https://www.taxtmi.com/caselaws?id=801886 Under the mercantile system, royalty liability for rejection or waste dumps sold in earlier periods crystallises when it is first asserted and quantified, provided no earlier demand existed and the taxpayer held a bona fide belief that royalty was not payable. Its deduction is therefore not denied merely as a prior-period item; the matching concept does not displace crystallisation of liability. Interest on delayed payment of such royalty is deductible as business expenditure under section 37(1) where it is compensatory rather than penal, arises from business expediency, and involves no breach or infraction of law. Royalty and consequential compensatory interest are deductible in the year the liability crystallises. en-us Thu, 22 Oct 2026 00:00:00 +0530 Wed, 28 Oct 2026 07:16:37 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=801886 Under the mercantile system, royalty liability for rejection or waste dumps sold in earlier periods crystallises when it is first asserted and quantified, provided no earlier demand existed and the taxpayer held a bona fide belief that royalty was not payable. Its deduction is therefore not denied merely as a prior-period item; the matching concept does not displace crystallisation of liability. Interest on delayed payment of such royalty is deductible as business expenditure under section 37(1) where it is compensatory rather than penal, arises from business expediency, and involves no breach or infraction of law. Royalty and consequential compensatory interest are deductible in the year the liability crystallises. Case-Laws Income Tax Thu, 22 Oct 2026 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=801886