Tamilnadu State Marketing Corporation Ltd. Vs ACIT (ITAT Chennai)
ITAT Chennai held that the VAT payment would not attract the provisions of section 40(a)(iib) of the Income Tax Act and hence, is allowable u/s.37 read with section 43B of the Act
Facts-
The only issue in this appeal of assessee is as regards to the revision order passed by PCIT by holding the assessment framed as erroneous and prejudicial to the interest of Revenue on account of Value Added Tax paid by assessee and claimed as deduction u/s.37 w.s. 43B of the Act and allowed.
Conclusion-
Held that the provision of section 40(a)(iib) of the Act cannot be applied as the value added tax payment is not an appropriation so as to bring the sum within the ambit of provisions of section 40 (a)(iib) of the Act. In sum up, we state that the Value Added Tax payable by the assessee to the State Government is-
a. Neither in the nature of royalty, licence fee, service fee, privilege fee, service charge nor any other fee or charge, by whatever name called.
b. Nor is it levied exclusively on the Assessee.
c. Nor can it be considered as appropriation by the State Government.
According to us, the VAT payment would not attract the provisions of section 40(a)(iib) of the Act and hence, is allowable u/s.37 r.w.s.43B of the Act, as claimed by the assessee. Hence, we quash the revision order passed by PCIT and allow the claim of assessee.
