AI Drafter 
TaxTMI 
TaxTMI 
2017 (10) TMI 1085
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....rocess (CWIP), under the head income from other source as against the claim of assessee that the same should be reduced from expenditure incurred during construction period. 2. Without prejudice to the Ground No. 1, in the facts and circumstances of the case and in law, Ld. CIT(A) erred in confirming the action of Ld. Assessing Officer in not allowing deduction of the interest expenses of Rs. 17.94 crores, debited to the CWIP, against the said interest income assessed by him, though there being a direct nexus of interest paid on borrowed funds with the said interest receipt. 3. In the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming the action of Ld. Assessing Officer in disallowing the mandatory CSR expenses of Rs. 95,08,197/- provided as per terms of environment clearance granted by Ministry of Environment & Forests (MoEF) which were incurred wholly and exclusively for purpose of business. 4. On the facts and in circumstances of the case as well as in law, the Ld. CIT(A) erred in confirming the action of Ld. Assessing Officer in disallowing the claim of the appellant for amortization of surface rights amounting to Rs. 8....
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....nterest credited to the capital work in progress of Rs. 13,40,90,000/-, confirmed the addition made on account of disallowance of Corporate Social Responsibility Expenditure of Rs. 9508197/-, confirmed the addition of Rs. 8,18,3,172/-, confirmed the depreciation on intangible assets of Rs. 42,49,575/-. However, deleted the addition made on account of adjustment to the closing stock of u/s 145A of Rs. 5,33,18,202/-. 4. Aggrieved by this, both Assessee and Revenue are in separate appeal. 5. The Ground No. 1 and 2 are inter-related and are against the taxing interest receipt. 5.1 Ld. Counsel for the assessee strongly urged that the authorities below were not justified in taxing the interest receipts. Ld. Counsel reiterated the submissions as made in the written submissions. For the sake of clarity and convenience the written submissions of the assessee are reproduced herein below:- "Submission:- 1. It is a fact on record that almost the entire funds of the assessee are borrowed funds (PB 324). From the Balance Sheet it can be noted that the share capital of the assessee is only Rs. 20 crores. Out of this capital, 51% capital (i.e. Rs. 10.20 crores) is allott....
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....ontractors pertaining to the work of construction. To facilitate the work of the contractor, the assessee permitted the contractor to use the premises of the assessee for housing its staff and workers engaged in the construction activity of the assessee's plant. This was clearly to facilitate the work of construction. Had this facility not been provided by the assessee, the contractors would have had to make their own arrangements and this would have been reflected in the charges of the contractors for the construction work. Instead, the assessee has provided these facilities. The same is true of the hire charges for plant and machinery which was given by the assessee to the contractor for the assessee's construction work. The receipts in this connection also go to compensate the assessee for the wear and tear on the machinery. The advances which the assessee made to the contractor to facilitate the construction activity of putting together a very large project was as much to ensure that the work of the contractors proceeded without any financial hitches as to help the contractors. The arrangements which were made between the assessee-company and the contractors pertaining to these....
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....of the assessee, the same cannot be said in the present case where the utilisation of various assets of the company and the payments received for such utilisation are directly linked with the activity of setting up the steel plant of the assessee. These receipts are inextricably linked with the setting up of the capital structure of the assessee-company. They must, therefore, be viewed as capital receipts going to reduce the cost of construction. In the case of Challapalli Sugars Ltd. vs. CIT 1974 CTR (SC) 309 : (1975) 98 ITR 167 (SC) : TC 17R.834, this Court examined the question whether interest paid before the commencement of production by a company on amounts borrowed for the acquisition and installation of plant and machinery would form a part of the actual cost of the asset to the assessee within the meaning of that expression in s. 10(5) of the Indian IT Act, 1922, and whether the assessee will be entitled to depreciation allowances and development rebate with reference to such interest also. The Court held that the accepted accountancy rule for determining cost of fixed assets is to include all expenditure necessary to bring such assets into existence and to put them in wor....
