ITO, Jaipur V. ANDHI MARBLES P LTD., Jaipur

ITA 879/JPR/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54186 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 2 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2004-2005
• Appeal Filed On: 01-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VINOD JOHARI
• Keywords: Depreciation; Revenue expenditure
• Section: 143(3)

Judgement Text

1 ITA 879-10 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH B JAIPUR BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ITA NO. 879/JP/2010 ASSTT. YEAR : 2004-05. THE INCOME-TAX OFFICER, VS. M/S. ANDHI MARBLES PV T. LTD., WARD 5(1), RAM BHAWAN, RAMGARH MODE, JAIPUR. AMER ROAD, JAIPUR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VINOD JOHARI RESPONDENT BY : SHRI MANISH AGARWAL DATE OF HEARING : 15.9.2011 DATE OF PRONOUNCEMENT : 23.9.2011 ORDER DATE OF ORDER : 23/09/2011. PER R.K. GUPTA, J.M. THIS IS AN APPEAL BY DEPARTMENT AGAINST THE ORDER OF LD. CIT (A) RELATING TO ASSESSMENT YEAR 2004-05. 2. THE DEPARTMENT IS OBJECTING IN DELETING THE ADDI TION OF RS. 1,00,86,166/- MADE BY AO BY CAPITALIZING THE EXPENDITURE IN VIEW OF SECTI ON 35E OF THE ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE CO MPANY WAS DERIVING INCOME FROM MINING OF MARBLES BLOCKS FROM THE MINES ALLOTTED TO THE ASSESSEE COMPANY BY THE STATE GOVERNMENT AT ANDHI. THEREAFTER, THE AO HAS REFERRE D PROVISIONS OF S. 35E AND HAS OBSERVED THAT THE ASSESSEE COMPANY HAS SHOWN LESSER PRODUCTION WAS COMPARED TO EXPENSES DEBITED AND FROM THE MINING RETURN IT WAS FOUND THAT THE MINES HAVE BEEN 2 CLOSED W.E.F. JUNE, 2003 AND THE SUBSEQUENT SALE WA S OF THE STOCK WHICH WAS LYING AT THE MINES. UNDER THESE CIRCUMSTANCES, A SHOW CAUSE WAS GIVEN BEFORE TREATING VARIOUS EXPENDITURES ON CONSUMABLE STORES AND SPARES, DIESE L, OIL AND LUBRICANT, REPAIR AND MAINTENANCE AND ON THE WAGES AGGREGATING AT RS. 96, 54,828/- AS CAPITAL EXPENSES FOR THE PURPOSE OF EXPLORING A NEW SITE FOR THE EXTRACTION OF MARBLE. THEREAFTER, THE AO HAS REPRODUCED THE PROVISIONS OF S. 35E AND HAS GIVEN A FINDING THAT AS PER S. 35E(1) IF THE EXPENDITURES HAVE BEEN INCURRED FOR THE OPERATIONS RELATING TO PROSPECTING FOR OR EXTRACTION OR PRODUCTION OF ANY MATERIAL THEN IS CO VERED U/S 35E(1). SHE HAS FURTHER GIVEN A FINDING THAT NO COMMERCIAL PRODUCTION HAS STARTED AND THE MARBLE IS COVERED UNDER THE SEVENTH SCHEDULE PART B SINCE IT IS CLAIMED FORMATI ON WHICH IS NAMED AS DOLOMITE. SHE HAD ALSO REFERRED THE AR REPLY IN WHICH HE HAS STAT ED THAT THE ASSESSEE COMPANY HAS STARTED DEVELOPING A MIN PIT ON THE AREA WHICH WAS NOT COVERED BY THE ORDER OF SUPREME COURT IN WHICH HUGE EXPENDITURES IN THE SHAPE OF CO NSUMABLES, DIESEL, OIL AND LUBRICANTS WERE INCURRED. SINCE, AS PER ROYALTY RETURN THE MIN ING WAS STOPPED FROM THE MONTH OF JUNE AND THEREFORE, THE AREA ON WHICH NEW DEVELOPME