ORIENT RESOURCES,CHENNAI vs. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, RANCHI, RANCHI

Smt. Rinku Singh, Ld CIT DR appeared for the revenue and Shri Smt. Rinku Singh, Ld CIT DR appeared for the revenue and Shri Smt. Rinku Singh, Ld CIT DR appeared for the revenue and Shri K.M. Mohan Dass, ld AR appeared for the assessee. ld AR appeared for the assessee.

It was submitted by ld AR that the assessee is in the business of extracting iron ore. It was the submission that the assessee has been in the business from AY 2007-08 onwards. It was the submission that during the assessment yea 2016-17, the mining license in respect of iron ore had been suspended by the Government. It was the submission that subsequently, the mining licenses have not been renewed till yet. It was the submission that the assessee is in litigation in regard to the suspension of the mining license owned by the assesse even till date. It was the submission that the assessee had been doing the mining during the AY 15-16. It was the submission that on account of suspension of mining license, the Assessing Officer had disallowed the assessee’s claim of expenses claimed under profit and loss account and also the depreciation claimed by holding that there was no business activity of the assessee. It was the submission that the assessee has kept its machinery and equipment ready for use and it was always in use till the licence was suspended. It was submitted that the expenses in relation to assessee’s business and the depreciation is liable to be allowed.

In reply, ld CIT DR submitted that the business of the assessee has stopped on account of suspension of mining licence. It was the submission that the business of the assesseehaving been stopped on account of suspension of mining license, the expenses and depreciation is not allowable to the assessee.

We have considered the rival submissions. It is an undisputed fact that the assessee is under litigation even now for restoration of his business activity of being mining of iron ore. It is also undisputed fact that the litigation is in regard to suspended mining license. Till A.Y. 2015-16, the assessee had been doing mining of iron ore. From A.Y. 2016-17 in the state of Jharkhand, the mining of iron ore has been stopped insofar as the mining license is under suspension and the issues are under litation before the Hon’ble Jurisdictional High Cour and Hon’ble Supreme Court. Just because the mining license of the assessee has been suspended, it cannot be said that the business of the assessee has come to a stop. Should the license be restored, then obviously, the assessee should have started the business. For such purposes, he has kept the machinery are installed ready to use. This being so, as it is noticed that the assessee has not stopped his business but his business has not been suspended on account of mining licence having been suspended, it cannot be said that the expenses incurred by the assessee or depreciation can be denied to the assessee. This being so, the AO is directed to grant the assessee the expenses as claimed and depreciation claimed by the assessee

In the result, appeal of the assessee stands allowed.