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2014 (8) TMI 105 - AT - Income TaxClaim of exemption u/s 10B - Under-pricing of sales to sister concern Held that:- In the case of sister concern M/s. Ramacanta Velingkar Minerals and on facts, it has been held that no under invoicing or underpricing has been done by the assessee of its sales made to sister concern AO applied the rates of processed fine ore with ROM and wrongly concluded the rates were not properly charged - The price of Rom varies between ₹ 360 to ₹ 575 for per tonne whereas the assessee has charged ₹ 450 tonne which shows that assessee has sold the ore at the market rate - CIT(A) is justified in his action Relying upon CIT(A) Vs. Calcutta Discount [1973 (4) TMI 6 - SUPREME Court] - when one trader transfers his goods to another trader at a price less than the market price, the taxing authority cannot take into consideration the market price of these goods, ignoring the real price fetch. Also in Marghbhai K. Patel & Co. Vs. CIT [1976 (2) TMI 15 - GUJARAT High Court] it has been held that the taxing authorities has no right to substitute the market price or average price in place of agreed price - unless it has been shown that the transaction in question was a sham one or unless the value shown was not the value in the books of account or unless it was not the value in the books of account or unless it was not bona fide transaction, it is not open to the taxing authorities to disregard the figures of the transactions shown in the books of account and disallow a part of price paid to partners in respect of purchases made by them thus, the order of the CIT(A) is upheld Decided against Revenue. Afforestation Expenses Capital in nature or not Held that:- The assessee has paid the 'compensation' for use of forest area for mining - Forest area/land used by assessee is a capital asset and anything paid for acquiring a capital asset is capital expenditure and not a revenue expenditure - the assessee has not acquired any capital asset but assessee has paid the amount of compensation for carrying out mining activities and the assessee has paid compensation as charges for degrading the forest land and the expenditure is incurred wholly and exclusively for the purpose of mining business and same has been treated as revenue expenditure by CIT(A) relying upon Deputy Commissioner of Income Tax vs. Timblo Pvt. Ltd. in Tax [2014 (7) TMI 1086 - BOMBAY HIGH COURT] CIT is justified in holding the payment on net present value as afforestation charges in respect of the mining lessees already obtained has been decided and is treated as revenue expenditure Decided against Revenue. Contribution towards construction of bridge Held that:- The assessee has paid by way of contribution for construction and development of roads between sugarcane producing centre and sugar factory of the assessee - the close proximity existed between construction of the road and running of factory - assessee has made contribution to the Govt. for construction of the bridge - The bridge was owned by the State Government and it is used by general public as well as mining companies and truck owners - The construction of the bridge is not a statutory obligation but it is a duty of the State Government the AO himself has treated this expenditure as capital expenditure the expenditure is in revenue nature and is allowed Decided in favour of Assessee.
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