ASSOCIATED STONE INDUSTRIES (K) LTD., Kota V. ACIT, Kota

ITA 497/JPR/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5594 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 7 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 18-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJINDER SINGH JCIT DHK
• Assessee Lawyers: HARSH BHUTA
• Keywords: Capital asset; Business expenditure; Commercial expediency; Revenue expenditure; Capital expenditure

Judgement Text

ITA NO. 497/JP/2012 M/S. ASSOCIAT ED STONE INDUSTRIES (K) LTD. VS. ACIT, CIRCLE- 1, K OTA 1 VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH FOE FLAG ;KN O] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI VIKRAM SINGH YA DAV, AM VK;DJ VIHY LA-@ ITA NO. 497/JP/2012 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2008-09 M/S. ASSOCIATED STONE INDUSTRIES (K) LTD. BAZAR NO.1, RAMGANJ, MANDI KOTA CUKE VS. THE ACIT CIRCLE- 1 KOTA LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AACCA 3549 F VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI HARSH BHUTA , CA JKTLO DH VKSJ LS@ REVENUE BY : SHRI RAJINDER SINGH,, JCIT LQUOKBZ DH RKJH[K@ DATE OF HEARING : 15/12/2015 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 08 /01/2016 VKNS'K@ ORDER PER R.P. TOLANI, JM:- THE ASSESSEE HAS FILED AN APPEAL AGAINST ORDER OF THE LD. CIT(A), KOTA DATED 20-03-3012 FOR THE ASSESSMENT YEAR 2008-09. THE CONCISE GROUNDS OF APPEAL ARE AS UNDER:- (I) DISALLOWANCE OF 50% OF MISC. EXPENSES INCLUDING POOJAN EXPENSES AMOUNTING TO RS. 24,271/- (II) DISALLOWANCE OF COMPENSATION PAID TO TAPARIES FOR VACATING THE UNAUTHORIZED CONSTRUCTION / KACCHI TAPARIES AMO UNTING TO RS.5,20,000/- (III) DISALLOWANCE OF MEMBERSHIP FEE PAID TO ROTARY CLUB ON BEHALF OF DIRECTOR AMOUNTING TO RS. 3,000/- ITA NO. 497/JP/2012 M/S. ASSOCIAT ED STONE INDUSTRIES (K) LTD. VS. ACIT, CIRCLE- 1, K OTA 2 (IV) DISALLOWANCE OF PROFESSIONAL CHARGES PAID TO C ONSULTANT FOR PREPARING PROJECT REPORT TO SET UP NEW POWER PLANT WHICH DID NOT MATERIALIZE AMOUNTING TO RS. 7,41,144/- LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT :- MISCELLANEOUS EXPENSES (POOJAN EXPENSES) 2. THE ASSESSEE EXPENSES TOWARDS POOJAN EXPENSES ON INDUCTION OF 2 NEW HP DUMPERS & 1 EXCAVATOR CK-300 BEFORE THE STARTING OF WORKING AT MINES. BESIDES AS LABOUR WELFARE MEASURES ORGANIZED FUNCTI ON TO HONOUR SOME OF THE BEST WORKERS WHICH WAS FOLLOWED BY LUNCH, POOJA AND MOMENTO AT OUR SHIV MANDIR OF LAXMIPURA MINES. LIGHT DECORATION CH ARGES ON THE OCCASION OF BABA RAMDEV MELA ON TEMPLE SITUATED AT OUR SATAL KHERI MINING AREA AS REQUESTED BY THE SC/ST WORKERS. THESE EXPENDITURES BEING INCIDENTAL TO BUSINESS AND IN THE NATURE OF LABOUR WELFARE WAS AL LOWABLE. THE NECESSARY VOUCHERS WITH SUPPORTING DOCUMENTS ALREADY SUBMITTE D TO ASSESSING AUTHORITY DURING THE COURSE OF ASSESSMENT PROCEEDIN GS. 2.1 LOWER AUTHORITIES ERRED IN DISALLOWING BY HOLDI NG THAT THEY WERE NOT INCIDENTAL FOR BUSINESS. 