Jitendra Nath Patnaik, Keonjhar V. DCIT, Sambalpur

ITA 185/CTK/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4382 (ITAT-CUTTACK)
• Duration Of Justice: 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 20-05-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 06-04-2011
• Court: TRIBUNAL
• Department Lawyers: S C MOHANTY
• Assessee Lawyers: S C BHADRA
• Keywords: Revenue expenditure; Set aside

Judgement Text

IN THE INCME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE : HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER, AND HONBLE SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER. ITA NO. 185/CTK/2010 (ASSESSMENT YEAR 2007 - 08) SHRI JITENDRA NATH PATNAIK, AT/P.O. BON AIKELA (JODA), DIST.KEONJHAR, PIN: 758 038 PAN ABFPP3817 J VERSUS DEPUTY COMMISSIONER OF INCOME - TAX, CIRCLE 1(1), SAMBALPUR. (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI S.C.BHADRA, AR FOR THE RESPONDENT SMT. S.C.MOHANTY, DR ORDER SHRI K.S.S.PRAS AD RAO, JUDICIAL MEMBER : THIS APPEAL IS FILED BY THE ASSESSEE HAVING BEEN AGGRIEVED BY THE ORDER OF THE COMMISSIONER OF INCOME - TAX (APPEALS) DT.28.1.2011 PASSED IN THE CASE OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2007 - 08. 2. THE SOLE ISSUE RAISED BY THE A SSESSEE IN THIS APPEAL IS AGAINST DISALLOWANCE OF RS.22,74,180 BEING THE AMOUNT PAID BY THE ASSESSEE TO THE DFO AS PER THE DIRECTION OF THE HONBLE APEX COURT TOWARDS NET PRESENT VALUE ON THE LAND LEASED OUT TO THE ASSESSEE BY THE GOVERNMENT FOR MINING OPE RATIONS AS A CONTRIBUTION TO AFFORASTATION FUNDS. 3. BOTH PARTIES WERE HEARD ON THE ISSUE RAISED BY THE ASSESSEE AND ITS LEGAL IMPLICATION. 4. ON CAREFUL CONSIDERATION OF THE MATERIAL MADE AVAILABLE TO THE TRIBUNAL, THE UNDISPUTED FACTS RELATING TO THE ISS UE ARE THAT THE ASSESSEE HAS PAID A SUM OF RS.22,74,180 TO THE GOVERNMENT OF INDIA TOWARDS NPV ON THE LAND LEASED OUT TO THE ASSESSEE BY THE GOVERNMENT FOR MINING OPERATION IN PURSUANCE TO THE DIRECTION OF THE HONBLE SUPREME COURT AND AS PER THE GUIDELINE ISSUED BY THE MINISTRY OF MOEF AS A CONTRIBUTION TO THE FUNDS CREATED BY THE GOVERNMENT FOR ITA NO.185/CTK/2011 2 DEVELOPMENT OF FOREST LAND. BOTH THE AUTHORITIES HAVE DISALLOWED THE CLAIM OF THE ASSESSEE CONTENDING THAT THE ASSESSEE HAS ACQUIRED AN ENDURING BENEFIT FOR PAYING THIS AMOUNT AND THEREFORE, IT HAS TO BE CAPITALIZED AND IT IS NOT AT ALL REVENUE EXPENDITURE. 