2001 (10) TMI 10

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....Income-tax Appellate Tribunal has referred the following two questions at the instance of the Revenue, under section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), for the opinion of this court: "1. Whether, the Appellate Tribunal is right in law and on facts in deleting the addition on account of unpaid sales tax liability amounting to Rs. 3,130 and Rs. 895 invoking....

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.... of the Act and disallowed the sum of Rs. 3,120 and Rs. 895 being outstanding sales tax liability and Rs. 10,785 and Rs. 4,599 on account of unpaid royalty. The Deputy Commissioner of Income-tax (Appeals) deleted the addition, the Revenue carried the matter before the Tribunal. The Tribunal, for the reasons stated in its order, upheld the order of the Deputy Commissioner of Income-tax (Appeals) an....

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.... Act could not be allowed unless and until the amount had actually been paid by the assessee. It was further submitted that even if the assessee was following the mercantile system of accounting, it could not be permitted a deduction on the basis of accrual of liability in view of the said section. We have no quarrel with the aforesaid proposition canvassed by Mr. Joshi. However, the provisions....

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....or the purpose of invoking in the case of outstanding royalty which was paid in the subsequent year. The word "royalty" does not fall within the meaning of "tax" or "duty". Normally, the concept of royalty signifies a recurring payment made to the State for the extraction of minerals from land, i.e., something paid as a price for mineral rights. Royalty on mineral rights is not a tax on land bu....