2.2 RELIANCE IS PLACED ON THE JUDGMENTS CIT V/S. MO HAN MEAKIN LTD. [(2010) 189 TAXMAN 377 (DELHI)] , CIT V/S. ARUNA SU GARS LTD. [(1981) 132 ITR 718 (MAD)], JT. CIT V/S. PANKAJ OXYGEN LTD. [(2003) 78 TTJ (NAG) ITA NO. 497/JP/2012 M/S. ASSOCIAT ED STONE INDUSTRIES (K) LTD. VS. ACIT, CIRCLE- 1, K OTA 3 119], I.C.B. LTD. V/S. I.T.O. [(2005) 93 ITD 418 (MUM)], VIJAY SEEDS CO. (P) LTD. V/S. ASSTT. CIT [(2001) 79 ITD 233 (PUNE )] IN ALL THESE CASES EXPENDITURE INCURRED IN PUJA, HA WAN, KIRTAN AND LABOUR WELFARE WAS ALLOWED AS BUSINESS EXPENDITURE, THEREF ORE, THE ABOVE EXPENDITURES IS ALLOWABLE AS BUSINESS EXPENDITURE. - COMPENSATION OF REMOVING UNAUTHORIZED ENCROACHME NT OF TAPARIES 3.1 ASSESSEE IS ENGAGED IN THE BUSINESS OF MINING O F KOTA STONE SINCE 1945, HAVING A HUGE MINING AREA OF 9.991 SQ.KM. ALLOTTED BY THE MINES & GEOLOGY DEPARTMENT, GOVERNMENT OF RAJASTHAN. THE MINING LEA SES COMPRISE OF OWN PURCHASE LAND, GOVERNMENT LAND, CHARAGAH LAND, AGRI CULTURE LAND, WELLS, ALONG WITH ENCROACHED, AUTHORIZED AND UNAUTHORIZED HOUSES , TAPARIES ETC. EVERY YEAR A CERTAIN AREA IS OPENED FOR MINING WHICH REQUIRES REMOVAL OF SUCH UNAUTHORIZED ENCROACHMENT AS A BUSINESS NECESSITY. LIKE EARLIER YEARS, ASSESSEE IN THIS YEAR PAID RS.210000/- & RS.310000/ - ON 12.01.2008, TO MR. RAM NARAIN S/O MOOLCHAND KOLI AND MR. BIRDHI CHAND S/O RAM NARAIN, TOWARDS COMPENSATION FOR VACATING UNAUTHORIZED KAC CHI TAPARIES SITUATED IN OUR MINING LEASE AREA AT BHAG NO.6, OF LAXMIPURA MINES. AS ON THIS UNEXPLORED AREA SOME UNAUTHORIZED TEMPORARY HOUSES/ KACHHI TAPARIES/BADA WERE THERE SINCE 20-25 YEARS. FOR MINING ACTIVITY O F ASSESSEE THEY WERE TO BE VACATED. THEREFORE, THERE SERVICES WERE UTILIZED WH OLLY AND EXCLUSIVELY IN THE ITA NO. 497/JP/2012 M/S. ASSOCIAT ED STONE INDUSTRIES (K) LTD. VS. ACIT, CIRCLE- 1, K OTA 4 INTEREST OF MINING BUSINESS TO EVACUATE UNAUTHORIZE D RESIDENTS AND SETTLE THE ISSUE BY PAYING SOME COMPENSATION FOR REHABILITATIO N OF THEM TO AVOID UN- NECESSARY COMPLICATIONS, LITIGATION, HARASSMENTS, I NTERRUPTIONS, VIOLENCE ETC. THE COPY OF AGREEMENT IN SUPPORT OF ABOVE PAYMENTS WAS SUBMITTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THIS EXPENDIT URE IS INCURRED