TMI Blog2010 (1) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 years – held that - the present case, the Tribunal has, on facts, come to the conclusion that the assessee company‘s objects did not include mining of ores or minerals or commercial production, in the sense understood within the meaning of Section 35 E of the said Act. Consequently, the Tribunal agreed with the assessee‘s contention that there would never be commercial production of any mineral or ore as a part of the activities of the assessee in view of the very objects of the assessee company and the FIPB permission given to the assessee company. Consequently, the provisions of Section 35 E would not be applicable to the facts and circumstances of the present case as there was no possibility of any commercial production – decided in f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing capitalized as work in progress but in this year the same was charged to the Profit Loss Account. It was made clear by the assessee before the Assessing Officer itself that the assessee was engaged in the business of exploring and prospecting of ores and minerals and that it was not engaged in the commercial production of any mineral. The assessee had explained before the Assessing Officer that it had decided to change the accounting policy to bring it in line with the worldwide policy of the parent group, namely, Rio Tinto group. As per the assessee, the changed policy furnished the true and fair representation of the profits of the assessee company and that the change was permitted as per the Accounting Standards I and II. 4. Howe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the appeal preferred by the assessee, while deleting the addition made by the Assessing Officer, came to the conclusion that the activity of exploration constituted a separate activity by itself as different and distinct from commercial production. The Commissioner of Income Tax (Appeals) also noted that the assessee had received permission from the Foreign Investment Promotion Board (FIPB) only with respect to exploration activity in various States in India. There was no permission with regard to any mining activity. It was also noted that in case the assessee wanted to commence any mining activity, a separate permission would have to be obtained from the FIPB. 6. As we have mentioned above, the only ground taken by the revenue was t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cting exploring, finding and research and other related activities. 4. To supply trained manpower, trained personnel to make evaluations, feasibility studies, techno-economic feasibility studies, project reports, forecasts and surveys.Thereafter, the Tribunal also noticed the permission letter dated 29.10.1996 issued by the Department of Industrial Policy and Promotion, whereby the approval was granted to the assessee company for carrying on its prospecting activities. Paragraph 5 of the said letter reads as under:- 5. The approval is subject to the condition that the joint venture company shall apply afresh for obtaining a prospective license in the light of the new guidelines and that the approval is given only for prospecting and for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ub-section at any time during the year of commercial production and any one or more of the four years immediately preceding that year, wholly and exclusively on any operations relating to prospecting for any mineral or group of associated minerals specified in Part A or Part B, respectively, of the Seventh Schedule or on the development of a mine or other natural deposit of any such mineral or group of associated minerals: Provided that there shall be excluded from such expenditure any portion thereof which is met directly or indirectly by any other person or authority and any sale, salvage, compensation or insurance moneys realised by the assessee in respect of any property or rights brought into existence as a result of the expenditure. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id not include mining of ores or minerals or commercial production, in the sense understood within the meaning of Section 35 E of the said Act. Consequently, the Tribunal agreed with the assessee's contention that there would never be commercial production of any mineral or ore as a part of the activities of the assessee in view of the very objects of the assessee company and the FIPB permission given to the assessee company. Consequently, the provisions of Section 35 E would not be applicable to the facts and circumstances of the present case as there was no possibility of any commercial production. We agree with this reasoning. 10. Consequently, we find that no substantial question of law arises for our consideration. The appeal is dism ..... X X X X Extracts X X X X X X X X Extracts X X X X
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