TaxTMI 
TaxTMI 
1986 (10) TMI 76
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....nsactions and thereby incurred expenditure of Rs. 2,19,998, during the accounting period from 1-4-1972 to 31-3-1973 relevant to the assessment year 1973-74. After taking out and selling sand from those lands he valued the cost of the lands together with his right to take out sand at Rs. 2,06,000 at the end of the accounting year and thus claimed the difference of Rs. 13,998 as revenue expenditure. In the opinion of the ITO it was capital expenditure. He, therefore, disallowed the same and added (it) back to the profit of the assessee. The assessee took up the appeal before the AAC who held that the said amount was allowable as revenue expenditure. Aggrieved by the said order of the AAC the department has come up on appeal, supporting the or....
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....ect of raising sub-soil sand, for storing the same, for movement of vehicles and of construction of houses for the employees. The total amount spent on those two leases was Rs. 64,726. Yet there is a third type of transaction which was entered into by the indentures dated 5-4-1972 and 5-8-1972. By those two documents right, title and interest for raising sub-soil sand on digging surface of the lands was purchased for a period of 9 years and 11 years and 11 months respectively for consideration of Rs. 24,878 and Rs. 30,000 respectively, total Rs. 59,978. 4. Contention of learned departmental representative is that the entire expenditure incurred by the assessee was in the capital field. According to him, by virtue of three documents effec....
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....ee incurred expenditure of Rs. 85,393. This expenditure is plainly capital expenditure. In this connection reference may be made to judgment of the Hon'ble Supreme Court in the case of Madnani Development Corpn. (P.) Ltd. v. CIT [1986] 161 ITR 165. 7. The other set of transaction is acquisition of two leases for a period of eight years each which is evidenced by the lease deeds dated 13-3-1973 and 14-3-1973. These leases, as the lease deeds mention, were in respect of raising sub-soil sand, for storing the same, for movement of vehicles, for construction of houses for the employees of the sand pits and for purchase and sale of sand. The cases of M. A. Jabbar and Gotan Lime Syndicate are not applicable to such a situation. The Hon'ble Sup....
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.... determining the nature of the expenditure have been sought to be applied to different situations arising on the facts of each case, but the difficulty in matching them with the seeming irreconcilability are perhaps explicable only on the ground that the determination in any particular case is dependent on the character of the lease or agreement, the nature of the asset, the purpose for which the expenditure was incurred and such other factors as in the facts and circumstances of that case would indicate. If we confine our attention to the mining leases, what appears to us to be an empirical test is that when minerals have to be won, extracted and brought to surface by mining operations, the expenditure incurred for acquiring such a right w....