TMI Blog1957 (8) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 10,266, which was the amount paid by the company to the owners of the surface land just above the coal mines at the time when de-pillaring operations started. In a coal mine it is the usual practice that coal is extracted through gallery working when the roof of the mine remains supported on the pillars of coal. After the gallery working, coal is extracted from these pillars which have to be demolished in that very process. This operation of winning coal from such pillars is called de-pillaring operation. When de-pillaring operations starts, the roof which the pillars support necessarily subsides and a colliery owner has to pay compensation for surface lands to the owners of the surface lands. The amount of ₹ 10,266 represents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of covenants by the lessors indemnifying the assessee against liability for surface damage, the assessee undertook to make payments to the lessors on specified dates in respect of each acre or part of an acre beneath which coal seams had first been worked since the previous accounting date. It was contended on behalf of the assessee in that case that payments to the lessors under the surface damage provisions of these leases were admissible deductions in computing profits. The Special Commissioners held that the amounts paid by the assessee to the lessors in consideration of the indemnities against liability for surface damage were of the nature of recurring business expenditure and allowed the sums as deductions. This view was affirmed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ou go along so as to enable you to work the mine? For instance, it was held in Robert Addie and Sons' Collieries Ltd. v. Commissioners of Inland Revenue [1924] 8 Tax Cas. 671 that the sum paid by the colliery company for restoring to an arable state all ground occupied by it or damaged by its workings was in the nature of capital expenditure and was not, therefore, a proper deduction in computing the company's liability to income-tax. The question is, on which side of the line the present case falls. In my opinion, the expenditure incurred by the assessee is capital expenditure in the circumstances of this case and is not a permissible deduction under section 10(2)(xv) of the Income-tax Act. I think that the prese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year, or year by year, until the drains are relaid. I express no opinion on the character of expenditure required to meet such payments or repairs as these. The whole terms of the lease are not before the Court, but, as far as they have been put before us in the case, it is clear that it was within the contractual contemplation of parties that the lessees working under the lease and in accordance with its provisions would, or might, cause damage to land by subsidence of a character so serious and permanent as to destroy its value unless restored in some way. A right to work the coal in such a manner as to sacrifice the value of the surface was a material asset for the company to possess, and, not unnaturally or unusually, the same principl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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