Assessee-company, engaged in wholesale and retail trade of beverages, had debited its profit and loss account with respect to amount of surcharge on sales. AO made disallowance of such surcharge under section 40(a)(iib). Supreme Court held that surcharge on sales tax was introduced only as an increase in tax payable and such increase could not be equated with ‘fee or charge’ and thus surcharge on sales tax or turnover tax paid by assessee-company was not ‘fee or charge’ coming within sweep of section 40(a)(iib). Review petition filed by Revenue was dismissed. (AY. 2014-15, 2015-16)
ACIT v. Kerala State Beverages Manufacturing and Marketing Corporation Ltd (2023) 291 Taxman 357 / 333 CTR 14/ 224 DTR 479 (SC) Editorial : Refer Kerala State Beverages Manufacturing and Marketing Corporation Ltd v. ACIT (2022) 440 ITR 492 / 286 Taxman 1 (SC)
S. 40(a)(iib) : Amounts not deductible-Surcharge on sales tax or turnover tax paid by assessee-company to State Government was not a ‘fee or charge’-Review petition was dismissed. [S. 37(1)]