AI Drafter 
TaxTMI 
TaxTMI 
2022 (11) TMI 733
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....loss. 2.2 Third ground in ITA No.2136 to 2139/Bang/2018 for the AYs 2011-12 to 2014-15 is with regard to sustaining disallowance claimed u/s 35E of the Act. 2.3 Fourth ground in ITA Nos.2136 & 2137/Bang/2018 for the AYs 2011-12 & 2012-13 is with regard to non-granting of depreciation on intangible assets claimed u/s 32(1)(ii) of the Act. 2.4 The fifth and last ground in ITA No.2138 & 2139/Bang/2018 for the AYs 2013-14 & 2014-15 is with regard to disallowance being interest on TDS made by the assessee u/s 37 of the Act. 3. The assessee has also filed additional ground in these appeals which is as follows:- "1. That in the alternate to Ground No 2, raised in memorandum of appeal, the appellant ought to be allowed deduction u/s 37 of the Act in respect of investment in land purchased/ allotted for mining of coal in forms of mining agreement in respect of the year in which land was purchased/ allotted to the appellant. It is respectfully submitted that the facts, required to adjudicate the additional ground, is already on record and there is no requirement for additional facts to be stated or referred. That the additional ground of appeal now rais....
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....o carry out mining operations. However, these lands were neither vacant nor owned by the Government. These lands were owned by various individuals and legal persons. For the purpose of undertaking mining activity, the assessee was required to purchase the surface rights of the said lands from its occupants by paying necessary compensation based on the principles outlined by the Government. 6.3 Accordingly, assessee had to purchase land comprised in the mining area of 1379.50 Hectares of land from its present owners/occupants after making payment of necessary compensation. For the period till 31st March 2014, a total of Rs. 189.78 Crs. was spent on purchase of land including Rs. 19.97 Crs. during the impugned period FY 2009-10. The copy of sample deed evidencing payment of compensation/acquiring land from the seller/occupier is referred by Ld. A.R. in page no. 122-123 of paper book of assessment year 2012-13. 6.4 Ld. A.R. submitted that grant of mining lease does not automatically provide the assessee right of way to the land area. The lease only provides the right to undertake mining activity in a specific area which would have to be acquired from its occupants. In this regar....
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....aharashtra, it is its responsibility to purchase all the surface rights of the lands forming part of the Mining Lease area of 1379.50 Hectares. Further, post termination/expiry of the Mining lease, the entire land along with its surface rights shall vests with the Government. She drew our attention to relevant paras of Primary agreement which is placed at paper book page No.26 in AY 2012-13. 6.9.2 In view of the aforesaid, the assessee submitted that even as per the Mining Lease, the assessee was bound to surrender the land along with its surface rights comprised in the entire mining area of 1379.50 hectares to the Maharashtra Government upon the termination/expiration of the Mining Lease Agreement. 6.10 The Mining Area of 1379.50 hectares was private land and not land owned by Government 6.10.1 The total mining area of 1379.50 Hectares, only 103.29 Hectares was owned by Government and balance 1,276.21 Hectares was owned/occupied by private individuals. 6.10.2 In order to commence the mining activity, assessee was required to have access to these lands since the Mining Agreement granted the right to mine minerals but not the right to access the land which is a private p....
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.... 6.15 The Assessee submitted that during AY 2009-10, the assessee has claimed depreciation on similar facts of Rs. 51,29,299/- . During the appeal proceedings, the matter was remanded to the AO for fresh examination in view of the documents furnished by the assessee. In his remand report (He referred Page 171-172 of the PB), the AO has specifically observed that the impugned depreciation on of Rs. 51,29,299/- is allowable. 6.16 Ld. A.R. submitted that the Ld. CIT(A) failed to appreciate the facts and law correctly by observing that the assessee is not the owner of such land comprising the mining area 6.17 Ld. A.R. further submitted that Ld. CIT(A) has been observed that there is no ownership of the assessee over the land, hence depreciation should not be allowed. The Ld. CIT(A) has based this observation on the presumption that land continues to remain in possession of the State Government, hence the assessee is not the owner of the land. 6.18 In this context, the assessee submitted that the Ld. CIT(A) and Ld. AO has failed to appreciate that as per the Act, for the purpose of claim of depreciation, in terms of Section 27(iiib) read with Section 269UA(d)(i) and Section ....
