Income Tax Appellate Tribunal - Jabalpur
Ismail And Sons vs Income-Tax Officer on 30 October, 1991
Equivalent citations: [1992]40ITD178(JAB)
ORDER
R.P. Garg, Accountant Member
1. This is an appeal by the assessee against the order of the CIT (Appeals) dated 3-6-1986 for the assessment year 1984-85.
2. The first ground is against the disallowance of Rs. 37,872 paid by the assessee as royalty for quarrying lime stone. The ITO found, on examination of the books of the assessee that the sum of Rs. 37,872 remained unpaid at the close of the year and disallowed the same by applying the provisions of Section 43-B of the Act. According to him, the royalty was clearly a levy under the Mining provisions and calculated at a specific rate and, therefore, the provisions of Section 43B were applicable. The disallowance was upheld by the CIT (Appeals) for almost similar reasons.
3. The learned Counsel's contention is that the royalty payment is in the nature of purchase price and not the tax or duty and, therefore, it is not covered by the provision of Section 43B. The learned Departmental Representative, on the other hand, supported the orders of the revenue authorities.
4. We have heard the parties and considered the rival submissions. Section 43B provides that a deduction otherwise allowable under this Act in respect of any sum payable by the assessee by way of tax or duty under any law for the time being in force...shall be allowed only in computing the income of that previous year in which such sum was actually paid by the assessee. The words "Tax" and "Duty" are interchangeable concepts. A tax or duty is a compulsory exaction of money by public authority for public purposes enforceable by law and is not a payment for services or the goods. A tax or duty is not and need not to be supported by any consideration of services rendered in return or the goods acquired. The royalty, on the other hand, is for consideration of the goods, i.e., the lime stone being extracted by the assessee from the quarry. There is, thus, an element of quid pro quo between the person, who pays the royalty and the public authority, which imposes it. Royalty, no doubt, is paid to the State Government and is calculated at a specific rate under the Mining provisions, the fact, however, remains that it was paid for quarrying lime stone and, therefore, it is not a tax or duty under any law. It is a contractual payment made by the assessee for extracting lime from the land. It is a sort of a payment in consideration, for the lime stone extracted by the assessee to be utilised as raw material in its business. It would, thus, be neither a tax nor a duty under any law within the meaning of the provisions of Section 43B of the Income-tax Act. The Departmental authorities were, therefore, not justified in invoking the provisions of Section 43B and disallowing the claim made by the assessee. We delete the disallowance and allow the claim of the assessee.
5. and 6. [These paras are not reproduced here as they involve minor issues].