TaxTMI 
TaxTMI 
2011 (6) TMI 997
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....tment of sales proceeds of Geological data. As per assessee, such geological data was classifiable as books and would come under the definition of plant given u/s.43(3) of Income Tax Act, 1961 ( in short 'the Act' ). Arguments of the assessee was that it had neither claimed depreciation u/s.32 nor claimed the expenses as revenue outgoes, but had carried it as a part of its "miscellaneous expenditure" in the balance sheet. Again as per assessee, decision of Apex Court in the case of Commissioner of Income Tax Vs. Elecon Engineering Co. Ltd. 166 ITR 66 and Scientific Engineering House (P) Ltd. Vs. Commissioner of Income Tax 157 ITR 86 were applicable on facts. 3. Short facts, apropos are that assessee, engaged in the busienss of lignite mini....
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....dered as business profit only. Hence, he made an addition of ₹ 9,39,70,450/- as business income of the assessee, being the sale consideration received on sale of geological data after deducting the expenses incurred. 4. In its appeal before the Commissioner of Income Tax(A), argument of the assessee was that the geological data was never treated as closing stock by it. According to the assessee, these were "books" and came under the definition of plant u/s.43(3) of the Act. Ld. Commissioner of Income Tax(A) sought a Remand report from the Assessing Officer. The Assessing Officer in such remand report reiterated his earlier views. Ld. Commissioner of Income Tax(A) after going through the submission of the assessee and remand report of....
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....n to those incurred for acquisition of business stock and profit on sale of such stock are to be treated as business profit. Further, the Hon'ble ITAT Delhi has also held in the case of M/s.ONGC Videsh Ltd. Vs. D Commissioner of Income Tax 127 TTJ 497 that the expenditure incurred by the assessee on Seismic data collected by it is revenue in nature. There is no reason as to why commercial exploitation of such data would not constitute business receipts. Based on the above facts, I am of the considered opinion that the geological data collected by appellant is revenue in nature. Accordingly, the action of the Assessing Officer in this issue is sustained. This ground of appeal on this issue is dismissed." 5. Now before us Ld. AR assailing t....
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....ifying the areas good for lignite mining, cannot be taken as something, which is not a part of the business of the assessee. May be that such data was collected on the directions of the Central Government for the purpose of benefiting other lignite manufacturers. But nevertheless it would still remain a part of the business of the assessee only. If the data collected fell within the term 'books and consequently a plant as defined u/s.43(5) of the Act, assessee would have definitely treated it so in its books of accounts and not as a part of its miscellaneous expenses in its balance sheet. Notably, we find that miscellaneous expenditure was being written off in a graded manner over the years. Hence assessee's claim that the expenditure incur....
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.... by the assessee in this appeal. First issue appearing in its ground Nos.2 & 3 are against the treatment of sale proceeds of geological data as business receipts. We have already dealt with this issue in assessee's appeal for Assessment Year 2006-07 at para-6 above. Therefore, ground Nos. 2 & 3 are dismissed. 8. Surviving ground No.4 assails the orders of the authorities below disallowing expenses of ₹ 2,31,52,085/- on insurance premium paid in the month of March, 2007. As per assessee, the payment made in March, 2007 was to be treated as revenue expenditure though shown as pre-paid. 9. During the course of assessment proceedings, assessee was required to explain why the insurance premium paid should not be disallowed as it did not ....
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....surance premium was paid by the assessee and hence it was allowable expenditure. Per contra Ld. DR supported the orders of the lower authorities. 12. We have perused the orders of the authorities below carefully and heard rival contentions. The disallowance was made for a reason that insurance premium paid covered periods subsequent to the relevant previous Year. Nevertheless the payment of insurance premium has not been disputed. Payment of premium is not an expenses coming under the purview of accrual system of accounting and also cannot be regarded as period cost. There is no accrual of liability for such payments and assessee by paying insurance premium is covering its risks for future. The risk covered could be for a year or for a ten....