JUDGMENT
V.C. Daga, J.
1. Being aggrieved by the judgment and order of the Tribunal dated 12-7-1999, the Department has filed the present appeal under Section 260-A of the Income Tax Act, 1961(‘Act’ for short). The respondent herein is a Co-operative Society running sugar factory. The appeal relates to the Assessment Year 1990-1991.
The Issue
2. The question of law placed for consideration reads as under : “Whether on the facts and in the circumstances of the case and in law the I.T.A.T. was justified in holding that the Government audit fees payable by the respondent is not a duty, cess or tax as envisaged in Section 43-B, when ultimately such payment goes to the State Treasury?”
The facts:
3. The essential facts are straight forward.
In the Assessment Year in question, the Assessing Officer made disallowance under Section 43-B of the Act, in respect of outstanding Government Audit Fees amounting to Rs. 1,63,925/-. Being aggrieved by the aforesaid order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals), Kolhapur, who confirmed the order of Assessing Officer, and held that the audit fees are paid in accordance with the rates fixed by the Cooperative department as such, it cannot be treated as remuneration.
Being aggrieved by the aforesaid order, the Assessee filed further appeal before the Income Tax Appellate Tribunal, Pune Bench, Pune. The Tribunal following its earlier decision in the case of Kumbhi Kesari Sahakari Sakhar Karkhana Ltd. allowed the claim of the assessee, holding that the Government Audit Fees is not duty, cess or tax payable to the Government as understood under Section 43-B of the Act. This order is the subject matter of challenge in the present appeal.
Submissions
4. Shri J.P. Deodhar, learned Counsel appearing for the Appellant, submitted that the Act does not define the term ‘duty ‘ and/or ‘fees’, therefore, it should be understood in the general sense assigned to the term ‘fees’ which is understood as payment to public body in exchange of service. On this anology, he submitted that payment of audit fees by the assessee to the co-operative department of the State would fall within the sweep of either of the above terms, as such the Assessing Officer was justified in making disallowance under Section 43-B of the Act.
5. Per contra, the learned Counsel appearing for the respondents tried to support the order of the Tribunal and submitted that levy of audit charges is nothing but the charges as required to be paid under Rule 74 of the rules framed under Maharashtra Co-operative Societies Act, 1960 for getting the accounts of the socie’ties audited. It has not been paid by the assessee by way of tax, duty, cess or fees as envisaged under Section 43-B of the Act.
The Statutory Provisions :
6. Adverting to the finding on the issue raised in this appeal, let us turn to the relevant statutory provisions governing the issue in question.
Income Tax Act, 1961 :
“43-B, Certain deductions to be only on actual payment. –Notwithstanding anything contained in any other provisions of this Act, a deduction otherwise allowable under this Act in respect of –
(a) any sum payable by the assessee by way of tax, cess or fee, by whatever name called, under any law for the time being in force; or; (b) ....... (c) ...... (d) ..... (e) .....
shall be allowed irrespective of the previous year in which the liability to pay such sum was incurred by the assessee according to the method of accounting regularly employed by him only in computing the income referred to in Section 28 of that previous year in which such sum is actually paid by him.”
Maharashtra Co-operative Societies Act, 1960.
“Section 81. Audit. –(l)(a) The Registrar shall audit, or cause to be audited
at least once in each co-operative year, by a person authorised by him by general or special order in writing in this behalf the accounts of every society which has been given financial assistance including guarantee by the State Government, or Government undertakings, from time to time, and the accounts of the apex societies, State and District level Federal Societies, District Central Co-operative Banks, Co-operative Sugar factories, Urban Co-operative banks, Co-operative Spinning Mills, District and Taluka Sale and Purchase Organizations, and any such Society or class of Societies which the State Government may, from time to time, by notification in the Official Gazette, specify.”
Maharashtra Co-operative Societies Rules, 1961.