YEAR AFTER YEAR FOR SMOOTH CONDUCT OF MINING BUSINESS WAS INCU RRED WHOLLY AND EXCLUSIVELY IN THE COURSE OF BUSINESS AND COMMERCIA L EXPEDIENCY AND FOR PRESERVING OR PROTECTING OF BUSINESS ASSETS I.E. MI NING AREA. LD. ASSESSING OFFICER ERRED IN DISALLOWING THE SAME ON TECHNICAL GROUNDS ABOUT COURT SETTLEMENT, ABSENCE OF NOTICE, FIR ETC. AND STEPPIN G IN THE SHOES OF BUSINESS TO ASSUME THAT THERE WAS NO NEED TO PAY COMPENSATION T O PROTECT BUSINESS ASSET AND PROTECT OPERATIONS. 3.2 RELIANCE IS PLACED ON FOLLOWING JUDICIAL PRECED ENTS: 1. [(1968) 45 TC 18 (HL)] COMMISSIONER OF INLAND REV ENUE V/S. CARRON OF COMPANY - HELD - EXPENSES INCURRED FOR REMOVING OBSTACLES / DISABILITIES IN THE COMPANYS TRADING OPERATION WHI CH PREJUDICED ITS OPERATION; SPECIALLY WHEN ACHIEVED WITHOUT ACQUISIT ION OF ANY TANGIBLE / INTANGIBLE ASSET - REVENUE EXPENDITURE. 2. [(1971) 81 ITR 754 (SC)] DALMIA JAIN & CO. LTD. V /S. CIT - HELD - IF EXPENDITURE IS INCURRED TO PROTECT THE BUSINESS OF THE ASSESSEE, TO DEFEND A CLAIM MADE AGAINST IT, THEN SUCH EXPENDITURE MUST BE CONSIDERED AS REVENUE EXPENSES. ITA NO. 497/JP/2012 M/S. ASSOCIAT ED STONE INDUSTRIES (K) LTD. VS. ACIT, CIRCLE- 1, K OTA 5 3. [(1980) 124 ITR 1 (SC)] EMPIRE JUTE CO. LTD. V/S CIT - HELD - EXPENDITURE INCURRED FOR PRESERVING AND MAINTAINING OR PROTECTING CAPITAL ASSET IS REVENUE EXPENDITURE. 4. [(1990) 187 ITR 39 (SC)] BIKANER GYPSUMS LTD. V/S . CIT - HELD - WHERE THE ASSESSEE HAS AN EXISTING RIGHT TO CARRY O N THE BUSINESS, ANY EXPENDITURE MADE BY IT DURING THE COURSE OF BUSINES S FOR THE PURPOSE OF REMOVING ANY RESTRICTION / OBSTRUCTION OR DISABILIT Y WOULD BE ON REVENUE ACCOUNT, PROVIDED THE EXPENDITURE DOES NOT ACQUIRE ANY CAPITAL ASSET. - REVENUE EXPENDITURE. 5. [(1994) 210 ITR 222 (CAL)] CIT V/S AUTO DISTRIBUT ORS LTD - PAYMENT MADE TO OBTAIN VACANT POSSESSION OF A BUILDING WAS NOT CAPITAL EXPENDITURE BUT WAS INCURRED WHOLLY AND EXCLUSIVELY IN THE COURSE OF BUSINESS AND ALLOWABLE AS SUCH. 6. [(1978) 114 ITR 434 (CAL)] CIT V/S DELUXE FILM DI STRIBUTORS LTD. - HELD - AMOUNT PAID FOR CLEARING TITLE IN THE COURSE OF CARRYING ON OF BUSINESS IS FOR COMMERCIAL EXPEDIENCY AND THEREFORE , ALLOWABLE. - MEMBERSHIP OF ROTARY CLUB 4.1 ASSESSEE INCURRED RS.3000/- UNDER THE HEAD OF S UBSCRIPTION TOWARDS THE MEMBERSHIP OF DIRECTOR SHRI DEEPAK JATIA FOR ROTAR Y CLUB, KOTA, AS PER THE TERMS OF APPOINTMENT OF SHRI DEEPAK JATIA, AS PER R ESOLUTION APPROVED BY AGM HE IS ENTITLED FOR MEMBERSHIP OF TWO CLUBS ON B EHALF OF THE COMPANY. THESE TYPES OF EXPENDITURES ARE ESSENTIAL FOR MEETI NG WITH EXPECTED/EXISTING CUSTOMERS, DELEGATES, DIGNITIES FOR ENHANCEMENT OF THE BUSINESS, AND USED ITA NO. 497/JP/2012 M/S. ASSOCIAT ED STONE INDUSTRIES (K) LTD. VS. ACIT, CIRCLE- 1, K OTA 6 EXCLUSIVELY FOR BUSINESS PURPOSE AND ALLOWED AS REV ENUE EXPENDITURE. LD. AO ERRED IN DISALLOWING CLUB MEMBERSHIP FEE AS NOT FOR PURPOSE OF BUSINESS. 