TMI Blog2011 (7) TMI 1171X X X X Extracts X X X X X X X X Extracts X X X X ..... nce u/s. 14A as the dividend income shown by the assessee is exempt from tax u/s. 10(34). Be that as it may, we are of the considered view that it will be reasonable to make disallowance @ 1% of the above dividend income earned. We direct the A.O. to calculate the disallowance of expenditure on such exempt income accordingly. Admission of Additional Grounds - Assessee received subsidy from the govt and he forgot to claim deduction regarding the same. Also, he didn't raise this ground before concerned authorities - HELD THAT:- We observe that Hon ble Supreme Court in the case of JUTE CORPORATION OF INDIA LIMITED VERSUS COMMISSIONER OF INCOME-TAX AND ANOTHER [ 1990 (9) TMI 6 - SUPREME COURT] has held that the first appellate authority can admit an additional ground when the ground raised was bona fide. We further observe that NATIONAL THERMAL POWER COMPANY LIMITED VERSUS COMMISSIONER OF INCOME-TAX [ 1996 (12) TMI 7 - SUPREME COURT] while dealing with the power of ITAT in admitting an additional ground held that the Appellate Assistant Commissioner should exercise his discretion in permitting or not permitting the assessee to raise an additional ground in accordance with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uced written down value - A.O. allowed depreciation on the written down value without deducting them from the sale proceeds - CIT(A) decided in favour of assessee HELD THAT:- Section 43(6)(c)(i)(B) specifically requires the reduction of the written down value of the block of assets by the money payable in respect of any asset falling within that block which is sold during the previous year. It is evident that the Ld. C.I.T.(A) has pointed out that the accounting treatment cannot effect the operation of the statutory provisions contained in Section 43(6) and for income-tax purposes, the block of assets concept was followed as per statutory provisions. Considering the totality of the above facts and legal position, we do not find any justification to interfere with the findings of the Ld. C.I.T.(A) - Revenue Appeal rejected. - ITA No. 1812 (Kol) of 2010, ITA No. 1936 (Kol) of 2010 - - - Dated:- 29-7-2011 - Mahavir Singh (Judicial Member) And C. D. Rao (Accountant Member) For the Petitioner : J. P. Khaitan, S. Bhowmick For the Respondent : Sumant Sinha ORDER C. D. Rao (Accountant Member) These two appeals, one filed by the assessee and other filed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceived in the bank account for which practically no expenditure is incurred. The expenditure incurred by the assessee is for its manufacturing operations. He also contended that Rule 8D of I.T. Rules was inserted in the Rules on March 24, 2008 pursuant to sub-section (2) inserted in section 14A of the Act with effect from April 1, 2007 and the said provisions cannot be made applicable for the assessment year under consideration, i.e. A.Y. 2006-07. Referring to pages 126 127 of the paper book, the learned counsel further submitted that in the instant case, there was no change in the share investments of the assessee and the only activity in relation to the share dividend income of ₹ 52,15,150/- received by way of six dividend warrants, was to deposit such warrants in the bank account for the purpose of encashment. The rest of the dividend income of ₹ 1,82,62,650/- was from mutual fund units. Out of the said amount, the sum of ₹ 1,76,04,165/- was reinvested in units without physically receiving the warrants. Only five warrants for an aggregate sum of ₹ 6,58,485/- were physically received and had to be deposited in the bank and as such, according to him, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee fairly admitted that the claim on this account was neither raised before the A.O. nor before the ld. C.I.T.(A) and contended that this being a legal issue, the matter be set aside to the A.O. He has also filed a paper book separately in relation to the above ground containing 59 pages, which are as under :- 1. Copy of West Bengal Incentive Scheme 2000 - Pages 1 to 50 2. Copy of letter dated 05/5/2005 together with Certificate of Registration issued by Directorate - Pages 51 to 53 Of Industries, Govt. of West Bengal. 3. Copy of Eligibility Certificate dated 30/8/2005 - Pages 54 to 59 Issued by WBIDCL. The ld. Departmental Representative did not object to the above submission of the assessee s learned counsel. 