Section 43B does not cover contractual nomination charges for quarry leases, allowing deduction on accrual.

Nomination charges paid for granite quarry leases to a State undertaking were held not to be a statutory impost within section 43B of the Income-tax Act, 1961. The Madras HC found that, although the amount was fixed by Government order in the context of Rule 8-C(7) of the Tamil Nadu Minor Mineral Concession Rules, it was in substance a contractual payment akin to lease rent or royalty, not a tax, duty, cess or fee. As section 43B is confined to those specified imposts, the provision did not apply; accordingly, delay in actual payment did not bar deduction otherwise admissible on accrual.

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Issues: Whether nomination charges paid for granite quarry leases to a State undertaking were a statutory impost falling within section 43B of the Income-tax Act, 1961, or a contractual payment allowable as business expenditure.

Analysis: The payment arose from lease arrangements under Rule 8-C(7) of the Tamil Nadu Minor Mineral Concession Rules, 1959 and Government Orders issued in that context. Although the amount was prescribed by the State and described as nomination charges, the Court held that its character depended on whether it was a compulsory statutory exaction or a contractual levy. Section 43B applies only to sums payable by way of tax, duty, cess or fee, and being a restrictive provision it must be confined to those specified imposts. The Court found that the levy was not a tax, duty, cess or fee, but a contractual payment in the nature of lease rent or royalty, and therefore outside the ambit of section 43B. Once section 43B was inapplicable, the delay in payment did not defeat deduction otherwise claimable on accrual.

Conclusion: The nomination charges were not hit by section 43B and were allowable to the assessee.

Ratio Decidendi: A levy arising from a commercial lease arrangement, even if prescribed by Government Order under an enabling rule, is not covered by section 43B unless it is a statutory exaction in the nature of tax, duty, cess or fee.

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