Payment for Acquiring Mining Rights is Capital Expenditure

In the light of the judgment of the Honorable Supreme Court in the case of Aditya Minerals Pvt. Ltd. (239 ITR 817) the impugned payment made for acquiring mining rights is capital expenditure and cannot be allowed as revenue expenditure. The reliance placed by the ld.CIT(A) on the coordinate bench decision of Tribunal in the case of P.Abubakar (supra) and the decision of the Hon’ble jurisdictional High Court in the case M/s.Ramgad Minerals & Minings Pvt. Ltd.,(supra) is misplaced in the light of the decision of the larger bench decision of the Honorable Supreme Court in the case of Aditya Minerals Pvt. Ltd.(supra).

9. Then an issue may arise as to whether this expenditure can be allowed on a staggering basis spread over lease period as revenue expenditure in the light of the decision of the Honorable Supreme Court in the case of Madras Industrial Corporation (225 ITR 802). Needless to mention that if the payment is capital in nature, expenditure cannot be allowed on staggered basis. Even for the purpose of spreading over period of lease, it is essential that the expenditure should be in the nature of revenue expenditure.