1997 TAX. L. R. 212 ::(1997) 138 CurTaxRep 260 ::1997 (3) SCC 323 ::(1997) 1 Scale 763 ::(1997) 224 ITR 560 ::(1997) 1 SCR 957 (SC) ::(1997) 90 Taxman 553 ::(1997) 4 Supreme 197 ::(1997) 137 Taxation 172 ::(1997) 2 JT 401 (SC)

Supreme Court Of India

(From : 1981 (130) ITR 868 (Rajasthan))

Hon'ble Judge(s): B. P. Jeevan Reddy, K. S. Par1poornan , JJ

(A) Income-tax Act (1922) , S.34(l)(a)— Escaped assessment - Omission to fully and truly disclose material or necessary fact - Lease agreement between assessee and ex-Ruler, exempting assessee from income-tax for 15 years - Placed before Income-tax Officer at time of original assessment - No omission to disclose material or primary facts - Assessment could not be re-opened under cl.(a)of S. 34(1). (1981) 130 ITR 868 (Raj), Reversed. Theassessee-company had entered into a lease agreement with the ex-Ruler of the erstwhile State, according to which the assessee was permitted to quarry flooring stones for a period of 15 years. The assessee was to pay royalty every year and was exempted from income tax in terms of the agreement. On merger of the erstwhile State, the assessee applied to the Income-tax Officer for exemption but the same was rejected. The assessee then filed a civil suit against the State of Rajasthan and the Union of India. The Income-tax Officer, in the assessments for the year 1950-51 to 1956-57, disallowed the deduction of the minimum royalty amount of Rs. 1,50,000 from the taxable income of the assessee-Company on the ground that the same was capital expenditure, while deduction of royalty paid by the assessee-company in excess of Rs. 1,50,000 was allowed. The same position was maintained by him in respect of the assessments for....