Dipak Kumar Sen, J. - (1.) The assessee is a colliery company and carries on the business, inter alia, of raising coal. In the assessment year 1964-65, the relevant previous year being the year ended on the 31st January, 1964, the assessee claimed deduction of expenses for removal of overburden in its mines where extraction of coal was carried on by what is known as opencast method and/or quarry method. The ITO disallowed the claim holding that such expenses were of capital nature. Being aggrieved thereby the assessee preferred an appeal. It was contended before the AAC that where coal was extracted by open-cast method in places where coal seam was near the surface, it was absolutely necessary to remove the overburden for reaching the coal seam. The expenditure incurred on such removal did not result in any enduring benefit as the process had to be repeated immediately in the neighbouring are as such contentions were not controverted and the AAC accepted the same.
(2.) From the order of the AAC, the revenue preferred an appeal to the Tribunal. The Tribunal confirmed the order of the AAC accepting, inter alia, the contention that the expenditure incurred for the removal of overburden did not bring any enduring benefit to the assessee and that such expenditure was part of the normal process involved in the raising of coal by this method.
(3.) On an application of the revenue under Section 256(1) of the I.T. Act, 1961, the Tribunal has drawn up a statement of case and has referred the following question of law arising from its order for the opinion of this court: "Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the sum of Rs. 4,95,978 claimed by the assessee to have been incurred in removal of overburden was a revenue expenditure and not a capital expenditure and in allowing the same ?";