PR COMMISSIONER OF INCOME TAX-II vs. RAJASTHAN STATE MINES andMINERALS LTD

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ITA/315/2017HC RajasthanRJHC02099631201713 December 20172 pages
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What did the High Court hold?

The Rajasthan High Court, while admitting the appeal, framed a substantial question of law concerning the ITAT's justification in allowing the reduction of Rs. 5,79,10,137/- on account of written-back excess amortization, given that the issue of disallowance in earlier years had not attained finality. The Court, in view of its decision in a related case (ITA No. 146/2016) involving the same assessee, held that the expenses were of a capital nature and thus could not be treated as revenue expenditure. Consequently, the issue was answered in favour of the department and against the assessee. However, the Court clarified that in light of the decision in ITA No. 146/2016 where depreciation was allowed to the assessee, the same benefit would be granted by the Assessing Officer. The appeal was disposed of accordingly.

What were the facts?

The appeal is filed by the Principal Commissioner of Income Tax-II against the order of the Income Tax Appellate Tribunal (ITAT). The ITAT had partly allowed an appeal filed by the assessee, Rajasthan State Mines & Minerals Ltd., and also an appeal filed by the department. The assessment year(s) are not explicitly stated for this specific appeal, but the procedural history indicates a related appeal (ITA No. 146/2016) involving the same assessee was decided on the same day. The core dispute revolves around the assessee's claim for a reduction of Rs. 5,79,10,137/- on account of written-back excess amortization. The appellant (Revenue) challenges the ITAT's decision to allow this reduction, particularly in light of the fact that the issue of disallowance in earlier years had not attained finality.

What were the issues?

1. Whether, on the facts and circumstances of the case and in law, the Tribunal is justified in allowing a reduction of Rs. 5,79,10,137/- claimed by the assessee on account of written-back excess amortization, especially when the issue of disallowance in earlier years has not attained finality. (Question of law) Assessee's contentions: The judgment does not record any specific contentions made by the assessee on this issue. Revenue's contentions: The Revenue argued that the expenses made were of a capital nature and therefore could not be treated as revenue expenditure. The judgment implies the Revenue's challenge is based on the non-finality of earlier years' disallowances and the nature of the expenditure.

Which sections of the Income-tax Act were involved?

Section 37

AI-generated summary — verify with the full judgment below

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 315 / 2017 Principal Commissioner of Income Tax-II, New Central Revenue Building, Statue Circle, Jaipur (Raj.) ----Appellant Versus Rajasthan State Mines & Minerals Ltd., C-89-90, Lal Kothi Scheme, Jaipur. ----Respondent _____________________________________________________ For Appellant(s) : Mr. Anuroop Singhi with Mr. Aditya Vijay For Respondent(s) : Mr. Sanjay Jhanwar with Ms. Archana _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS Judgment 13/12/2017 1. By way of this appeal, the appellant has assailed the judgment and order of the tribunal whereby tribunal has partly allowed the appeal of the assessee as well as the department. 2. This court while admitting the appeal on 28.11.2017 framed following substantial question of law:- “Whether on the facts and circumstances of the case and in law, the tribunal is justified in allowing reduction of Rs.5,79,10,137/- claimed by the assessee on account of written back excess amortization, moreso when the issue of disallowance in earlier years not attained finality.” 3. In view of the decision taken by us today in the case of same assessee in ITA No.146/2016 where on first issue regarding

(2 of 2) [ITA-315/2017]

Section 37, the expenses which are made are of capital nature, therefore, it cannot be taken as revenue expenditure. 4. In that view of the matter, the issue is required to be answered in favour of the department and against the assessee. 5. However, we make it clear that in view of the decision in ITA No.146/2016 where we have allowed the depreciation to the assessee, the same benefit will be granted to him by the Assessing Officer. 6. The appeal stands accordingly disposed of. (VIJAY KUMAR VYAS), J. (K.S. JHAVERI), J. bmg 102.

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