COMMISSIONER OF INCOME TAX Vs. RAJENDRA TRADING CO PVT LTD
LAWS(CAL)-1983-1-14
HIGH COURT OF CALCUTTA
Decided on January 10,1983

COMMISSIONER OF INCOME-TAX Appellant
VERSUS
RAJENDRA TRADING CO. (P.) LTD Respondents

JUDGEMENT

Mukharji, J. - (1.) In this reference under Section 256(1) of the I.T. Act, 1961 ("the Act"), the following question has been referred to this court: "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in allowing the expenses of Rs. 23,206 during this year though the assessee incurred the same in the earlier year ?" The fact that expenses incurred in removing overburden in the course of mining can be allowed as revenue expenditure is concluded by the decision of this court in the case of CIT v. Amalgamated Jambad Syndicate Pvt. Ltd. [1979] 117 ITR 698 as well as a decision in the case of CIT v. Katras Jharia Coal Co. Ltd. [1979] 118 ITR 6. The question, however, in this case is, whether the Tribunal was justified in allowing the expenses of Rs. 23,206 during the year though the assessee had incurred the same in the earlier year.
(2.) The assessment year is 1966-67 and the relevant accounting period ended on December 31, 1965. The assessee-company derived income from mining operations. The ITO noticed that the assessee had written off Rs. 23,206 as development expenses. He found that these expenses were of capital nature. He also found that the company did transact some business in the next year and as such it was not justified to write off the expenses in this year. Therefore, he disallowed the amount.
(3.) The assessee preferred an appeal before the AAC. It was contended that the expenses were incurred to find out mica veins and as such these expenses were business expenses. The AAC held that these expenses were development expenses. He also held that these expenses were for prospecting the mine and did not yield any result and there was no business in the next year. He upheld the disallowance.;


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