TaxTMI 
TaxTMI 
2017 (11) TMI 1080
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....specific conditions for development of the society and surrounding villages. Every year some development work is done in the surrounding villages of the mine for maintaining environment. The expenditure incurred on the development work is claimed as incidental to and necessary for carrying out the mining operation smoothly. The property and assets created by the development works do not remain the assets of the assessee. While preparing the Profit and Loss A/c and Balance sheet the above development expenses were debited in the account as capital expenditure and rebate u/s.35E was claimed in place of charging the total expenditure to revenue A/c as the same, does not form part of the assessee's assets. During the course of assessment the learned Assessing Officer has disallowed the rebate on the aforesaid development expenses. As the issues arising in both the assessment years are common they are heard together and disposed off by way of this common order. We first take up the appeal for A.Y.2002-03. The grounds of appeal are as follows :- "1(i) That the Ld. CIT(A) grossly erred on facts and in law in the determination of deduction u/s. 35E of the LT. Act, 1961 (....
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.... 35E and 28/37 of the Act. The CIT (A) has relied on irrelevant consideration and therefore, the order requires to be set aside and the claim of the appellant or the claim allowable under the Act has to be allowed. 5. That the Ld. CIT (A) grossly erred on fact and in law in not allowing due claims and benefits of carry forward of losses claimed and determined in the earlier years. 6 That the appellant craves leave to add, to alter, to amendments and or withdraw any of the above grounds of appeal before or at the time of hearing of the appeal." 4. The assessee filed an application for admission of an additional ground which reads as follows :- "Assumption of jurisdiction to issue notice u/s 148, without laying necessary foundation for the same is illegal, bad in law and as such all consequential proceedings are nullity. " 5. After hearing the rival contentions we are of the considered opinion that this additional ground of appeal challenging the reopening of the assessments, being a legal ground and a jurisdictional matter, the same has to be admitted as it does not require any enquiry into fresh facts. In other words, all the facts necessary for adj....
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....Mandir, construction of Data Baba Mazar, expenses towards electrification of villages and repairing of villagers' houses and beautification.of Mission More, etc. Thus, the entire development expenditure of Rs. 26,62,332 on which deduction under section 35E was claimed was not in the nature of expense incurred for development of Mines and accordingly the' deduction under section 35E of the Act was not admissible to the assessee. The expenses incurred.in the past on account of development expenses are also not found to be connected with development of Mines. Hence, the assessee company was not eligible for deduction under section 35E of the Act on account of total expenses to the extent o! Rs. 38,53,288. Therefore, the eligible deduction u/s. 35E for this year is only Rs.(87,35,400-38,53,288) i.e., Rs. 48,82,112, however, an amount of Rs. 62,16,050 was allowed vide order ujs.154/ 143 (3) dated 20-12-2006. The assessee by claiming deduction under section 35E of the Act on the expenses which were not connected with development on Mines has Claimed excessive relief under the Act. There was a failure on the part of the assessee in disclosing fully & truly all material fa....
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....ts in respect of this claim of the claim of deduction u/s 35E of the Act, as were necessary for assessment, in the reasons recorded, cannot per say fulfil the requirement of law when there is full disclosure of all the facts,. The requirement of the proviso to section 147 of the Act are not fulfilled in this case. 11. The Hon'ble Bombay High Court in the case of M/s. Hindustan Lever Limited vs ACIT and Ors 268 ITR 332(Bom) held as follows : "The reasons recorded must be based on evidence. The AO, in the event of challenge to the reasons, must be able to justify the same based on material available on record. He must disclose in the reasons as to what fact or material was not disclosed by the assessee fully and truly necessary for the assessment of that assessment year so as to establish the vital link between the reasons and evidence. That vital link is the safeguard against arbitrary reopening of the concluded assessment. " 12. In the case of Atma Ram Properties Private Limited vs DCIT 343 ITR 141 (Del) has held as follows :- "Held, (i) that for the assessment year 1999-2000, the Assessing Officer had gone into the question of loans and advances from sister....
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....unds, the Ld. CIT(A) grossly erred on facts and in law in not accepting the claim of deduction of Rs. 54,62,981/- u/s. 35E of the Act, as claimed in the return filed u/s.153A of the Act. (ii) That the Ld. CIT(A) grossly erred on facts and in law in enhancing the income of the appellant by reducing the claim u/s. 35E of the Act, below the figure determined by the Assessing officer. 3(i) That the Ld. CIT(A) grossly erred on facts and in law in not accepting the claim of the appellant in respect of development expenditure amounting to Rs. 1,22,91,627/-, allowable as business expenditure u/s. 28/37 of the Act. (ii) That the Ld. CIT(A) grossly erred on facts and in law in restricting the claim of the appellant to Rs. 22,91,627 out of the total development expenditure of Rs. Rs. 1,22,91,627/-. (iii) That the Ld. CIT(A) grossly erred on facts and in law in not appreciating the contention of the appellant that the development expenditure was incurred necessarily and exclusively for the purposes of business and that the same qualified for claim as revenue expenditure u/s. 28/37 of the Act. 4. That the Ld. CIT(A) grossly erred on fact and in law i....