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....Supreme Court in Tuticorin Alkali Chemicals & Fertilizers Ltd.'s case (supra) is that if funds have been borrowed for setting up of a plant and if the funds are 'surplus' and then by virtue of that circumstance they are invested in fixed deposits the income earned in the form of interest will be taxable under the head 'income from other sources'. On the other hand the ratio of the Supreme Court judgment in Bokaro Steel Ltd.'s case (supra) to our mind is that if income is earned, whether by way of interest or in any other manner on funds which are otherwise 'inextricably linked' to the setting up of the plant, such income is required to be capitalized to be set off against pre-operative expenses. 2.19 The facts in the instant case are pari materia with the facts of the Indian Oil Panipat (supra) and the ratio decidendi of Hon'ble Delhi High Court in that case will squarely apply to the facts of the assessee. In the instant case, undisputedly, the funds have been borrowed for the specific purpose of execution of the mega road projects and as per the loan agreement executed between the consortium of bankers and the assessee dated 23.11.2005, all the disbursements shall be dep....
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....ase of CIT Vs. Karnataka Power Corporation 247 ITR 268 where it is held that hire charges realised by assessee for plant and machinery given to contractors for use in construction work and interest charged on advances made to them were capital receipts which reduced the capital cost, is applicable. 7. It is submitted that Hon'ble Rajasthan High Court in case of CIT Vs. Bhawal Synthetics India Ltd. reported in 152 DTR 273 at para 6 of the order held that where FD is made for obtaining the letter of credit to purchase machinery, the interest earned on FDR is nothing but income from other sources. However, in this case, nobody appeared from the side of the assessee and the subsequent decision of Supreme Court in case of CIT Vs. Karnal Co-operative Sugar Mills Ltd. where it was held that interest earned by the assessee on deposits against margin money required for obtaining letter of credit or bank guarantee, etc. is not taxable income but a capital receipt and the same be adjusted against the project cost, was not brought to its notice. Thus, this decision of Hon'ble Rajasthan High Court is per incuriam. 8. Without prejudice to above, it is submitted that there is a ....
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.... State Mines and Minerals Ltd. in short RSMML a Government of Rajasthan Undertaking. We are unable to accept the submissions of the Ld. Counsel for the assessee, in view of the Judgments of the Hon'ble Supreme Court rendered in the case of CIT vs. Tuticorin Alkali Chemicals & Fertilizers Ltd. (Supra), CIT vs. Autocast Ltd. (Supra) Hon'ble Supreme Court in the case of CIT vs. Autocast Ltd. 248 ITR 110 (SC) following the ratio laid in the case of M/s Tuticorin Alkali Chemicals & Fertilizers vs. CIT held as under:- "The question that was before the High Court (see [1998] 229 ITR 789) read thus (page 790) "Whether, on the fact and in the circumstances of the case, the interest income is not assessable to tax in the hands of the appellant?" The High Court answered the question against the Revenue. The Revenue is in appeal by special leave. It is not now in dispute that the appeal must succeed, having regard to the Judgment of this court in Tuticorin Alkali Chemicals and Fertilizers Ltd. vs. CIT [1997] 227 ITR 172. The civil appeal is accordingly allowed. The Judgment and order under challenge is set aside. The question is answered in the nega....
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....plants, solar heaters etc. for the surrounding villages. In pursuance of the said term a proportionate provision of Rs. 0.95 crores was made during the year under appeal. Ld. Counsel for the assessee submitted that the Assessing Officer in incorrectly mentioned that assessee has failed to bring any concrete material to prove its contention that the same has been incurred to obtain environment clearance from Pollution Control Board for carrying out the mining activities at various mining sites by ignoring the letter dt. 10.12.2008 of Ministry of Environment and Forests where the environment clearance was making provisions for such expenditure. 6.2 Ld. Counsel placed reliance on the decision of the Co-ordinate Bench rendered in the case of ACIT vs. Jindal Power Ltd. 138 DTR 313, Sri Venkata Satyanarayana Rice Mill Contractor vs. CIT 223 ITR 101 (SC), Judgments of the Hon'ble Supreme Court in the case of ACIT vs. Rajasthan Spinning & Weaving Mills Ltd. 274 ITR 463 (Raj.), CIT vs. Rupsa Rice Mill 104 ITR 249 (Orissa) (SC). 6.3 On the contrary, Ld. Departmental Representatives opposed the submissions, and supported the order of the authorities below. 6.4 We have heard the rival....