4.2 RELIANCE IS PLACED ON THE JUDGMENTS - JT. CIT V /S. SONY INDIA (P) LTD. - [(2005) 4 SOT 30 (DEL), GUJARAT PETROSYNTHESE LTD. V/S. DY. CIT [(2001) 76 ITD 257 (AHD), INFOSYS TECHNOLOGIES LTD. V/S. JT. C IT [(2007) 109 TTJ BANG) 631, ESKAYEF LTD. V/S. DY. CIT - (1999) 71 ITD 419 (BANG), SIMBHAOLI SUGAR MILLS LTD. V/S. ASSTT. CIT - [(2007) 17 SOT 90 (DEL ). IN ALL THESE CASES IT HAS BEEN HELD THAT FEES PAID FOR CLUB MEMBERSHIP OF DI RECTORS / CORPORATE MEMBERSHIP OF CLUB WAS HELD TO BE A ALLOWABLE EXPEN SES. - PROFESSIONAL CHARGES PAID FOR PREPARING REPORT FO R NEW POWER PROJECT WHICH WAS NOT STARTED: 5.1 ASSESSEE IS PROFITABLY ENGAGED IN THE FIELD O F MINING ACTIVITIES SINCE LAST MORE THAN 6 DECADES WITH SUCH A GOOD EXPERIENC E IN MINING FIELD, THE COMPANY WAS LOOKING FOR SOME NEW MINE BASED BUSINES S ACTIVITIES FOR PAST 1- 2 YEARS. DURING THIS PERIOD A NEW BUSINESS OPPORTUN ITY SURFACED BY WAY OF ALLOTMENT OF COAL MINES BLOCKS WITH A CONDITION TO ESTABLISH 600 MW COAL BASED POWER PLANT IN RAIGARH DISTRICT, CHHATTISGARH . THE COMPANY ALSO ACCORDINGLY AMENDED ITS OBJECT CLAUSE IN THE MEMORA NDUM OF ASSOCIATION, THE COPY THEREOF WAS DULY SUBMITTED DURING THE COUR SE OF ASSESSMENT PROCEEDINGS. FOR THIS PURPOSE COMPANY ENGAGED SERV ICES OF M/S DEVELOPMENT CONSULTANTS PRIVATE LTD., KOLKATA, TO P REPARE A DETAILED PROJECT ITA NO. 497/JP/2012 M/S. ASSOCIAT ED STONE INDUSTRIES (K) LTD. VS. ACIT, CIRCLE- 1, K OTA 7 REPORT (DPR) INCLUSIVE OF SITE INSPECTIONS, EQUIPME NT REQUIRES, ENGINEERING LAYOUTS, ELECTRICAL SYSTEMS, INSTRUMENTATION REQUIR EMENT, CIVIL AND ENGINEERING ASPECTS, ENVIRONMENTAL ASPECTS, CONSTRUCTIONS AND O RGANIZATION STRUCTURE, EMPLOYMENT AND FINANCIAL ASPECTS ETC. A VOLUMINOUS DPR HAS ACCORDINGLY PREPARED BY THE CONSULTANTS WHICH PRODUCED DURING T HE COURSE OF ASSESSMENT. DUE TO CERTAIN EXIGENCIES THIS PROJECT COULD NOT BE STARTED AS THE COAL BLOCK WAS ULTIMATELY ALLOTTED TO SOME OTHER PARTY, THUS T HE REASONS FOR NON START OF NEW POWER PROJECT WERE BEYOND THE CONTROL OF ASSESS EE. ASSESSEE PAID RS.741144/- DURING THE YEAR 2007-08 AS A CONTRACTUA L OBLIGATION TO M/S DEVELOPMENT CONSULTANTS PRIVATE LTD, CONSULTING ENG INEERS, KOLKATA, FOR SUCH PREPARATION OF DETAILED PROJECT REPORT (DPR) F OR 