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.... the conclusion that mining area purchased by the assessee is not an expenditure related to mining operation 6.23 The ld. A.R. submitted that the Hon'ble Bench to Para 5.3 (I) of the impugned order of the Ld. CIT(A) whereby the Ld. CIT(A) has stated that the leasehold arrangement is essentially for acquiring mining rights for which royalty is prescribed by the State Government. The CIT(A) has observed that AO has noted that no consideration has been paid for acquiring the impugned land in perpetuity. The CIT(A) also notes that payment of royalty on the coal mined has already been claimed as revenue expenditure and that claim of depreciation on land is over and above the mining expenditure. 6.24 The ld. A.R. submitted that the Ld. CIT(A) as well as the Ld. AO has completely misunderstood the facts and have also failed to appreciate the law. The same is explained hereunder: 6.25 The assessee, by way of the mining lease, was granted the license to undertake mining activity. However, it does not have the surface rights on the land forming part of the mining area which as per the agreement was to be acquired by the assessee. Every piece of land has two components - right on the....
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.... also placed reliance on the order of Tribunal in the case of ACIT vs Progressive Constructions Ltd [2018] 92 Taxmann.com 104 (ITAT-Hyderabad) (SB). 6.32 The ld. A.R. submitted that the Mining Lease being right to undertake mining activity and the acquisition of surface rights thereon falls with the purview of the term "business or commercial right" 6.33 The lease granted to the assessee is nothing but a license under the Mines and Minerals (Development & Regulation) Act, 1957 to undertake mining of coal. Without the mining lease, no person can undertake any mining activity. Further, the license/lease holder is also required to acquire the surface rights of the area falling within the mining area 6.34 This "right to mine" and the "surface right" falls within the definition of intangible assets as defined in Section 32(1)(ii) and Explanation 3 to Section 32(1(ii). She submitted that the term "Business and Commercial Rights" has been dealt by the Hon'ble Delhi High Court in the case of CIT vs Hindustan Coca Cola Beverages (P.) Ltd. [2011] 198 TAXMAN 104 (Delhi). 7. The ld. DR submitted that as per the agreements, the lease-hold arrangement is essential ly for acquiring mi....
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.... of the earth-material, due to mining-processes involved. Essentially therefore, there is neither capital accretion nor the wear and tear against which depreciation can be allowed in the normal course. 7.4 The judicial position on the issue at hand reveals. that, the issue is predominantly against assessee's case in the present facts and circumstances. * It is clear that depreciat ion is not al lowable for lease hold rights as well as tenancy rights as held in the case of Peerless General Finance & Investment company limited vs CIT [2013] 35 Taxmann.com (Kolkata) and Dabur India Ltd. Vs ACIT (2013) 37 Taxmann.com 289 (Mumbai-Trib) . * In the case of CIT Vs. O.P. Monga (Born) 162 ITR 224, it was held that ownership of an asset is a must; for a rightful claim of depreciation. In view of the condition that the lease-agreements were only for a specified period, which on the date of expiry would be restored to the owner, therefore gives no entitlement of depreciation to the assessee as in the present case. * In the case of ACIT Vs Malayala Manorama Co. Ltd (ITAT Cochin) 4 ITR (Trib) 513 and Dribits International (P) Ltd. Vs DCIT (ITAT-Pune) 62 DTR 171; ....
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.... mining lease does not automatically provide the assessee right of way to the land area. The lease only provides the right to undertake mining activity in a specific area which would have to be acquired from its occupants. In this regard, ld. A.R. made reference to Section 24A of the Mines and Minerals (Development and Regulation) Act, 1957 ("MMDR Act"), relevant extract (He referred Page 173 of the Paper book of assessment year 2012-13). Further the extract of MMDR Act which is very clear that the mining lease holder would be required to pay compensation to the occupier of the lands. Section 24A: Rights and liabilities of a holder of prospecting licence or mining lease. (i) On the issue of a reconnaissance permit, prospecting licence or mining lease under this Act and the rules made thereunder, it shall be lawful for the holder of such permit, licence or lease, his agents or his servants or workmen to enter the lands over which such permit, lease or licence had been granted at all times during its currency and carry out all such reconnaissance, prospecting or mining operations as may be prescribed: Provided that no person shall enter into any building or....
