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2023 (9) TMI 1117 - AT - Income TaxDisallowance of royalty u/sec. 43B - violation of Rule 46A by the ld. CIT(A) while providing relief to the assessee - HELD THAT:- As on the merits of the addition u/sec. 43B, the law laid down specifically by the decision of State of West Bengal v. Kesoram Industries Ltd. [2004 (1) TMI 71 - SUPREME COURT] is that royalty is not tax. Further, the Hon'ble Gujarat High Court in the case of CIT v. Kutch Minerals [2008 (1) TMI 1001 - GUJARAT HIGH COURT] has held that royalty is not tax and hence the provisions of sec.43B would not be attracted. When the merits of addition under the said provision is not sustainable, then in such scenario, the issue whether there has been any violation of Rule 46A by the ld. CIT(A) while providing relief to the assessee on this very section itself becomes redundant and infructuous. DR also could not refute the said proposition of law as laid down by the Hon'ble Supreme Court (supra) by citing any decision favouring the Revenue. Accordingly, there is no infirmity in the order of the ld. CIT(A) on this issue and it is upheld. Hence, ground No.1 of the Revenue’s appeal is dismissed. Suppression of sale - Assessee has resorted to manipulation of sales price of iron ore sold to its sister concerns to evade payment of Royalty - HELD THAT:- Hon'ble Supreme Court in the case of CIT v. Calcutta Discount Company Ltd. [1973 (4) TMI 6 - SUPREME COURT] held that when one trader transfers his goods to another trader at a price less than the market price, the taxing authority cannot take into account the market price of those goods ignoring the real price fetched. In this case of the assessee, the AO has not alleged that the assessee has not offered its income for purposes of taxation in the return of income. AO also has not doubted the transaction as such. It is also not the case of the AO that the assessee has earned more than it has offered to tax merely because the sale to sister concern is at a price lower than the sale price charged by the sister concern. It is clear that what has to be considered for taxation, is not the market price of the goods which were transferred but the actual price that was received or fetched. Income which actually accrues is taxable. But income which the assessee could have but has not in fact earned cannot be taxed. Assessee appeal allowed.
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