600 MW COAL BASED POWER PLANT IN RAIGARH DISTRICT, CHHATTISGARH AND D EBITED THE SAME AS REVENUE EXPENDITURE UNDER THE HEAD OF LEGAL AND PROFESSIONA L EXPENSES AT MUMBAI. IN BUSINESS REALITIES IN EXPANSION OF BUSINESS VARI OUS PROPOSALS ARE EXPLORED AND EXPENDITURE IS INCURRED ON FEASIBILITY AND OTHE R ASPECTS. DUE TO UNFORESEEN CIRCUMSTANCES AND NON FEASIBILITY SOME OF THE PROPO SALS ARE DROPPED FOR ONE OR ANOTHER REASON. AS PER SETTLED LAW IF ASSESSEE S UCCEEDS IN COMMENCING NEW PROJECT THEN SUCH EXPENDITURE WILL BE TREATED AS PR E-OPERATIVE EXPENDITURE, HOWEVER IF ANY PROJECT IS NOT COMMENCED IT IS TO BE ALLOWED AS REVENUE EXPENDITURE. IN THE GIVEN FACTS AND CIRCUMSTANCES, WHICH ARE NOT DISPUTED THE ITA NO. 497/JP/2012 M/S. ASSOCIAT ED STONE INDUSTRIES (K) LTD. VS. ACIT, CIRCLE- 1, K OTA 8 LEGAL AND PROFESSIONAL EXPENSES INCURRED FOR EXPLOR ING NEW BUSINESS INTRINSICALLY LINKED TO MINING IS TO BE ALLOWED AS REVENUE EXPENDITURE. LD. ASSESSING OFFICER ERRED IN DISALLOWING THESE PROFES SIONAL CHARGES ASSUMING TO BE CAPITAL IN NATURE. 5.2 RELIANCE IS PLACED ON THE FOLLOWING JUDGMENTS: - 1. CIT V. EXPANDED METAL MFRS. - [(1991) 189 ITR 317 ( ALL)] - HELD - WHERE ASSESSEE - FIRM, CARRYING ON BUSINESS OF EXPE NDITURE OF IRON METAL BY MECHANICAL PROCESS AND ITS SUPPLY, STARTED A NEW BUSINESS OF MANUFACTURE OF RUBBER PRODUCTS AND FOR THAT PURPOSE RAISED LOAN INTEREST WAS ALLOWABLE FOR RELEVANT PERIOD EVEN THOUGH DURIN G THAT PERIOD ASSESSEE'S RUBBER FACTORY DID NOT WORK. 2. (1997) 226 ITR 253 (MP)] - CIT V/S. MALWA VANASPATI & CHEMICALS CO. LTD - HELD - WHERE ASSESSEE - COMPANY IN MANUFA CTURE, PROCESSING AND SALE OF VEGETABLES, OIL SET UP A NEW UNIT OF MA NUFACTURE OF A KIND ACID AND TRIBUNAL HELD THAT ASSESSEE'S BUSINESS ACT IVITY RELATING TO A NEW CONSTITUTED AN EXPANSION OF ITS BUSINESS AND NOT DI FFERENT BUSINESS DISTINCT FROM ITS EXISTING BUSINESS AND THAT INTERE ST PAID ON BORROWINGS FOR SETTING UP OF THAT NEW UNIT FOR PERIOD PRIOR TO COMMENCEMENT OF PRODUCTION IN THAT UNIT WAS ALLOWABLE U/S 36 (1)(II I), TRIBUNAL'S ORDER WAS TO BE UPHELD. 3. [(1998) 233 ITR 139 (CAL)] CIT V/S. WESTERN BENGA L COAL FIELDS LTD. - HELD - INTEREST PAID ON BORROWED CAPITAL FOR ONE OF TWO LINES OF BUSINESS IS ALLOWABLE AFTER ITS DISCONTINUANCE IF I T IS FOUND THAT THERE EXISTED COMMON MANAGEMENT, COMMON ACCOUNTS AND INTE RLACING OF VARIOUS ACTIVITIES OF ASSESSEE. ITA NO. 497/JP/2012 M/S. ASSOCIAT ED STONE INDUSTRIES (K) LTD. VS. ACIT, CIRCLE- 1, K OTA 9 4. CIT V. BHILAI IRON FOUNDRY (P.) LTD. [1998] 234 ITR 661 (M.P.) - HELD - WHERE AMOUNT WAS BORROWED FOR EXPANSION OF EXISTI NG BUSINESS MERELY BECAUSE EXTENDED UNIT HAD GONE NOT INTO OPER ATION, INTEREST PAID ON SUCH BORROWED CAPITAL COULD NOT BE DISALLOWED. 