TaxTMI 
TaxTMI 
2019 (1) TMI 1332
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....Environmental Relief Fund of Rs. 70,31,561/- under the provisions of section 43B of the Act. 4. Briefly stated facts of the case are that the present appeal is filed by the assessee in the second round of proceedings before the Tribunal, wherein in earlier round vide order dated 6.5.2013, the matter was set aside to the file of Assessing Officer. The Assessing Officer in the original assessment proceedings noted that the assessee had suo motu initially disallowed sum of Rs. 70,31,561/- on account of Environmental Relief Fund Liability under section 43B of the Act. Subsequently, the assessee filed revised computation of income with the note that it had erroneously added the same as disallowable under section 43B of the Act. The Assessing Officer in the first round had not entertained the relief claimed by the assessee in line with the ratio laid down by the Hon'ble Supreme Court in the case of Goetze (India) Limited [2006] 284 ITR 323 (SC), since the assessee had failed to furnish any revised return of income. The Dispute Resolution Panel (DRP) had also upheld the draft assessment order of Assessing Officer and hence, final assessment order was passed. The Tribunal had set aside th....
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....aimed on account of said fund, the provisions of section 43B of the Act do not apply. It was further stressed that the CIT(A) was wrong in stating that this was 'cess'. The Ld.AR of the assessee pointed out that where the Government of India does not prescribe the scheme, the assessee could not suffer as assessee was ready to pay. He then referred to Rule 5 under Schedule 1 r.w.s.44 of the I.T. Act, wherein special procedure for the assessability of income of General Insurance Company is prescribed. The said rule starts with the Profit and Loss Account and since the amount is not debited to the Profit and Loss Account, hence, provisions under section 43B of the Act are not applicable. The Ld. AR of the assessee then placed reliance on the following decisions:- i) Somaiya Orgeno-Chemicals Ltd. Vs. CIT [1974] 74 Taxman 206 (Bom); ii) CIT Vs. New Horizon Sugar Mills (P) Ltd. [2004] 141 Taxman 254 (SC) 8. The Ld. AR also invited our attention to the definition of 'cess' as held by the Hon'ble Supreme Court in the case of M/s Guruswamy & Co. Etc. Vs. State of Mysore & Ors. AIR 67 SC 1512. The Ld. AR also placed reliance on the following decisions:- i) CIT Vs. McDowell & Co. Ltd., [2....
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....alent to the amount of premium on public liability policies issued and disclosed under the head 'Current Liabilities'. The amount collected towards contribution to Environment Relief Fund was to be remitted in a manner as prescribed by the Central Government. However, the Government had not notified the manner of remitting the funds so collected till December, 2008. Accordingly, the entire liability towards the contribution received towards Environment Fund Liability remained unpaid as on 31st March, 2006. The issue which arises before us is that the contribution so collected by the assessee which had to be remitted to the fund created under Public Liability Fund Act, in the absence of any such fund being created till the due date of filing of the return of income and, hence, not being contributed, whether can be added as income of the assessee under section 43B of the Act? 11. The relevant provisions of the Public Liability Fund Act, 1991 are as under:- "4(1) Every owner shall take out, before he starts handling any hazardous substance, one or more insurance policies providing for contracts of insurance thereby he is insured against liability to give relief under sub-section (1) ....
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....ision of Hon'ble Bombay High Court in the case of Somaiya Orgeno-Chemicals Ltd. [1994] 74 Taxman 206 (Bombay) for the aforesaid proposition. In such circumstances, where the assessee has collected the contribution to the ERF from the owner (insured) then he is only acting as a custodian of the said fund and the said amount cannot be regarded as income of the assessee. In case the amount is not the receipt of the assessee, not routed through Profit and Loss Account, then there is no question of applicability of provisions of section 43B of the Act. 13. Another aspect which needs to be kept in mind is the absence of a mechanism of making contribution to ERF; though under the Act, the assessee has collected the amount from the owner (insured), but in the absence of the fund being created, the assessee was handicapped in transferring the amount so collected to the fund. The manner of remittance was prescribed in December 2008 and the assessee has paid the accumulated balance on 2.9.2009. In the absence of the creation of fund, the assessee had no means of depositing the said amount and the assessee in such circumstances cannot be held responsible for non-depositing the contribution to....