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....rtaking the mining activity. In other words, what the assessee has acquired is the surface right of the land forming part of the mining lease since the title in the land would ultimately vests with the Government. 8.5 Post getting mining lease, it was required to acquire the surface rights of the entire land comprised in the allocated mining area of 1379.50 hectares. These surface rights were purchased over a period of time as under: (h) Prior to FY 2008-09: Rs. 65,77,73,136/- (i) FY 2008-09: Rs. 17,61,20,528/- (j) FY 2009-10: Rs. 58,48,23,149/- (k) FY 2010-11: Rs. 12,51,91,928/- (l) FY 2011-12: Rs. 19,97,27,680/- (m) FY 2012-13: Rs. 1,35,70,076/- (n) FY 2013-14: Rs. 14,05,80,799/- 8.6 Total amount spent by the assessee in purchasing the surface rights in relation to the allocated land in the mining area was Rs. 189.78 Crs. (Till FY 2013-14) 8.7 The surface rights of these lands, though were purchased by the assessee, were ultimately to be transferred to the Government after a period of 30 years, being the period of mining lease agreement. 8.8 The assessee was even contractually & legally bound to acquire th....
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....ion of the state government and in any ordinary and fair course of working all engines machinery, plant buildings, structures, other works and conveniences which at the commencement of the said terms were upon or under the said lands and all such machinery set up by the lessee/lessees below ground which cannot be removed without causing injury to the mines or work under the said lands (except such of the same as may with the sanction of the state government has become disused) and all buildings and structure of bricks of stone erected by lessee/lessees above ground level in good repair order and condition and fit in all respects for further working of the said mines and the said minerals." (c) Para 5 & 6 of Part IX of the Mining Agreement (ld. A referred Page No.29 of paper book for assessment year 2012-13) "5. Lessee/lessees to remove his/their properties on the expiry of lease The lessee/lessees having first paid and discharged the rents, rates any royalties payable by virtue of these presents may at the expiration or sooner determination of the said terms or within 6 calendar months thereafter (unless the lease shall be determine under Cls 1 and 2 of t....
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....erty. For getting the right to access land, assessee was required to purchase the surface rights from the existing owners/occupiers to enable it to undertake the mining activity. Accordingly, assessee not only purchased the surface rights of the said land from the private individuals who were the owners/occupiers, it also purchased such surface rights from the Government. Total amount spent as stated aforesaid is Rs. 189.78 Crs. 8.11 It is noted that during AY 2009-10, the assessee has claimed depreciation on similar facts of Rs. 51,29,299/-. During the appeal proceedings, the matter was remanded to the AO for fresh examination in view of the documents furnished by the assessee. In his remand report (ld. AR referred Page 171-172 of the PB), the AO has specifically observed that the impugned depreciation on of Rs. 51,29,299/- is allowable. 8.12 It is to be noted that the assessee is not the owner of such land comprising the mining area. 8.13 However, the ld. CIT(A) has observed that there is no ownership of the assessee over the land, hence depreciation should not be allowed. The Ld. CIT(A) has based this observation on the presumption that land continues to remain in posse....
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....ent than compensation paid to lease hold land owners, as rightly pointed out by the ld. AR. 8.18 However, the Ld. CIT(A) has equated purchase of mining land to payment of royalty and came to the conclusion that mining area purchased by the assessee is not an expenditure related to mining operation. 8.19 The Ld. CIT(A) has also noted that the leasehold arrangement is essentially for acquiring mining rights for which royalty is prescribed by the State Government. The ld. CIT(A) has observed that no consideration has been paid for acquiring the impugned land in perpetuity and also noted that payment of royalty on the coal mined has already been claimed as revenue expenditure and that claim of depreciation on land is over and above the mining expenditure. 8.20 In the present case, the assessee, by way of the mining lease, was granted the license to undertake mining activity. However, it does not have the surface rights on the land forming part of the mining area which as per the agreement was to be acquired by the assessee. Every piece of land has two components - right on the surface of the land (i.e., for constriction of property, agriculture, etc.) and the right to the mine....