5. IAC V/S. COROMANDAL FERTILIZERS LTD. [1989] 29 ITD 455 (HYD) - HELD - WHERE THE ASSESSEE WAS IN THE BUSINESS OF MANUFACTU RE AND SALE OF FERTILIZERS HAD AMENDED ITS OBJECT CLAUSE AND ENTE RED INTO THE BUSINESS OF CEMENT MANUFACTURING THE CLAIM OF ASSESSEE FOR D EDUCTION OF INTEREST PAID ON LOAN RAISED FOR SET UP OF CEMENT PLANT WAS DISALLOWED AS THE PLANT HAD NOT COMMENCED. THE TRIBUNAL HELD THAT EVE N IF SUCH A DIVERSION HAD IN FACT TAKEN PLACE INASMUCH AS FERTI LIZER ACTIVITY AND CEMENT ACTIVITY WERE ONE AND THE SAME BUSINESS, AND THERE WAS UNITY OF CONTROL AND MANAGEMENT AND AS SUCH THE ASSESSEE CLA IM FOR DEDUCTION OF INTEREST WAS ALLOWED. 6. KALYANI STEEL LTD. V/S. DY. CIT [1997] 62 ITD 233 ( PUNE) - HELD - WHERE ASESSEE ENGAGED IN PRODUCTION OF STEEL HAD UN DERTAKEN A NEW PROJECT OF SEAMLESS TUBES AND IT WAS FOUND THAT ASS ESSEES STEEL BUSINESS AND TUBE BUSINESS CONSTITUTED SAME BUSINESS INTERES T ON BORROWED CAPITAL CLAIMED AS PRE OPERATIVE EXPENSES RELATIN G TO TUBE BUSINESS WAS ALLOWABLE U/S. 36 (1) (III). 7. TATA CHEMICALS V/S. DY. CIT [2000] 72 ITD 1 (MUM) - HELD - IN ORDER TO DECIDE WHETHER TWO BUSINESSES ARE A SINGLE, COMP OSITE OR SAME BUSINESS THE DECISIVE TEST IS UNITY OF CONTROL. 8. GRASIM INDUSTRIES LTD. V/S. DY. CIT [1999] 64 TTJ ( MUM) 357 - HELD - WHERE ALL EXISTING UNITS OF ASSESSEE WERE FOUND TO CONSTITUTE SAME ITA NO. 497/JP/2012 M/S. ASSOCIAT ED STONE INDUSTRIES (K) LTD. VS. ACIT, CIRCLE- 1, K OTA 10 BUSINESS ASSESSEE WOULD BE ALLOWED DEDUCTION OF INT EREST EVEN THOUGH SUCH UNIT HAD NOT COMMENCED PRODUCTION. IT IS CONTENDED BY LD. COUNSEL THAT IN VIEW OF ABOV E FACTUAL AND LEGAL CONTENTIONS, JUDICIAL PRECEDENT ALL THE ABOVE EXPEN DITURE BEING REVENUE IN NATURE AND INCURRED WHOLLY AND EXCLUSIVELY FOR BUSI NESS PURPOSE SHALL BE ALLOWED TO ASSESSEE. 6.1 LD. DR SUPPORTED THE ORDER OF LOWER AUTHORITIES . 7.1 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. 1. APROPOS POOJAN EXPENSES, WE FIND MERIT IN THE CONTE NTIONS OF ASSESSEE, THESE EXPENDITURE BEING IN THE FIELD OF C USTOMARY EXPENSES, LABOUR WELFARE HAVING BEEN ALLOWED IN PAST YEAR SHO ULD BE ALLOWED. OUR VIEW IS FORTIFIED BY HONBLE DELHI HIGH COURT AN D MADRAS HIGH COURT JUDGMENTS IN THE CASES OF MOHAN MEAKIN LTD AN D ARUNA SUGARS RESPECTIVELY (SUPRA). 