“Rule 74. Levy of audit charges and supervision charges. — (1) The Registrar may payable annually on or before a specified date by all or any class of societies including the societies in liquidation as such rate as may be fixed by him with the approval of the State Government. Such charges, if not paid, by the specified date, shall be recoverable under Subsection (2) of Section 155.
(2) The Stale Government may authorise the Registrar to grant total or partial exemption from the payment of audit charges and/or supervision charges assessed to any society or class of societies.”
Findings
7. Having heard the parties, it is clear that the provisions of Section 43-B of the Act provides for certain deductions, while computing income referred to in Section 28 of the previous year, if any sum is actually paid by the assessee in that year. One of such item is deduction of the amount paid by way of tax, duty, cess
or fee by whatever name called, The question is what do you mean by ‘tax’, ‘duty’, ‘cess’, or ‘fees’ referred to in Sub-section (l)(a) of Section 43-B. Can the levy of audit charges be termed as ‘fees’ as contemplated under the said section? It is needless to mention that in most of the legislations, tax includes, tax, toll, cess, rate fee or other impost. Readily available legislation in this behalf is M. P. Panchayats Act. In the said Act, the word ‘tax’ has been defined in Section 2(xxxiii) as follows:
” “lax” includes a tax, toll, cess, rate, fee or other impost leviable under this Act, but does not include a fine.”
“The tax is a compulsory extraction of money by a public authority for public purposes. Toll is a payment in respect of some benefit advantage or seivice, generally for use of another’s property. A cess is a tax imposed for some specific purpose with reference to some goods. A fee is a payment levied by the State in respect of services performed by it for the benefit of the individual. A duty is a tax levied on a commodity.” (AIR 1971 MP 138)
Section 43-B when refers to the word ‘tax’ in association of the words ‘tax’, ‘duty’ or ‘cess’, then the word ‘fee’ will take colour from other words in whose association it appears. Even otherwise, when particular words pertaining to a class, category or genus are followed by general words, the general words are construed as limited to things of the same kind as those specified. This rule of ejusdem generis applies when “(1) the statute contains an enumeration of specific words; (2) the subject of enumeration constitute a class or category; (3) that class or category is not exhausted by the enumeration; (4) the general terms follow the enumeration and (5) there is no indication of a different legislative intent.
8. As held by the Apex Court in the case of Amarchand Chakraborty v. The Collector of Excise, Government of Tripura, , there is no generic difference between a tax and a fee, though broadly a tax is a compulsory extraction as part of a common burden without promise of any specific advantages to the Classes of tax payers whereas fee is payment for services rendered, benefit provided or privileges conferred. The specific benefit or advantage to the payers of fees may even be secondary as compared with primary motive of regulation in public interest.
9. On the aforesaid canvass applying the well recognised principles of interpretation concept of ‘fees’ referred to in Section 43-B cannot be equated with levy of audit charges payable for getting the audit of the accounts done. The word ‘fee’ has been used in books of accounts of the assessee loosely, in general commercial sense as normally understood in the trading society since payments were made to the co-operative department of the State through Registrar in exchange of services of the auditors availed by the assessee. Levy of audit charges are nothing but price required or demanded for services rendered by the government auditors. In other words, the expenses were nothing but payment made or charged or compensation for utilising services of the auditors i.e. payment of money for professional services. Such payment, in our view, is beyond the mischief of Section 43-B. The fee contemplated or envisaged under Section 43-B is the payment of the nature referred to by the Supreme Court in the case of Amarchand Chakrabarty (supra), It is an expenditure which the assessee has incurred wholly and exclusively for the purpose of business and is an
allowable expenditure. The provisions of Section 43-B does not apply to the Government Audit charges. Thus, disallowance of Rs. 1,63,9257- on account of outstanding Government Audit fees could not have been done by the Assessing Officer nor the same could have been affirmed by the C.I.T.. As such the Tribunal rightly allowed the same.
The Conclusions :
10. Accordingly, the above question is answered in the affirmative i.e. in favour of the assessee and against the revenue.
11. In the result, the appeal is dismissed with no order as to costs.