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....dia Minerals Ltd. (supra) on which reliance placed by the assessee, wherein it has been held as follows: "7. We have heard the rival contentions of the parties and perused the material available on record. Considering the facts and circumstances of the case, we uphold the contention of the learned Counsel for the assessee for the simple reason that the denial of claim of depreciation has been made on misinterpretation of law and the applicability thereof. Explanation to Section 32(1)(ii) leans in favour of the assessee to the extent that it is the actual action of put to use which entitles the assessee to claim depreciation. A straight line method of claiming the writing off of lease hold rights for the period of lease cannot be denied to the assessee for the simple reason it being intangible asset has been written off which pertains to land being a intangible asset. It is nobody's case that the land either belonged to the lessee or to the Government. This simply indicates that a depletion of the land against the payment of premium it was leased has to be claimed after capitalization thereof by the assessee which is for the purpose of its main business. All expenses ar....
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....Thus, in our view, the expenditure incurred by the assessee of Rs. 214 crores for creating the project or project facilities have created an intangible asset in the form of right to operate the project facility and collect toll charges. ............ Thus, having held that the expenditure of Rs. 214 crores incurred by the assessee has resulted in creation of an intangible asset of enduring nature for the assessee, it is necessary now to examine whether such intangible asset comes within the scope and ambit of section 32(1)(ii) of the Act. For this purpose, it is necessary to look into the said provision which is reproduced hereunder for the sake of convenience. ..................... 13. A plain reading of the aforesaid provisions would indicate that certain kind of assets being knowhow, patents, copyrights, trademarks, license, franchise, or any other businesses or commercial rights of similar nature are to be treated as intangible asset and would be eligible for depreciation at the specified rate. It is the claim of the assessee that the right acquired under C.A. to operate the project facility and collect toll charges is in the nature of license. However, the lea....
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....d. (supra), while interpreting the aforesaid expression by applying the principles of ejusdem generis observed, the right as finds place in the expression "business or commercial rights of similar nature" need not answer the description of knowhow, patents, trademarks, license or franchises, but must be of similar nature as the specified asset. The Court observed, looking at the meaning of categories of specified intangible assets referred to in section 32(1)(ii) of the Act preceding the term "business or commercial right of similar nature", it could be seen that the said intangible assets are not of the same line and are clearly distinct from one another. The Court observed, the use of words "business or commercial rights of similar nature", after the specified intangible assets clearly demonstrates that the legislature did not intend to provide for depreciation only in respect of specified intangible assets but also to other categories of intangible assets which were neither visible nor possible to exhaustively enumerate. The Hon'ble Court, therefore observed, in the circumstances the nature of business or commercial right cannot be restricted only to knowhow, patents, tradem....
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....usiness and Commercial Rights" has been dealt by the Hon'ble Delhi High Court in the case of CIT vs Hindustan Coca Cola Beverages (P.) Ltd. [2011] 198 TAXMAN 104 (Delhi). The Hon'ble Court observed as under: "24. It is worth noting that the meaning of business or commercial rights of similar nature has to be understood in the backdrop of section 32(1)(ii) of the Act. Commercial rights are such rights which are obtained for effectively carrying on the business and commerce, as is understood, is a wider term which encompasses in its fold many a facet. Studied in this background, any right which is obtained for carrying on the business with effectiveness is likely to fall or come within the sweep of meaning of intangible asset. The dictionary clause clearly stipulates that business or commercial rights should be of similar nature as know-how, patents, copyrights, trademarks, licenses, franchises, etc. and all these assets which are not manufactured or produced overnight but are brought into existence by experience and reputation." 8.29 In the case of South Eastern Coal Fields Ltd. Vs. JCIT Nagpur (85 ITD 608) (Nag.) the coordinate Bench of Nagpur considered similar issue a....
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.... in respect of the leasehold land, the assessee company acquired the right to possession of the said land from the villagers who were occupying the said land. For this purpose, the assessee company spent certain amount for relocating and rehabilitating the said villagers. The contention of the learned counsel for the assessee before us was that this entire expenditure was incurred by the assessee for the use of land for a limited period and as no asset of enduring benefit came into existence, the ent ire expendi ture has to be al lowed as revenue expendi ture. In support of this contention, he has relied on various authorities and has also made an attempt to distinguish the precedents relied upon by the Revenue. In this regard, it is worthwhile to review the various decisions cited by the learned representatives of both the sides in the light of facts and circumstances of the present case so as to ascertain whether the expenditure in question can be treated as capital or revenue. 11.7 Before us, the learned counsel for the assessee has relied on the decision of Hon'ble Supreme Court in the case of R.J. Trivedi (supra) wherein the expenditure was incurred by the assesse....