NT HAS BEEN DONE WAS ENTIRELY A NEW PROJECT WHICH IS COVERED UNDER THE PROVISIONS OF S. 35E OF I.T. ACT. THEREAFTER, A FURTHER SHOW CAUSE NOTICE WAS ISSUED ON 28.11.2006 BEFORE D ISALLOWING THESE EXPENDITURES U/S 35E. THEREAFTER, THE EXPLANATION FURNISHED WAS REPR ODUCED IN THE BODY OF ASSESSMENT ORDER BUT IT HAS NOT BEEN CONSIDERED SATISFACTORY O N THE GROUND THAT EXPENDITURE DEBITED UNDER THE HEAD ADMN. EXPENSES, FINANCIAL EXPENSES A ND DEPRECIATION HAS DIRECT NEXUS WITH DAY TO DAY EXPLORING OF THE NEW MINES AND THE ONLY WORK RELATING TO THE OLD MINE WAS THE LEGAL WORK AND SELLING OF THE EXISTING STOCK LYING. SINCE, THE EXPENDITURE WHICH IS INCURRED ENTIRELY ON NEW AREA WHICH IS NOT COVERED BY THE DECISION OF SUPREME COURT FOR 3 CLOSING OF MINES WITH LICENSES NO. 5/89 AND 77/84. THE MINING REPORT ALSO CONFIRMS THE STATUS OF THESE MINES. CLEARLY THE REMOVAL OF OVER BURDEN BEFORE ACTUALLY REACHING THE ACTUAL DEPOSITS CANNOT BE TERMED AS THE ONGOING PRO CESS AND THEREFORE, DEVELOPMENT EXPENSES AS MENTIONED IN THE SHOW CAUSE COULD NOT H AVE BEEN ALLOWED AS REVENUE EXPENDITURE. BESIDES THAT ENTIRE DEPRECIATION OF BU ILDING BUILT AT MINES, 75% OF WIRELESS MAINTENANCE EXPENSES AND 20% OF TELEPHONE AND VEHIC LE RUNNING EXPENSES WERE ALSO CONSIDERED AS CAPITAL EXPENSES AND IN THIS PROCESS TOTAL AMOUNT OF ` 1,00,86,166/- WAS CAPITALIZED. FURTHER, AS PER PROVISIONS OF S. 35E O F I.T. ACT 1/10 TH OF THE SAME OR INCOME OF THE ASSESSEE WHICHEVER IS LESS FROM THE YEAR OF PRODUCTION TO 10 CONSECUTIVE PREVIOUS YEAR IS TO BE ALLOWED AS PER S. 35E OF I.T. ACT. 4. DETAILED SUBMISSIONS WERE FILED BEFORE LD. CIT ( A), WHICH ARE REPRODUCED BY LD. CIT (A) IN HIS ORDER AT PAGES 5 TO 9. AFTER CONSIDE RING THE DETAILED SUBMISSIONS, THE LD. CIT (A) HELD THAT PROVISIONS OF SECTION 35E ARE NOT APPLICABLE ON THE FACTS OF THE PRESENT CASE. THEREFORE, HE DELETED THE ADDITION MADE BY AO BY HOLDING THAT EXPENDITURE CLAIMED BY ASSESSEE IS REVENUE IN NATURE. 5. NOW THE DEPARTMENT IS IN APPEAL HERE BEFORE THE TRIBUNAL. 6. THE LD. D/R HEAVILY PLACED RELIANCE ON THE ORDER OF AO. FINDING OF AO WAS ALSO READ AND EXPLAINED. IT WAS SUBMITTED THAT AO HAS EX AMINED THE ISSUE IN DETAIL AND THEN ONLY CAME TO A CONCLUSION THAT PROVISIONS OF SECTIO N 35E ARE APPLICABLE AND THE EXPENDITURE INCURRED BY ASSESSEE IS IN NATURE OF CA PITAL. IT WAS EXPLAINED THAT THE EXPENDITURE INCURRED BY ASSESSEE IS NOT INCURRED ON THE RUNNING BUSINESS BUT HAS INCURRED THE EXPENSES ON AN ADDITIONAL PLOT ALLOTTED TO THE ASSESSEE TO FIND OUT MINERALS IN THAT PLOT. NATURE OF MATERIAL DISCUSSED BY THE AO WAS ALSO EXP LAINED BY LD. D/R. IT WAS SUBMITTED 4 THAT MARBLE IS ALSO A KIND OF MINERAL AND, THEREFOR E, EXPENDITURE BY ASSESSEE IS COVERED BY PROVISIONS OF SECTION 35E AND THE SAME CAN BE ALLOW ED IN 10 YEARS AND THE AO HAS GIVEN THE BENEFIT OF DEDUCTION 1/10 TH OF THE