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....rds is made in the favour of RSMML as lessee, Government being the lessor. 2. The GOR vide letter dated 04.09.2012 (PB 265) has clarified that the impugned land will not be transferred to assessee neither it would be allowed to create any charge or mortgage on the said project land mutated in favour of RSMML for any financing purposes. This proves, in no uncertain terms, that assessee does not have any ownership or associated right over the project land and the expenditure incurred by it is only to secure mining activity rights for a limited period of mining lease i.e. upto 28-12-2040. Thus, assessee does not have any right of ownership in the impugned land except conducting mining activities and extraction of lignite, maximum quantity to be extracted which is also specified, for limited purpose of supply of same to designated power plants. 3. Thus, on payment of compensation by the assessee through RSMML, what the assessee acquire is only the surface right for doing mining as a sub-licensee of RSMML. The title in the land is not transferred in favour of RSMML by executing a conveyance and therefore, the question of RSMML transferring it in favour of the assessee ....
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....of the assessee did not undergo any change. The assessee only acquired a facility to carry on business profitably by paying nominal lease rent. In the light of the aforesaid findings of fact and the ratio of the apex court decisions, the court does not find this to be a case which warrants interference. Even the Assessing Officer has recorded that the payment was for use of land. There is no legal infirmity committed by the Tribunal." 5. The Ld. CIT(A) has relied on the decision of ITAT, Jaipur Bench in case of RSMM Ltd. Vs. ACIT in ITA No.144 & 124/JP/2014 dt. 12.02.2016. In this decision also, it is held that expenses laid by the assessee for the purpose of getting the mining land and leasehold land are required to be treated as capital expenditure but the AO is directed to give all benefits as capital expenditure. Though the facts of the assessee's case is different than that in the above case in as much as assessee is only a sub-licensee and neither the leasehold right in the land is transferred in its name nor it has any right to create mortgage of the mining leases, but still even as per the ratio of above decision, if it is held that expenditure is capital in nature....
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....td. v. CIT 225 ITR 802 allowed spreading over of liability over a number of years on the ground that there was continuing benefit to the company over a period. Therefore, analogously, expenditure incurred on an infrastructure project for development of roads/highways under BOT agreement may be treated as having been made/incurred for the purposes of business or profession of the assessee and same may be allowed to be spread during the tenure of concessionaire agreement. 2. In view of above, Central Board of Direct Taxes, in exercise of the powers conferred under section 119 of the Act hereby clarifies that the cost of construction on development of infrastructure facility of roads/highways under BOT projects may be amortized and claimed as allowable business expenditure under the Act. 3. The amortization allowable may be computed at the rate which ensures that the whole of the cost incurred in creation of infrastructural facility of road/highway is amortized evenly over the period of concessionaire agreement after excluding the time taken for creation of such facility. 4. In the case where an assessee has claimed any deduction out of initial cost of devel....
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....able on record. The Ld. CIT(A) has given a finding on fact by observing as under:- "In my opinion, the main purpose of acquiring the land was to extract lime stones which is the raw material for assessee. After extraction the land become unusable for any other purpose. The assessee cannot use this land perpetually as in the case of a normal agriculture or residential land, this land can be used till its deposits (i.e. lime stone) lasts. Therefore, I agree with the findings of the AO in AY 2008-09 wherein he allowed such expenditure in 20 equal instalments. Considering the above, the AO is directed to allow the expenditure equally in 20 years including the current year. Therefore, addition of Rs. 46,56,887/- is confirmed. The AO is directed to allow expenditure of Rs. 2,45,099/-." There is no dispute with regard to the fact the AO himself had allowed expenditure in 20 equal instalments in AY 2008-09. In the year under appeal, the Revenue has not demonstrated the change into the facts and the reason for changing the stand. Therefore, we did not see any reason to interfere into the order of Ld. CIT(A), same is hereby affirmed. This ground is dismissed." ....
