TMI Blog2010 (9) TMI 849X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the dozers were required for the business of extraction and sale of iron ore which was the business of the assessee. How many dozers should be engaged was a question which could be best to be considered by the assessee. It is not the case of the Revenue that the expenditure was not bonafide and/or it was incurred by way of diversion of profits to a related person or a sister concern of the assessee. As such, the Revenue could not have gone into the question of expediency of the expenditure incurred and/or expediency of hiring of the 4 dozers. That was a matter of commercial expediency and the assessee was the best judge of it. In favour of assessee. - Tax Appeal No. 18 of 2005 - - - Dated:- 29-9-2010 - D.G. Karnik, F.M. Reis, JJ. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, the expenditure on the lease rent for 3 out of 4 dozers which were not used at all, was not a justifiable expenditure. The Commissioner of Income Tax (Appeals) (for short "the CIT"), while partly allowing the appeal, held that the business decision taken by the assessee of hiring dozers, though erroneous, the same could not be questioned by the Assessing Officer and the expenditure which was made by the assessee even on a wrong business decision had to be allowed by the Assessing Officer. The other grounds of challenge raised by the assessee were rejected. Aggrieved by the decision of the CIT, the assessee as well as the Revenue filed appeals before the ITAT. The ITAT allowed the appeal in respect of some other parts of the order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer was on the ground of prudence. According to him, it was imprudent for the assessee to have taken on rent 4 dozers when it did not use 3 dozers - the majority - for the purpose of actual iron ore extraction. He concluded that this was an imprudent expenditure and accordingly rejected the claim on that ground. 5. In our view, the decision of the Assessing Officer was totally erroneous and has rightly been reversed by the CIT and the reversal has rightly been confirmed by the ITAT. Supporting the decision of the ITAT, learned Counsel for the assessee referred us to a decision of the Supreme Court in the case of The Commissioner of Income-tax, Bombay vs. M/s Walchand and Co. (Pvt.) Ltd. Bombay, AIR 1967 SC 1435. While interpreting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra Pradesh vs. Dhanrajgirji Raja Narasingirji, (1974) 3 SCC 520, the issue which was referred to at the instance of the Commissioner of Income-Tax to the High Court was "whether on the facts and circumstances of the case any expenditure incurred by the assessee in connection with the criminal proceedings initiated and conducted by the Government against Shri Ramgopal Ganpatrai was an allowable deduction under Section 10(2)(xv) of the Indian Income-tax Act, 1922." In that case, the assessee invited one Shri Ramgopal Ganpatrai to finance the company. Subsequently, Ramgopal Ganpatrai moved a resolution for removal of the assessee as the chairman of the Board of Directors of the company. The resolution was accepted and the assessee was removed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f diversion of profits to a related person or a sister concern of the assessee. As such, the Revenue could not have gone into the question of expediency of the expenditure incurred and/or expediency of hiring of the 4 dozers. That was a matter of commercial expediency and the assessee was the best judge of it. 8. A businessman, sees an opportunity and smells of money which often is light years away. He sees an opportunity which is not seen by others. He incurs an expenditure in pursuit of a business opportunity. Sometimes the judgment as to the existence of a business opportunity turns sour. But the expenditure incurred for pursuit of the business and/or exploitation of a business opportunity cannot be denied by the tax authorities on t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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