EXPENDITURE CLAIMED. BY OBSERVING THAT THE EXPENDITURE WILL BE ALLOWED IN 10 YEARS, THEREFORE, THE AOS ORDER DOES NOT SUFFER FROM ANY INFIRMITY AND THE LD. CIT (A) WAS NOT JUSTIFIED IN HOLDING THAT EXPENDITURE INCURRED WAS OF REVENUE NATURE AND ALLOWABLE UNDER SECTION 3 7(1) OF THE ACT. 7. ON THE OTHER HAND, LD. COUNSEL OF THE ASSESSEE P LACED RELIANCE ON THE ORDER OF LD. CIT (A). IT WAS SUBMITTED THAT THE DETAILED WRITTE N SUBMISSIONS WERE FILED BEFORE LD. CIT (A) WHICH HAS BEEN TAKEN INTO CONSIDERATION. IT WA S FURTHER SUBMITTED THAT THE ASSESSEE WAS NOT SEARCHING THE MARBLE IN THE ALLOTTED PLOT A S WHOLE OF THE PLOT WAS ALLOTTED TO ASSESSEE FOR EXTRACTING THE MARBLE FROM THAT ADDITI ONAL AREA ALLOTTED TO ASSESSEE. IT WAS FURTHER SUBMITTED THAT ASSESSEE IS IN SAME BUSINESS FOR LAST SO MANY YEARS AND SIMILAR EXPENDITURE CLAIMED RELATING TO THE BUSINESS DONE F ROM OTHER PLOT HAS BEEN ALLOWED AS A REVENUE EXPENDITURE. NATURE OF BUSINESS OF THE ASSE SSEE IS SAME. IT WAS ALSO SUBMITTED THAT THOUGH IN ADDITIONAL AREA NO MARBLE WAS EXTRAC TED DURING THE YEAR, HOWEVER, THE SAME HAS BEEN ISSUED IN THE SUBSEQUENT YEAR AND THE EXPE NDITURE INCURRED BY ASSESSEE HAS BEEN ALLOWED BY THE DEPARTMENTAL AUTHORITY ITSELF. THERE FORE, THE NATURE OF EXPENDITURE INCURRED BY ASSESSEE IS PURELY OF REVENUE IN NATURE AND THE LD. CIT (A) WAS JUSTIFIED IN ALLOWING THE SAME. PART OF THE ORDER OF LD. CIT (A) WAS READ BY LD. A/R. IT WAS ALSO ADDED THAT THE LD. D/R HAS PLACED RELIANCE ON THE ORDER O F AO. HOWEVER, THE FINDING OF LD. CIT (A) REMAINED UNCONTROVERTED WHICH HAS BEEN GIVEN BY LD. CIT (A) AFTER CONSIDERING DETAILED SUBMISSIONS FILED BEFORE HIM. 5 8. REGARDING BROCHURE FILED BY LD. D/R SHOWING THAT MARBLE IS A MINERAL, IT WAS SUBMITTED THAT MARBLE CAN BE A MINERAL BUT IF ANY P ERSON IS SEARCHING OUT THE MINERAL IN AN AREA AND MAY NOT BE ABLE TO FIND OUT MINERAL THE N ONLY SECTION 35E CAN BE APPLIED. HOWEVER, IN CASE OF ASSESSEE IT WAS SHOWN THAT THER E ARE MARBLES AS ADJACENT PLOT WAS ALLOTTED TO THE ASSESSEE FOR EXTRACTING THE MARBLE AND ASSESSEE HAS EXTRACTED MARBLE ALSO IN SUBSEQUENT YEAR AND THERE IS NO DISPUTE IN THIS FAC T. THEREFORE, EXPENDITURE INCURRED BY ASSESSEE IS IN NATURE OF REVENUE. 8.1. FURTHER, A BRIEF NOTE WAS ALSO FILED BY LD. CO UNSEL OF THE ASSESSEE AND RELIANCE WAS PLACED ON THE DECISION OF TRIBUNAL IN CASE OF NEYVE LI LIGNITE CORPORATION LTD, 309 ITR 136 (CHENNAI) WHEREIN THE MINING DEVELOPMENT EXPEND ITURE WERE HELD AS REVENUE IN NATURE. 