9911796707
TMI Blog2001 (1) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 1 lakh representing minimum royalty payable to the Government of Orissa ?" The assessment year involved is 1975-76. The factual position as noted in the statement of case is as follows : The assessee-company was incorporated in the accounting year 1971-72, relevant to the assessment year 1973-74 as its previous year ended on August 31 of the relevant financial year. One Basti Sugar Mills Company Limited was the promoter of the company. The dominant object of incorporation was setting up of a paper mill in the district of Koraput in the State of Orissa for manufacture of 60,000 tonnes of paper per annum. For this purpose, it was granted a letter of intent on January 30, 1971, by the Government of India. With a view to have supply of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale of bamboos, interest and consultancy fees aggregating in all to Rs. 4,18,113. The assessee claimed expenditure of Rs. 5,06,832. The Income-tax Officer while computing the income allowed only Rs. 2,22,419 including the royalty amounting to Rs. 1 lakh. He did not give any specific reason for disallowance of the other claims. The assessee carried the matter in appeal before the Appellate Assistant Commissioner ("the AAC" in short). The said authority was of the view that the Incometax Officer commuted errors in computing the income from consultancy fees as also in allowing expenditure. He was of the view that only actual royalty relatable to the sale of bamboos of Rs. 2,43,021 would be allowed. He also observed that the payment of minimum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us that appears immaterial. The assessee-company had got transferred the letter of intent from the promoter company and had also started doing business in the sale of bamboos in its own name. Obviously, therefore, it was also responsible to meet all the expenditure relating thereto including the payment of royalty. The assessee-company was also bound by the terms of the agreement dated September 17, l971, entered into by its promoters on its behalf. In fact this position has not been disputed by the Appellate Assistant Commissioner when he himself has in terms of clause 10 of the said agreement allowed a part of the royalty amounting to Rs. 56,500. We fail to understand why clause 13 of the same agreement was not binding on the assessee an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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