COMMISSIONER OF INCOME TAX Vs. KARUNA MICA COMPANY

JUDGEMENT

(1.) THESE two references are under S. 256(1) of the INCOME TAX ACT, 1961. The assessment years in question are 1968 -69 and 1969 -70. Both the references involve a common question of law and the question of law referred for the opinion of this Court is as follows :

(2.) AS it appears from the statement of the case submitted by the Tribunal, the assessee is a registered firm carrying on the busi ness of extracting mica from mica mines taken on lease from the State of Bihar. The ITO, in the course of assessment for the assessment years in question, found that under the head " Palmo Godown", certain expenses were debited which included expenses on mine surfaces, channel work, mines, underground works and bricks used for these works. For the asst. year 1968 -69, according to the ITO, the total expenditure, which represented expenses of capital nature came to be Rs. 1,63,735 and similarly for the asst. year 1969 -70, according to the ITO, the total expenditure came to be Rs. 2,42,216, which represented expenses of a capital nature.

(3.) THE ITO, however, found that the assessee himself wanted to extend the working of the mines throughout the year and thus they carried out this work for which permission was granted by the mining authorities. According to the ITO, these works enabled the assessee to work the mica mines throughout the year and to extract more mica in the years in question. Hence, in the view of the ITO, this resulted in a clear enduring benefit to the assessee -firm inasmuch as before the construction of this wall and roof in the mines, raising of mica was done only for a period of six months and after this construction, the raising could be done throughout the year. The ITO pointed out to the actual increase in the raising of mica and held it to be the result of the work carried out by the assessee.