9. WE HAVE HEARD RIVAL SUBMISSIONS AND CONSIDERED T HEM CAREFULLY. AFTER CONSIDERING THE SUBMISSIONS AND MATERIAL ON RECORD, WE FIND THAT LD. CIT (A) WAS JUSTIFIED IN ALLOWING THE CLAIM OF ASSESSEE. DETAILED SUBMISS IONS WERE FILED BEFORE LD. CIT (A) WHICH HAS BEEN TABULATED IN THE ORDER OF LD. CIT (A ) AT PAGES 3 TO 9 OF HIS ORDER. IN THESE WRITTEN SUBMISSIONS, THE ASSESSEE HAS DISCUSSED THE PROVISIONS OF SECTION 35E AND THE REASONING THAT HOW THEY ARE NOT APPLICABLE ON THE F ACTS OF THE PRESENT CASE AND HAS ALSO GIVEN THE REASONING THAT HOW THE EXPENDITURE CLAIME D BY ASSESSEE IS REVENUE IN NATURE AND THEREAFTER AFTER DISCUSSING ALL THE SUBMISSIONS , THE LD. CIT (A) HAS HELD THAT THE EXPENDITURE CLAIMED BY ASSESSEE IS REVENUE IN NATUR E. THE FINDING OF THE LD. CIT (A) HAS BEEN RECORDED AT PAGES 10 & 11 WHICH ARE AS UNDER : - I HAVE CONSIDERED FACTS OF THE CASE AND ARGUMENTS TAKEN BY SHRI AGARWAL QUITE CAREFULLY. IT IS A FACT THAT THE APPE LLANT COMPANY WAS ENGAGED IN THE MINING ACTIVITY OF MARBLE SINCE LAST MANY YEAR AND THEY 6 WERE HAVING MINES IN ANDHI AREA OF JAIPUR. ONCE A B IG CHUNK OF THE LAND IS AVAILABLE FOR MINING PURPOSE THEN CONSIDERING COMME RCIAL EXPEDIENCY AND TECHNICAL SUITABILITY IT IS FOR THE PERSON AUTHORIZ ED FOR MINING TO CONTINUE THE MINING PROCESS IN THE EXISTING PIT IN FURTHER D EPTH OR TO GO FOR MINING IN OTHER AVAILABLE AREA BY REMOVING THE OVER BURDEN . THE SUPREME COURT IN ITS DECISION HAS STAYED THE MINING ACTIVITY IN A NDHI AREA UPTO A CERTAIN AREA WHICH WAS IDENTIFIABLE. IT IS ALSO UNDISPUTED FACT THAT THE APPELLANT SINCE EARLIER YEAR WAS DOING OPEN CAST MINING AND I N THE OPENING CAST MINING THE EXPANSION OF AREA OF MINING IS INEVITABL E PROCESS. NOW ON THE AVAILABLE LAND WHETHER DURING THE YEAR THE APPELLAN T HAS INCURRED THE EXPENDITURE JUST ON ADJOINING LAND TO THE EXISTING PIT OR INCURRED THE EXPENDITURE ON THE AVAILABLE LAND KEEPING IN VIEW T HE RESTRICTIONS IMPOSED BY HONBLE SUPREME COURT DOES NOT CHANGE THE MATERI AL POSITION REGARDING HAVING THE MINING ACTIVITY WHICH WAS ALRE ADY BEING UNDERTAKEN SINCE YEARS AND INCURRING THE EXPENDITURE ON REMOVA L OF OVERBURDEN ON THE AVAILABLE PIECE OF LAND BUT BEYOND RESTRICTED AREA DOES NOT MAKE SUCH ACTIVITY AS DEVELOPMENT OF THE MINE AS ENVISAGED IN S. 35E OF I.T. ACT. I ALSO AGREE WITH SHRI AGARWAL THAT S. 35E ONLY COVER S THE EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY ON ANY OPERATIONS R ELATING TO PROSPECTING FOR ANY MINERAL OR GROUP OF ASSOCIATED MINERALS SPE CIFIED IN PART A OR PART B OF SEVENTH SCHEDULE OF I.T. ACT, 1961. SPECIFICAL LY MARBLE BLOCKS ARE NOT COVERED UNDER THE SEVENTH SCHEDULE. I ALSO AGRE E WITH HIM THAT DOLOMITE AND MARBLE IS NOT THE SAME MINERAL WHICH I S CLEAR FROM DICTIONARY MEANING AND EVOLVING PROCESS OF DOLOMITE VIS--VIS MARBLE. WITH THIS DISCUSSION IN MY CONSIDERED VIEW THESE EX PENDITURES CANNOT BE CONSIDERED AS CAPITAL EXPENSES AND CERTAINLY NOT TH E EXPENDITURES WHICH ARE COVERED U/S 35E OF I.T. ACT. AO IS THEREFORE, D IRECTED TO ALLOW THE SAID EXPENDITURE OF RS. 1,00,86,166/- WHICH HAS BEEN CAP ITALIZED BY HIM SINCE THESE ARE THE EXPENDITURES OF ALLOWABLE NATURE LOOK ING TO THE MINING ACTIVITY OF THE APPELLANT COMPANY. 