M/S. ADITYA MINERALS PVT. LTD. versus COMMISSIONER OF INCOME TAX, ANDHRA PRADESH

Citation: [1999] SUPP. 2 S.C.R. 233 · Decided: 07-09-1999 · Supreme Court of India · Bench: S.P. BHARUCHA · Disposal: Dismissed
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Judgment (excerpt)

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MIS. ADITYA MINERALS PVT. LTD. 
v. 
,,COMMISSIONER OF INCOME TAX, ANDHRA PRADESH 
SEPTEMBER 7, 1999 
[S.P. BHARUCHA, B.N. KIRPAL, V.N. KHARE, S.S. MOHAMMED 
QUADRI AND D.P. MOHAPATRA, JJ.] 
Income Tax Act, 1961 
A 
B 
Revenue-Expenditure-Assessee obtaining mining lease for 15 years- C 
Amount equal to rent of lease for fall period deposited with lessor as guarantee 
and it was adjustable against rent of every month-Held, the claim of assessee 
that the rent amount was revenue expenditure was rightly negatived by 
Revenue authorities. 
The appellant-assessee was granted lease of certain land for excavation D 
purposes at a monthly rent of Rs. 35 per acre. It was stipulated that the 
lessee would deposit with the lessor by way of guarantee for due performance 
of the lease deed for fifteen years, the amount equal to the rent of lease for 
full period of lease which would be adjustable against rent of every month 
and the guarantee deposit would not carry any interest. For the relevant E 
assessment year the assessee claimed the rent amount as revenue 
expenditure. The claim was negatived by the revenue authorities, Income Tax 
Appellate Tribunal as also by the High Court. Aggrieved, the assessee filed 
the present appeals. The Division Bench hearing the appeals felt that there 
was conflict between two judgments of this Court delivered by the Benches 
of three Judges in Gotan Lime Syndicate* and Pingle Industries Ltd**, and F 
referred the matter to a larger Bench. Accordingly, the appeals were heard 
by the Bench of five Judges. 
Dismissing the appeals, the Court 
HELD : 1.1. There is.a material difference between the facts of Golan G 
Lime Syndicate.** and Pingle Industries Ltd*~ The judgment of Gotan Lime 
Syndicate clearly shows that in that case there was no payment once for all; 
it was an yearly payment of dead-rent and royalty. The Court took the view 
that the royalty payment was not a direct payment for securing an enduring 
advantage; it had relation to the raw material to be obtained; and what the H 
233 
234 
SUPREME COURT REPORTS (1999) SUPP. 2 S.C.R 
A company got was a right to get lime for manufacturing and the payment had 
a direct relation to the amount of lime that was removed. The judgment adds· 
that the case of Pingle Industries Ltd was distinguishable because on the 
facts it was a lump sum payment in instalments for acquiring a capital asset 
of enduring benefit to the trade. [235-F-G] 
B 
*Gotan Lime Syndicate v. Commissioner of Income tax, Rajasthan & 
Delhi, (1966) 59 I.T.R. 718, explained and distinguished. 
1.2. The instant case is on a par with Pingle Industries Ltd** According 
to the lease deed in the present case, what was to be paid by the assessee 
was rent for the land that was leased. The assessee was required to pay in 
C advance the rent, calculated at monthly rate, for the entire period of the 
lease, i.e., fifteen years, in the form of a "deposit". The deposit was by way 
of guarantee for due performance of the lease deed for fifteen years, that is, 
towards fifteen years rent. It was adjustable against the rent of each month 
and it carried no interest. [236-B-C] 
D 
E 
**Pingle Industries Ltd v. Commissioner of Income-tax, Hyderabad, 
(1960) 40 I.T.R. 67, affirmed. 
· 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4858-59 
of 1989. 
From the Judgment and Order dated 4.12.84 of the Andhra Pradesh High 
Court in C.R. Nos. 38 and 75 of 1980. 
Sanjay Kunur and R.N. Keshwani for the Appellant. 
p 
M.L. Verma, Ranbir Chandra, S.K. Dwivedi and S. Wasim A. Quadri for 
the Respondent. 
The Judgment of the Court was delivered by 
BHARUCHA, J. These appeals have been referred to a Constitution 
G Bench to resolve the apparent conflict between the judgments of two Benches 
of this Court, of three l~arned Judges each, in Pingle Industries Ltd v. 
Commissioner of Income-tax, Hyderabad, (1960) 40 I.T.R. 67 and Gotan Lime 
Syndicate v. Commissioner of Income tax, Rajasthan & Delhi, (1966) 59 I.T.R. 
718. 
H 
The common question to be considered reads thus : 
ADITYA MINERALS PVT. LTD. v. C.l.T. [BHARUCHA, J.] 
235 
"Whether on the facts and in the circumstances of the case, the sum A 
of Rs. 10,752 paid by the assessee in the accounting year was not 
expenditure allowable as a deduction in computing the business profit 
of the assessee- company?" 
The appellant-assessee obtained a lease dated 8th March, 1972 from 
Aditya Minerals Private Limited. It was a term of the lease deed that
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