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....enue expenditure, the Hon'ble Apex Court allowed the said expenditure as revenue expenditure. Similarly, in the case of CIT v. Associated Cement Co. Ltd. [1988] 172 ITR 257' (SC), the assessee by bearing the cost of laying pipelines as per the agreement entered into with the Government/municipality, was not needed to pay municipal taxes for 15 years and considering that the assessee in the absence of the said arrangement would have to pay the taxes every year to the debit of revenue account, the said expenditure was allowed as revenue expenditure- by the Hon'ble Supreme Court. In the present case as already observed, the expenditure was incurred by the assessee for acquiring any enduring benefits in the capital field and therefore the same is distinguishable from the case of Madras Auto Service (P.) Ltd. (supra) as well as that of Associated Cement Co. Ltd. (supra). Further in the case of Empire Jute Co. Ltd.(supra) the Hon'ble Supreme Court observed that if the advantage merely consists of facilitating the assessee's trading operation or enabling the management and conduct of the assessee's business more efficiently or more profitably while leaving fixed ca....
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....that the lease amounts having been paid to the surface owners by the assessee therein for extracting iron coal at the beginning of the mining operation, it was considered as capital in nature whereas in the present case the assessee has made the relevant payments during the currency of the lease period. After carefully perusing the said decision of Hon'ble Mysore High Court, it however, appears that the payment made to the Pattedars who were occupying rights over the land which had been acquired by the assessee from the Government was found to be of the same character as the payments to the Government for acquiring the mining leases and keeping in view this character of the payment, the Hon'ble Mysore High Court held the same to be a capital expenditure. In the case of Chloride India Ltd. (supra) relied upon by the revenue, the assessee had paid the money for buying out the tenancy right and, therefore, it was held by the Hon'ble Calcutta High Court that the amount so paid for acquiring the possession which was a benefit of enduring nature, is a capital expenditure. In the present case also, the assessee has acquired the right to possession from the villagers/occupants ....
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....al expenditure and the learned CIT(Appeals) was fully justified in upholding the action of the Assessing Officer in treating the same as capital expenditure and thereby disallowing the deduction claimed by the assessee in respect of the same." 8.30 In the case of ONGC Videsh Ltd. Vs. Deputy Commissioner of Income-tax (37 SOT 97), wherein the Coordinate Bench of Delhi Tribunal considered similar issue that the Commercial rights of exploration of minerals, oil, by entering into production sharing agreement with Russian Government fall under the expression "any other business or commercial rights on similar nature", same being akin to licenses "as stipulated in section 32(1)(ii) of the Act and therefore, they are in the nature of intangible assets, eligible for depreciation at the prescribed rate, wherein it was held as under: "The law has specified items of intangible assets eligible for depreciation in the following categories : (i) know-how (ii) patents (iii) copyrights (iv) trademarks (v) licences (vi) franchises (vii) any other business or commercial rights of similar nature. So far as claim of depreciation in case of intangible assets falling in the category of "any ....
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....erefore in the nature of asset in the form of license. This right had been granted to the assessee by way of license and the assessee became owner of such right i.e., license to have an access and to carry on of business of exploration and development of mineral oil. Accordingly, such an asset falls within the category of asset falling under s. 32(1)(ii). The assessee had acquired business and commercial right and license by making payment of Rs. 1,559.10 crores, which is in the nature of intangible assets entitled to claim of depreciation under s. 32(1) (ii). In view of the above discussion assessee's claim for allowing deduction of entire expenditure of Rs. 1,559.10 crores is declined. The stand of CIT(A) in treating the alleged expenditure as deferred revenue expenditure and directing the AO to allow 1/19th of the expenditure during the year is also declined, since there is no concept of deferred revenue expenditure under IT Act. Commercial rights of exploration of mineral oils acquired by assessee by entering into production sharing agreement with the Russian Government fall under the expression 'any other business or commercial rights of similar nature, same b....
