The Commissioner Of Income Tax v. Dr. Prafulla R. Hede And And Anr

IN THE HIGH COURT OF BOMBAY AT GOA TAX APPEAL NO. 15 OF 2012 THE COMMISSIONER OF INCOME TAX., Versus DR. PRAFULLA R. HEDE AND AND ANR., ... Appellant ... Respondents Ms. Asha A. Desai, Advocate for the appellant. -Coram:S. C. DHARMADHIKARI &U. V. BAKRE, JJ.-Date:6th February, 2012 P.C.:- Heard Ms. Dessai appearing on behalf of the appellant-TheCommissioner of Income Tax. 2. This appeal challenges the order of the Income TaxAppellate Tribunal, Panaji Bench, Panaji in ITA Nos.135/PNJ/2011and 136/PNJ/2011 dated 29th August, 2011, by which the twoappeals against the order dated 24th March, 2011 made underSection 263 of the Income Tax Act, of the learned Commissioner ofIncome Tax, Panaji, Goa have been allowed. 3. Respondent No.1 before us was holding a mining lease for aperiod of 20 years, made effective from 30th October, 1987. Thesaid lease was granted upto the period expiring on 22nd November,2007 after the title of concessions had been converted and declaredas mining lease w.e.f. 22.11.1987 by virtue of Goa, Daman and DiuMining Concessions (Abolition and Declaration as Mining Leases)Act, 1987. Referring to an order passed on 30th October, 2002, inthe case of T.N. Godavarman Thirumalpad vs. Union of India of theHon'ble Supreme Court of India directing the user agencies forwhom the forest land was diverted to pay the net present value forsuch diversion after 30th October, 2002, that a notification wasissued by the Government of Goa, Forest Department, notifying that the user has to pay the present value depending upon the quality anddensity of forest on the land in question. Pursuant to thisnotification, the Deputy Conservator of Forest, North Goa Division,Ponda, Goa determined the net present value to be paid by the assessee in respect of the mining lease at Rs.2,13,98,160/- and raiseda demand vide letter dated 11th April, 2005. After referring to theclassification of the amount and the payment by the assessee, whatemerges from the record is that the assessee claimed afforestationcharges as deduction of income from the business. Clarification wasgiven in response to the queries raised by the assessing authority. The assessee claimed this as a revenue expenditure and theAssessing Officer duly examined the claim and allowed thededuction as revenue expenditure. However, the learnedCommissioner of Income Tax, Panaji reached a conclusion that theAssessing Officer failed to note several judgments and erroneouslyconcluded that the expenditure incurred as compensation forafforestation charges has given the assessee an enduring benefit formany years and that the amount should be added to the income of theassessee for the assessment year as an expenditure of capital nature which the Assessing Officer has failed to do. The Commissioner ofIncome Tax, Panaji interfered with the Assessment Order underSection 143(3) of the Income Tax Act, 1961. 4. Aggrieved and dissatisfied with this order of the Commissioner of Income Tax, Panaji, Goa dated 24th March, 2011,that the assessee carried the matter in appeal to the Income TaxAppellate Tribunal, Panaji Bench, Panaji, which delivered theimpugned order. 5. The only question before the Tribunal was, whether the assessment order could be said to be erroneous and prejudicial to theinterest of revenue and, therefore, required to be set aside in therevisional jurisdiction ? On the facts admitted and emerging from therecord, the Tribunal concluded that the payment as stated is towards 4. Aggrieved and dissatisfied with this order of the Commissioner of Income Tax, Panaji, Goa dated 24th March, 2011,that the assessee carried the matter in appeal to the Income TaxAppellate Tribunal, Panaji Bench, Panaji, which delivered theimpugned order. 5. The only question before the Tribunal was, whether the assessment order could be said to be erroneous and prejudicial to theinterest of revenue and, therefore, required to be set aside in therevisional jurisdiction ? On the facts admitted and emerging from therecord, the Tribunal concluded that the payment as stated is towards the loss of forestry on the forest land that has been diverted and noforest asset for the assessee is created by making such payment of netprofit value. The land in fact belongs to a third party. Theassumption on which the Commissioner of Income Tax proceeded iswholly erroneous. The Tribunal concluded that the order of theAssessing Officer was a possible view of the matter and in the givenfacts and circumstances, could not have been said to be erroneousand prejudicial to the interest of the revenue, requiring interference under Section 143(3) of the Income Tax Act, 1961. 6. Without examining the broad question and the contour of thepowers conferred on the revisional authority, in the present facts andcircumstances, we are of the view that the findings of the appellateTribunal, particularly in paragraphs 13 to 15 of the impugned orderare consistent with the materials placed on record. We agree withthem and we are of the opinion that they do not give rise to anyquestion of law, requiring interference by this Court in its appellatepowers. The expenditure so incurred is for commercial expediencyand should not be treated as expenditure of capital nature. Thejudgments that the Tribunal has referred to are on similar facts andgiven in similar circumstances. We do not find any reason tointerfere with its conclusion, as no question of law arises for ourdetermination and consideration. 7. After hearing the learned Counsel appearing for theDepartment, we are of the view that there is no merit in this appealand it is, accordingly, dismissed. There will be no order as to costs. S. C. DHARMADHIKARI, J. U. V. BAKRE, J.