TMI Blog2011 (6) TMI 997X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Commissioner of Income Tax Vs. Elecon Engineering Co. Ltd. 166 ITR 66 and Scientific Engineering House (P) Ltd. Vs. Commissioner of Income Tax 157 ITR 86 were applicable on facts. 3. Short facts, apropos are that assessee, engaged in the busienss of lignite mining, had incurred expenditure for collecting geological data pertaining to various projects at Bahur, Jammu Kashmir. As per assessee, it was acting as a nodal agent appointed by Government of India for the purpose of collecting geological data on lignite deposits and coordinating efforts to locate areas proficient in lignite deposits. According to the assessee, such exploration and collection of geological data was done on behalf of Central Government and the expenditure incurred being recoverable from other agencies under the Government, which were given the responsibility to do lignite mining, it had carried such expenses as part of its miscellaneous expenditure on the assets side of its balance sheet. In other words, according to the assessee, these were expenditure of capital nature and recoveries on sale of geological data were capital receipts. However, in the opinion of the Ld.Assessing Officer assessee c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e distinguishable on facts. There is no dispute that books constitute plants. But the ld. AR has not explained as to how this furthers the cause of the appellant. The Commissioner of Income Tax u/s.263 for A.Y.2001-01 held that the geological data available with the appellant constituted closing stock. The Assessing Officer, in the remand report has also rightly argued that the expenditure incurred on geological data are akin to those incurred for acquisition of business stock and profit on sale of such stock are to be treated as business profit. Further, the Hon ble ITAT Delhi has also held in the case of M/s.ONGC Videsh Ltd. Vs. D Commissioner of Income Tax 127 TTJ 497 that the expenditure incurred by the assessee on Seismic data collected by it is revenue in nature. There is no reason as to why commercial exploitation of such data would not constitute business receipts. Based on the above facts, I am of the considered opinion that the geological data collected by appellant is revenue in nature. Accordingly, the action of the Assessing Officer in this issue is sustained. This ground of appeal on this issue is dismissed. 5. Now before us Ld. AR assailing the order of the aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pex Court in the case of Elecon Engineering C. Ltd.(supra), what was held by their Lordships was that plant included drawings acquired from foreign collaborators for manufacturing gears and for coming to this conclusion, Hon ble Apex Court relied on its own decision in the case of Scientific Engineering House Pvt Ltd.,(supra). In the latter case, assessee had entered into technical collaboration agreement with a foreign company for manufacturing certain scientific instruments. The said foreign collaborator had also rendered documentation services with regard to such scientific instruments comprising of drawings, designs, charts, plans and other literatures. It was in this context that Hon ble Apex Court held such drawing, designs, charts and plants to be books falling within the definition of plant. Here on the other hand, assessee was selling geological data not as a part of any collaboration agreement for mining lignite or as a part of a turnkey project. Therefore, we are of the opinion Ld. Commissioner of Income Tax(A) was justified in confirming the action of the Assessing Officer treating the sale consideration received on sale of geological data as business income. Appeal of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... premium was paid by the assessee and hence it was allowable expenditure. Per contra Ld. DR supported the orders of the lower authorities. 12. We have perused the orders of the authorities below carefully and heard rival contentions. The disallowance was made for a reason that insurance premium paid covered periods subsequent to the relevant previous Year. Nevertheless the payment of insurance premium has not been disputed. Payment of premium is not an expenses coming under the purview of accrual system of accounting and also cannot be regarded as period cost. There is no accrual of liability for such payments and assessee by paying insurance premium is covering its risks for future. The risk covered could be for a year or for a tenure of a project. The period would in almost all case run beyond the end of a previous year. Nevertheless, the moment premium is paid, the insurance company is obliged to render services. It is not disputed that the premium was paid for the business purpose of the assessee. The payment here was only 0.12% of the total expenditure of assessee as, mentioned by the Ld. Commissioner of Income Tax(A) at para-4 of his order. This is reproduced hereunder for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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