TMI Blog1996 (4) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... ither tax nor duty ?" The brief facts giving rise to this reference are that the assessee in its return for the assessment year 1984-85 had among others claimed a deduction of Rs. 76,956 towards its liability for payment of royalty. This claim was disallowed by the Assessing Officer in view of the provisions of section 43B of the Income-tax Act, 1961. According to the Assessing Officer, the payment of royalty was a levy to which provisions of section 43B were applicable. The appeal of the assessee against the order of the Assessing Officer was dismissed by the Commissioner of Income-tax (Appeals). On further appeal before the Tribunal, the Tribunal held that only tax and duty was disallowable under the provisions of section 43B of the Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this is to be paid to the State for extraction of minerals from a land, i.e., something as a price for the use of the State minerals. But their Lordships of the Supreme Court in the case of India Cement Ltd. [1991] 188 ITR 690 have taken a view that such royalty is not a price and it has to be held to be a tax and as such a cess on royalty would be a tax on royalty. This was also a case with regard to imposition of cess on royalty on mineral rights under the T. N. Panchayats Act, whether the State is competent to levy cess or not. Their Lordships came to a conclusion that the State is not competent to levy this cess as this is covered by entry 54 of List I (Union List) and entry 49 of List II does not cover this. Therefore, the levy of ces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his court in the case of India Cement Ltd. [1991] 188 ITR 690 (SC); [1990] 1 SCC 12, AIR 1990 SC 85. In that decision the Constitution Bench, speaking through Sabyasachi Mukherji J., as he then was, expressly rules that royalty is a tax and for imposing such royalty the State Legislature will have no power under entry 50 of the Second List. Mr. Sanghi contended that strictly royalty cannot be said to be a tax and to that extent, the decision of the Constitution Bench may appear to be erroneous. It is not possible to agree with this contention. In paragraph 34 of the report, the Constitution Bench has made the following pertinent observations : '34. In the aforesaid view of the matter, we are of the opinion that royalty is a tax, and as su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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