CIT vs. ACC RIO TINTO EXPLORATION LTD

IN THE HIGH COURT OF DELHI AT NEW DELHI . . . ITA 611/2012 . . . CIT ..... Appellant . Through: Mr. Abhishek Maratha, Sr. Standing Counsel with Ms. Anshul Sharma, Advocate. . versus . . . ACC RIO TINTO EXPLORATION LTD ..... Respondent . Through: Mr. Sandeep S. Karhail with Ms. Sayaree Basu Mallik, Advocate. . . . CORAM: . HON'BLE MR. JUSTICE S. RAVINDRA BHAT . HON'BLE MR. JUSTICE R.V.EASWAR . . . O R D E R . 19.10.2012 . . . The Revenue claims to be aggrieved by an order of the Income Tax Appellate Tribunal (?Tribunal?, for short) dated 26.08.2011 in ITA No.6007/Del/2010. The Tribunal dismissed the Revenue?s appeal and the assessee?s cross-objections. It was held by the Tribunal that the provision of Section 35E are inapplicable in the facts of the case; for this purpose it relied upon the judgment of this Court in the case of the same assessee ? reported as Commissioner of Income Tax v. ACC Rio Tinto Exploration Ltd., ITA No.547/2009 decided on 28.01.2010. The relevant part of the Tribunal?s discussion is as follows: - . . . ?2. The return of income filed on 22.10.2001 declaring loss of `300,52,260/-. In the limited scrutiny, the loss was assessed at a reduced loss of `138,72,104/- Thereafter, the case was reopened u/s 148 on 30.6.2004 by issuing notice u/s 148. The assessee is engaged in the business of prospecting exploration of ores and minerals and during the financial year, the assessee has changed its accounting policy in respect of treatment given to exploration expenditure and the expenses were not capitalized and the expenditure was charged to profit and loss account. In the limited scrutiny order, the AO held that company has not commenced its business during the relevant previous year, therefore, the expenses incurred have to be capitalized. The assessee has shown the income from interest on FDR and earning on account of foreign exchange fluctuation only. The AO held that the assessee?s case falls under the provisions of section 35E. The assessee contended that the provisions of section 35E are not applicable to the case of the assessee. Ld. AR submitted that this issue has been decided by the Hon?ble Delhi High Court in the assessee?s own case in ITA No.547 of 2009 in Order dated 28th January, 2010 for the year 2001-02 itself wherein the Hon?ble High Court has held as under: . . . ?7. Going through the objects of the assessee company and the permission granted by the FIPB, the Tribunal, in our view rightly so, came to the conclusion that the assessee was not in the business of mining ores or minerals and that it was only in the business of . prospecting or exploring the ores and minerals. Consequently, the argument of the Assessing Officer, that the assessee had not commenced its business, was held to be incorrect. We agree with this conclusion, which is based purely on the facts of the present case.? . . . Since the issue is covered by the decision of jurisdictional High Court we find no fault in the order of the CIT (A) and we dismiss this ground of revenue?s appeal.? . . . The Tribunal as is evident followed the decision of this Court in assessee?s case for the previous year. Having regard to the above, the Court is of the opinion that no substantial question of law arises for consideration. The appeal is accordingly dismissed. . . . S. RAVINDRA BHAT, J . . . . . . . R.V.EASWAR, J . OCTOBER 19, 2012 . hs . . . . . $ 6 .