As in all the appeals common order of the learned Single Judge is under challenge, they are being considered simultaneously.

2. All the appeals are directed against the common order dated 18.02.2016 passed by the learned Single Judge in the respect of writ petitions whereby the learned Single Judge, for the reasons recorded in the order, has set aside the impugned assessment orders so far as they relate to `Privilege Fee’ as being taxable income. Learned Single Judge has further remanded the matter to the assessing Officer to reexamine in respect of disallowance after giving opportunity of hearing to the respondent-herein the original petitioner in respect of the concerned assessment years.

3. The short facts of the case appears to be that, the respondent-original petitioner is a Company being an undertaking of the Government of Karnataka engaged in the business of canalization of liquor, beer and rectified spirit. In respect of the assessment year of 2009-10, 2010-11, 2011-12 and 2012-13, the assessing officer under Section 143(3) of the Income Tax Act (hereinafter referred to as `the Act’) after making assessment, has passed the order disallowing of privilege fee of the respective amount paid by the respondent-Company to the Government of Karnataka. The other disallowance was also made in the assessment year in respect of certain other expenses.

4. We may, for ready reference, reproduce the details of the original writ petitions, writ appeals, assessment year and the privilege fees which are disallowed by the impugned assessment orders in the respective original writ petitions as under:

Writ Appeal Nos.	Writ Petition Number	Assessment Year	Privilege Fee
853/2016	12872/2013	2010­2011	Rs.570,14,37,000/­
854/2016	14687/2014	2011­2012	Rs.695,14,70,000/­
855/2016	15910/2015	2012­2013	Rs.829,41,58,944/­
856/2016	17514/2015	2009­2010	Rs.479,36,60,000/­

5. The assessing officer has disallowed the privilege fee on the following grounds:

(i) the privilege fees paid is beyond surplus earned by the Company in the trade of liquor.

(ii) The distribution of the profits arising in the hands of 50 CL11 licence holders was taken over by the State Government undertaking namely the respondent-herein;

(iii) The privilege fees paid is nothing but the appropriation of the income.

(iv) The Government of Karnataka has taken away not only the profits earned by the assessee-Company in the name of privilege fees but also other income.

(v) The Company has to compute the profit, pay the taxes on it and only then the surplus if any can be appropriated.

(vi) The Government of Karnataka has varied the privilege fee every year and there is no fixed rate.

(vii) The percentage of privilege fee is not known to Company in advance or at the beginning of the year and the payments made by the Company are against the provisions of Companies Act, Income Tax Act and the Accounting standards.

(viii) The Government Order levying the privilege fee is passed purposefully only at the fag end of the financial year.

(ix) The respondent Company is parting with its taxable profits to the Government under the name of `privilege fee.’

(x) The provisions of Section 40(a)(ii) would be applicable.

(xi) The privilege fee does not specify the definition of `fee’ as all the elements of `tax’ levied are imposed.

(xii) The payment of privilege fees is not an expenditure incurred towards earning of income.

(xiii) Section 40(a) (ii b) is held as clarificatory in nature.

(xiv) The amendment made in Section 24 of the Karnataka Excise Act, 1965 is illegal.

6. The respondent Company filed respective writ petitions before the learned Single Judge challenging the aforesaid assessment orders for the respective years passed by the Assessment Officer and prayed to declare disallowance of the privilege fee in the assessment year as in violation of the powers of t