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.