ACIT, Bhubaneswar V. M/s Orissa Mining Corporation Ltd, Bhubaneswar

ITA 372/CTK/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4399 (ITAT-CUTTACK)
• Duration Of Justice: 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2011
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 26-05-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 19-10-2010
• Court: TRIBUNAL
• Department Lawyers: PARAMITA TRIPATHYDR
• Assessee Lawyers: P VENUGOPAL RAO
• Keywords: Capital expenditure

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. 372/ CTK/ 2010 (ASSESSMENT YEAR 2007 - 08) ASST.COMMISSIONER OF INCOME - TAX, CIRCL E 1(1), BHUBANESWAR. VERSUS M/S.ORISSA MINING CORPORATION LTD., OMC HOUSE, POST BOX NO.34, BHUBANESWAR. PAN: AAACO 3324 L. (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SMT. PARAMITA TRIPATHY,DR FOR THE RESPONDENT SHRI P.VENUGOPAL RAO, AR ORDER SHRI K.K.GUPTA, ACCOUNTANT MEMBER : THIS APPEAL BY THE REVENUE RAISES THE FOLLOWING GROUNDS. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. C1T(A) IS NOT JUSTIFIED IN DELETING THE ADDITION OF RS.81,38,28,655 MADE BY THE AO UNDER THE HEAD COMPEN SATORY AFFORESTATION EXPENSES(NPV) TREATING THE SAME AS CAPITAL EXPENDITURE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN HOLDING THAT PAYMENT OF NPV DOES NOT BRING ANY ENDURING BENEFIT TO THE ASSESSEE WHEREAS THE ASSESSEE ENJOYS LONG RUN BENEFIT FOR YEARS TOGETHER BY RAISING MINERALS FROM THE LAND FOR WHICH NPV IS PAID. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CT(A) IS NOT JUSTIFIED IN HOLDING THAT ENHANCED VALUE OF CLOSING STOCK FOR A PARTIC ULAR YEAR SHOULD INVARIABLY BE TAKEN INTO ACCOUNT FOR THE PURPOSE OF OPENING STOCK FOR THE SUBSEQUENT YEAR. 2. AT THE OUTSET THE L EARNED COUNSEL FOR THE ASSESSEE - RESPONDENT SUBMITTED THAT THE LEARNED CIT(A) HAD PASSED THE ORDER FOLLOWING THE ISSUES COVE RED BY PERSUING THE TRIBUNAL DECISIONS IN ASSESSEES FAVOUR. THE ORDER ITA NO.372/CTK/2010 2 OF THE LEARNED CIT(A) INCORPORATES THE ORDER WHICH HAVE BEEN FOLLOWED AND ARE BEING SUBMITTED IN THE PAPER BOOK WHICH MAY KINDLY BE PERUSED . 3. THE LEARNED DR AGRE ED TO THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE RESPONDENT THAT THE ISSUES RAISED BY THE ASSESSING OFFICER IN THIS APPEAL REMAIN DELIBERATED UPON BY THE TRIBUNAL ON THE FACTS AND CIRCUMSTANCES AS WERE DEALT WITH BY THE LEARNED CIT(A) WERE ACCORDING TO THE A SSESSME NT ORDER. SHE HAD NO FURTHER CONTROVERTING MATERIAL TO SUBMIT. 4. WE HAVE HEARD THE RIVAL CONTENTIONS. THE LEARNED CIT(A) IN HIS ORDER TO DELETE THE ADDITION OF RS.81,38,28,650 HAD CONSIDERED THE ISSUES FROM ALL ANGLES AND SUPPORTED HIS DECISION ON THE FAC T FINDING OF THE ASSESSING OFFICER BY PLACING RELIANCE ON THE TRIBUNALS ORDER IN THE CASE OF ORISSA FOREST DEVELOPMENT CORPORATION LTD (FDC) IN ITA NO.19/.CTK/2001 DT.30.4.2001 FOR EIGHT YEARS. THE ASSESSING OFFICERS CONTENTION S ON THE SAME WAS TO RECONS IDER THE SUBMISSION WAS BASICALLY REPRODUCED BY THE LEARNED CIT(A) IN VIEW OF THE FACT THAT THE COMPENSATORY AFFORESTATION HAS BEEN HELD TO BE REVENUE IN NATURE AND THE AMOUNT SPENT COULD NOT BE CONSIDERED FOR CREATING AN ASSET GIVING ENDURING BENEFIT TO THE ASSESSEE AS A CAPITAL EXPENDITURE. ON THE NEXT ISSUE REGARDING THE ENHANCING THE VALUE OF THE CLOSING STOCK CORRESPOND THE OPENING STOCK OF THE SUCCEEDING YEAR WAS ALSO HELD BY THE LEARNED CIT(A) WHEN THE ITAT , CUTTACK IN ASSESSEES OWN CASE FOR THE AS SESSMENT YEAR 2004 - 05 IN ITA NO. 126/CTK/2008 HAS AFFIRMED THE PRINCIPLE THAT THE VALUE OF THE CLOSING STOCK ADOPTED FOR THIS YEAR SHOULD INVARIABLY BE TAKEN AS OPENING STOCK FOR THE SUBSEQUENT YEAR. FINDING NO INFIRMITY IN THE ADJUDICATION THEREOF BY THE T RIBUNAL AND ON THE FACTS AS NOTED BY THE ASSESSING OFFICER, THE CIT(A) DELETED THE ADDITION. 5. ON BOTH THE ISSUES, THE LEARNED DR HAS NOT BEEN ABLE TO CONTROVERT THE ITA NO.372/CTK/2010 3 FINDINGS OF THE LEARNED CIT(A) BY PRODUCING ANY MATERIAL AND AS SUCH, THE ISSUES REMAINED COVERED IN FAVOUR OF THE ASSESSES BY THE ORDERS OF THE TRIBUNAL. HENCE, THE APPEAL OF THE REVENUE IS BOUND TO BE DISMISSED . 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. PRONOUNCED IN OPEN COURT ON DT. 27 TH MAY, 2011 SD/ - SD/ - (K.S.S.PRAS AD RAO) JUDICIAL MEMBER (K.K.GUPTA) ACCOUNTANT MEMBER DATE: 27 TH MAY, 2011 H.K.PADHEE, SENIOR PRIVATE SECRETARY. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT: ASST.COMMISSIONER OF INCOME - TAX, C IRCLE 1(1), BHUBANESWAR. 2. THE RESPONDENT: M/S.ORISSA MINING CORPORATION LTD., OMC HOUSE, POST BOX NO.34, BHUBANESWAR. 3. THE CIT, 4. THE CIT(A), 5. THE DR, CUTTACK 6. GUARD FILE (IN DUPLICATE) TRUE COPY, BY OR DER, SENIOR PRIVATE SECRETARY.