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2016 (9) TMI 1394

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..... e books of account for the year 1992-93, therefore, resolution is passed subsequently but since it was mercantile system for the year 1992-93, it will come into force. The contention which has been raised by Mr. Singhi is required to be accepted, it can only be one time revenue expenditure and subsequent claim of the assessee will not be acceptable and if his claim is made and accepted, it will be for the department to recover the tax from the assessee. The issue is answered in favour of the assessee and against the Department for the revenue expenses of year 1992-93 only one time. - D.B. Income Tax Reference No.1/2000 - - - Dated:- 15-9-2016 - Mr. K.S. Jhaveri And Mr. Banwari Lal Sharma, JJ. Mr. Anuroop Singhi, for the petitioner. Mr. Sanjay Jhanwar, for the respondent. Mr. K.S. Jhaveri 1. By way of this reference, the following questions have been referred by the Income Tax Appellate Tribunal, Jaipur under Section 256(1) of the Income Tax Act, 1961 to this Court: 1. Whether on the facts and in the circumstances of the case, the Appellate Tribunal was justified in allowing the sum of ₹ 6 crores as revenue expenditure notwithstanding the fact t .....

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..... rtment. 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 ₹ 2.96 crore as prospecting charges vide demand notice dated 19-3-91. This amount is not allowed as deduction in 91-92 because the liability was not provided in the accounts. By a specific resolution the Board of Directors in a meeting had on 29-8-92 passed resolution. Resolved that the approval of the Board be and is hereby approached for payment of ₹ 2.96 crores to the Directions of Mines Geology towards pro-rata prospecting expenses of Jhamarkotra Roak Phosphate deposits. Since the liability was accepted, sum was provided in the accounts and claimed 14. The ld. A.R. furt .....

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..... vanced by the appellant while challenging such an order. However, in the instant case, we find that there is a detailed discussion in the order of the Commissioner on the facts of the case. Those facts are not adverted to or dealt with. The decision of the Commissioner is overruled with single observation that the case is covered by the judgment in Escorts JCB Ltd., without discussing as to how it was so covered. This is notwithstanding the fact that the decision as to which is the 'place of removal' depends upon the facts of each case. 6. The other judgment which is relied upon in the case of Ravi Yashwant Bhoir vs. District Collector Raigad ors. reported in (2012) 4 SCC 407 wherein in para no.46, it has been held as under:- 46. The emphasis on recording reason is that if the 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 authori .....

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..... ital 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 an asset of enduring nature. (iii) Even the assessee is not entitled for an amortization u/s 35E of the I.T. Act because the expenses on prospecting have not been incurred by the assessee the the expenses do not relate to the prospecting for any mineral or group of an Associated Minerals specified in Part-A or Part-B respectively of the Seventh Schedule, that Sub-section 6 of sec. 35E speaks that such amortization is allowable in the case of amalgamation only to the amalgamated companies. In this case, the expenses were incurred by the Mining Deptt. Of Govt. of Rajasthan and not by the company. (iv) The expenses has to pay this amount as premium and pre-condition to the lease agreement and he himself has not incurred any expenditure on the prospecting of the rock phosphate. (v) The expenses were incurred by the Mining Deptt. Before March, 1988 during which the assessee company was only a contractor to the Govt. of Rajasthan and the expenses incurred by the S .....

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