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TMI Blog2014 (1) TMI 1581X X X X Extracts X X X X X X X X Extracts X X X X ..... following ground No.1 in ITA No.122/Kol/2009 for AY 2005-06 and in ITA No.1521/Kol/2009 for AY 2006-07 following grounds No. 1 to 5:- "ITA No.122/Kol/09 1) That under the facts and circumstances of the case, ld. CIT(A) had erred in law as well on facts by not considering that Net Present Value is a compensation, paid by the assessee to the Forest Deptt., for utilization of forest land for non-forest purpose. Hon'ble Supreme Court has categorized such payments as fees to be paid by the mine owners to the Forest Deptt., quantified on the basis of the period for which the mine owners taking out different ores, from the Mother Earth. Therefore the NV is directly linked to the earlier previous years which is not allowable as the business expenditure of th9e current financial year u/s.37(1)." ITA No.1521/Kol/2009 "1. That on the facts and circumstances of the case, ld. CIT(A) has erred in law as well as on facts in concluding(vide his order, page-14) that the assessee did not get any fresh right to mining by making payment of Rs.1,45,00,000/-. 2. That on the facts and circumstances of the case, ld. CIT(A) has erred in law as well as on facts in not considering the order of the Mini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extension of right. On the other hand, had this payment was not made the appellant would have been liable for contempt. So this payment may be construed as some restriction, obstruction or disability. Simply because this is a onetime payment, the same cannot be treated as capital expenditure. I am therefore, inclined to accept the contention of the appellant that the ratio of the decision of the Bikaner Gypsums Ltd.-vs. CIT, (1991) 187 ITR 39, 49 (SC) will apply in this case wherein the SC has held "where the assessee has an existing right to carry on a business, any expenditure made by it during the course of business for the purpose of removal of any restriction or obstruction or disability would be on revenue account, provided the expenditure does not acquire any capital asset. Payments made for removal of restriction, obstruction or disability my result in acquiring benefits to the business but that by itself would not acquire any capital asset." 5.(vi) The ratio of the decision of the Enterprising Enterprises as quoted by the AO will not apply in this case as in this case the appellant, which had taken a quarry on lease for 10 years, claimed deduction of a proportionate part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NPV directed the Ministry of Environment and Forests to formulate a scheme providing that whenever any permission is granted for change of use of forest land for non-forest purposes, and one of the conditions of the permission should be that there should be compensatory afforestation, then the responsibility of the same should be that of user agency. Hon'ble Apex Court observed that the money so received towards NPV should be used for natural assisted re-generation, forest management, protection, infrastructure development, wildlife protection and management, supply of wood and other forest produce saving devices and other allied activities. In the context, Hon'ble Apex Court observed that NPV will not fall under Article 110 or 199 or 195 of the Constitution. It was observed that such payments were levied for rendering service which the state considers beneficial in public interest. It is a fee which falls in entries 47 of List-III of 7th Schedule of the Constitution. The fund set up is a part of economic and social planning which comes within Entry 23 of List III and the charge which is levied for that purpose would come under Entry 47 of List III. In that context, it was held by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions or enabling the management and conduct of the assessee's business to be carried on more efficiently or more profitably while leaving the fixed capital untouched, expenditure would be on revenue account, even though the advantage may be endured for an indefinite future. 14. We observe that in the case before us, assessee has got right to carry on mining operations in 1982 and 1985, i.e. long time ago before the assessee was asked to pay NPV as per direction of Hon'ble High Court and consequently assessee was compelled to make the payment to facilitate to continue its mining business. Therefore, the above decision of Hon'ble Apex Court in the case of Bikaner Gypsums Limited (supra) squarely applies to the case of assessee and it could not be capital in nature. 14.1 A similar issue also came before Hon'ble Karnataka Bench of ITAT in the case of National Aluminium Co. Ltd.-vs.-DCIT [101 TTJ (CTK) 949]. In the said case, assessee-company debited an amount of Rs.6.20 crores towards contribution to Minerals Exploration Fund set up by Government of India. The said payment was required on the direction of State Pollution Control Board and Ministry of Environment and Forests as a con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he trader by reason of such expenditure. It was further held that where law imposes on the assessee, an obligation to incur expenses for being permitted to pursue its trading activity, the expenditure would be an outgoing from the profits of the trade. 15. In view of the above decision and the facts of the case before us, we hold that ld. CIT(Appeals) has rightly held that the above expenditure of Rs.3,95,56,500/- paid by the assessee as NPV to enable the assessee to carry on its mining business is revenue in nature, which is allowable as business expenditure under section 37(1) of the Act. Therefore, we uphold the order of ld. CIT(Appeals) by rejecting Ground No.1 of the appeal taken by the Department. Hence, Ground No.1 is rejected." Similarly, this issue is also covered by the Co-ordinate Bench decision in the case of ACIT v. Freegrade & Co. Ltd. in ITA No. 934/Kol/2009 dated 05-08- 2011. 5. On the other hand, Ld. SR-DR has not denied that the Co-ordinate Bench decision is not applicable to the present facts of the case but he relied on the decision of Hon'ble Supreme Court in the case of T.N. Godavarman Thirumulpad v. Union of India and Others (2006) 1 SCC dated 26-09- 2005. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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