TaxTMI 
TaxTMI 
2014 (1) TMI 1515
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....siness expenditure of the current FY under section. 37(1) of the I.T. Act, 1961. (2) That the ld. CIT(A.) has erred in law as well as on facts by deleting the addition made for delayed payment of Employees' Contribution to the P.F. stating that the same is covered as per provision of Sec. 43B of the I.T. Act, whereas Sec. 2(24)(x) read with Sec. 36(1)(va) applies in the case of Employer's Contribution to the P.F. only. 2. At the time of hearing, ld. A.R. submitted that he has no objection in respect of Ground No. 2 of the appeal if the order of ld. CIT(Appeals) is reversed and the finding of Assessing Officer is restored as the assessee failed to deposit Employees' Contribution even before due date of filing of the return. 3. In view of the above submission of ld. AR, we restore the action of Assessing Officer by reversing the order of ld. CIT(Appeals). Hence, Ground No. 2 of the appeal taken by the Department is allowed. 4. Now coming to Ground No. 1 of the appeal, the relevant facts are that the assessee wasengaged in the business of Mining as a licensee for mining in Sanindpur Mines and Oraghat Mines of Orissa, which was acquired by the asses....
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....gh Court in the case of M/s. Essel Mining & Industries in ITA No. 376 of 2005 in an appeal filed against the order of ITAT in ITA No. 2520/Kol./2004, wherein ITAT, Kolkata Bench decided the issue in favour of the assessee stating that afforestation expenditure should be treated as revenue in nature. 6. However, Assessing Officer did not agree with the contention of the assessee and stated that it is 'one-time levy' to meet the future social course. The Hon'ble Supreme Court has categorized it as a fee in Writ Petition No. 202 of 1995, under which the Users to pay NPV to the Forest Department. Assessing Officer stated that the said payment is a one time payment and accordingly held that it is capital in nature and added back to the income of the assessee. Being aggrieved, assessee filed appeal before the first appellate authority. 7. On behalf of the assessee, it was contended that NPV is charged by the State Government from the User Agency as per direction of the Hon'ble Supreme Court of India and as per the guidelines issued by the Ministry of Environment & Forest. The expenditure was incurred not for the purpose of obtaining any asset but for smooth running of the business ....
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....991) 187 ITR 39 held that the payment made by the assessee though is a one-time payment but cannot be treated as capital expenditure. It is relevant to state that in the case of Bikaner Gypsums Ltd. (supra), the Hon'ble Apex Court has held that where the assessee has an existing right to carry on a business, any expenditure made by it during the course of business for the purpose of removal of any restriction or obstruction or disability would be on revenue account, provided the expenditure does not acquire any capital asset. Payments made for removal of restriction, obstruction or disability may result in acquiring benefits to the business but that by itself would not acquire any capital asset. 8. In view of above, ld. CIT(Appeals) held that the said payment is revenue in nature and is allowable as business expenditure under section 37(1) of the Act. Hence, Department is in appeal before the Tribunal. 9. During the course of hearing, ld. DR submitted that the said payment of NPV by the assessee-company is a fee to the State Government for exploiting forest land. Since it is a onetime payment, he submitted that Assessing Officer is justified to disallow the payment for treati....
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.... in any court". Therefore, the Hon'ble Apex Court acknowledged that the essential nature of levy of NPV is a fee. Ld. AR submitted that the fee is in the nature of levy and non-payment of its leads to consequences, inter alia, to the stoppage of the business. Therefore, whether it is a periodic levy or one-time levy is immaterial. He further submitted that assessee has made the payment of the said NPV in the assessment year under consideration and since it is in the nature of a fee, the expenditure is to be allowed in the assessment year under consideration as it is revenue expenditure and falls under section 43B of the Income Tax Act. He submitted that Hon'ble Apex Court in the case of Bikaner Gypsums Ltd. (supra) has held that "where the assessee has an existing right to carry on a business, any expenditure made by it during course of business for the purpose of removal of any restriction or obstruction or disability would be on revenue account, provided the expenditure does not acquire any capital asset". Ld. AR submitted that ld. CIT(Appeals) has rightly held that it is a revenue expenditure because payments have been made by the assessee for removal of restriction, obstruction....
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....List-III of 7th Schedule of the Constitution. The fund set up is a part of economic and social planning which comes within Entry 23 of List III and the charge which is levied for that purpose would come under Entry 47 of List III. In that context, it was held by Their Lordships that levy of NPV is a fee that means every mining agency using and converting forest land to non-forest purpose has to pay a fee for continuing carrying on of the business. We agree with ld. AR that non-payment of this NPV could lead to consequences, inter alia, to the stoppage of the business. The Hon'ble Apex Court has held in the case of Bikaner Gypsums Ltd. -vs.- CIT (supra) at page 49 as under :- "Where the assessee has an existing right to carry on a business, any expenditure made by it during course of business for the purpose of removal of any restriction or obstruction or disability would be on revenue account, provided the expenditure does not acquire any capital asset. Payments made for removal of restriction, obstruction or disability may result in acquiring benefits to the business but that by itself would not acquire any capital asset".m 13. We observe that by mak....
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....IT [101 TTJ (CTK) 948]. In the said case, assesseecompany debited an amount of Rs.6.20 crores towards contribution to Minerals Exploration Fund set up by Government of India. The said payment was required on the direction of State Pollution Control Board and Ministry of Environment and Forests as a condition to renew assessee's clearance certificate. The Fund was set up for peripheral development works. It was held that the said payment is not a voluntary one and it is a payment on the basis of the direction given by the Government of India, Ministry of Mines, under which the assesseecompany comes. When a payment is made as per specific direction of Government of India, it cannot but be in the business interest of the assessee-company to abide by such directions of the Government of India. Accordingly, this payment is a statutory requirement and the expenditure has been considered wholly and exclusively for the purpose of business and has got a direct connection with the business activity of the Company. It was held that since the assesseecompany was following mercantile system of accounting and the provisions had been made on the basis of Office order, the same was rightly account....