COMMISSIONER OF INCOME TAX Vs. SALITHO ORES LTD

JUDGEMENT

(1.) This appeal, at the instance of the revenue, is directed against the order dated 27-12-2004, passed by the Income Tax Appellate Tribunal, Panaji Bench, Panaji (for short "ITAT").

(2.) By an order dated 22-8-2005, the appeal has been admitted by this Court on the following substantial question of law:

(3.) The Assessee is engaged in the business of extraction and sale of iron ore. For the assessment year 1989-90, the Assessee filed a return of its income, declaring a loss of Rs. 1,39,89,493. The Assessing Officer, after disallowing several items of expenditure and/or deductions, assessed the total business loss of the Assessee to be Rs. 65,102 only. The Assessing Officer, amongst the others, rejected the claim of the Assessee for expenditure of Rs. 25,90,448, representing the lease rental in respect of 3 dozers, on the ground that the 3 dozers were not used at all during whole of the previous year. According to the Assessing Officer, the expenditure on the lease rent for 3 out of 4 dozers which were not used at all, was not a justifiable expenditure. The Commissioner of Income Tax (Appeals) (for short "the CIT"), while partly allowing the appeal, held that the business decision taken by the Assessee of hiring dozers, though erroneous, the same could not be questioned by the Assessing Officer and the expenditure which was made by the Assessee even on a wrong business decision had to be allowed by the Assessing Officer. The other grounds of challenge raised by the Assessee were rejected. Aggrieved by the decision of the CIT, the Assessee as well as the revenue filed appeals before the ITAT. The ITAT allowed the appeal in respect of some other parts of the order of the CIT, but confirmed the decision of the CIT as to the deduction of Rs. 25,90,448 towards the lease rentals of all 3 dozers. Aggrieved by the decision of the ITAT, the revenue is in appeal.