ACIT, CIRCLE - 25, KOLKATA vs. M/S. MALA ROY & OTHERS, KOLKATA

After hearing rival contentions we find that two issues are adjudicated by the Revenue before us. The first is deletion by the ld. CIT(A) of a disallowance made by the AO u/s 40(a)(ia) of the Act and the second is deletion by the ld. CIT(A) of the disallowance made by the AO of depreciation claimed on leasehold mining rights..

The ld. CIT(A) has in his order given a factual finding that Section 40(a)(ia) of the Act is not applicable to the case of the assessee, for the reason that what was paid was onlyreimbursement of expenditure. This finding of fact could not be controverted by the ld. DR. The AO also does not controvert this claim of the assessee with evidence. The basis of disallowances is that, there is no contract between the parties. The ld. CIT(A) states that, it was an arrangement between the parties to reimburse the cost actually incurred. Thus we find no infirmity in the order of the ld. CIT(A) as there is no element Assessment Year: 2014-15 M/s. Mala Roy & Others. of income in the payment made when costs are reimbursed and consequently there is no obligation on the assessee to deduct tax at source. In the result, ground nos. 1 and 2 of the Revenue are dismissed.

On the issue of depreciation, we find that the ld. CIT(A) has allowed the claim of the assessee on the ground of consistency. The assessee claimed in his submissions before the CIT(A) that, the AO made the following factual mistakes: a) The finding that the assessee firm is not the owner of the mining rights is not correct, as the mining lease was granted by the Government in the names of Mala Roy, Indrajit Roy and Premjit Roy and of the mining reports and returns with respect to the mines are submitted to various Government Departments by the assessee Mala Roy and others. The firm has been paid sales tax, royalty etc. on these mines for the last 20 years. b) It is to say factually incorrect on the part of the AO to state that mining rights has been terminated w.e.f. 15.05.2013. It was submitted that the leasehold rights continued.

It was submitted that on similar facts, depreciation was allowed in the earlier years and hence on ground of consistency depreciation too has to be allowed. The ld. CIT(A) on these facts allowed the claim of the assessee. The ld. DR could not controvert these factual findings of the ld. CIT(A).

We find no infirmity in this order of the ld. CIT(A). Thus we uphold the same and dismiss ground nos. 3 and 4 of the Revenue.

Ground no. 5 is general in nature.

In the result, the appeal filed by the Revenue is dismissed. Kolkata, the 15th January, 2020.