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2018 (6) TMI 1789 - HC - Income TaxNature of expenditure - payment of the net present value by an assessee engaged in mining for use of forest land for mining purpose - revenue or capital expenditure - AO reasoned that since it was a one-time payment for the assessee to continue its business operations or undertake mining operations in the relevant area for the first time, it had to be regarded as a capital expenditure and could not be deducted from the income as a revenue expenditure - HELD THAT:- Both the Commissioner (Appeals) and the Appellate Tribunal have referred to a judgment of Bikaner Gypsums Ltd. [1990 (10) TMI 2 - SUPREME COURT] as observed that since the assessee was entitled to carry on mining operations and such payment had been made for the removal of the difficulty in the assessee carrying on its business in accordance with its licence, the expenditure had to be regarded as a revenue expenditure and could not be treated as a capital expense. This is not a case where the assessee, upon payment of the NPV, obtained a fresh right to undertake any business. That right of the assessee was covered by the licence previously granted in its favour by the State of Odisha. The NPV payment is a kind of a compensation for using forest land for non-forest purpose pursuant to an order of the Supreme Court. The payment of the NPV in this case, like in the case of Bikaner Gypsums Ltd. , has to be regarded as a revenue expenditure in accordance with the ratio in the Bikaner Gypsums Ltd. case, since it was a one-time payment made to remove an obstacle from the path of the assessee carrying on its business operations. For the reasons aforesaid, the concurrent findings of the Commissioner (Appeals) and the Appellate Tribunal based on a long-standing judgment of the Supreme Court does not call for any interference. - Decided against revenue.
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