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2022 (6) TMI 1202 - HC - Income TaxDepreciation on ‘Geographical Report’ as intangible asset - whether the Geographical Report is only a document and not an asset and no deduction is permissible under Section 35E (2) ? - ITAT deleted the addition - HELD THAT:- Assessing Officer raised various queries on the Geographical Report for which the assessee offered certain explanation. The Tribunal elaborately considered the Geographical Report. To examine as to whether deduction can be claimed by the assessee on the said amount, the Tribunal noted that the Geographical Report is a fundamental document which was essential to assess the feasibility of the mine, to evaluate the economics of the mine and contains a mine-plan according to which the mining activity is to be carried on. Therefore, the Tribunal after appreciating the scope of the report held that the activity involves the nature of exploring, locating or providing deposits and it is only after the study of the Geographical Report, the location of deposit can be identified. Further, the Tribunal noted that the report gives the idea of the nature of deposit and whether mining activity can be carried on in the location. Thus, ultimately the Tribunal agreed with the assessee’s stand. However with regard to the claim of the additional depreciation at 15%, the Tribunal did not agree with the assessee. However, the assessee is not an appeal as against such finding Additions on expenses on Road belonging to Zilla Parishad - HELD THAT:- It cannot be disputed by the revenue that by upgrading/ constructing the link-road from the mine to the railway station, the assessee stands benefitted as the transportation of coal which has been mined, can be transported more efficiently and profitably. Further, the road is a public road and the assessee is not the owner of the road and the road was upgraded/ constructed not exclusively by the assessee but the assessee had made contribution for doing the upgradation/ construction work and the remaining contribution was made by the Zilla Parishad. Therefore, the tribunal agreed with the assessee and dismissed the cross-objection filed by the revenue The roads which were constructed around the factory with the help of the amount of Rs. 50,000 contributed by the assessee belonged to the Government of Uttar Pradesh and not to the assessee. Moreover, it was only a part of the cost of construction of these roads that was contributed by the assessee, since under the sugarcane development scheme, one-third of the cost of construction was to be borne by the Central Government, one-third by the State Government and only the remaining one-third was to be divided between the sugarcane factories and sugarcane growers. These roads were undoubtedly advantageous to the business of the assessee as they facilitated the transport of sugarcane to the factory and the outflow of manufactured sugar from the factory to the market centres. There can be no doubt that the construction of these roads facilitated the business operations of the assessee and enabled the management and conduct of the assessee’s business to be carried on more efficiently and profitably. It is no doubt true that the advantage secured for the business of the assessee was of a long duration inasmuch as it would last so long as the roads continued to be in motorable condition, but it was not an advantage in the capital filed, because no tangible or intangible asset was acquired by the assessee nor was there any addition to or expansion of the profit-making apparatus of the assessee. The amount of Rs. 50,000 was contributed by the assessee for the purpose of facilitating the conduct of the business of the assessee and making it more efficient and profitable and it was clearly an expenditure on revenue account. Revenue appeal dismissed.
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