2. APROPOS IN THE GIVEN FACTS AND CIRCUMSTANCES, EXPEN DITURE AMOUNTING TO RS. 5,20,000/- ON COMPENSATION AND PAY MENT TO FACILITATORS FOR REMOVAL OF ENCROACHMENT TO ENSURE SMOOTH MINING ACTIVITIES RELATED TO BUSINESS OF THE ASSESSEE ARE TO BE HELD AS ALLOWABLE EXPENDITURE. OUR VIEW IS FORTIFIED BY HON BLE SUPREME COURT JUDGMENTS IN THE CASE OF DALMIA JAIN AND CO. AND EMPIRE JUTE ITA NO. 497/JP/2012 M/S. ASSOCIAT ED STONE INDUSTRIES (K) LTD. VS. ACIT, CIRCLE- 1, K OTA 11 CO (SUPRA) AND OTHER JUDGMENTS. THIS GROUND OF THE ASSESSEE IS ALLOWED. 3. APROPOS MEAGER AMOUNT OF RS. 3000/- INCURRED ON CLU B MEMBERSHIP FEE IS ALLOWABLE IN VIEW OF VARIOUS ITAT JUDGMENTS INCLUDING SONY INDIA (SUPRA). AS A RESULT THIS GROUND OF THE ASSES SEE IS ALLOWED. 4. APROPOS LAST GROUND I.E. PROFESSIONAL CHARGES ON PR EPARATION OF FEASIBILITY REPORT FOR NEW POWER PROJECT, IT IS NOT DISPUTED THAT THE OPPORTUNITY OF ALLOTMENT OF A COAL MINE ALONG WITH ESTABLISHMENT OF 600 MW COAL BASED POWER PLANT IN RAIGARH DISTRICT, CHHATTISGARH WAS OFFERED TO ASSESSEE. NEITHER THE GENUINENESS OF EXPENDITURE NOR THE SHELVING OF THE POWER PLANT PROJECT DUE TO NON ALLOTMENT OF COAL BLOCK IS DOUBTED BY AUTHORITIES BELOW. THE EXPENDIT URE HAS BEEN DISALLOWED ONLY BY HOLDING IT TO BE CAPITAL IN NATU RE. HONBLE ALLAHBAD HIGH COURT IN THE CASE OF CIT V. EXPANDED METAL MFRS. - [(1991) 189 ITR 317 HELD THAT - WHERE ASSESSEE FIR M, CARRYING ON BUSINESS OF EXPENDITURE OF IRON METAL BY MECHANICAL PROCESS AND ITS SUPPLY, STARTED A NEW BUSINESS OF MANUFACTURE OF RU BBER PRODUCTS AND FOR THAT PURPOSE RAISED LOAN INTEREST WAS ALLOW ABLE FOR RELEVANT PERIOD EVEN THOUGH DURING THAT PERIOD ASSESSEE'S RU BBER FACTORY DID NOT WORK. THE FACTS OF THE ASSESSEE CASE ARE SIMILA R AND FURTHER SUPPORTED BY A CATENA OF JUDGMENTS AS MENTIONED ABO VE. IN THESE FACTS AND CIRCUMSTANCES RESPECTFULLY FOLLOWING THE SE JUDGMENT WE HOLD THAT ASSESSEE IS ELIGIBLE FOR CLAIM OF EXPENDI TURE OF RS. 7,41,144/- AS REVENUE EXPENDITURE INCURRED FOR FEAS IBILITY OF NEW POWER PROJECT WHICH COULD NOT COMMENCE. ITA NO. 497/JP/2012 M/S. ASSOCIAT ED STONE INDUSTRIES (K) LTD. VS. ACIT, CIRCLE- 1, K OTA 12 8.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 08 /01/20 16. SD/- SD/- FOE FLAG ;KNO VKJ-IH-RKSYKUH (VIKRAM SINGH YADAV) (R.P.TOLANI) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 08 /01/ 2016 *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S. ASSOCIATED STONE INDUSTRIES (KO TAH) LTD., KOTA 2. IZR;FKHZ@ THE RESPONDENT- THE ACIT , CIRCLE- 1, KOTA 3. VK;DJ VK;QDRVIHY ) @ CIT(A) 4. VK;DJ VK;QDR@ CIT 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.497/JP/2012) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR