TaxTMI 
TaxTMI 
2017 (10) TMI 1458
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....ce of Rs. 10,00,000/- contributed by the assessee to State Renewal Fund, which was disallowed by the Assessing Officer as the same was merely an application of fund and not an expenditure? 3. Whether the Tribunal was justified in deleting the addition of Rs. 2,34,990/- made by disallowing the contribution to Social Welfare Activities u/s 37(1) of the Act, despite the fact that the same was not incurred exclusively for the purposes of business and hence not allowable? 4. Whether the Tribunal was justified in reversing the order of CIT(A) as well as Assessing Officer and holding the income from sale of Carbon Emission Reduction Certificates (CERs) of Rs. 36,24,742/- as capital income, ignoring that the same was specifically a revenue receipt and even the assessee has claim benefit u/s 801A of the Act? 5. Whether the Tribunal was justified in allowing deduction of Rs. 2,94,04,000/- in respect of Mines Closure Expenses by reversing the orders of CIT(A) and Assessing Officer, even when the said expenditure was not even debited in the books of accounts and is also not an ascertained liability?" 3. Now, the issue no.1,2 & 3 are covered by the decision of this court in the case ....
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....um of Rs. 2,49,04,000/- towards proportionate mines closure expenses for the financial year 2009-10 in the books of accounts prepared for financial year 2009-10 in the books of accounts prepared for Financial Year 2011-12 as prior period expenses of Rs. 2,49,04,000/- while making computation of total income for the assessment year 2012-13. As the assessment proceedings for the year are under progress, it is requested to allow the claim of the assessee while passing the assessment order u/s 143(3). Copy of Income Tax Return Acknowledgement, computation of total income and notes to the computation are enclosed for the ready reference." I have gone through the claim made by the assessee in respect of towards proportionate mines closure expenses for the financial year 2009-10 amounting to Rs. 2,49,04,000/-. As the assessee itself mentioned in his reply that the expenditure has not been debited in the books of accounts for the assessment year under consideration therefore no question of its allowability arises. Even otherwise, legally also the claim of the assessee is not valid in view of the decision of Hon'ble Supreme Court in the case of Goetze (India) Ltd. Vs. CIT 284 ITR 323, th....
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....elines, are also required to prepare and obtain the approval of mine closure plan as per the guidelines within a period of one year from the issue of these guidelines. The said guidelines have also provided the computation for calculating the annual closure cost in Annexure-1. It is fairly admitted by the ld. A/R for the assessee that neither the expenditure has been debited in the books of account towards the closure of the mines nor any plan was submitted for obtaining the approval of mine closure within one year of publication of said guidelines by the authority. The ld. A/R has submitted that the Auditor General Office while conducting the supplementary audit of accounts for financial year 2010-11 has observed that the assessee has not provided liability in respect of mines closure plan for its Lignite mines as per the said guidelines issued by the Ministry of Coal. As the assesseehas not made the provision for the expenses in the books of account for the A.Y. 2010-11 and 2011-12, the assessee has made the provision of Rs. 15,15,36,000/- in the books of accounts for the A.Y. 2012-13. In the books of accounts for the A.Y. 2012-13, the individual break up of assessment years 2010....
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.... permitted to be exploited infinitely and indefinitely. In our view, once the mine is exploited, its closure and rehabilitation is necessary. In our view, the Ministry of Coal, Government of India had provided a structure programme/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 Coal Ministry, has elaborately given the chart to quantify the liability and the manner in which the amount is required to be spent for closure of the mines and for restoring the ecological balance and environment protection.Therefore, to say that the liability is merely a contingent and has not arises, in our view is preposterous and without any merit.The provisions are required to be made in the books of account of the assessee. Since the amount is ascertainable and discernable to be spent on the closure of the mines, in view of the formula given by the Ministry of Coal, therefore, in our view the liability is not a contingent liability and is required to be made provision in ....
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.... closure liability is a ascertained liability .As per matching principle as well as the mercantile system of accounting, the liability is allowable in principle under section 37 of the Act. In view of the above, the ground of the assessee is allowed and the AO is directed to give the benefit of deduction of Rs. 2,94,04,000/- towards mines closure expenses in the A.Y. 2010-11. 5.4 He contended that in view of the decision of the Supreme Court in Poonam Chand Trilok Chand vs. Commissioner of Income Tax (06.01.1982 - ALLHC), 136 ITR 0537 holding as under: 8. Now, coming to the merits of the claim, we find that the view taken by the AAC was absolutely correct while the one taken by the Appellate Tribunal is erroneous in law. As noted above, the assessee follows the mercantile system of accounting. It may be that the assessee was disputing its liability to pay the purchase tax to the State Govt. and had not made any debit entry in its books of account. It is on record that when the assessee lost its case finally, it debited the amounts to the accounts of the customers and made payments to the State Govt. Those payments ' were, of course, made in the subsequent years, but that w....