7 10. BRIEF SUBMISSIONS FILED HERE BEFORE THE TRIBUNA L BY THE LD. COUNSEL OF THE ASSESSEE ARE ALSO REPRODUCED HERE AS UNDER :- WHILE ALLEGING SO LD. AO HAS MADE A SERIOUS ERROR OF IGNORING THE FACT THAT ASSESSEE WAS DOING OPEN CAST MINING WITHOUT GOING MUCH DEEPER AND FOR EXTENSION OR DEVELOPMENT OF MINE IT IS NOT NECESSAR Y THAT THE SAME WOULD BE DONE IN DEPTH ONLY, THE EXPANSION OF AREA OF MINING IS A N ONGOING PROCESS WITHOUT WHICH THE OPEN MINING IS NOT POSSIBLE. THE COMMERCIAL PRODUCTION OF THE ASSESSEE WAS CARRI ED ON UNDER NORMAL COURSE OF BUSINESS FOR PAST MORE THAN 15 YEARS AND SINCE OPENING OF ANOTHER MINING PIT IS AN ONGOING PROCESS UNDERTAKEN AT THE EXISTING MINING AREA AND NO NEW EXPLORATION OF MINERAL FOR THE FIRST TIME HAD S INCE TAKEN PLACE, THE PROVISIONS OF SECTION 35E OF THE INCOME TAX ACT, 1961 ARE NOT APPLICABLE. FURTHER THE EXPENDITURE OF SIMILAR NATURE WERE INCURRED IN EARL IER YEARS ALSO WHICH WERE ALLOWED AFTER DUE SCRUTINY OF THE ASSESSEES RECORD S IN ALL EARLIER YEARS WHERE THE ASSESSMENTS WERE ALWAYS COMPLETED U/S 143(3) OF THE ACT. WITHOUT PREJUDICE TO THE ABOVE, IT IS SUBMITTED THA T SECTION 35E ONLY COVERS THE EXPENDITURE INCURRED WHOLLY AND EXCLUSIV ELY ON ANY OPERATIONS RELATING TO PROSPECTING FOR ANY MINERAL OR GROUP OF ASSOCIAT ED MINERALS SPECIFIED IN PART A OR PART B OF THE SEVENTH SCHEDULE OF INCOME TAX ACT , 1961. MARBLE BLOCKS ARE NOT COVERED UNDER THE SEVENTH SCHEDULE BUT THE LD. AO H AS MADE THE DISALLOWANCE BY CLAIMING THAT MARBLE IS COVERED UNDER THE PART B OF SEVENTH SCHEDULE SINCE ITS CLAIMED FORMATION IS NAMED AS DOLOMITE WHICH IS APP EARING AT S. NO. 9 OF PART B OF SCHEDULE-7 WHICH READS AS LIMESTONE, DOLOMITE AND MAGNESITE . DOLOMITE MARBLE AND LIMESTONE ARE NOT THE SAME MINE RALS, AS HAS BEEN DEFINED IN THEIR DICTIONARY MEANING WHICH ARE AS UN DER: AS PER WEBSTERS DICTIONARY DOLOMITE - DOUBLE CARBONATE OF CALCIUM AND MAGNESIUM. 8 MARBLE NATURALLY OCCURRING CALCIUM CARBONATE WHICH HAS BEEN CRYSTALLIZED FROM LIMESTONE UNDER HEAT AND PRESSURE, FORMING A HARD R OCK CAPABLE OF TAKING A HIGH POLISH AND OFTEN VEINED OR MOTTLED BY THE PRESENCE OF OTHER CRYSTALLIZED MINERALS. LIMESTONE : A SEDIMENTARY ROCK COMPOSED LARGELY OF MINERALS C ALCITE AND ARAGONITE, WHICH ARE DIFFERENT CRYSTAL FORMS OF CAL CIUM CARBONATE. AS PER OXFORD DICTIONARY DOLOMITE : A MINERAL OR SEDIMENTARY ROCK CONSISTING CHIEFLY OF A CARBONATE OF CALCIUM AND MAGNESIUM. MARBLE : A HARD FORM OF LIMESTONE, TYPICALLY VARIEGATED OR MOTTLED, WHICH MAY BE POLISHED AND IS USED IN SCULPTURE AND BUILDING. LIMESTONE : A TYPE OF WHITE ROCK, CONTAINING CALCIUM, USED AS BUILDING MATERIAL AND IN MAKING CEMENT. DOLOMITE: DOLOMITE ROCK IS ONE OF THE FEW SEDIMENTARY ROCKS T HAT UNDERGOES A SIGNIFICANT MINERALOGICAL CHANGE AFTER IT IS DEPOSITED. THEY AR E ORIGINALLY DEPOSITED AS CALCITE/ARAGONITE RICH LIMESTONES, BUT DURING A PRO CESS CALL