9. In this case, original return for the assessment year under consideration was filed on 23/11/2006. Revised return was filed on 02/2/2007 making certain fresh claim with regard to computation of MAT. The assessee received a sum of ₹ 9,49,561/- from State Government on account of Industrial Promotion Assistance which, according to the assessee, was its capital receipt. It appears that the assessee did not claim any deduction on this account from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sistant Commissioner must be satisfied that the ground raised was bona fide and that the same could not have been raised earlier for good reasons. The Appellate Assistant Commissioner should exercise his discretion in permitting or not permitting the assessee to raise an additional ground in accordance with law and reason. The same observations would apply to appeals before the Tribunal also. 9.2. We further refer to the decision of Hon ble jurisdictional High Court in the case of Maynak Poddar (HUF) vs. WTO [262 ITR 633 (Cal)] wherein the assessee has shown certain assets as chargeable to tax but subsequently claimed it to be not chargeable. When the matter reached to the Hon ble High Court, their Lordships have held that if an asset is not chargeable to wealth-tax in law, it cannot be taxed merely because the assessee has offered the same as chargeable wealth for the purpose of Wealth-tax Act. The relevant portion of the finding, to quote, is as under :- The subject is not to be taxed unless the charging provision clearly imposes the obligation. Equally important is the rule of construct ion that if the words of a statute are precise and unambiguous, they must be accep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tance is a capital receipt liable to be deducted from its total income. He, therefore, submitted that as the issue is a legal one and bona fide, the matter may be set aside to the A.O. and the ld. Departmental Representative did not raise any objection to this. We, therefore, restore the matter raised in ground No. 3 above to the A.O. and we direct him to examine the facts of the case and thereafter he should re-adjudicate the issue in accordance with law and after considering the documents as may be furnished by the assessee in support of its claim. Needless to mention that he will allow adequate opportunity of being heard to the assessee. This ground of the assessee is thus allowed for statistical purposes. ITA No. 1936 (Kol) of 2010 [Revenue s appeal] 10. In the department s appeal, the first ground reads as under :- 1. That the Ld. CIT(A)-VI, Kolkata has erred in law as well as on facts by deleting the disallowance made by the A.O. on account of claim of deduction of proportionate of leasehold land written off of ₹ 20,55,052/-. 11. The A.O. observed that the assessee during the assessment year under appeal made a claim of ₹ 20,55,052/- of amortizat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice in writing specifying the land proposed to be so used and the purpose for which the same is required and the said land shall not be so used if objection is issued by the collector within two months after the receipt by him of such notice unless the objection so stated shall on reference to the State government be annulled or waived . The LD. A.R argued that from time to time depending on the necessity of the company to facilitate the carrying on of its business and for execution of the lease hold agreement the company was approaching the Collector of the district for permission for using the land which was not used for operations. The Collector following the land revenue Act 1956 used to pass the order determining the compensation as per the market rate and would give permission for using the land. The appellant was asked to file all such orders of the collector giving permission for usage of land by the appellant after paying compensation. I have also gone through the Rajasthan land revenue act. According to section 89(2), The right to all mines and quarries includes the right of access of land for the purpose of mining and quarrying and the right to occupy such other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see for acquiring lease hold right for extracting minerals from mineral bearing land is a capital expenditure. The question before the Apex court was whether the lease rent paid by the mining lessee for acquiring leasehold right for extracting minerals from mineral bearing land would be a Capital or revenue expenditure. I have also gone through the judgement of the Hon ble Madras High Court in the case of Enterprising Enterprises V Dy.Commissioner of Income Tax [2004] 268 ITR 95. In this case the main issue was quarry lease rent paid to the Government for acquiring the right to excavate the granite on lease for ten years is capital or revenue expenditure. The facts of this case differ from the facts of the appellant s case. The appellant has not paid any lease rental for acquiring the right to exploit the minerals. The compensation was paid for the damage caused on the infringement of right of the land owner. As per the requirement /necessity you go to the collector and you pay the persons whose property is damaged on the surface each time you cause the damage is a deduction and a revenue expense in my opinion. The payments are progressively distributed as they work, as they p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt