2002 (5) TMI 21 - HC - Income Tax

Business Expenditure, Deduction Only On Actual Payment - Whether, on the facts and in the circumstances of the case, the Income tax Appellate Tribunal was legally justified in (i) holding that the royalty does not partake the character of tax , duty , cess or fee for the purpose of applicability of the provisions of section 43B of the Income-tax Act? - we answer the reference in favour of the Revenue and against the assessee.

Summary

The High Court of Rajasthan ruled that royalty is considered a tax, and therefore, unpaid royalty liability is subject to section 43B of the Income-tax Act. The Tribunal's decision to allow the liability was overturned, citing precedents from the apex court and other High Courts. The judgment favored the Revenue over the assessee.