M/S BALAJI MINES AND MINERALS PRIVATE LIMITED,PANAJI vs. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE - 1, MARGAO, MARGAO

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ITA 324/PAN/2017Status: DisposedITAT Panaji10 January 2019AY 2008-092 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the compensatory afforestation expenditure is a revenue expenditure, relying on High Court decisions. Therefore, the disallowance made by the lower authorities was set aside.

What were the facts?

The assessee incurred compensatory afforestation expenditure which was treated as capital expenditure by the Assessing Officer and confirmed by the CIT(A). The expenditure was for clearing land to create a shorter approach road for business operations.

What were the issues?

Whether compensatory afforestation expenditure incurred for business operations is a revenue or capital 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, PANAJI BENCH, PANAJI

Before: SHRI SHAMIM YAHYA, AM & SHRI RAM LAL NEGI, JM

For Appellant: Shri P. J. Pardiwalla, Shri Y. V. Raviraj
Hearing: 15.11.2018

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI

BEFORE SHRI SHAMIM YAHYA, AM AND SHRI RAM LAL NEGI, JM

ITA No.324/Pan./2017 (Assessment Year: 2008-09) M/s. Balaji Mines and Minerals Private Asst. CIT-1, Limited Margao Range, Goa Vs. Salgaocar Bhavan, Altinho, Panaji, Goa-403 001 PAN/GIR No. AAACB 7003 P (Appellant) : (Respondent) Appellant by : Shri P. J. Pardiwalla : Shri Y. V. Raviraj Respondent by Date of Hearing : 15.11.2018 : 14.01.2019 Date of Pronouncement

O R D E R Per Shamim Yahya, A. M.:

This is an appeal by the assessee is directed against the order of the learned

Commissioner of Income Tax (Appeals)– Panaji, pertaining to assessment year 2008-09.

2.

The grounds of appeal raised by the assessee reads as under:

1.

i. The Ld. CIT(A) erred in confirming the disallowance of compensatory afforestation expenditure Rs. 4,31,215 made by the assessing officer by holding that such expenditure was towards acquiring a right of enduring nature even when no right to land was transferred to the appellant. ii. In doing so, the learned CIT(A) failed to appreciate that such expenditure was incurred wholly and exclusively for the appellant's business by facilitating appellant's trading operations and hence a revenue expenditure allowable u/s. 37 of the ITA.

3.

Brief facts of the case are that in the assessment order, the Assessing Officer (A.O.

for short) has treated the compensatory afforestation expenditure incurred by the assessee

as capital expenditure and has disallowed the same. The expenditure was in the nature of

clearance which led to a shorter approach road. The learned CIT-A has also upheld the

A.O.’s action, However, he allowed the deprecation at the rate of 10%.

2 ITA No.324/Pan./2017 4. Against the above order, the assessee is in appeal before us.

5.

We have heard both the counsel and perused the records. Learned counsel of the

assessee submitted that the payment by the assessee to Forest Department for the

compensatory afforestation is a revenue expenditure, He submitted that the same has

been so held by ITAT as well as the Hon'ble Bombay High Court at Goa (in Tax Appeal

No. 66 of 2012) in the case of Dy. CIT vs. Timblo Pvt. Ltd. vide order dated 5/11/12.

6.

Per Contra, the ld. Departmental Representative (ld. DR for short) relied upon the

order's of authorities below.

7.

Upon careful consideration we find that the issue is duly covered in favour of the

assessee by the Hon’ble High Court decisions cited above. Accordingly, we set aside

order's of authorities below and decide the issue in favour of assessee.

8.

In the result, this appeal by the assessee stands allowed.

Order pronounced by listing the result on the Notice Board of the Bench under Rule 34(4) of the Appellate Tribunal Rules, 1963. Sd/ Sd/- - RAM LAL NEGI SHAMIM YAHYA JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 14.01.2019 Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The CIT(A); (4) The CIT, Panji City concerned; (5) The DR, ITAT, Panji; (6) Guard file.

By Order Roshani, Sr. PS

(Sr. P.S./P.S.) ITAT

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