Barmer Lignite Mining Company Limited Vs DCIT (ITAT Jaipur)
In the matter abovementioned ITAT Jaipur allows Amortization of Surface Rights u/s 35.
Assessee being a subsidiary of M/s. Rajasthan State Mines and Minerals Ltd. (RSMML) (a Government of Rajasthan Undertaking). It engaged in business of carrying out lignite mining activities at Kapurdi Mines from October, 2011. Assessee company was formed as JV Company wherein 51% holding is of M/s. RSMML and 49% is of M/s. RWPL (M/s. Raj West Power Limited (RWPL). To execute obligations under IA (imlplementation agreement) and JV agreement for acquiring and transferring mining lease, obtaining various approvals and permissions and acquisition of land for the Kapurdi mining project and Jalipa mining project, RSMML incurred expenditure on payment of compensation to the land losers and other expenses which were reimbursed by assessee. Assessee further incurred expenses for acquiring mining lease and operational rights over the aforesaid mining project for a period of 30 years without acquiring any right in the land and capitalized in the balance sheet as “Surface Rights on Kapurdi Mines” and “Surface Rights on Jalipa Mines”. AO observed that land is not registered in the name of the assessee but it has ownership right over the land. Land is not a depreciable asset, therefore, depreciation is not allowable on the same. The acquisition of mining land does not fall in the ambit of section 32(1) (ii) to qualify as an intangible asset. AO disallowed the claim of amortization. CIT (A) upheld the assessment order.
