1980 (9) TMI 65 - HC - Income Tax

Summary

Issues involved: Interpretation of business expenditure for royalty amounting to Rs. 23,330 for assessment year 1965-66.

Summary:
The case involved a dispute regarding the admissibility of royalty as a business expenditure for the assessment year 1965-66. The assessee, engaged in coal mining, claimed royalty payable to the Government of West Bengal. The Income Tax Officer (ITO) disallowed the claim stating it related to earlier years. The Appellate Assistant Commissioner (AAC) upheld the decision, considering the liability had not accrued in the relevant year. However, the Tribunal allowed the claim, stating the assessee was within its right to claim within the year 1964 for previous years. The issue revolved around the retrospective effect of the amendment made in 1964 to the West Bengal Estates Acquisition Act, which vested the right to claim royalty in the State. The High Court held that the State's right to receive royalty accrued with the amended Act, making the claim admissible. The judgment was in favor of the assessee, and each party was directed to bear its own costs.

In a separate opinion, Justice Sudhindra Mohan Guha concurred with the decision.