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TMI Blog2019 (1) TMI 1918X X X X Extracts X X X X X X X X Extracts X X X X ..... as just if ied in delet ing the addi t ion on account of acquisition of land expenses of Rs. 53,09,116/- without appreciating that the expense is related to the acquisition of land and cannot be revenue expenditure. 3. Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) was justified in deleting the addition of Rs. 1,20,61,377/- on account of school expenses at Orissa, without appreciating that the expense is related to the running of the school and not wholly and exclusively for the purpose of business. The appellant craves leave to add to, amend or withdraw the aforesaid ground of appeal." 2. Briefly stated, the assessee company which is engaged in the business of mineral separation and production of rare earth compound had filed its return of income for A.Y. 2012-13 on 29.09.2012, declaring total income at Rs. 331,23,40,080/-. Subsequently, the income of the assessee was assessed under Sec. 143(3) of the I.T. Act at Rs. 333,72,82,571/- after inter alia making the following additions/disallowances: Sr. No. Particulars Amount 1. Disallowance of provision for the enhanced compensation on land acquisition Rs. 16,42,000/- 2. Disallowance o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion to verify the veracity of the said claim. 5. Per contra, the ld. Authorized Representative (for short "A.R‟) relied on the order of the CIT(A). The ld. A.R took us through the relevant observations of the CIT(A) in context of the aforesaid additions/disallowances and submitted that the additions had rightly been deleted by the CIT(A). 6. We have heard the authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record. Insofar, the disallowance of Rs. 16,41,654/- that was made by the A.O on the ground that the same pertained to the provision for enhanced compensation on land acquisition is concerned, we find that it was observed by the CIT(A) that the A.O had misconceived the facts and had wrongly made the said addition/disallowance. It was noticed by the CIT(A) that the amount of Rs. 16,41,654/- booked by the assessee as a revenue expenditure comprised of viz. (i) interest on service tax on payments made to transporters (Rs. 12,40,970/-); (ii) interest on Kerala State General Tax (Rs. 92,637/-); and (iii) Interest on leasehold land acquisition payments (Rs. 3,08,047/-). Apart therefrom, it was observed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er consideration and are in agreement with the view taken by the CIT(A) that the A.O on the basis of misconceived facts had made an addition of Rs. 16,41,654/- in the hands of the assessee. The ld. D.R had also not placed before us any such material or raised any such contention which could persuade us to conclude that the factual observations of the CIT(A) suffer from any infirmity. We thus being of the considered view that the aforesaid expenses aggregating to Rs. 16,41,654/- viz. (i). interest on service tax on transport of goods :Rs. 12,40,970/-; (ii). Interest on Kerala State General Tax : Rs. 92,637/-; and (iii). Interest on leasehold land acquisition payments : Rs. 3,08,047/-, being in the nature of a revenue expenditures were allowable as a deduction while computing the income of the assessee, thus finding no infirmity in the order of the CIT(A) who had rightly deleted the addition of Rs. 16,41,654/- made by the A.O, uphold his order. The Ground of appeal No. 1 raised by the revenue is dismissed. 8. We shall now advert to the disallowance of Rs. 53,09,116/- made by the A.O in context of impugned land acquisition expenses. The A.O while disallowing the aforesaid expen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CIT(A) that the expenses on maintenance of the Government of Kerala employees by the assessee had been in existence since long. Rather, the allowability of such expenditure was also one of the issue involved in the appeal of the assessee for A.Y. 1997-98, wherein the Tribunal while disposing off the appeal viz. ITA No. 1664/Mum/2003, dated 06.07.2007 had directed that the same was to be allowed as a deduction, observing as under: "This is apparent from the G.O. No. 471/96/ID dated 9.5.1996 wherein it has been clearly mentioned that sanction is accorded subject to the condition that the entire establishment cost, salary, pension conditions should be met by the assessee. Admittedly, the assessee has been carrying on the business of mining at the site in Kerala for more than 20 years and such expenditure is being incurred year after year." We further find that as observed by the CIT(A), during the year under consideration the Special Tehsildar (I.A. Kerala), vide his order dated 05.05.2009 had sanctioned 13 posts exclusively for looking after the assesses land. Rather, it was observed by him that as per the order of the Joint Secretary to the State Government of Kerala mineral ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... areas and was not restricted to only the children of the employees. However, the A.O not finding favour with the said claim of the assessee disallowed the said expenses by observing that as the employees of the assessee were drawing educational allowance from the assessee as per the government rules, therefore, the aforementioned expenses incurred on running of the school was not allowable as a deduction. 11. We have deliberated at length on the issue before us and find from a perusal of the orders of lower authorities that the aforementioned school viz. Atomic Energy Central School, Oscom was being run at the place where the assessee had set up its manufacturing units viz. Chatrapur, Orissa. Rather, the assesses major business activity of mining of Rare Earth Minerals and also processing beneficiation of illiminite from the mining activity was being carried out at Chatrapur, Orissa. Apart therefrom, we find from the order of the CIT(A) that the Central school established in Chatrapur, viz. Atomic Energy Central School, Orissa had been operative for over a decade and was providing education to the children of the employees of the assessee as well as the wards of the local residen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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