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2021 (11) TMI 424 - AT - Income TaxDisallowance being expenses incurred by the assessee towards reclamation and rehabilitation of mine area - allowable revenue expenses u/s 37(1) or not? - HELD THAT:- All these documents are public documents and are in the public domain. These documents are necessary for us to adjudicate the issue in this appeal and therefore we admit the aforesaid documents are additional evidence. From a perusal of the sequence of events relating to mining operations and orders of the Hon’ble Apex Court especially in the order dated 28.09.2012, it is clear that the Hon’ble Supreme Court directed compensatory payment to be made by the lease holders of various mines for Restoration and Rehabilitation of damage to ecology owing to mining operations. This payment was made for the purpose of restoring the ecological balance consequent to damaged ecology owing to mining operations. It is pursuant to the aforesaid directions that the assessee had to make the aforesaid payment and this fact is not in dispute. In fact, in the decision rendered by this Tribunal in the case of Ramgadh Minerals and Mining Ltd [2020 (11) TMI 174 - ITAT BANGALORE] Payment in question cannot be regarded as the payment which is hit by explanation to section 37(1) of the Act. Revenue authorities proceeded on the basis that since the assessee did not have licence for mining and could undertake only prospecting operations, the assessee could not have incurred these expenses which are in relation to mining operations and by doing so, the assessee has violated the conditions imposed on them by the Government of Karnataka in their order dated 07.11.2012 permitting the assessee to undertake prospecting operations. The aforesaid conditions imposed in the order dated 07.11.2012 cannot be the basis to construe these expenses in question as the payment which is hit by the provisions of explanation to section 37(1) - these payments cannot be said to be the expenditure incurred by an assessee for any purpose which is an offence or which is prohibited by law. As the sequence of event would go to show that the payment in question is for the purpose of reclamation and rehabilitation of mine area and paid consequent to the directions of Hon’ble Supreme Court. The expenditure in question was the revenue expenditure and had to be allowed as a deduction under section 37(1) of the Act as expenditure incurred wholly and exclusively in connection with the business of the assessee. In this regard, that the AO has not doubted the claim of the assessee that the payment in question has been made towards reclamation and rehabilitation of mines. In these circumstances, we direct that the deduction claimed should be allowed. - Decided in favour of assessee.
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