DCIT CC 1 4 KOLKATA, KOLKATA vs. LAL TRADERS & AGENCIES PVT LTD, KOLKATA

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ITA 2387/KOL/2025Status: DisposedITAT Kolkata22 July 20268 pages
AI SummaryAllowed

What did the Tribunal hold?

The CIT(A) allowed the assessee's appeal, holding that the payments were not for original acquisition of mining rights but for the extension of an existing lease, thus not capital in nature.

What were the facts?

The assessee, engaged in mining, debited lease payments to its P&L account. The AO treated these payments, related to an extended mining lease, as capital expenditure as they provided an enduring benefit.

What were the issues?

Whether lease payments made for the extension of an existing mining lease constitute capital expenditure or revenue expenditure.

Which sections of the Income-tax Act were involved?

Section 37

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH, KOLKATA

Before: SHRI RAJESH KUMAR, AM & SHRIPRADIP KUMAR CHOUBEY, JM

For Appellant: Shri S Jhajharia, AR
For Respondent: Ms. Monalisa Pal Mukherjee, DR
Hearing: 01.07.2026Pronounced: 22.07.2026

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRIPRADIP KUMAR CHOUBEY, JM

ITA No.2387/KOL/2025 (Assessment Year: 2017-18) LAL TRADES & AGENCIES DCIT CC 1 4 KOLKATA PVT LTD AAYAKAR BHAWAN POORVA, 7, WATERLOO STREE 110 SHANTI PALLY, KOLKATA- KOLKATA-700069 Vs. 700107, KOLKATA-700107, KOLKATA-700069, WEST BENGAL WEST BENGAL (Appellant) (Respondent) PAN No. AAACL5478J CO No. 5/KOL/2026 (Arising out of ITA No. 2387/K/25 for A.Y. 17-18) LAL TRADES &AGENCIES DCIT CC 1 4 KOLKATA PVT LTD AAYAKAR BHAWAN POORVA, 7, WATERLOO STREE 110 SHANTI PALLY, KOLKATA- KOLKATA-700069 Vs. 700107, KOLKATA-700107, KOLKATA-700069, WEST BENGAL WEST BENGAL (Appellant) (Respondent) Assessee by : Shri S Jhajharia, AR Revenue by : Ms. Monalisa Pal Mukherjee, DR Date of hearing: 01.07.2026 Date of pronouncement: 22.07.2026

O R D E R Per Rajesh Kumar, AM:

These are appeals preferred by the Revenue and Cross Objection by the assessee against the order of the CIT (A), Kolkata-20, (hereinafter referred to as the “Ld. CIT(A)”] dated 06.05.2025 for the AY 2017-18.

ITA No. 2387/KOL/2025 3. The issue raised in ground no.1 is against the order of ld. CIT (A) deleting the addition of ₹2,66,27,069/- as made by the ld. AO on account of lease payments linked to acquisition of mining rights which according to the ld. AO relate to acquiring enduring business rights and these payments are in the nature of capital expenditure and therefore, not allowable u/s 37 of the Income-tax Act, 1961 (the Act).

4.

The facts in brief are that the assessee is engaged in the business of Iron ore and manganese mining on leased land in the state of Orissa. The assessee filed the return of income on 29.10.2017, declaring total income at ₹17,26,76,560/-. The case of the assessee was selected for scrutiny under Computer Assisted Scrutiny Selection (CASS). The assessee replied all the queries raised by the ld. AO during the assessment proceedings. The ld. AO observed that the assessee has debited an amount under assessed leased rent

5.

In the appellate proceedings, the ld. CIT (A) allowed the appeal of the assessee by observing and holding as under:-

“4.2 Observations and decision: I have carefully considered the facts of the case and the submissions of the appellant. The appellant has raised various grounds of appeal in this case against the addition of Rs.2,66,27,069/-. The A.O. in the assessment order has stated that in the scrutiny assessment it was found that the assessee has debited an amount of Rs.2,66,27,069/- has assessed lease rent in the Profit & Loss A/c. This amount of Rs.2,66,27,069/- includes payment of Orissa Space Application Centre of Rs.5,18,440/-, payment of Stamp Collector cum sub- registrar of Rs.1,89,39,383/- and fees and registration of Rs.79,35,754/-. The A.O. in the assessment order has stated that since the said payments by the appellant are linked to the acquisition of mining rights which are in the nature of capital expenditure. Therefore, the same are not allowable as expenditure in the P & L A/c. The appellant in its submission has stated that the said disallowance of expenditure of Rs.2,66,27,069/- by the A.O. is not only erroneous rather it is based on wrong appreciation of the fact. While elaborating upon the relevant fact of the case, appellant has stated that as per new section 8A of MMDR Act which had been inserted through amendment of lease period was granted by the Govt. of Orissa from the past for tenure of 50 years starting from 1970 and expiring on 26-05-2020. In the light of such application filed by the assessee company, the office of the District Mining Office, Mayurbhanj, Baripada had issued a notice on 22-08- 2016 wherein the sub-Registrar, Rairanpur, Mayurbhanj, had computed a stamp duty liability of Rs.1,98,39,383/- for the purpose of execution /registration of supplementary lease deed in relation to extension of validity of mining lease. In response to the same the assessee had duly discharged such liability during the assessment year under consideration. Further, some departmental fees of Rs.79,35,754/- were also paid at the time of execution of lease deed on 20-12-2016. The entire liability paid by us on such account amounted to Rs 2,77,75,137/- (Rs.1,98,39,383/- + Rs. 79,35,754/-). As such liability was related to the tenure of 50 years out of which 47 years had

7.

The appeal of the Revenue is dismissed.

CO No. 5/KOL/2026 8. Since, we have already dismissed the appeal of the Revenue, hence, the CO of the Assessee become infructuous, hence, dismissed.

9.

In the result, both the appeal of the assessee and the Revenue are dismissed.

Order pronounced on 22.07.2026.

Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 22.07.2026 Sudip Sarkar, Sr.PS

Asst. Registrar Income Tax Appellate Tribunal, Kolkata

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