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TMI Blog2024 (1) TMI 972X X X X Extracts X X X X X X X X Extracts X X X X ..... ted, is answered in favour of the revenue and against the assessee. Disallowance of deduction of proportionate amount of lease hold land written off - HELD THAT:- The amount paid by the assessee was determined by the Collector in terms of the statutory provision of Rajasthan Revenue Act read with the Rajasthan Land Acquisition Act. The event to pay compensation arose to the assessee only on account of damage caused to the surface of the land falling in mining lease area during mining operation/business operation. There was no requirement to pay had there been no damage caused to the surface of the land by mining/business operation. Thus, the payment in question made by the respondent/assessee was in the nature of expenditure for carryi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... written down value as so increased. The deduction by the amount in question is undoubtedly under the aforesaid provisions of Section 43(6)(c)(i)(B) of the Act, 1961. Therefore, the CIT(A) and the Income Tax Appellate Tribunal have not committed any manifest error of law to reduce the sale proceeds from the written down value and allowed the depreciation on reduced written down value. The substantial question of law nos. 3 and 4 are answered in favour of the assessee and against the revenue. - HON BLE JUSTICE SURYA PRAKASH KESARWANI AND HON BLE JUSTICE RAJARSHI BHARADWAJ Appearance : For the Appellant : Sri Vipul Kundalia, Adv. Smt. Oindrilla Ghosal, Adv. For the Respondent : Sri J.P. Khaitan, Sr. Adv. Sri Sanjoy Bha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f assets concept was followed as per the statutory provisions? Substantial Question of Law No. 1 3. So far as the afore-quoted substantial question of law No. 1 is concerned, we find that this issue has been decided in favour of the revenue and against the assessee by a judgment and order dated 18.12.2023 in ITA No. 158/2010 (Commissioner of Income Tax, Kolkata II, Kolkata Vs. M/s. Birla Corporation Limited). Following the aforesaid judgment, the substantial question of law No. 1, as afore-quoted, is answered in favour of the revenue and against the assessee. The present appeal of the revenue stands allowed in respect of the substantial question of law No. 1 and to that extent the impugned order of the Tribunal dated 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eduction to Rs. 19,38,232/-. The CIT(A) had set aside the disallowance made by the assessing officer and accepted the contention of the assessee that the compensation paid was an expenditure incidental to the business activity. Aggrieved by the order of the CIT(A), the revenue had filed the ITA No,. 1936(Kol)/2010 which was dismissed by the impugned order passed by the Income Tax Appellate Tribunal, B Bench, Kolkata. 5. Learned senior standing counsel for the revenue has submitted that the compensation paid by the assessee to land owners for damage caused to the surface of the land falling in mining lease area for carrying out mining operation or allied activity, is a capital expenditure and not a business expenditure and the CIT(A) ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The event to pay compensation arose to the assessee only on account of damage caused to the surface of the land falling in mining lease area during mining operation/business operation. There was no requirement to pay had there been no damage caused to the surface of the land by mining/business operation. Thus, the payment in question made by the respondent/assessee was in the nature of expenditure for carrying out business operations. No interest in land has been acquired by the respondent/assessee by payment of such compensation. Thus, the payments are in the nature of incidental expenditure to conduct the mining and business operation. Therefore, the expenditure so incurred by the respondent/assessee is revenue in nature. Consequently, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Section 43(6)(c)(i)(B) of the Income Tax Act, 1961. The aforesaid amount represented the sale of part of some block assets. Section 43(6)(c)(i)(B) is reproduced below: 43. Definitions of certain terms relevant to income from profits and gains of business or profession.- (1) ... (6) written down value means (a)... (b)... (c) in the case of any block of assets,- (i) in respect of any previous year relevant to the assessment year commencing on the 1st day of April, 1988, the aggregate of the written down values of all the assets falling within that block of assets at the beginning of the previous year and adjusted,- (A)... (B) by a reduction of the moneys payable in respect of any asset ..... X X X X Extracts X X X X X X X X Extracts X X X X
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