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....of lease hold rights for the period of lease cannot be denied to the assessee for the simple reason it being intangible asset has been written off which pertains to land being a intangible asset. It is nobody's case that the land either belonged to the lessee or to the Government. This simply indicates that a depletion of the land against the payment of premium it was leased has to be claimed after capitalization thereof by the assessee which is for the purpose of its main business. All expenses are incurred for the purpose of business and are incidental to the holding of rights were claimed u/s.32(1)(ii) being the license to carry out the mining therefore could not be denied insofar as the Government and the lessee are in control of the asset. The definition of depreciation therefore has been misconstrued for the purpose of allowing deduction by the Assessing Officer and the learned CIT(A) in holding a view on the promulgation of Section 32(1)(ii) with effect from the year 1998-99 which has been further amended w.e.f. Assessment Year 2003-04. In this view of the mater, we are inclined to hold that the assessee is entitled to depreciation as charged to the P & L account in accordan....
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....e case under consideration, the surface right of land was given for mining the lignite for specific purpose and not for enjoyment of land as such. Therefore, the ratio laid down in the case relied by the Ld. CIT(A) is not applicable to the case of the assessee. As against this, the cases relied by assessee with reference to Ground No.7 are applicable to the facts of the case and be considered. 10. So far as the alternate ground for allowing claim u/s 35E is concerned, the same is not pressed. In view of above, AO be directed to allow the amortization of expenditure to the assessee or alternatively, to allow depreciation as intangible asset." 7.2 On the contrary, Ld. D/R opposed the submissions and placed reliance on the decision of the CIT(A). Ld. CIT(A) has decided the issue in para 7.3 of the order as under:- "7.3 I have considered the facts of the case, assessment order and the written submissions of the appellant. As noted an amount of Rs. 9,56,28,198/- had been claimed as depreciation on fixed assets which included an amount of Rs. 8,18,38,172/- on amortization expenses. The Assessing Officer concluded that the land was not a depreciable asset, th....
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....ing activity rights for a limited period of mining lease. As discussed above, the land is acquired and transferred to M/s RSMML which is a majority stake holder in the appellant company. Thus effectively the land is in the possession of the appellant company. Further, it exercises the same rights as M/s RSMML, the only difference being that the land has not been transferred in their name. A lot of emphasis has been placed by the appellant on the fact that the land was transferred by the Government of Rajasthan to M/s RSMML and not to the appellant company and also that the title of land would not vest even with M/s RSMML. It was further stressed that handing over the possession of land is completely distinct and different from transferring the title of land. The facts of this case are identical with the case of M/s Rajasthan State Mines & Minerals Ltd. vs. ACIT, Circle-6, Jaipur in ITA No. 144/JP/2014 and 124/JP/2014 dated 12/02/2016 wherein it was held as follows: "20.1 The vexed question before us is the amortization of amount paid for getting the mining land/leasehold land by the assessee. Whether it is required to the treated as revenue expenditure an....
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.... for getting the mining land and lease hold land as capital expenditure. The AO is further directed to given all benefits as a capital expenditure. The Judgment relied upon by the assessee of Hon'ble Supreme Court in the matter of Madars Industrial Investment Corporation Ltd. Vs. CIT, 225 ITR 802 is not applicable to the facts and circumstances of the case. However, the judgment of Hon'ble Supreme Court in the matter of Enterprising Enterprises (2007) 160 Tax an 188 (SC) is squarely applicable to the facts and circumstances of the case and further the said judgment is of later date and, therefore, is required to be followed by the Bench. The judgment of NMDC Ltd. vs. JCIT (Supra) is not applicable to the facts and circumstances of the case as in the aid judgment the issue was not with respect to applicability of section 37 but was in respect to allowing the depreciation u/s 32 of the Act. The submission of the Ld. A/R for the assessee is that the value of wasting asset will depreciate with the extraction of mineral, in our view, is preposterous. In our view, the passage of guidelines for protecting the environment, now it is the duty of the lesser/assessee to submit and execute the....
