TMI Blog1980 (9) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... this reference with the assessment year 1965-66, for which the previous year ended on March 31, 1965. The assessee is engaged in raising of coal from coal mines. It claimed royalty of Rs.. 28,725 as payable to the Govt. of West Bengal. The ITO disallowed the claim on the ground that it related to the earlier years. Aggrieved by the said order of the ITO, the assessee preferred an appeal to the AAC. It appears that the Government had raised royalty to 2 1/2 per cent. with retrospective effect which the assessee was required to pay. That was done by a notification dated December 29, 1961. The said notification is to the following effect: " New Delhi-the 29th December, 1961. S.O. No. 3094: In exercise of the powers conferred by section 30 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egal position. Under the West Bengal Estates Acquisition Act, 1953, s. 5 vested the right of the intermediaries in the estate ill the Government. Now, this provision came up for consideration before this court in the case of Katras Jharia Coal Co. Ltd. v. State of West Bengal [192] 66 CWN 304. Mr. Justice Sinha, as his Lordship then was, delivered the judgment. The effect of that judgment was that so far as the State of West Bengal was concerned, the State was not entitled to claim royalty from those who were operating the mines, viz., the type of people like the assessee. As a result of this, certain amount of, confusion arose and the right to claim royalty by the State which was payable to the lessor of the mining lease had become ineffe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... engal by virtue of the decision of the High Court referred to hereinbefore until the amendment was made in 1964. When the Amendment Act, 1964, was passed, it became effective with retrospective effect and the liability to pay royalty arose and the assessee settled the claim. The assessee's liability, even for the earlier years, would have been barred, if such amendment was not passed. On behalf of the assessee, reliance was placed on the case of Nonsuch Tea Estate Ltd. v. CIT [1975] 98 ITR 189 (SC). There, under an unwritten agreement, H C Ltd. were the managing agents of the assessee-company and were entitled to a commission of 1 1/2 per cent. on all sales and a sum of Rs. 12,000 per annum for secretarial work. After the coming into forc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... naging agents arose only when the Government conveyed its approval by its letter dated September 2, 1957, and not prior to that date. The sum of Rs. 97,188 was, therefore deductible, according to the Supreme Court, in computing the profit for the year ending June 30, 1958. Now, learned advocate for the revenue contended before us that the royalty payable became due on raising of the coal. For this, proposition, he drew our attention to the observations of the judicial Committee in the case of Raja Bahadur Kamakshya Narain Singh of Ramgarh v. CIT [1943] 11 ITR 513 (PC) at page 522. His submission was that there was a claim for royalty by the lessee to the lessor. That claim had only become due to the State instead of to the lessor because of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffective until the amendment was made in 1964 because that gave the State the right to realise the royalty. The notification or the communication of the circular issued in 1961 only raised the quantum of royalty but that right remained ineffective in West Bengal and it became effective only with the introduction of the West Bengal Estates Acquisition (Amendment) Act, 1964, though the original Act was given retrospective effect So, on that date with retrospective effect, it revived the claim. The result of the retrospective operation is not that it made the accrual of any liability as prior to that date. The claim of the lessor to get the royalty was revived with retrospective effect by the coming into operation of s. 5(2) of the amended Act ..... X X X X Extracts X X X X X X X X Extracts X X X X
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