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TMI Blog2023 (9) TMI 1117X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Hon'ble Supreme Court (supra) by citing any decision favouring the Revenue. Accordingly, there is no infirmity in the order of the ld. CIT(A) on this issue and it is upheld. Hence, ground No.1 of the Revenue s appeal is dismissed. Suppression of sale - Assessee has resorted to manipulation of sales price of iron ore sold to its sister concerns to evade payment of Royalty - HELD THAT:- Hon'ble Supreme Court in the case of CIT v. Calcutta Discount Company Ltd. [ 1973 (4) TMI 6 - SUPREME COURT ] held that when one trader transfers his goods to another trader at a price less than the market price, the taxing authority cannot take into account the market price of those goods ignoring the real price fetched. In this case of the assessee, the AO has not alleged that the assessee has not offered its income for purposes of taxation in the return of income. AO also has not doubted the transaction as such. It is also not the case of the AO that the assessee has earned more than it has offered to tax merely because the sale to sister concern is at a price lower than the sale price charged by the sister concern. It is clear that what has to be considered for taxation, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee did not file any evidence in support of its claim and it appears that the assessee has no substantive evidence to produce in support of the claim made in its reply. The assessee has thus failed to explain the claim of royalty debited to the P L account amounting to Rs. 5,85,17,298/-. The royalty is a government due and section 43B speaks of the government dues payable. Therefore, unpaid royalty cannot be allowed as an expenditure and accordingly royalty of Rs. 5,85,17,298/- is disallowed and added to the total income of the assessee. 3. The ld. CIT(A) while giving relief to the assessee, has observed and held as follows:- 4.3. From the above table, it is quite clear that the appellant has already paid the share of royalty amount which is to be borne by the appellant i.e. 5,85,17,297/- and which has been debited to the P and L account. The royalty which is outstanding and payable by the associate concerns has not been routed through the P L Account by the appellant and hence, there is no question of disallowance of the said amount u/s. 43B of the Act. In view of the fact the royalty debited to P and L account has been paid before the filing of the return of inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Nos. 2 3 pertains to the issue of suppression of sale. The AO has discussed this issue from para 3.3.4 of his order and held as follows:- 3.3.4 From the above reply it can be easily noticed and understood that the assessee has resorted to manipulation of sales price of iron ore sold to its sister concerns to evade payment of Royalty. This fact has been admitted by the assessee in its above reply itself. Not only there is evasion of royalty but also heavy under-invoicing of the sales made to its sister concerns resulting in huge tax evasion. By resorting to such unfair means the assessee has suppressed its sales value to evade payment of royalty and payment of income tax. The practice being followed by the assessee is not only unfair and immoral but also illegal. This is loot of natural resources of the country without payment of royalty, income tax and other statutory payments. It appears that the assessee has least regard for the laws of the country and hence requires no consideration in light of the malpractices the assessee has resorted to reduce its mandatory and statutory liabilities. The assessee's contention that it is transaction between associate concerns is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 319 603 40401000 - do- - do- 51/50 52,600 1,73,58,000 330 592 31139200 3 M/s Salitho Ores Pvt Ltd M/s Shantilal Khushaldas Bro. Pvt. Ltd. 46/45 1,75,143 5,77,97,190 330 592 103684656 - do- - do- 46/45 1,73,500 5,72,55,000 330 592 102712000 - do- - do- 50/50 1,69,700 5,60,01,000 330 592 100462400 - do- - do -. 46/45 1,66,290 5,48,75,700 330 592 98443680 - do- - do- 51152 1,04,350 3,44,35,500 330 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the case, the CIT(A) in A.Y. 2008-09 had deleted the addition made by the AO on the identical issue. In view of the facts brought on record and following the decision of CIT(A) in appellant's case for A.Y. 2008-09 on identical issue, the addition made by the AO amounting to Rs. 1 07,77,75,066/- is hereby deleted. Ground no.3 is allowed. We further find that the Hon'ble Supreme Court in the case of CIT v. Calcutta Discount Company Ltd . [1973] 91 ITR 8 (SC) held that when one trader transfers his goods to another trader at a price less than the market price, the taxing authority cannot take into account the market price of those goods ignoring the real price fetched. In this case of the assessee, the AO has not alleged that the assessee has not offered its income for purposes of taxation in the return of income. The AO also has not doubted the transaction as such. It is also not the case of the AO that the assessee has earned more than it has offered to tax merely because the sale to sister concern is at a price lower than the sale price charged by the sister concern. In fact, the Hon'ble Supreme Court in the case of Calcutta Discount Company Ltd . (supra) has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as dumping of waste ores. Vide Gazette Notification, Govt. of Goa framed a Policy for regulating the mining dumps on Govt. and private land. During the F.Y. 2013-14, the assessee had paid conversion charges pursuant to above Policy of the Govt. of Goa to regularize such use of agricultural land into non-agricultural purposes. The breakup of the said charges is as follows:- Conversion fees 4,07,36,000 Part C-7(i) of Policy + Interest 12,22,080 4,19,58,080 + Fine/penalty 81,47,200 Part C-7(iv) of Policy 5,01,05,280 The aforesaid conversion charges were paid based on the Policy issued. The AO in the course of assessment, referring to the Policy document, required the assessee to explain why charges imposed as a result of unauthorised use of land in violation of the existing provisions of Land Revenue Code, 1968 with regards to conversion of land and use of land for non-agricultural purposes without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany supplied gypsum, the railway station, track, etc. were removed to another area offered by the appellant company. Out of the total expenses of Rs. 12 lakhs incurred by the railway for the shifting, the appellant company paid Rs. 3 lakhs as its share under the agreement. The appellant claimed deduction of the sum of Rs. 3 lakhs in computing its profits. The Appellate Tribunal held that the sum was allowable as a deduction as it was a revenue expenditure. But the High Court, on a reference, held that the amount was capital expenditure. On appeal to the Supreme Court: Held, reversing the decision of the High Court, that the amount was spent on the removal of a restriction which obstructed the carrying on of the business of mining within a particular area in respect of which the appellant had already acquired mining rights. The payment of Rs. 3 lakhs was not made for initiating the business of mining operations or for acquiring any right; the payment was made for shifting the railway station, track, etc., i.e., to remove an obstruction to facilitate the business of mining, and it did not bring into existence any advantage of an enduring nature. The expenditure was on rev ..... X X X X Extracts X X X X X X X X Extracts X X X X
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