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..... There is no dispute about the cost of acquisition. The only dispute is with regard to nature of the asset acquired whether leasehold rights partake character of land or intangible asset. Intangible asset has been defined u/s 32(1)(ii)being knowhow, patents, copy rights, trade marks, license, franchises or any other business or commercial rights of similar nature. Obviously, leasehold rights on land do not fall in the category of above categories. It does not fall even in residuary category of any other business or commercial rights of similar nature. Because the term 'rights of similar nature' qualifies that even to fall under residuary clause, it should be in the nature of above know-how, patents, copy-rights, trade marks license or franchise. Applying the rule of ejusdem generis even to fall within the residuary category it should be in the nature of rights enumerated above. Further, definition of the term 'immovable property' is given in section3(26) of the General Clauses Act and States that it shall include land, benefits to arise out of land and thing attached to the earth or permanently fastened to anything attached to earth. Right of enjoyment to immovable property under ....
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....ection 32(1)(ii) allows the depreciation on intangible assets which provides depreciation of know how, patents, copy rights, trade marks, licenses, franchisees or any other business of commercial rights of similar nature being intangible assets acquired on or after the April 1, 1998. The payment so made by assesee for acquisition of mining land does not falls within the ambit of section 32(1)(ii) of the Act because the payment is not in the nature of know-how, patents, trademarks, licenses, franchisee. So far as the work 'other business or commercial right' is concerned same is also having limited scope has it refers to 'other business' or commercial right of similar nature', it means other business or commercial right having nature of knowhow, patents, trademarks, licenses, franchise. The intangible asset refers in this provision re of having nature of rights which are granted by government authorities only. Rights acquired in normal course of business are not eligible for depreciation under this provision. Hence, depreciation on the said sum is not allowable under this provision. Another contention of assessee to allow deduction u/s 35E is also not acceptable. Sub-sectio....
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.... under the identical facts held as under:- "These are the principles which have to be applied in order to determine whether in the present case the expenditure incurred by the company was capital expenditure or revenue expenditure. Under clause 4 of the deed the lessors undertook not to grant any lease, permit or prospecting licence regarding limestone to any other party in respect of the group of quarries called the Durgasil area without a condition therein that no limestone shall be used for the manufacture of cement. The consideration of Rs. 5,000 per annum was to be paid by the company to the lessor during the whole period of the lease and this advantage or benefit was to enure for the whole period of the lease. It was an enduring benefit for the benefit of the whole of the business of the company and came well within the test laid down by Viscount Cave. It was not a lump sum payment but was spread over the whole period of the lease and it could be urged that it was a recurring payment. The fact however that it was a recurring payment was immaterial, because one had got to look to the nature of the payment which in its turn was determined by the nature of the asset whi....
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.... Further, the Coordinated-Bench of this Tribunal in the case of ONGC Videsh Ltd. vs. DCIT [2010] 37 SOT 97 (Delhi) held that expenditure incurred on purchase of evaluation of the seismic data of foreign block. As the expenditure incurred for furtherance of the activities undertaken by the assessee in the normal course of its business at therefore allowable as business expenditure. In the case in hand the expenditure is incurred for rights of mining as given by the Government of Rajasthan assigned to RSSML and this lease was assigned to the assessee with the concurrence of the Government of Rajasthan and Government of India. The RSSML had incurred expenditure of Rs. 283.79 crores on acquisition of land which was duly reimbursed by BLMCL in terms of JV Agreement in lieu of transfer of mining lease, surface rights and other associated rights for development, operation and management of mines. Assessee further incurred expenses amounting to Rs. 7.07 crores being administrative and pre operating expenses for acquiring the aforesaid mining rights over Kapurdi lignite mining lease and also incurred net interest and finance cost of Rs. 74.99 crores in respect of funds borrowed for afore....
