INCOME TAX ACT, 1961

Section 40(a)(iib)

Business disallowance under section 40(a)(iib) - Exclusive levy imposed on State Government undertaking - Gallonage Fee confined to wholesale trade of foreign liquor exclusively licenced to assessee under PL-9 licence. -

Assessee was a company engaged in wholesale and retail trade of beaverages within the State of Kerala, and was a State Government Undertaking falling within the 'Explanation' provided under section 40(a)(iib). It claimed deduction of Gallonage Fee paid by it. AO invoked section 40(a)(iib) and disallowed deduction. Assessee contended that levy was made by Excise Department of State Government and since similar levy was imposed on other undertakings also, it could not be considered as an 'exclusive levy' imposed directly by State Government. Held: As supported by Assistant Solicitor General of India, wholesale trade in foreign liquor in the State was exclusively licenced to assessee under FL-9 licence and therefore, Gallonage Fee levied under Foreign Liquor Rules became an 'exclusive levy' on assessee and, therefore, it squarely fell within the scope of disallowances provided under section 40(a)(iib).

REFERRED :

FAVOUR : Against the assesse.

A.Y. :

INCOME TAX ACT, 1961

Section 40(a)(iib)

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