DIAGENESIS THE CALCITE AND/OR ARAGONITE IS ALTERED TO DOLOMITE. THE PROCES S IS NOT METAMORPHISM, BUT SOMETHING JUST SHORT OF THAT. MAGNESIUM RICH GROUND WATERS THAT HAVE A SIGNIFICANT AMOUNT OF SALINITY ARE PROBABLY CRUCIAL AND WARM, T ROPICAL NEAR OCEAN ENVIRONMENTS ARE PROBABLY THE BEST SOURCE OF DOLOMI TE FORMATION. IN DOLOMITE, THE MAGNESIUMS OCCUPY ONE LAYER BY THE MSELVES FOLLOWED BY A CARBONATE LAYER WHICH IS FOLLOWED BY AN EXCLUSIVE LY CALCITE LAYER AND SO FORTH MARBLE A METAMORPHIC ROCK FORMED BY ALTERATION OF LIMESTON E OR DOLOMITE, OFTEN IRREGULARLY COLORED BY IMPURITIES, AND USED ESPECIA LLY IN ARCHITECTURE AND SCULPTURE GEOLOGISTS CATEGORIZE ROCKS INTO THREE BASIC GROUPS , OF WHICH SEDIMENTARY AND METAMORPHIC ARE TWO. IGNEOUS IS THE THIRD. SEDI MENTARY ROCKS ARE LAID DOWN IN LAYERS OF SEDIMENTS SUCH AS MUD, SILT AND SAND T HAT ACCUMULATE AND HARDEN OVER 9 TIME. IGNEOUS ROCKS ARE FORMED FROM THE SOLIDIFICAT ION OF LAVA OR MAGMA. METAMORPHIC ROCKS ARE A BIT OF A COMBINATION. THEY ARE SEDIMENTARY ROCKS OR IGNEOUS ROCKS THAT HAVE BEEN DEFORMED AND CHANGED B Y HIGH PRESSURE AND TEMPERATURE DEEP IN EARTH, OR BY CONTACT WITH, OR C LOSE PROXIMITY TO A MAGMATIC INTRUSION. DIFFERENTIATION 1. ON THE BASIS OF CHARACTER, FORMATION AND COMPOSI TION: ` THE MAIN DIFFERENCE BETWEEN DOLOMITE AND MARBLE IS THAT DOLOMITE IS A SEDIMENTARY ROCK WHEREAS MARBLE IS A METAMORPHIC RO CK . SEDIMENTARY ROCK IS A TYPE OF ROCK THAT IS FORMED BY SEDIMENTATION OF MATERIAL AT THE EARTH'S SURFACE AND WITHIN BODIES O F WATER. SEDIMENTATION IS THE COLLECTIVE NAME FOR PROCESSES THAT CAUSE MINERAL AND/OR ORGANIC PARTICLES ( DETRITUS ) TO SETTLE AND ACCUMULATE OR MINERALS TO PRECIPITATE FROM A SOLUTION . PARTICLES THAT FORM A SEDIMENTARY ROCK BY ACCUMULATING ARE CALLED SEDIMENT . BEFORE BEING DEPOSITED, SEDIMENT WAS FORMED BY WEATHERING AND EROSION IN A SOURCE AREA, AND THEN TRANSPORTED TO THE PLACE OF DEPOSITION BY WATER , WIND , MASS MOVEMENT OR GLACIERS . METAMORPHIC ROCK IS THE RESULT OF THE TRANSFORMATION OF AN EXISTING ROCK TYPE, THE PROTOLITH, IN A PROCESS CALLED METAMORPHISM , WHICH MEANS 'CHANGE IN FORM'. THE PROTOLITH IS SUBJECTED TO HEAT AND PRESSURE (TEMPERATURES GR EATER THAN 150 TO 200 C AND PRESSURES OF 1500 BARS) CAUSING P ROFOUND PHYSICAL AND/OR CHEMICAL CHANGE. THE PROTOLITH MAY BE SEDIMENTARY ROCK , IGNEOUS ROCK OR ANOTHER OLDER METAMORPHIC ROCK. METAMORPHIC ROCKS MAKE UP A LARGE PART OF THE EARTH 'S CRUST AND ARE CLASSIFIED BY TEXTURE AND BY CHEMICAL AND MINERAL ASSEMBLAGE ( METAMORPHIC FACIES ). THEY MAY BE FORMED SIMPLY BY BEING DEEP BENEATH THE EARTH'S SURFACE, SUBJECTED TO HIGH TEMPERATURES AND THE GREAT PRESSURE OF THE ROCK LAYERS ABOVE IT. THEY CAN FORM FROM TECTONIC PROCESSES SUCH AS CONTINENTAL COLLISIONS, WHICH CAUSE HORIZONTAL PRESSURE, FRICTI ON AND DISTORTION. THEY ARE ALSO FORMED WHEN ROCK IS HEATED