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....efore, a business or commercial rights which is similar to the words preceding it, is an intangible asset eligible for depreciation u/s 32(1)(ii). 2. In the present case, assessee has allotted shares of Rs. 10.20 crores to RSMML without any financial obligation on it in lieu of it having obtained the mining lease for the mines, transferring such mining lease, surface rights and other rights in relation thereto for the development, operation and management of mines in favour of the assessee and to contribute its local knowledge, technical knowledge and other expertise in relation to the mines as referred in clause 2 and clause 3 (PB 73-75) of JV agreement dt. 27.12.2006. Thus, clearly what the assessee has obtained by way of allotting shares to RSMML free of cost is a valuable asset by way of know-how and license which is a business/commercial right. It is not a simple case of assessee compensating RSMML for services provided as held by the Ld. CIT(A) rather it is a case of assessee obtaining valuable rights by way of know-how to develop the mines and also the license to operate & manage the mines as all the licenses, approvals, consents required for operation of the mines ....
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....ship (including the right of nomination) vests in the Exchange only when a member commits default. Otherwise, he continues to participate in the trading session on the floor of the Exchange; that he continues to deal with other members of the Exchange and even has the right to nominate subject to compliance of the rules. Moreover, by virtue of Expln. 3 to s. 32(1)(ii) the commercial or business right which is similar to a "licence" or "franchise" is declared to be an intangible asset. Moreover, under r. 5 membership is a personal permission from the Exchange which is nothing but a "licence" which enables the member to exercise rights and privileges attached thereto. It is this licence which enables the member to trade on the floor of the Exchange and to participate in the trading session on the floor of the Exchange. It is this licence which enables the member to access the market. Therefore, the right of membership, which includes right of nomination, is a "licence" or "akin to a licence" which is one of the items which falls in s. 32(1)(ii). The right to participate in the market has an economic and money value. It is an expense incurred by the assessee which satisfies the test o....
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....term "business or commercial rights of similar nature", it is seen that the aforesaid intangible assets are not of the same kind and are clearly distinct from one another. The fact that after the specified intangible assets the words "business or commercial rights of similar nature" have been additionally used, clearly demonstrates that the Legislature did not intend to provide for depreciation only in respect of specified intangible assets but also to other categories of intangible assets, which were neither feasible nor possible to exhaustively enumerate. In the circumstances, the nature of "business or commercial rights" cannot be restricted to only the aforesaid six categories of assets, viz., knowhow, patents, trademarks, copyrights, licenses or franchises. The nature of "business or commercial rights" can be of the same genus in which all the aforesaid six assets fall. All the above fall in the genus of intangible assets that form part of the tool of trade of an assessee facilitating smooth carrying on of the business. In the circumstances, it is observed that in case of the assessee, intangible assets, viz., business claims; business information; business records; contracts;....
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....an assessee for carrying on a business more efficiently by utilizing an available knowledge or by carrying on a business to the exclusion of another assessee. A non-compete right encompasses a right under which one person is prohibited from competing in business with another for a stipulated period. It would be the right of the person to carry on a business in competition but for such agreement of non-compete. Therefore the right acquired under a non-compete agreement is a right for which a valuable consideration is paid. This right is acquired so as to ensure that the recipient of the non-compete fee does not compete in any manner with the business in which he was earlier associated. The object of acquiring a know-how, patents, copyrights, trademarks, licences, franchises is to carry on business against rivals in the same business in a more efficient manner or to put it differently in a best possible manner. The object of entering into a non-compete agreement is also the same i.e., to carry on business in a more efficient manner by avoiding competition, atleast for a limited period of time. On payment of non-compete, the payer acquires a bundle of rights such as restricti....
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....ss without competition has an economic interest and money value. The term 'or any other business or commercial rights of similar nature' has to be interpreted in such a way that it would have some similarities as other assets mentioned in Cl.(b) of Expln.3. Here the doctrine of ejusdem generis would come into operation and therefore the non-compete fee vests a right in the assessee to carry on business without competition which in turn confers a commercial right to carry on business smoothly. When once the expenditure incurred for acquiring the said right is held to be capital in nature, consequently the depreciation provided under Sec.32(1)(ii) is attracted and the assessee would be entitled to the deduction as provided in the said provision i.e., precisely what the Tribunal has held." CIT Vs. MIS Bharti Teletech Ltd. (2015) 119 DTR 139 (Del.) (HC) In this case, the amount paid to acquire network and the facilities was held to be intangible asset eligible for depreciation. The held part of this judgment reads as under:- "The question as to whether the claim for depreciation confirms to one or the other description under Section 32, espec....
