Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2014 (1) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (1) TMI 1581 - AT - Income TaxDisallowance of expenses of Net Present Value as compensation paid - compensation paid by the assessee to Forest Department for utilization of forest land for non-forest purposes. - Held that:- Decision in ACIT v. Rungta Sons (P) Ltd. [2014 (1) TMI 1515 - ITAT KOLKATA] followed - The said payment is not a voluntary one and it is a payment on the basis of the direction given by the Government of India - When a payment is made as per specific direction of Government, it cannot but be in the business interest of the assessee-company to abide by such directions of the Government of India - This payment is a statutory requirement and the expenditure has been considered wholly and exclusively for the purpose of business and has got a direct connection with the business activity of the Company - The expenditure resulting in a capital asset in the hands of a third party, is to be taken as revenue expenditure because no asset arises to the trader by reason of such expenditure - Where law imposes on the assessee, an obligation to incur expenses for being permitted to pursue its trading activity, the expenditure would be an outgoing from the profits of the trade. The said expenditure paid by the assessee as NPV to enable the assessee to carry on its mining business is revenue in nature, which is allowable as business expenditure under section 37(1) of the Act - Decided against Revenue.
|