AI Drafter 
TaxTMI 
TaxTMI 
2017 (12) TMI 1784
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....s 2009-10 to 2012-13. 3. For the sake of clarity and convenience, facts relevant to assessment year 2008-09 are stated herein: The respondent-assessee is an individual engaged in the business of extraction of Iron ore and trading in Iron ore. The return of income for the assessment year 2008- 09 was filed on 30/09/2008 disclosing taxable income of Rs. 3,17,38,490/-. The said return of income was revised admitting additional income of Rs. 5,84,01,227/- on account of material found during the course of survey operations. Against the said return of income, the assessment was completed by the Addl.CIT, Bellary Range, Bellary [hereinafter referred to as 'AO'] vide order dated 16/12/2010 passed u/s 143(3) of the Income-tax Act, 1961 [hereinafter referred to as 'the Act' for short] at total income of Rs. 10,35,26,771/- after making several additions. One of the additions relates to an amount of Rs. 23,62,578/- debited to P&L Account, it was stated that it represents proportionate lease amount paid for acquiring mining rights. The explanations furnished by the respondent-assessee as well as the finding of the AO is stated by the AO vide para.12 of the assessment order which is a....
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.... situ were not stock-intrade and therefore, neither the rent nor the royalty which was paid was allowable as revenue deduction as by making these payments the assessee had acquired a capital asset of enduring benefit. This decision was subsequently followed by the Hon'ble Apex court in the case of R.B.Seth Molchand Suganchand vs. CIT (86 ITR 647)(SC) wherein it was held that the amount paid for obtaining mining lease for 20 years was held to be a capital expenditure. The Hon'ble Supreme Court, in the case of Gotan Lime Syndicate vs. CIT (1966) 59 ITR 718)(SC) held that rent paid for lime excavation was held to be revenue expenditure. Subsequently, the Hon'ble Apex Court held in the case of Aditya Minerals Pvt. Ltd. vs. CIT (236 ITR 39)(SC) perceived difference of opinion between co-ordinate benches of the Hon'ble Supreme Court in Pingle Industries (supra) and Gotan Lime Syndicate (supra) and therefore, referred the matter to a larger bench. This controversy was resolved by bench consisting of 5 judges in Aditya Minerals Pvt. Ltd. vs. CIT (239 ITR 817) wherein it was held that there was no conflict of decisions of Hon'ble Apex Court in Pingle Industries (supra) and Gotan Lime Syndic....
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....posit was "by way of a guarantee for the performance of this lease deed for fifteen years", that is, towards fifteen years' rent. It was adjustable against the rent of each month and it carried no interest. On the facts, as it appears to us, this case is on a par with Pingle Industries Ltd.'s case (supra) and, accordingly, the civil appeals must fail and are dismissed." In the light of the judgment of the Hon'ble Supreme Court in the case of Aditya Minerals Pvt. Ltd. (239 ITR 817) the impugned payment made for acquiring mining rights is capital expenditure and cannot be allowed as revenue expenditure. The reliance placed by the ld.CIT(A) on the coordinate bench decision of Tribunal in the case of P.Abubakar (supra) and the decision of the Hon'ble jurisdictional High Court in the case M/s.Ramgad Minerals & Minings Pvt. Ltd.,(supra) is misplaced in the light of the decision of the larger bench decision of the Hon'ble Supreme Court in the case of Aditya Minerals Pvt. Ltd.(supra). 9. Then an issue may arise as to whether this expenditure can be allowed on a staggering basis spread over lease period as revenue expenditure in the light of the decision of the Hon'bl....
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....it as deduction in the subsequent year does not arise as the liability of the expenditure had not crystallized during the year under consideration. Therefore, grounds of cross objections of the assessee are dismissed. 16. In the result, all the cross objections filed by the assessee are dismissed. Order pronounced in the open court on 26th December, 2017 ============= Document 1 1. Whether on fact and in circumstances of the case the learned CIT(A) is opposed to law and fact of the case? 2. Whether on the facts and in circumstances of the case the learned CIT(A), has erred in allowing the expenditure of Rs.23,62,578/ as revenue expenditure even though the said expenditure is in the nature of payment towards acquiring the right to perform mining activities on the land which intern is a capital expenditure? 3. Whether on the facts and in circumstances of the case the learned CIT(A), has erred in allowing the expenditure of Rs.23,62,578/ as revenue expenditure however the said expenditure is incurred on securing asset or advantage of enduring nature which is capital expenditure? 4. Whether on the facts and in circumstances of the case the learn....
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....d 1/25th of Rs. 4,43,77,056/- being Rs. 17,75,082/-. Similarly, the assessee has calculated the mining lease for Kallahalli mines for 20 years and claimed 1/20th of Rs. 2,34,99,846/- being Rs. 11,74,992/-. Since the assessee has utilised the mines for only six months, he has taken 50% of Rs. 11,74,992/- amounting to Rs. 5,87,496/-. Thus, the total expenditure debited towards lease deposit is Rs. 23,62,578/- Rs. 17,75,082 Rs. 5,87,496/-]. In this connection, the assessee has filed a letter addressed by the Conservator of Forests dtd 01-09-2007 to the Principle Chief Conservator of Forests, Bangalore which gives the detailed account of amount paid by the assessee, the same are summarised below. Rs. 1. Compensatory afforestation to extent of 34.04 hectares. 2. Cost of raising and maintenance of safety zone over 3.77 hectares and also the cost of raising and maintenance of the 1,864,480 565,565 plantations over 1½ times of safety zone area. 3. The assessee paid towards Net Present Value. Total 21,069,800 23,499,845 Document 3 Similarly, expenditure breakup is available for the mining lease obtained in respect of Jaisin....