UP BY THE INTRUSION OF HOT MOLTEN ROCK CALLED MAGMA 10 FROM THE EARTH'S INTERIOR. THE STUDY OF METAMORPHIC ROCKS (NOW EXPOSED AT THE EARTH'S SURFACE FOLLOWING EROSION AND UPLIFT) PROVI DES US WITH VERY VALUABLE INFORMATION ABOUT THE TEMPERATURES AND PRESSURES TH AT OCCUR AT GREAT DEPTHS WITHIN THE EARTH'S CRUST. MARBLE IS DIFFERENT FROM DOLOMITE DESPITE THE FACT THAT SOMETIMES IT IS MADE UP BY METAMORPHOSIS OF DOLOMITE BUT IT IS TOTA LLY DIFFERENT FROM DOLOMITE BECAUSE PROCESS OF METAMORPHOSING CHANGES THE FORM, STRUCTURE OR SUBSTANCE OF THE DOLOMITE. MARBLE IS ALSO DIFFERENT FROM LIMESTONE . THE MAIN DIFFERENCE BETWEEN LIMESTONE AND MARBLE IS THAT LIMESTONE IS A SEDIMEN TARY ROCK, TYPICALLY COMPOSED OF CALCIUM CARBONATE FOSSILS, AND MARBLE IS A METAM ORPHIC ROCK. LIMESTONE FORMS WHEN SHELLS, SAND, AND MUD ARE DEPOSITED AT THE BOT TOM OF OCEANS AND LAKES AND OVER TIME SOLIDIFY INTO ROCK. MARBLE FORMS WHEN SED IMENTARY LIMESTONE IS HEATED AND SQUEEZED BY NATURAL ROCK-FORMING PROCESSES SO T HAT THE GRAINS RECRYSTALLIZE. LIMESTONE IS USUALLY MADE OF PRECIPITATED CALCITE, SHELL FRAGMENTS, AND MUD. IF YOU LOOK VERY CLOSELY, YOU MAY SEE TINY FOSSILS IN IT. MARBLE IS LIMESTONE THAT HAS METAMORPHOSED THROUGH HEAT AND PRESSURE, THEREFORE, THE PARTICLES IN THE LIMESTONE HAVE RECRYSTALLIZED INTO INTERLOCKING CAL CITE CRYSTALS. IMPURITIES IN THE MARBLE WILL APPEAR AS DARK STREAKS IN THE WHITISH C ALCITE CRYSTAL MATRIX. 2. ON THE BASIS OF USAGE: THE USAGE OF MARBLE, LIMESTONE AND DOLOMITE IS ENTI RELY DIFFERENT AND THEY CANNOT BE USED AS A SUBSTITUTE OF EACH OTHER AND TH US CANNOT BE PUT AT PAR IN TERMS OF THEIR USAGE AS SUCH . SOME EXAMPLES OF THEIR INDIVIDUAL USAGE ARE AS UN DER: MARBLE IS USED FOR STONE HOME FURNISHINGS, FLOORS, COUNTE RS, CLOCKS, HOT PLATES, TABLES, PILLARS, STRUCTURAL RESURFACING, EV EN BATHROOM APPLICATIONS BESIDES HAVING USED FOR SCULPTURE ETC. 11 DOLOMITE IS TYPICALLY USED IN FERTILIZER, AS A FURNACE REFR ACTORY, AND IN CONSTRUCTION AND CERAMIC MATERIALS. LIMESTONE IS USED IN PATH PAVERS, LANDSCAPING ROCK, ROAD GRA VEL, CONCRETE AGGREGATE AND SOIL CONDITIONER. IN ADDITION, LIMEST ONE IS USED AS AN ADDITIVE TO PAINT AND OTHER PRODUCTS, AND A SOURCE OF CALCIUM C ARBONATE. IF LIMESTONE IS POWDERED IT CAN BE USED TO NEUTRALISE THE ACIDITY I N LAKES CAUSED BY ACID RAIN AND TO NEUTRALISE ACIDIC SOILS. IT IS ALSO USED IN CEME NT AND IN MAKING GLASS. 3. VALUE: IN TERMS OF THE VALUE, THE MARBLE, LIMESTONE AND D OLOMITE CANNOT BE PUT AT PAR AND HAS DIFFERENT VALUES WHICH ARE BASED ON THE QUALITY, SIZE AND SHAPE. THUS IT CANNOT BE HOLD THAT THE MARBLE IS THE FORMA TION OF DOLOMITE AND THEREFORE, COVERED IN THE ITEMS SPECIFIED IN S.NO. OF PART-B OF SCHEDULE 7 OF THE INCOME TAX ACT, 1961 AND ACCORDINGLY THE PROVISIONS OF SECTION 35E OF THE ACT ARE NOT APPLICABLE ON THE DEVELOPMENT OF THE MARBLE MIN ES. FURTHER