| The Tax Publishers2020 TaxPub(DT) 3414 (Bang-Trib) INCOME TAX ACT, 1961
Section 37(1)
Supreme Court in (1966) 59 ITR 718 (SC) : TC 17R.197) : 1966 TaxPub(DT) 0242 (SC) had held that royalty payment including the dead rent had relation only to the lime deposits collected by lessee and would, therefore, be revenue expenditure and mere fact that there was no lump sum payment, would not itself lead to the conclusion that yearly payments made under the mining lease have relation to the acquisition of an enduring advantage. Royalty and dead rent paid under the Mineral Concession Rules, 1960, will have to be allowed as revenue deduction.
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Business expenditure - Deduction on account of rent on different leases which were part of the head of expenditure 'Rates & Taxes' - Allowability -
Assessee was engaged in the business of gold mining and extraction. Assessee in arriving at the profits of business, claimed a deduction as dead rent on different leases which were part of the head of expenditure 'Rates & Taxes' in the profit and loss account. Before AO, assessee submitted that the said payment was paid as per the Mines, Minerals Concession Rates, 1994 as dead rent. AO, however, took the view that since the mines in respect of which the aforesaid payment was made was operational, amount cannot be allowed as a deduction. Held: Supreme Court in (1966) 59 ITR 718 (SC) : TC 17R.197) : 1966 TaxPub(DT) 0242 (SC) had held that royalty payment including the dead rent had relation only to the lime deposits collected by lessee and would, therefore, be revenue expenditure. Mere fact that there was no lump sum payment, would not itself, lead to the conclusion that yearly payments made under the mining lease have relation to the acquisition of an enduring advantage. Amount of royalty cannot be less than the amount of dead rent which was in the nature of minimum royalty. Royalty and dead rent paid under the Mineral Concession Rules, 1960, will have to be allowed as revenue deduction for the purpose of computation income. Similarly, where royalty had relation to the quantity extracted the royalty and the dead rent may be allowed as revenue deduction. Therefore, appeal of Revenue was dismissed.
Followed:Singareni Collieries Co. Ltd. v. CIT, (1967) 66 ITR 553 (AP) : 1967 TaxPub(DT) 0240 (AP-HC) CIT v. Lawrence D'Souza (2011) 203 Taxman 200 (Karn) : 2012 TaxPub(DT) 0346 (Karn-HC) Pingle Industries Ltd. v. CIT (1960) 40 ITR 67 (SC) : TC 16R.935 : 1960 TaxPub(DT) 0175 (SC) Abdul Kayoom v. CIT (1962) 44 ITR 689 (SC) : TC 16R.1006 : 1962 TaxPub(DT) 0237 (SC).Distinguished:Gotan Lime Syndicate (1947) 15 ITR 533 (Raj) : TC 17R.203 : 1964 TaxPub(DT) 0227 (Raj-HC)
REFERRED :
FAVOUR : In assessee's favour
A.Y. : 2010-11
INCOME TAX ACT, 1961
Section 35D
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