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TMI Blog2019 (1) TMI 1918X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure - CIT-A deleted the addition - HELD THAT:- Expenditure incurred by the assessee pursuant to an understanding with the State government of Kerala was in the course of its business of mining, hence the same being clearly in the nature of a revenue expenditure was to be allowed as a deduction while computing its income for the year under consideration. Apart therefrom, we find that the issue under consideration as regards the allowability of the aforesaid expenditure is squarely covered by the order passed in the assesses own case - We thus finding ourselves to be in agreement with the view taken by the Tribunal, thus are of the considered view that the amount incurred by the assessee was rightly claimed as a revenue expenditure. We thus not finding any infirmity in the order of the CIT(A) wherein the latter had ordered deletion of the addition - Decided against revenue Addition on account of school expenses at Orissa - expense is related to the running of the school and not wholly and exclusively for the purpose of business - CIT-A deleted the addition - HELD THAT:- The aforesaid expense which had strictly been incurred by the assessee pursuant to government direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome of the assessee was assessed under Sec. 143(3) of the I.T. Act at ₹ 333,72,82,571/- after inter alia making the following additions/disallowances: Sr. No. Particulars Amount 1. Disallowance of provision for the enhanced compensation on land acquisition ₹ 16,42,000/- 2. Disallowance of Land Acquisition Expenses ₹ 53,09,116/- 3. Disallowance of School expenses ₹ 1,20,61,377/- 3. Aggrieved, the assessee carried the matter in appeal before the CIT(A). The CIT(A) after deliberating on the contentions advanced by the assessee did find favour with the same and deleted the aforesaid additions/disallowances made by the A.O. 4. The revenue being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. The ld. Departmental Representative (for short D.R‟) relied on the order passed by the A.O. It was submitted by the ld. D.R that the CIT(A) had wrongly deleted the aforementioned additions/disallowance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion on land acquisition is concerned, we find that it was observed by the CIT(A) that the A.O had misconceived the facts and had wrongly made the said addition/disallowance. It was noticed by the CIT(A) that the amount of ₹ 16,41,654/- booked by the assessee as a revenue expenditure comprised of viz. (i) interest on service tax on payments made to transporters (₹ 12,40,970/-); (ii) interest on Kerala State General Tax (₹ 92,637/-); and (iii) Interest on leasehold land acquisition payments (₹ 3,08,047/-). Apart therefrom, it was observed by the CIT(A) that during the year under consideration the liability to pay service tax to the transporters was to be borne by the service availer. It was noticed by him that the assessee as a service availer had paid service tax in respect of the amount paid to the transporters for movement of raw materials to its factory premises. However, as there were certain errors while computing the service tax liability on the part of the assessee, thus pursuant to the audit conducted by the service tax authorities certain additional payment became payable by the assessee. The principal amount that was paid by the assessee towards the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 92,637/-; and (iii). Interest on leasehold land acquisition payments : ₹ 3,08,047/-, being in the nature of a revenue expenditures were allowable as a deduction while computing the income of the assessee, thus finding no infirmity in the order of the CIT(A) who had rightly deleted the addition of ₹ 16,41,654/- made by the A.O, uphold his order. The Ground of appeal No. 1 raised by the revenue is dismissed. 8. We shall now advert to the disallowance of ₹ 53,09,116/- made by the A.O in context of impugned land acquisition expenses. The A.O while disallowing the aforesaid expenses of ₹ 53,09,116/- which were booked by the assessee under the head miscellaneous expenditure‟ had observed that the same pertained to acquisition of land. The A.O held a conviction that as the expenditure incurred by the assessee was in context of acquiring land, hence the same was required to be capitalized and could not have been claimed by the assessee as a revenue expenditure. 9. We have deliberated at length on the issue under consideration and find that the bifurcated details of the miscellaneous expenditure of ₹ 53,09,116/- booked by the assessee in it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee had been in existence since long. Rather, the allowability of such expenditure was also one of the issue involved in the appeal of the assessee for A.Y. 1997-98, wherein the Tribunal while disposing off the appeal viz. ITA No. 1664/Mum/2003, dated 06.07.2007 had directed that the same was to be allowed as a deduction, observing as under: This is apparent from the G.O. No. 471/96/ID dated 9.5.1996 wherein it has been clearly mentioned that sanction is accorded subject to the condition that the entire establishment cost, salary, pension conditions should be met by the assessee. Admittedly, the assessee has been carrying on the business of mining at the site in Kerala for more than 20 years and such expenditure is being incurred year after year. We further find that as observed by the CIT(A), during the year under consideration the Special Tehsildar (I.A. Kerala), vide his order dated 05.05.2009 had sanctioned 13 posts exclusively for looking after the assesses land. Rather, it was observed by him that as per the order of the Joint Secretary to the State Government of Kerala minerals and metals department 75% of the establishment cost was to be borne by the assessee. The re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the A.O not finding favour with the said claim of the assessee disallowed the said expenses by observing that as the employees of the assessee were drawing educational allowance from the assessee as per the government rules, therefore, the aforementioned expenses incurred on running of the school was not allowable as a deduction. 11. We have deliberated at length on the issue before us and find from a perusal of the orders of lower authorities that the aforementioned school viz. Atomic Energy Central School, Oscom was being run at the place where the assessee had set up its manufacturing units viz. Chatrapur, Orissa. Rather, the assesses major business activity of mining of Rare Earth Minerals and also processing beneficiation of illiminite from the mining activity was being carried out at Chatrapur, Orissa. Apart therefrom, we find from the order of the CIT(A) that the Central school established in Chatrapur, viz. Atomic Energy Central School, Orissa had been operative for over a decade and was providing education to the children of the employees of the assessee as well as the wards of the local residents and those of the adjoining areas. The expenses incurred by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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