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....of the opinion that this issue required to be considered by the AO. Accordingly, the AO is directed to grant the loss claimed by the assessee in accordance with law while passing the consequential order in assessment year 2010-11 under consideration. It is needless to say that AO has to give an opportunity of hearing to the assessee before deciding this issue. Ordered accordingly. 12. Next common ground in ITA Nos.2136 to 2138/Bang/2018 for the AYs 2011-12 to 2014-15 is with regard to sustaining of disallowance claimed u/s 35E of the Act. 12.1 The facts of the case are that the Assessing Officer has drawn the conclusion in the assessment order as follows:- "...........On perusal of list of expenditure mentioned above, the value of mines & purchase of following assets which are eligible for depreciation u/s 32 are not eligible for claim of deduction u/s 35E of the Act. Hence, the deduction u/s 35E is disallowed on following expenditure: Sl.No. Particulars Amount (Rs.) 1. Value of mines 13000000 2. Purchase of hose rubber pipe 408673 3. Construction of Hume Pipe Culvert 173939 4. Construction of ground water tank 295584 5....
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....be allowed under sub-section (1) for any relevant previous year shall be- (a) an amount equal to one-tenth of the expenditure specified in sub-section (2) (such one-tenth being hereafter in this sub-section referred to as the instalment); or (b) such amount as is sufficient to reduce to nil the income (as computed before making the deduction under this section) of that previous year arising from the commercial exploitation whether or not such commercial exploitation is as a result of the operations or development referred to in sub-section (2) of any mine or other natural deposit of the mineral or any one or more of the minerals in a group of associated minerals as aforesaid in respect of which the expenditure was incurred, whichever amount is less: Provided that the amount of the instalment relating to any relevant previous year, to the extent to which it remains unallowed, shall be carried forward and added to the instalment relating to the previous year next following and deemed to be part of that instalment, and so on, for succeeding previous years, so, however, that no part of any instalment shall be carried forward beyond the tenth previous....
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.... not brought anything on record to substantiate that, no depreciation was otherwise claimed in this respect. In these facts & circumstances the AO's action is to be upheld. The assessee's grounds of appeal are therefore disal lowed. Findings:- 14. We have heard the rival submissions and perused the materials available on record. If the assessee claims any depreciation on this expenditure incurred for excavation of coal prior to commencement of production by capitalizing the same, the assessee is not entitled for deduction u/s 35E of the Act. On the other hand, if the assessee has not claimed any depreciation on this expenditure, the claim of assessee u/s 35E of the Act is to be granted. Accordingly, the issue is remitted to AO for fresh consideration. AO has to decide the issue after giving opportunity of hearing to the assessee. Ordered accordingly. 15. Next common ground in ITA Nos.2136 & 2137/18 for the AYs 2011-12 & 2012-13 is with regard to disallowance being depreciation on intangible assets claimed u/s 32(1)(ii) of the Act. 15.1 Facts of the case are that the assessing Off icer has drawn the conclusion in the assessment order, which is reproduced as under: ....
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....dmit the additional ground of appeal, which has not been inadvertently taken at the time of filing the appeal." 15.3 The amount of Rs.46,94,687/- pertains to depreciation claim on the acquiring of additional/new land/mining rights during the period under consideration, the AO has disallowed the assessee's claim for the same reasons as elucidated in respect of the claim at his para-4, with regard to the same issue of depreciation on lease-hold rights, which has been disallowed. The ld. CIT(A) confirmed the disallowance of depreciation on the same reasons adduced in ground No.1 of this order and disallowed the depreciation claim of Rs. 46,94,687/- held to be inadmissible. The assessee's grounds of appeal are therefore disallowed by the Ld. CIT(A). 15.4 Similar is the position in assessment year 2012-13 & 2013-14 except change in figures. Against this assessee is in appeal before us. 16. We have heard the rival submissions and perused the materials available on record. In our opinion, as discussed in ground No.1 with regard to granting of depreciation on leasehold land, this ground is also allowed on similar lines. This ground of appeals of the assessee is allowed. Ho....
