9911796707
TMI Blog2014 (9) TMI 1100X X X X Extracts X X X X X X X X Extracts X X X X ..... f assets would be allowed. - Decided in favour of assessee. Disallowance of quarry development expenses - Held that:- Admittedly, by removing the overburden of the mines, the assessee has not acquired any asset. It was also explained that removal of the soil, stones etc. in order to reach the deposits of cement grade lime stones is a continuous process and the expenditure is required to be incurred year after year. It was also explained that in the earlier year, such expenditure was always allowed. While allowing the relief, the CIT(A) has relied upon case of Alembic Chemicals Works Co.Ltd. Vs. CIT, Gujarat - [1989 (3) TMI 5 - SUPREME Court], CIT Vs. Associated Cement Company Ltd. - [1988 (5) TMI 2 - SUPREME Court] and Empire Jute Co.Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not been carried out in the years under consideration but the assets are kept as a stand by for the whole year. Moreover, although the production is suspended but the other activities of the units are being carried out. In such circumstances, I find that the AO was not justified in disallowing the depreciation on the assets of these units. The additions made by him are, therefore, directed to be deleted. 5. It was brought to our knowledge that in AY 2003-04 to 2006-07, the Committee on Disputes did not permit the Revenue to file appeal against the order of learned CIT(A) on the above ground. The assessee is a Government of India undertaking and the high powered committee formed by the Government i.e., COD directed the CBDT to accept t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are closed and some of the units are working, then, the depreciation on the entire block of assets would be allowed. Accordingly, ground No.1 of the Revenue's appeal is rejected. 7. Ground No.2 of the Revenue's appeal in all the three years is against the deletion of the disallowance of quarry development expenses in each year as under:- Assessment Year Amount 2007-08 ₹ 1,79,88,000/- 2008-09 ₹ 2,13,95,000/- 2009-10 ₹ 1,69,19,000/- 8. We find that learned CIT(A) allowed the relief to the assessee with the following finding:- I have conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nse and it is only where the advantage is in the capital field that the expenditure would be disallowable on an application of this test. If the advantage consists merely in facilitating the assessee's trading operations or enabling the management and conduct of the assessee's business to be carried on more effectively or more profitably while leaving the fixed capital untouched, the expenditure would be on revenue account, even though the advantage may endure for an indefinite future. Similarly in the case of Empire Jute Co.Ltd. v. CIT, (1980) 124 ITR 1 (SC) it has been held as under:- There may be cases where expenditure, even if incurred for obtaining advantage, of enduring benefit, may, none-the-less, be on revenue a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stones etc in order to reach the deposits of cement grade lime stones. The Hon'ble Calcutta High Court in the case of CIT vs. Katras Jharia Coal Co.Ltd. 118 ITR 6 (Cal) has held that expenses for removal of over burden were not for acquiring any right of properties and will also not result in any enduring benefit and therefore were revenue in nature. In view of the findings above and in view of the judicial decisions discussed above the disallowance made by the AO is deleted. These grounds of appeal are allowed. 9. After considering the facts of the case and the arguments of both the sides, we do not find any infirmity in the above order of learned CIT(A). Admittedly, by removing the overburden of the mines, the assessee has not ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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