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Issues: Whether external development charges paid to the development authority under the Haryana Development and Regulation of Urban Areas Rules, 1976 were in the nature of tax, duty, cess or fee so as to attract section 43B of the Income-tax Act, 1961, and consequently be allowable only on actual payment before the due date of return.
Analysis: The payment was treated as a user charge under the governing rules, with a provision for refund or adjustment where services were not availed. The character of the levy, as reflected in the rules and the surrounding facts, showed that it was paid in consideration of development facilities such as infrastructure and utilities, and not as a compulsory exaction in the exercise of sovereign taxing power. The reasoning followed the principle that the words tax, duty, cess or fee in section 43B form a restricted class confined to imposts falling within the genus of taxation, and a contractual or service-linked payment does not fall within that class. On that basis, the payment was also consistent with treatment as consideration under a service contract rather than a statutory levy.
Conclusion: Section 43B of the Income-tax Act, 1961 was held to be inapplicable to the external development charges, and the disallowance based on non-payment before filing the return was not sustainable.
Ratio Decidendi: A payment made as a contractual or service-linked user charge, and not as a compulsory statutory impost, does not fall within the ambit of tax, duty, cess or fee for the purposes of section 43B of the Income-tax Act, 1961.
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