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2020 (1) TMI 178 - BOMBAY HIGH COURTInterest on borrowing for setting up of the Argon Gas Plan - revenue or capital expenditure - ITAT holding that interest paid on borrowings, capitalized in the books of account for setting up of Argon Gas Plant as a revenue expenditure - HELD THAT:- In R.B. Seth Moolchand Suganchand [1972 (9) TMI 8 - SUPREME COURT] the assessee was granted a lease of certain areas for mining of Mica for twenty years. The mines were earlier worked out by other companies for a period of fifteen years. The question was whether the expenditure for acquiring the leasehold rights were on revenue or a capital account. The Hon'ble Supreme Court held that the lease was a long term lease and it conferred right to excavate mica, that is to remove it, grade it and pay royalty to the government in accordance with the quality of mica extracted and thus, was a revenue expenditure. On behalf of the assessee it was contended that the expenditure was for getting a specific quantity of mica in the mines which was assessee's stock in trade. On behalf of the Revenue, it was contended that the amount of lease was a capital expenditure in as much as the pillars of mica (before it is mined) cannot be said to be stock in trade. Accepting the claim made on behalf of the Revenue, the expenditure was held to be capital expenditure. ITAT could not have held that because the mine continued to belong to the Government (in fact the mineral rights would always belong to the Government) and the observation that the facts speak for themselves are insufficient to interfere with the concurrent finding of fact properly recorded by the AO and the CIT (Appeals). We find that the respondent had obtained a long term captive source of the raw material by purchase of right from Texmaco. However, at the same time the raw material was required to be won, gotten and brought to the surface and as such, cannot be said to be a stock in trade as held by the Hon'ble Supreme Court in the case of R.B. Seth Moolchand Suganchand. Consequently, the substantial question of law framed at serial no. II is answered in the negative and in favour of the appellant.
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