9911796707
TMI Blog2018 (6) TMI 1789X X X X Extracts X X X X X X X X Extracts X X X X ..... ] as observed that since the assessee was entitled to carry on mining operations and such payment had been made for the removal of the difficulty in the assessee carrying on its business in accordance with its licence, the expenditure had to be regarded as a revenue expenditure and could not be treated as a capital expense. This is not a case where the assessee, upon payment of the NPV, obtained a fresh right to undertake any business. That right of the assessee was covered by the licence previously granted in its favour by the State of Odisha. The NPV payment is a kind of a compensation for using forest land for non-forest purpose pursuant to an order of the Supreme Court. The payment of the NPV in this case, like in the case of Bikane ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r reasoned that since it was a one-time payment for the assessee to continue its business operations or undertake mining operations in the relevant area for the first time, it had to be regarded as a capital expenditure and could not be deducted from the income as a revenue expenditure. In the assessee s appeal before the Commissioner (Appeals), the Commissioner observed that the assessee did not get any fresh right to mining by making the payment of the NPV in terms of the Supreme Court order; it was only that if the payment had not been made, the assessee would have been liable to be hauled up for contempt or have its mining operations stopped. Both the Commissioner (Appeals) and the Appellate Tribunal have referred to a judgment repor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forest purpose pursuant to an order of the Supreme Court. The payment of the NPV in this case, like in the case of Bikaner Gypsums Ltd. , has to be regarded as a revenue expenditure in accordance with the ratio in the Bikaner Gypsums Ltd. case, since it was a one-time payment made to remove an obstacle from the path of the assessee carrying on its business operations. On behalf of the Revenue, a judgment reported at 86 ITR 647 ( R.B. Seth Moolchand Sugachand v CIT ) has been cited where a prospecting licence fee was found to be a capital expenditure. However, as is evident from paragraph 11 of the report, the fee was paid for obtaining a prospecting licence and it was such fee that entitled the business to be conducted in the relevant ar ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