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....yment of service tax and TDS whereas in the present case, the issue in dispute is regarding interest payment on belated payment of TDS. Hence it is seen that the facts and dispute are similar and therefore, by respectfully following this Tribunal order, we decide the issue in favour of the assessee." 17.4 She took support from order of Tribunal in the case of DCIT vs M/S Narayani Ispat Pvt Ltd ITA No.2127/Kol/2014 (Kolkata- Trib) wherein the Tribunal held as under: "The principle laid down by the Hon'ble Supreme Court in the case of Bharat Commerce Industries Ltd. (supra) is not applicable in the instant facts of the case. Thus, we hold that the Assessing Officer in the instant case has wrongly applied the principle laid down by the Hon'ble Supreme Court in the case of Bharat Commerce Industries Ltd.(supra). We also find that the Hon'ble Supreme Court in the case of Lachmandas Mathura (Supra) has allowed the deduction on account of interest on late deposit of sales tax u/s 37(1) of the Act. In view of the above, we conclude that the interest expenses claimed by the assessee on account of delayed deposit of service tax as well as TDS liability are allowable e....
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....in the present case was compensatory and not penal in nature, as per the relevant service tax / excise provisions. The assessee claims that the law has provided for distinct provisions for compensating the loss on default in payment of tax and imposition of penalty for breach of the statutory provisions. While section 75 is a section for compensating the-Government of delayed payment of the service tax / excise, there are separate provisions for penalizing the assessee for non-payment or delayed payment of service tax / excise. The assessee submits that as held by the Courts, the recovery of interest u/s 75 of the service tax / excise law is automatic and does not require a separate proceeding by way of issuance of notice. The assessee's case is that, where there are separate sections governing the imposition of penalty under the service tax / excise law, it cannot be the intent of the legislature to levy a penalty for under section 75 as well. 18.1 He placed reliance on following judgements: (a) Division bench of the Andhra Pradesh High Court in CIT v. Hyderabad Allwyn Metal Works Ltd. (1988) 172 ITR 113 (b) Prakash Cotton Mills Pvt. Ltd. v. CIT (1993) 201....
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....t law of the land, assessee was legally as well as contractually bound to purchase land, forming part of the allocated mining area, from its present occupiers/owners upon payment of necessary consideration (c) Assessee was required to extract coal and supply the same to KPCL (d) At the end of the mining period, upon expiration/termination of the mining lease, the assessee was required to hand over the entire land to the Government. Such vesting of title to the government was pursuant to process of law and is automatic. (e) The only amount received by the assessee was the coal excavation charge received per ton of coal excavated and supplied to KPCL (f) The amount spent by the assessee on acquiring land is an expense incurred by the assessee in the process of undertaking the mining activities. (g) The land so acquired by the assessee would ultimately be transferred to the government without assessee receiving any compensation. 21.1 In this context, the assessee submits that the land so purchased by it from its occupiers/owners was used for the purpose of mining activity. Post completion of the activity, the title of the land vested wit....
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....ent made to the Railway authorities the assessee did not acquire any fresh right to any mineral nor he acquired any capital asset instead the payment was made by it for shifting the Railway Station and track which operated as hindrance and obstruction to the business or mining in a profitable manner. The assessee had already paid tender money, licence fee and other charges for securing the right of mining in respect of the entire area of 4.27 square miles including the right to the minerals under the Railway area. The High Court has held that on payment of Rs. 3 lakhs, the assessee acquired capital asset of an enduring nature. The High Court failed to appreciate that clause 3 was only restrictive in nature it did not destroy the assessee's right to the minerals found under the Railway area. The restriction operated as an obstacle to the assessee's right to carry on business in a profitable manner. The assessee paid a sum of Rs. 3 lakhs towards the cost of removal of the obstructions which enabled the assessee to carry on its business of mining in an area which had already been leased out to it for that purpose. There was, therefore, no acquisition of any capital asset. Ther....
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.... land should be allowed as deduction u/s 37(1). 21.4 She also placed reliance on the order of Tribunal in the case of M/s Associated Soapstone distributing Co. Pvt. Ltd. Vs. ACIT, Circle-5 (Jaipur), wherein held as under: "25 In the instant case, during the relevant previous year, the assessee company paid an amount of 35,00,000 to Mr. Panchiya Meena. It is the contention of the AR that the amount has been paid as compensation to the land owner. The area for which compensation was paid forms part of the area which has already been leased out by the government of Rajasthan to the assessee company and for which the assessee company had the right to carry out mining operations. It was contended that as the existence of the landowner on such land had the potential of obstructing the mining operations, the assessee company paid the compensation with a view to carry on its business activities smoothly and without any operation hindrances. It was further submitted that on payment of compensation, the landowner surrendered the land. To the government of Rajasthan and the land becomes exclusive property of government of Rajasthan and mutated in the name of government of....