Actual payment under Section 43B: adjustments remitted to Assessing Officer for factual verification and possible deduction.

Whether adjustments against excess royalty pre-payments amount to 'actual payment' for claiming deduction under section 43B is the central issue; the Tribunal found the record shows some sums paid through banking channels while other amounts were treated as book adjustments and the AO and CIT(A) failed to verify if initial estimated payments held by the State extinguished liability on final determination, so the Tribunal remitted the matter to the Assessing Officer for detailed factual verification and opportunity of hearing and allowed the appeal for statistical purposes in favour of the assessee.

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Issues: Whether amounts adjusted against excess royalty previously paid to the State (shown as negative liability on final determination) qualify as "actual payment" for the purpose of claiming deduction under section 43B of the Income-tax Act, 1961.

Analysis: The authorities below accepted that certain sums were paid through banking channels while treating remaining amounts as mere book adjustments against receivables arising from prior excess royalty payments. The appellate record before the Tribunal included orders of the State Mineral Superintendent showing final determination of liability and instances of negative balances reflecting excess pre-payments. The lower authorities and CPC did not verify whether the initial estimated payments, held by the State, effectively amounted to payments extinguishing liability once final determinations were made. In view of the foregoing factual materials and absence of adequate verification by the Assessing Officer and CIT(A), the issue of whether the adjustments represent actual payments cannot be conclusively resolved on the present record and requires fresh examination and opportunity of hearing.

Conclusion: The matter is remitted to the Assessing Officer for detailed verification of records and factual determination whether the adjustments represent actual payments qualifying under section 43B of the Income-tax Act, 1961; appeal is allowed for statistical purposes and in favour of the assessee.

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