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....or the assessee has placed reliance on the decision of the Hon'ble Supreme Court rendered in the case of Techno Shares & Stocks Ltd. & Ors. vs. CIT 327 ITR 323. As per the assessee what it has acquired is an intangible asset and therefore is entitled for depreciation. In our considered view, the assessee is required to demonstrate that it has acquired knowhow, patents, copyrights, trademarks, license, franchisee or any other business or commercial rights of similar nature being intangible assets. In the case in hand, it is contended that assessee has allotted shares of Rs. 10.20 crores to RSMML without any financial obligation on it in lieu of it having obtained the mining lease, for the mines, transferred such mining lease, surface rights and other rights in relation thereto for the development, operation and management of mines in favour of the assessee and to contribute its local knowledge, technical knowledge and other expartise in relation to the mines as referred in clause 2 to 3 of the JV Agreement dated 27/12/2006. The assessee has not demonstrated as what knowledge was transferred to the assessee, in the absence of the same it cannot be inferred with certainty that what....
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....diture. 14.2 Ld. D/R vehemently argued that the Ld. CIT(A) was not justified in allowing the deduction. 14.3 Per contra Ld. Counsel for the assessee supported the order of the Assessing Officer and reiterated the submissions as made in the written submissions. 14.4 We have heard the rival contentions, perused the material available on record and gone through the order of the authorities below. We find that Ld. CIT(A) has given a finding on fact by observing as under:- (2.3) "2.3 I have considered the facts of the case, assessment order and the written submissions of the appellant. As noted an amount of Rs. 2,11,47,269/- has been claimed as land tax out of which a sum of Rs. 1,48,03,747/- had been disallowed suo moto by the assessee under Section 43B of the IT Act, 1961 as the same had not been paid and the balance amount of Rs. 63,44,181/- was claimed. The Assessing Officer disallowed the claim as the levy of the same had been disputed by the asessee before the Land Tax Authorities and the matter was sub-judice in the Rajasthan High Court and no documentary evidences had been provided by the assessee, of dismissal of the writ petition filed by the company. It was ....
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....e year under consideration.[para 18.1] It was further submitted that otherwise also because of specific provision of section 43B, such statutory liability are allowable on payment basis even if expenditure is not booked in books of account.[para 18.2] The service tax and land tax are statutory liability which are paid during the year as per the orders of the CESTAT and Rajasthan High Court. These are statutory liabilities which pertains to the business carried on by the assessee. The assessee cannot be denied a deduction in respect of these payments merely on account of the fact that these are payments in respect of matter which are contested ;before the authorities and no expenditure is book in the profit and loss account. In light of above, order of the Commissioner (Appeals) is to be upheld deletion the disallowance under section 43B made by Assessing Officer. [para 20] In view of the discussion as above, and the decision of the jurisdictional ITAT, the addition made by the Assessing Officer is deleted. The ground of appeal is allowed." 14.5 The above finding on fact is not controverted by the Revenue. Since, the land tax is allowable u/s 43B of the....
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....rnate, in ground no. 3, it was stated that since mine closure charges attributable to closing stock of lignite, to the extent of Rs. 72,12,891/- have been included in the value of closing stock, the same should be reduced from the mine closure charges disallowed. Identical issue arose in case of M/s Rajasthan State Mines & Mineral Ltd. Vs. ACIT, Circle-6, Jaipur in ITA No. 144/JP/2014 and 124/JP/2014 dated 12.02.2016 and the relevant portion of the order is as follows: "30.3 We have heard rival contentions and perused the material on record. In our view, once assessee whether private or government take on lease a mine, its closures is inevitable. A mine cannot be permitted to be exploited infinitely and indefinitely. In our view, one the mine is exploited, its closure and rehabilitation is necessary. In our view, the Ministry of Coal, Government of India had provided structured programmed/guidelines for closure of mines. In our opinion, the view expressed by the AO and Ld. CIT(A) is contrary to law and we disagree with the view of the authorities below that the liability is a contingent liability and is not ascertainable liability. The guidelines laid down by the ....