LD. AO AT PAGE 6 IN PARA 1 HAS ALSO OBSERVE D THAT MARBLE IS COVERED UNDER THE SEVENTH SCHEDULE OF THE ACT BECAU SE ITS CLAIMED FORMATION IS NAMED AS DOLOMITE. THE OBSERVATIONS OF LD. AO ARE N OT APPROPRIATE BECAUSE IT IS NOT THE INTENTION OF THE STATUTE TO COVER THOSE MIN ERALS WHICH IS GENERATED / CAUSED DUE TO FORMATION / TRANSFORMATION / PROCESS OF ANOT HER MINERAL (WHICH IS COVERED UNDER SEVENTH SCHEDULE). IF THE INTENTION OF THE ST ATUTE HAD BEEN TO COVER THESE FORMATTED OR TRANSFORMED MINERALS ALSO THAN THERE W AS BOUND TO BE A CLEAR MENTION OF THIS FACT. BUT THE SCHEDULE 7 PROVIDES T HE EXHAUSTIVE LIST OF MINERALS WHICH ARE INTENDED TO INCLUDE UNDER THE SEVENTH SCH EDULE WHERE MARBLE DO NOT FIND PLACE. ATTENTION IS ALSO INVITED TO THE FACT THAT MINING D EPARTMENT ALSO MADE A DISTINCTION BETWEEN DOLOMITE AND MARBLE FOR LEVY OF ROYALTY AND HAS PRESCRIBED DIFFERENT RATES IN RESPECT OF BOTH MINERALS. THE RO YALTY RATE PER TONNE AS EXISTED IN THE YEAR UNDER APPEAL FOR MARBLE WAS ` 125/- AS AGAINST THE RATE PER TONNER FOR 12 DOLOMITE AT ` 45/-. THE APPELLANT DURING THE YEAR UNDER APPEAL H AD PAID ROYALTY AT THE RATE PRESCRIBED FOR MARBLE, THEREFORE, IN ABSEN CE OF OTHER PARAMETER, THE CLASSIFICATION DONE BY MINING DEPARTMENT IS THE BES T GUIDE TO ASCERTAIN THE MINERAL EXCAVATED FROM THE MINES OWNED BY THE APPEL LANT. 11. AFTER TAKING INTO CONSIDERATION THE FINDING OF LD. CIT (A) AND THE WRITTEN SUBMISSIONS OF LD. A/R AND ALSO TAKING INTO CONSIDE RATION THE DECISION OF CHENNAI BENCH OF THE TRIBUNAL REPORTED IN 309 ITR 136 (SUPRA), WE FIND THAT LD. CIT (A) WAS RIGHT IN HOLDING THAT EXPENDITURE INCURRED BY ASSESSEE IS RE VENUE IN NATURE. IN CASE OF M/S. NEYVELI LIGNITE CORPORATION LTD. (SUPRA), THE TRIBU NAL HAS HELD THAT EXPENDITURE INCURRED ON REMOVAL OF OVERBURDEN IN OPEN CAST MINES FOR EXC AVATING LIGNITE IS REVENUE IN NATURE. IT WAS HELD BY TRIBUNAL THAT THE EXPENDITURE IS NOT OF CAPITAL IN NATURE AND NOT COVERED BY SECTION 35E AS THE SAME WAS EXCLUSIVELY INCURRED FO R THE PURPOSE OF DEDUCTION UNDER SECTION 37. THE RATIO OF THIS DECISION SQUARELY AP PLICABLE ON THE FACTS OF THE PRESENT CASE AS IN THIS CASE ALSO THE ASSESSEE INCURRED EXPENDIT URE FOR EXTRACTING MARBLE FROM THE ADDITIONAL PLOT ALLOTTED AND, THEREFORE, IN OUR VIE W THE EXPENDITURE INCURRED BY ASSESSEE WAS REVENUE IN NATURE. IN VIEW OF THESE FACTS AND C IRCUMSTANCES AND IN VIEW OF THE REASONING GIVEN BY LD. CIT (A), WE CONFIRM HIS ORDE R. 12. IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISM ISSED. 13. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 23 .9.2011. SD/- SD/- ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR, D/- 13 COPY FORWARDED TO :- THE INCOME-TAX OFFICER, WARD 5(1), JAIPUR. M/S. ANDHI MARBLES PVT. LTD., JAIPUR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 879/JP/2010) BY ORDER, AR ITAT JAIPUR.