assigns to any person its rights over any minerals, mines or quarries, it can delegate its aforesaid powers to the person to whom the right has been assigned for proper enjoyment of such rights. He referred to sub-section (4) of section 89 of the Rajasthan Land Revenue Act 1956 and sub-section (4) of section 247 of the Madhya Pradesh Land Revenue Code 1959 which are in similar terms. Sub-section (4) of Section 89 of the Rajasthan Act is reproduced hereunder : (4) If, in the exercise of the right herein referred to over any land, the rights of any persons are infringed by the occupation or disturbance of the surface of such land, the State Government or its assignee shall pay to such persons compensation for such infringement and the amount of such compensation shall be calculated by the Collector, or, if his award is not accepted by the Civil Court as nearly as may be, in accordance with the provisions of the Rajasthan Land Acquisition Act, 1953 (Rajasthan Act, XXIV of 1953). The learned counsel further submitted that payment of the compensation as aforesaid does not result in acquisition of any interest in land by the assessee. The order determining the compensation s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d order of ld. C.I.T.(A) dated 25/06/2008 has been filed at pages 91 to 108 of the paper book. The Tribunal, however, by an order dated 27/05/2009 in ITA No.1818 to 1820/Kol/2008 remanded the matter to the A.O. observing that the decision of the Hon ble Supreme Court in the case of Enterprising Enterprises (supra) was not available when the assessments for the assessment years 2000-01 and 2002-03 were decided and that contradictory facts were claimed by the rival parties and the Tribunal could not record any finding of fact in the absence of relevant material. A copy of the said order of the Tribunal dated 27/05/2009 is placed at pages 109 to 121 of the paper book. It was further stated by the learned counsel that against the said order dated 27/05/2009 passed by the Tribunal, the assessee has preferred an appeal u/s. 260A of the Act before the Hon ble Calcutta High Court being ITA No.282 of 2009. A copy of the said appeal is placed at pages 122 123 of the paper book. The said appeal was admitted by the Hon ble High Court on 27/11/2009, inter alia, on the following question: Whether the Learned Tribunal was justified in remanding for rendering fresh decision after having ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel also relied on the judgment dated 14th and 15th March, 1932 of High Court of Justice (King s Bench Division) in the matters of O Grady (H.M. Inspector of Taxes) vs. Bullcroft Main Collieries, Ltd. O Grady (H.M. Inspector of Taxes) vs. Markham Main Colliery, Ltd. A copy of the said judgment has been filed before us at the time of hearing, which is placed on record. He, therefore, submitted that the order of the ld. C.I.T.(A) on this issue be upheld. 14. The ld. Departmental Representative relied on the order of the Hon ble Supreme Court in the case of Enterprising Enterprises vs. DCIT (supra) and contended that the order of ld. C.I.T.(A) be reversed on the issue. 15. We have heard the parties and perused the material placed on record. The learned counsel for the assessee has elaborated the facts of the case making reference of several decisions of Tribunal and Hon ble Supreme Court and High Courts. After careful consideration of the same and evidences filed on record and in the paper book, we find that the assessee is required to pay compensation as determined by the local authority/court to the persons whose rights are infringed because of the mining activity. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . in assessee s own case uphold the order of the ld. C.I.T.(A) on this point and reject Ground No. 2 of the revenue s appeal. 20. Ground No.3 of the Revenue s appeal reads as under :- 3. That the Ld. CIT(A)-VI, Kolkata has erred in law as well as on facts by deleting the addition made by the A.O. on account of profit on sale of plant and machinery of closed down unit for ₹ 2,41,44,000/-. 21. The above ground is against not treating the accounting profit of ₹ 2,41,44,000/- from sale of certain depreciable fixed assets as revenue receipt chargeable to tax. But the assessee had reduced the sale proceeds from the written down value of the block of assets and claimed depreciation on such reduced written down value. In the assessment for the year under consideration, the AO did not accept such treatment on the ground that the assets in question were earmarked for disposal in the preceding year and the assessee in its accounts had transferred such assets from the heading of fixed assets to current assets. While taxing the said accounting profit of ₹ 2,41,44,000/- as revenue receipt, the A.O. allowed depreciation on the written down value without deducting ..... 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