Case Law Details
Case Name : CIT, Kerala Vs M/s. Travancore Sugars & Chemicals Ltd. (Supreme Court of India)
Related Assessment Year :
Courts :
Supreme Court of India
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Brief Facts:
The respondent-assessee is engaged in the manufacture and sale of foreign liquor and sugar. The assessee filed its return of income for assessment year 1990-1991 declaring an income of Rs. 15,84,398/-.
The assessee had shown that a vend fee (i.e. charges which Karnataka State compulsorily takes from three mills for the purpose of conferring a special benefit on the said three mills, viz., the repairs and replacement of existing machinery and equipment.) of Rs. 2
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The judgement of Apex Court has come in the right time but squarely opposite to its own court’s judgement in the case M/s. Mc Dowell & Co Limited (314 ITR 167). The previous order may be based on the facts of the case that the vend fee levied by Kerala State Government is with a specific purpose of purchasing machinery to the assessee company itself but in the later decision, the facts might be different. The Hon’ble Apex Court’s decision in the case of M/s. Bharat Earth Movers (245 ITR 428) that if a business liability definitely arisen in the previous year should alone be allowed which may be discharged at a later date is also to be kept in mind. The recent amendment in section 40(b)(iib) that the privilege fee is not a allowable deduction w.e.f 1.4.2014 needs attention with the above decisions.
The judgement of Apex Court has come in the right time but squarely opposite to its own court’s judgement in the case M/s. Mc Dowell & Co Limited (314 ITR 167). The previous order may be based on the facts of the case that the vend fee levied by Kerala State Government is with a specific purpose of purchasing machinery to the assessee company itself but in the later decision, the facts might be different. The Hon’ble Apex Court’s decision in the case of M/s. Bharat Earth Movers (245 ITR 428) that if a business liability definitely arisen in the previous year should alone be allowed which may be discharged at a later date is also to be kept in mind.
Thanks!!
Nice interpretations.