Market cess payment not tax under IT Act 1961; Revenue appeal dismissed under section 43B. CBDT order applies.

The Tribunal dismissed the Revenue's appeal, ruling that the market cess paid by the Assessee was not covered under section 43B of the IT Act, 1961. The payment was made before the extended due date of filing the return, as allowed by the CBDT order, and was deemed a fee for utilizing market facilities, not a tax. This distinction led to the rejection of the Revenue's disallowance claim under section 43B.

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Issues:
1. Disallowance of market cess under section 43B of the IT Act, 1961.

Analysis:
The appeal before the Appellate Tribunal ITAT Ahmedabad was filed by the Revenue against the order of CIT(A)-V, Baroda for the assessment year 2007-08. The primary issue revolved around the disallowance of market cess under section 43B of the IT Act, 1961. The Assessee, engaged in the business of ginning and pressing of cotton, had filed its return of income declaring a total income of Rs. 62,73,130/-. The assessment was framed under section 143(3) by the Assessing Officer, determining the total income at Rs. 88,86,320/-. The Revenue contended that the market cess paid by the Assessee should be disallowed under section 43B of the Act. The CIT(A) had granted partial relief to the Assessee, leading to the Revenue's appeal before the Tribunal.

The Revenue argued that the market cess should be considered a tax and covered under section 43B of the Act, thus justifying the disallowance made by the Assessing Officer. However, the CIT(A) held that market cess is not a tax but a payment made by the trader for utilizing market facilities and services, hence not falling under section 43B. The Tribunal noted that the Assessee had paid the market fees before the extended due date of filing the return, as permitted by the CBDT order dated 31st October 2007. Consequently, the Tribunal upheld the CIT(A)'s decision, dismissing the Revenue's appeal.

In conclusion, the Tribunal dismissed the appeal of the Revenue, emphasizing that the market cess paid by the Assessee was not covered under section 43B of the IT Act, 1961. The decision was based on the fact that the payment was made before the due date of filing the return, as extended by the CBDT order. The judgment highlighted the distinction between taxes and market cess, ultimately leading to the rejection of the Revenue's claim for disallowance under section 43B.

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