5. THE LEARNED AR OF THE ASSESSEE HAS PLACED BEFORE THE TRIBUNAL, A COPY OF THE ORDER OF THE CIT(A),BHUBANESWAR DT.21.7.2010 IN I.T.A.NO.0268/2009 - 10 IN THE CASE OF ORISSA MINING CORPORA TION LTD, WHEREIN SIMILAR SUCH ISSUE WAS CONSIDERED AND IT WAS HELD THAT THE PAYMENT TOWARDS COMPENSATORY AFFORASTATION IS REVENUE IN NATURE AND DIRECTED THE ASSESSING OFFICER TO ALLOW THE SAME . ON COMPARISON OF THE FACTUAL MATRIX IN THAT CASE WITH THOSE OF THE PRESENT CASE IN HAND, WE FIND NO DISSIMILARITY. APART FROM THAT THE ASSESSEE IS ONLY A LEASE HOLDER OF LAND FOR MINING OPERATION AND NOT THE OWNER OF THE LAND. AS PER THE DIRECTION OF THE SUPREME COURT, GOVERNMENT OF INDIA HAS FORMED RULES TO BE ISS UED BY THE MINISTRY OF MOEF ACCORDING TO WHICH THEY ARE DETERMINING THE NPV OF THE LAND GIVEN TO THE LESSEE AND THAT AMOUNT IS TO BE COLLECTED FROM THE LESSEE AND FORM PART OF SUCH FUNDS WHICH WILL BE UTILIZED FOR DEVELOPMENT OF FORESTS OF EQUIVALENT AREA AS FOREST LEASED OUT TO THE ASSESSEE IN OTHER PART THAN THE LEASED AREAS. THEREFORE, THE LEARNED AR OF THE ASSESSEE CONTENDED THAT THE AMOUNT IN QUESTION PAID IS ALLOWABLE BEING REVENUE IN NATURE. 6. CONTRARY TO THIS, THE LEARNED DR SUPPORTED THE IMPUGNE D ORDERS OF THE AUTHORITIES BELOW. HOWEVER, HE DID NOT DISPUTE THE FACT THAT THE FACTUAL MATRIX IN THE CASE OF ORISSA MINING CORPORATION LTD AS DECIDED BY THE CIT(A),BHUBANESWAR DT.21.7.2010 (SUPRA) ARE SIMILAR WITH THOSE OF THE PRESENT CASE ON HAND. ITA NO.185/CTK/2011 3 7. O N CAREFUL ANALYSIS OF THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW AND THE ORDER PASSED BY THE CIT(A), BHUBANESWAR DT.21.7.2010 IN THE CASE OF ORISSA MINING CORPORATION LTD, COPY OF WHICH IS MADE AVAILABLE BY THE ASSESSEE BEFORE US, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE IS NOT ACQUIRING ANY ASSET NOR ENDURING BENEFIT BUT IS HAVING ONLY A RIGHT TO WORK OF MINING IN THE LAND GIVEN TO HIM FOR A SPECIFIC PERIOD ON LEASE . THEREFORE, THIS AMOUNT IS PRACTICALLY A REVENUE EXPENDITURE INCURRED BY THE ASSESSEE WHILE DOING HIS TRADE OF MINING OPERATION. HENCE, WE ARE OF THE CONSIDERED VIEW THAT THE CLAIM OF THE ASSESSEE TO ALLOW THE SAME AS REVENUE EXPENDITURE IS VERY MUCH WITHIN THE PROVISIONS OF THE INCOME - TAX ACT,1961 APPLICABLE THERETO. HENCE, HAVING FIND MERITS IN THE APPEAL OF THE ASSESSEE, WE SET ASIDE THE IMPUGNED ORDER OF THE LEARNED CIT(A) ON THIS ISSUE AND DIRECT THE ASSESSING OFFICER TO ALLOW THE EXPENDITURE IN QUESTION AS REVENUE EXPENDITURE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. PRONOU NCED IN OPEN COURT ON DT. 17.06.2011 S D/ - S D/ - (K.K.GUPTA) ACCOUNTANT MEMBER (K.S.S.PRASAD RAO) JUDICIAL MEMBER DATE: 17.06.2011 H.K.PADHEE, SENIOR PRIVATE SECRETARY. COPY OF THE ORDER FORWARDED TO : 1. THE APP ELLANT: SHRI JITENDRA NATH PATNAIK, AT/P.O. BONAIKELA (JODA), DIST.KEONJHAR, PIN: 758 038 2. THE RESPONDENT: DEPUTY COMMISSIONER OF INCOME - TAX, CIRCLE 1(1), SAMBALPUR 3. THE CIT, 4. THE CIT(A), 5. THE DR, CUTTACK 6. GUARD FILE (IN DUPLICATE) TRUE COPY, BY ORDER, SENIOR PRIVATE SECRETARY.