TMI Blog2018 (6) TMI 275X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act, includes other intangible assets also which is not mentioned as it is not possible to specify each item - thus payment made by the assessee in the form of compensation for acquiring mining rights in the land is intangible assets and hence depreciation is allowed - the ground of revenue is dismissed. Addition being royalty paid in financial year 2001-02 - Held that:- A perusal of the order of appellate authority reveals that the assessee paid advance in the March 2002 in respect of the next financial year which was duly adjusted and claimed by the assessee in the assessment year 2003-04. The issue has been discussed at length by the Ld. CIT(A) and only thereafter allowed the appeal of the assessee. We, therefore, do not find any infirmity in the order of the Ld. CIT(A) Invisible loss in the raw material - Held that:- Percentage of yield and invisible wastage depend on several factors as has been mentioned hereinabove such as quality of cotton, fly generated during manufacturing process, moisture contents in the cotton etc. and the percentage of invisible waste cannot be standardized as the inputs in the textile division depends on the various factors - AO has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in March, 2002 and allowable in the year i.e. A. Y. 2003-04 in which it was debited in the books of accounts. 4. On the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the invisible loss in the raw material without appreciating the fact that there was a gain in the raw material in earlier assessment years and the assessee could not bring any evidence on record to substantiate the loss in the raw material. 3. The issue raised in ground No.1 is against allowing the loss of ₹ 53,28,000/- being loss on sale of shares of its associated concern whereas as per the AO the said loss was speculation loss in terms of explanation to section 73 and should not be allowed. 4. The facts in brief are that in the assessment proceedings the AO observed from the perusal of P L account that assessee has debited a loss of ₹ 53,28,000/- on sale of shares of associated concern M/s. Ramganjmandi Investments Ltd. According to the AO the said losses resulted from the sale of shares to associate concern in which no outside party was involved which suggests that it was a managed affair and a colourable devise. Accordingly, a show cause notice w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during advantage. Thus, the investment did not bring in an asset of a capital nature and the loss suffered by the asse.ssee was a revenue loss and not a capital loss. Further, the Bombay High Court court, in the case of CIT v. Investa Industrial Corpn. Ltd. f1979J 119 ITR 380, had also taken a similar view. Under the circumstances, the assessee's claim of debiting the loss is upheld and the disallowance made by the A.O is directed to be deleted. This Ground of Appeal is allowed. 7. The Ld. D.R. while relying on the order of the AO submitted that the said loss has resulted from the transactions which were non genuine as the party involved in these transactions were only as an associate concern of the assessee and therefore the whole deal was shrouded with doubts. The Ld. D.R. prayed before the Bench that AO has passed the order by disallowing the loss after examining the issue in depth and the same needs to be affirmed. 8. The Ld. A.R. on the other hand submitted that in A.Y. 2004-05 the same issue was involved and order of CIT(A) allowing the loss under identical facts was not challenged by the department in appeal and thus it attained finality. Follo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the said provision is that a part of the business of the company must relate to purchase and sale of shares but it is not the case we are dealing with. We, therefore, do not find any infirmity in the order of Ld. CIT(A) and accordingly the same is affirmed by dismissing the ground No.1 raised by the Revenue. 10. The ground No.2 is against the deletion of disallowance on account of depreciation of ₹ 6,37,034/- by Ld. CIT(A) as made by the AO on the compensation paid by the assessee to land owners for acquiring the mining rights in the land. 11. The facts in brief are that the assessee had paid compensation for acquiring mining rights to the land owner on which it claimed depreciation of ₹ 6,37,034/-. The said depreciation was claimed on the WDV as appearing on the first day of the financial year and the Revenue has allowed depreciation on the said compensation in the earlier years. By making payment of compensation the assessee did not acquire any ownership in the land but only mining rights were acquired by the assessee. In the past the assessee claimed the entire compensation as revenue expenditure which was disallowed by the department and thereafter assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dem generis provides that where there are general words following particular and specific words, the meaning of the latter words shall be confined to things of the same kind. The Ld. Counsel contended that the expression Business or commercial rights of similar nature specified in section 32(1)(ii) of the Act, such as rights need not answer the description of know-how, patents, trade marks, licenses or franchises but must be of similar nature as the specified assets. In the above decision it has been clearly held that business or commercial rights of similar nature have been additionally used and the legislature did not intend to provide for depreciation only in respect of the specified intangible assets but also to other categories of intangible assets, which it is neither feasible nor possible to exhaustively enumerate and thus can not be restricted only to the six categories of assets as mentioned therein. The Ld. A.R. finally submitted that in view of the ratio laid down by Hon ble Delhi High Court the payment of compensation for acquiring mining rights in the land is clearly intangible assets and the order of Ld. CIT(A) needs to be affirmed on this issue. 15. We have he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng a detailed finding that ₹ 70,50,772/- was paid in the month of March as advance rent for the next financial year and was claimed accordingly in the next year. The Ld. CIT(A) also relied on the decision of ITAT Chandigarh Special Bench in the case of DCIT vs. Glaxo Smithkline Consumer 107 ITD 343 Chandigarh Special Bench and on the decision of a Hon ble High Court of Andhra Pradesh in the case of Gopi Krishna Granites India Ltd. vs. DCIT 118 taxman 880 (AP) and finally held that the payment made as advance of royalty in March 2002 was allowable against the liability of royalty in assessment year 2003-04 and accordingly deleted the addition by allowing the appeal on this issue. 17. The Ld. D.R. argued before the Bench that royalty payable in assessment year 2003-04 to the tune of ₹ 70,50,772/- was not allowable under section 43B as the same should have been claimed in A.Y. 2002-03 when it was actually paid as these payments are allowable on the basis of payment and relied on the order of AO in support of his contention. 18. The Ld. A.R., on the other hand, submitted that AO has misunderstood the facts of the case by mentioning the advance rent as royalty which ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be withdrawn. Therefore, the Ld. CIT(A) deleted the addition of ₹ 74,57,220/-. 23. The Ld. D.R. vehemently submitted before us that Ld. CIT(A) has grossly erred by directing the AO to delete the disallowance without giving any concrete findings supporting his decision. The Ld. D.R. submitted that the assessee who has charged the invisible loss of ₹ 74,57,220/- in the P L account and it is for the assessee to prove the genuineness of the same that the previous year the assessee registered an invisible profit to the extent of 21144 kg as against the invisible waste of 82858 (0.97%) during the year. The Ld. D.R. contended that there is enormous difference between the invisible gain in the earlier year vis- -vis the loss invisible during the year and therefore, the AO has rightly made the disallowance. In view of these facts, the Ld. D.R. prayed that the order of Ld. CIT(A) be set aside and that of AO be restored. 24. On the other hand, per contra, the Ld. A.R. filed before us a chart of material consumed for production and yield ratio in which a comparison has been prepared for three years. The Ld. A.R. submitted that the percentage of yarn manufactured to raw mat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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