TaxTMI 
TaxTMI 
TaxTMI 
2016 (9) TMI 1394
X X X X Extracts X X X X
X X X X Extracts X X X X
....hat the assessee claimed deduction of Rs. 6 crores as lease money in addition to royalty/deed/rent/land tax and was of capital nature? 2. Whether on facts and in the circumstances of the case, the Appellate Tribunal was justified in allowing the prospecting charges of Rs. 2.96 crores for survey reports for mining operation as revenue expenditure notwithstanding the fact that expenditure resulted in enduring benefits to the assessee and thus was capital expenditure, not related to assessment year 1992-93 as the liability was accepted by the company only on 28.8.1992 relevant to assessment year 1993-94?" 2. Counsel for the Department has contended that in view of the D.B. Income Tax Reference No. 77/1995, which has been answered against the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....overnment of Rajasthan and the assessee-company use to carry out excavation work as per plan/directions of the mining department. With effect from 1-4-1998, the assesseecompany started excavating minerals act its own and thereby ceased to work as a contractor to the Government of Rajasthan. Before carrying out actual excavation, a minor must now the spots where excavation should be carried out and for that purpose corresponding or survey must be carried out. In view of these facts, assessee-company requested the Government of Rajasthan to give various survey records to facilitate the mining operation of the appellant. The Government of Rajasthan gave the appellant various survey reports and demanded from it Rs. 2.96 crore as prospecting cha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the other hand, argued that the assessee made provision of this amount and provision of any amount is not allowable expenditure. In this connection, he relies upon the decision of the Kerala High Court cited at 203 ITR 714 and Allahabad High Court cited at 199 ITR 81. 16. We have examined the facts of this case as well as the arguments put-forth by the rival parties and have also examined the case laws relied upon by them and are of the opinion that the contentions raised by the ID. A.R. On behalf of the assessee carries force. Following the decisions of the various courts relief upon by the ID. A.R. And also the decision of the Supreme Court cited at AIR 1955 page 169, we are of the view that the first appellate authority was not reasonab....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e decision reveals the `inscrutable face of the sphinx', it can be its silence, render it virtually impossible for the courts to perform their appellate function or exercise the power of judicial review in adjudging the validity of the decision. Right to reason is an indispensable part of a sound judicial system, reasons at least sufficient to indicate an application of mind of the authority before affected party can know why the decision has gone against him. One of the salutary requirements of natural justice is spelling out reasons for the order made. In other words, a speaking out, the inscrutable face of the sphinx is ordinarily incongruous with a judicial or quasi-judicial performance." 7. He further contended that for assessment....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ficer while considering non admissible claim in paragraphs 3.5 (i to vi) reads as under:- (i) The assessee's has not, till the year end, accepted this as a liability even of contingent nature, not to speak of as certained liability. It is also admitted by the assessee that the name would be accounted for in the accounts of f.y. 1991-92 which would be relevant for the a.y. 92-93. (ii) Even if it in accepted that the assessee has to pay this amount then also it is not in the nature of revenue expenditure rather it is capital in nature. The benefit which may accrue to the assesse, in of enduring nature ane even according to sec. 35-K prospecting charged are of capital nature. It is a sort of premium to be paid by the assessee to obtain a....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... Commissioner of Income Tax, reported in (1989) 177 ITR 0377 and Empire Jute Co. Ltd. vs. Commissioner of Income Tax, reported in (1980) 124 ITR 0001 and contended that under mercantile system, the expenses were shown in the year 1992-93 and even while assessment order was passed for the year 1991-92, the assessee was made clear that he is accepting the liability and he further contended that he will not make payment which was made by the State Government for the expenditure incurred for the survey which is being done. Therefore, the Corporation had no other option to make payment which has no capital value. 12. We have heard the counsel for the petitioner as well as counsel for the respondent. 13. Taking into consideration the fact init....