1996 (3) TMI 38 - HC - Income Tax

High Court: Mandi fee not tax under Income-tax Act

The High Court of Madhya Pradesh ruled in favor of the assessee, holding that mandi fee was not to be treated as a tax or duty under section 43B of the ... Firm Registration, Question Of Fact, Question Of Law Issues involved: Interpretation of section 43B of the Income-tax Act, 1961 regarding the treatment of mandi fee as a tax or duty.Summary:The High Court of Madhya Pradesh considered a case referred by the Tribunal regarding the applicability of section 43B of the Income-tax Act, 1961 to mandi fee. The case involved an outstanding balance of mandi tax for the assessment year 1984-85. The Income-tax Officer added the unpaid amount to the assessment invoking section 43B. However, the Commissioner of Income-tax (Appeals) ruled that section 43B did not apply to mandi tax and deleted the addition. The Tribunal, relying on relevant case law, held that mandi fee was neither a tax nor a duty under section 43B. The Department appealed, but the Tribunal's decision was upheld by the High Court.The Tribunal's decision was based on the understanding that mandi fee did not fall within the scope of taxes mentioned in section 43B of the Act at the relevant time. The Tribunal cited the case of Srikakollu Subba Rao and Co. v. Union of India to support their view. The High Court agreed with the Tribunal's interpretation and found no merit in the Department's appeal.Ultimately, the High Court ruled in favor of the assessee, holding that mandi fee was not to be treated as a tax or duty under section 43B of the Income-tax Act, 1961. The case was decided without any order as to costs, with a fixed counsel fee for each side. The High Court directed the transmission of the order to the Tribunal promptly.