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TMI Blog2020 (12) TMI 715X X X X Extracts X X X X X X X X Extracts X X X X ..... s levied on the mining leases - AO considered that the assessee would get the benefit of the fee paid for 10 years and allowed 1/10th of the expenditure claimed as deduction by the assessee - HELD THAT:- Environmental Protection Fees cannot be equated to consideration paid for acquiring mining rights and therefore the decision of ITAT Bangalore in the case of K R Kaviraj [ 2017 (12) TMI 1784 - ITAT BANGALORE] is not applicable to the facts of the present case. We are of the view that the sum paid was a compensation paid by the assessee for damage to the environment and it cannot be said that it gives an enduring benefit to the assessee. We therefore agree with the conclusion of the CIT(Appeals) that expenditure in question is a capital exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red. 5. The appellant craves leave to add, alter, amend and/or delete any of the grounds mentioned above. 2. There is a delay of 1 day in filing this appeal which was explained due to administrative reasons. The delay is condoned accepting the reasons given in the affidavit for condonation of delay. 3. As far as ground No.2 raised by the revenue is concerned, the facts are that assessee is a company engaged the business of gold mining and extraction. In the return of income filed for AY 2010-11, the assessee in arriving at the profits of business, claimed a deduction of a sum of ₹ 15,64,745 as dead rent on different leases which were part of the head of expenditure rates taxes in the profit and loss account. Before the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 966 Dead rent and royalty paid mining lease-Allowance of- Revised instructions regarding 20/01/1966 BUSINESS EXPENDITURE SECTION 37(1), By Circular No. 16D of 1965, dt. 21st June, 1965, instructions were issued that in view of the decision of the Rajasthan High Court in the case of Gotan Lime Syndicate (1947) 15 ITR 533 (Raj) : TC 17R.203 the payment of dead rent or royalty in respect of a lease under the Mineral Concession Rules, 1960, should be regarded as expenditure of a capital nature and should not be allowed as a deduction in computing the taxable income. The above decision of the High Court has recently been reversed by the Supreme Court. A gist of the above decision has appeared in short notes of current cases in (19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tity extracted the royalty and the dead rent may be allowed as revenue deduction. The Court has observed that each case must depend on its own facts and a close similarity between one case and another is not enough because even a single significant detail may alter the entire aspect. In view of this, ITOs should examine the mining lease deed and see whether the case is covered by the above decision of the Supreme Court. In view of the above CBDT Circular relied on by the Commissioner of Income Tax (Appeals), there is no merit in ground No.2 raised by the revenue and accordingly the same is dismissed. 7. The facts relating to ground No.3 are that the assessee paid a sum of ₹ 11,80,76,208 to the Govt. of Karnataka towards Environ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al expenditure u/s. 35D of the Act and therefore the assessee accepts that the payment in question would give an enduring benefit. 10. The ld. counsel for the assessee relied on the order of CIT(Appeals) and submitted that the decision rendered by the ITAT Bangalore Bench in the case of K R Kaviraj (supra) is with regard to lump sum consideration paid for acquiring mining rights and therefore of no relevance to the issue sought to be agitated by the revenue in ground No.3. 11. We have given a careful consideration to the rival submissions. We are of the view that Environmental Protection Fees cannot be equated to consideration paid for acquiring mining rights and therefore the decision of ITAT Bangalore in the case of K R Kaviraj ( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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