised by the assessee of Rs. 2,07,514 should be taken as a revenue receipt and should be taken into account in the computation of the assessee's total income for this year, and on that basis the total income in the hands of the assessee would come to Rs. 94,660 instead of the total loss determined by the ITO at Rs. 1,12,850. Accordingly, the CIT directed the Assessing Officer to give effect to his order by issuing a proper demand notice and challan in respect of the income of the assessee which he had computed at Rs. 94,660. Aggrieved by this order of the CIT, the assessee has come up on appeal to the Tribunal. 18. At the time of hearing of this appeal, Shri R. N. Bajoria, the learned Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the head ' Cereals ' in the Schedule to the Act on page 5 of the assessee's paper book. The learned Counsel next referred us to Rule 82 of the Bihar Agricultural Produce Markets Rules, 1975 according to which the Market Committee was empowered to levy and collect market fee on agricultural produce bought or sold in the market area at the rate of Re. 1 per Rs. 100 worth of agricultural produce. The learned Counsel pointed out that under section 27, sub-section (2), this market fee, called in Hindi ' bazar fee ', is to be collected from the purchaser and paid over to the Market Committee by the seller. In this connection, the learned Counsel referred to sub-rule (iii) of rule 82 which requires the seller who is a licensee to realise the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 685 wherein it has been held that the market fee realised by the assessee in that case, which maintained its accounts on the mercantile system and which had to be paid to the Mandi or to the constituents from whom it was realised, did not form part of the trading receipt or income of the assessee and that the assessee held the market fee for and on behalf of the State Government as a trustee. He pointed out that this decision of the Allahabad High Court has followed the decision of the Supreme Court in the case of CIT v. Bijli Cotton Mills (P.) Ltd. [1979] 116 ITR 60 relating to the nature of " dharmada ", which had been held to be not taxable in the hands of the assessee collecting it. The learned counsel next referred to the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. He, therefore, argued that the CIT was not right in his conclusion that the assessment order in question was erroneous insofar as it was prejudicial to the interests of the revenue and that, therefore, his order passed under section 263 of the Act deserved to be cancelled. 21. Shri Tripathy, the learned Departmental Representative relied on the findings of the CIT in his order under section 263 of the Act and argued that under rule 82(iii) of the Bihar Agricultural Produce Markets Rules, 1975 the assessee had to pay within a week of its collection the market fee and that the assessee had not so paid, the assessee was not entitled to deduction on the mercantile system of accounting as claimed by it and that it would be allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arkets Act, 1960 does not represent a trading receipt. This position is now well settled by the decisions of the Rajasthan High Court and the Allahabad High Court referred to above, namely, Trilok Chand Prem Prakash's case and Sita Ram Sri Kishan Das's case. The distinction between a tax and a fee is very well known and it is sufficient to refer to the latest decision of the Supreme Court in the case of Om Parkash Agarwal v. Giri Raj Kishori [1987] 164 ITR 376. In fact, this decision of the Supreme Court has been followed by the Andhra Pradesh High Court in the case of Sri Kakollu Subba Rao Co. at p. 718 to hold that the provisions of section 43B of the Act would have no application to market cess collection. We are, therefore, unable to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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