2017 (3) TMI 1833 - HC - Income Tax

Nature of expenditure - Payment made by way of compensation by the assessee as per the direction of the Apex Court for mining lease to the Forest Department - revenue expenditure or a capital expenditure - HELD THAT - Tribunal in the impugned order has relied upon its earlier decision in case of M/s.Ramgad Minerals and Mining Pvt.Ltd.,and the very decision of the Tribunal was carried before this Court in 2012 (1) TMI 313 - KARNATAKA HIGH COURT and this Court has dismissed the appeal of the Revenue and it has been further stated that SLP was preferred against the aforesaid decision of this Court in case of Ramgad supra and the said SLP has also been dismissed. We may record that in view of aforesaid decision as such, no substantial questions of law would arise for consideration. But even if it is to be examined, in view of the aforesaid decision that the decision of the Tribunal has been not interfered with by this Court and SLP is dismissed, the question has to be answered against the Revenue and in favour of Assessee.

Summary

Issues:
1. Whether the Tribunal's order can be considered perverse for relying on a decision not finalized?
2. Whether the amount paid by the assessee for mining lease to the forest department should be treated as revenue or capital expenditure?

Analysis:
1. The appellant raised concerns about the Tribunal's decision being considered perverse for relying on a decision that had not reached finality. The High Court noted that the key legal issue was whether the payment made by the assessee for mining lease compensation should be classified as revenue or capital expenditure.

2. The Court heard arguments from both parties and observed that the Tribunal had based its decision on a previous case involving Ramgad Minerals and Mining Pvt. Ltd. The respondent's counsel highlighted that the Tribunal's decision in the Ramgad Minerals case had been upheld by the High Court, and subsequent appeals were dismissed. Therefore, the Court concluded that no substantial legal questions remained for consideration.

3. Despite the lack of legal issues to address, the Court acknowledged that if the matter were to be examined, the previous decisions favored the assessee. Given the dismissal of appeals and lack of interference by higher courts, the Court indicated that the question should be resolved in favor of the assessee.

4. Consequently, the Court disposed of the appeal in line with the prevailing legal precedents and upheld the Tribunal's decision regarding the classification of the payment for mining lease compensation.