D.N.SINHA,J. - (1.) THESE four applications have been consolidated for the sake of convenience inasmuch as a common question of law has arisen in these applications. The facts are as follows : The assessee in this case is the Samla Collieries Ltd. In its own statement of facts, being annexure "A", set out at p. 65 of the paper-books, it has been stated that the company carried on the business of coal mining and as such had taken several coal mines on lease from owners of land to whom royalties were being paid. It is further stated that the several collieries were being worked by the company and the coal raised therefrom was sold. In other words, this is a simple case of a company working a mine, raising and selling the coal. The assessment years are 1950-51, 1951-52, 1952-53 and 1953-54. For these years, the assessee incurred liabilities for payment of three classes of expenses (1) road and P. W. D. cess, (2) education cess and (3) payments made on account of royalty-holders as per royalty agreements.
(2.) WE need not deal with the views of the ITO or the AAC, but may straightaway mention that the Tribunal held that so far as the amount paid on account of royalty-holders was concerned, that was allowable for deduction, but the amounts paid as cess were excluded because of s. 10(4) of the IT Act. The point arises as follows : The road and P. W. D. cess are paid under the Bengal Cess Act, being Act IX of 1880. The relevant sections are ss. 5 and 6, which run as follows : "5. From and after the commencement of this Act in any district or part of a district, all immovable property situate therein except as otherwise in s. 2 provided, shall be liable to the payment of a road cess and a public works cess." "6. The road cess and the public works cess shall be assessed on the annual value of lands and 'until provision to the contrary is made by Parliament' on the annual net profits from mines, quarries tramways, railways, and other immovable property, ascertained respectively as in this Act prescribed and the rates at which such cesses respectively shall be levied for each year shall be determined for such year in the manner in this Act prescribed : Provided that the rate at which each such cess shall be levied for any one year shall not exceed the rate of one-half anna on each rupee of such annual value and annual net profits respectively." The education cess is levied under the Bengal (Rural) Primary Education Act, 1930. The relevant section is s. 29, which runs as follows : "29. (I) In any district or part of a district in which the provisions of this chapter are in force, all immovable property on which the road and public works cesses are assessed according to the provisions of the Cess Act, 1880,shall be liable to the payment of a primary education cess. (2) The primary education cess shall be levied at the rate of three and a half pice on each rupee of annual net profits from mines and quarries and at the rate of five pice on each rupee of annual value of land and of annual net profits from tramways, railways and other immovable property as determined under the Cess Act, 1880." Coming now to the IT Act, s. 10 deals with the headings under which tax is payable and the allowances that are to be made for computing the income on the various headings. Sec. 10(I) provides that tax shall be payable by an assessee under the head "profits and gains of business, profession or vocation" in respect of the profits or gains of any business, profession or vocation carried on by him. Sub-s. (2) lays down the method of computation of such profits or gains. Various allowances are to be made, of which we are concerned in this case with two, namely, s. 10 (2)(ix) and s. 10(2)(xv). Under cl. (ix) of sub-s. (2) allowance is given for any sum paid on account of land revenue, local rates or municipal taxes in respect of such part of the premises as is used for the purposes of the business, profession or vocation. Clause (xv) of sub-s. (2) is the residuary clause which deals with allowances which are of a revenue nature and not of the nature of capital expenditure. We now come to sub-s. (4) of s. 10. It reads as follows : "10. (4) Nothing in cl. (ix) or cl. (xv) of sub-s. (2) shall be deemed to authorise the allowance of any sum paid on account of any cess, rate or tax levied on the profits or gains of any business, profession or vocation or assessed at a proportion of or otherwise on the basis of any such profits or gains..."
(3.) READING these provisions together, it has been held that the amounts paid as cess for road and P. W. D. as also the education cess are excluded by the provisions of sub-s. (4) of s. 10. It is conceded that the matter does not come under cl. (ix) of sub-s. (2). It would come under cl. (xv) unless it is excluded by the proviso. The proviso seems to be without complication and excludes allowances of any sum paid on account of any cess levied on the profits or gains of any business. I have already mentioned that the assessee in this case carries on a mining business which consists of raising coal from the mines and selling the same. I do not see how it can be argued that the profit which is gained by raising the coal and selling the same does not come within the provisions of the Cess Act or the Education Cess Act or is not within the ambit of sub-s. (4) of s. 10.;