TaxTMI 
TaxTMI 
2018 (3) TMI 1809
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....see. The assessee filed various documents and case was discussed and thereafter the Assessing Officer completed the assessment u/s.143(3) of the Act dated 30.12.2011. 4. Ground Nos.1 & 2 of appeal are general in nature and hence, requires no separate adjudication by us. 5. Ground No.3(1) relates to confirmation of addition on account of "donation and subscription". 6. The Assessing Officer found that the assessee has claimed Rs. 15.67 lakhs as donation & subscription. The Assessing Officer following the order of the Tribunal in the case of the assessee for the assessment year 2005-06 to 2007-08 allowed the expenditure of Rs. 3.86 lakhs incurred under the instructions of Government authorities and also which are covered under the provisions of section 80G of the Act and disallowed the claim of Rs. 3.79 lakhs and added to the income of the assessee. 7. On appeal, the CIT(A) confirmed the action of the Assessing Officer. 8. Before us, ld A.R. of the assessee submitted that the expenditure is incurred wholly and exclusively for the purposes of business. He submitted that since the assessee is a public sector undertaking, has undertaken number of development work in and a....
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....tted that there is no such donation which is eligible for deduction u/s.80G. We considering the facts and submissions, set aside the orders of lower authorities and direct the Assessing Officer to allow deduction of Rs. 5.25 lakhs made under the head "donation and subscription" and allow this ground of appeal of the assessee. 11. In the present case in hand, the assessee has filed details of donation covered u/s.80G of the Act, which are relied by the Assessing Officer in assessment order and the Assessing has granted relief available under 80G being 50%, which is not disputed and made disallowance of balance claim and other claims and we consider the facts and restrict the disallowance to the extent of Rs. 3.69 lakhs and partly allowed the ground of appeal of the assessee. 12. Ground No.3(2) relates to confirmation of disallowance of Rs. 288.10 lakhs incurred for CMPDIL expenses. 13. The Assessing Officer noticed that the assessee has incurred expenditure of Rs. 480.40 lakhs under the head ""CMPDIL expenses" appearing in the annual report under schedule 12(B). The Assessing Officer disallowed Rs. 288.10 lakhs considering the same as capital expenditure as this amount was ....
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....nature of work/services rendered by CMPDIL are of contractual in nature and usage of asset is of enduring nature. Therefore, the CIT(A) called for a remand report from the Assessing Officer. The Assessing Officer submitted his report, wherein, it was stated that the work undertaken by CMPDIL are purely contractual nature and obtaining of an asset is of enduring nature. The remand report was furnished to the assessee for its comments and the assessee filed its submissions. 18. The CIT(A)observed that the expenditure is not incurred on existing revenue yielding mine but such expenditure is in connection with a new capital asset. Therefore, this expenditure is in the nature of preliminary and prospecting expenditure covered u/s.35E of the Act and directed the Assessing Officer accordingly. 19. We find that the CIT(A) gave his findings that the claims of the assessee has to be allowed u/s.35E and not under section 37 of the Act, as the expenses being preliminary and prospecting expenditure. We also find that the Tribunal for the assessment year 2008-09 in ITA No.37/ctK/2012 order dated 3.1.2018 on similar issue has held that the assessee shall approach the respective assessing au....
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....of 10% is sufficient and accordingly the stock is valued. Ld A.R. submitted that the disallowance made by the Assessing officer is reduced by Rs. 361.20 Lakhs in the order u/s. 154 dated 28/03/2012 pertaining to amount of provision on account of deterioration in opening stock.. Hence the net disallowance on this account remains at Rs. 537.87 Lakhs'. It was submitted that as per accounting policy consistently followed by the assessee company (clause 10.2 of Schedule - 'O' , Provision @ 10% on the value of closing stock of coal is made to take care of deterioration of stock due to fire and longer period of stocking etc. where the stock is valued at Net Realizable Value. No such provision is made where the stock is valued at cost.' 24. Before us, both the parties agreed that the issue requires reconsideration in view of the decision of the Tribunal in ITA No. 50,51,52, & 53 for the assessment year 2004-05 to 2007-08 and also by the Tribunal decision dated 3.1.2018 in ITA No.73/CTK/2012 for the assessment year 2008-09, wherein, it has been observed as under: "Having heard both the parties and perusing the material on record, we are of the considered view that in....
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....ness under the head "Profits and gains from business" has to be computed in accordance with method of accounting regularly employed by the assessee. Similarly, s. 145A provides that the inventory shall be valued in accordance with the method of accounting employed by the assessee, therefore, if the method of valuation adopted by the assessee is recognised method then the same cannot be rejected on the ground that the net realisable value/market value has been determined on the basis of certain estimate. It is to be noticed that the AO while holding that the inventories valued by the assessee @ 5 per cent is excessive, did not care to estimate the net realisable value of the store and proceeded to disallow the amount of Rs. 68,59,108 written off as obsolete stores and claimed in P&L a/c altogether. It has come on record that the assessee has valued the inventories which were rusted, non-moving and unusable on account of obsolescence/ damage/deterioration by efflux of time at cost and net realisation value, whichever is lower. It has also come on record that these items were 5-6 years old. It is also not disputed that the assessee had made the requisite efforts to dispose of the same....
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....onsideration in the light of details furnished by the assessee as per law. and this ground of appeal is allowed for statistical purposes. 31. Ground No.3(5) relates to confirmation of addition of Rs. 1769.58 towards charge on lease hold land. Ground No.3(6) relates to depreciation on premium paid for lease hold land as intangible assets. These grounds are interconnected; therefore, they are disposed as under: 32. The Assessing Officer found that the assessee company acquires land from government for exploration of coal out of the designated allotment of land. The assessee claimed before the Assessing Officer that the amount paid for the lease land are the commercial assets of the company. The price paid is actually for purchase of a mining right which is a capital expenditure. The Assessing Officer also noted that in the preceding year, such a claim has been disallowed by the CIT(A)and the Tribunal. Therefore, the Assessing officer did not accept the claim of the assessee and disallowed Rs. 1769.58 lakhs. 33. On appeal, the CIT(A) following the decision dated 12.9.2011 of the Tribunal in assessee's own case in ITA No.226,227/CTK/2009, 456,457 & 458/CTK/2010and No.50,51,52 ....
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..... Further, the TDS credit has been reduced further to Rs. 12436.36 lakhs in the order passed u/s.154 of the Act dated 28.3.2012, which was confirmed in first appeal. 38. Both the parties agreed that the issue is covered by the decision of this Bench in assessee's own case for the assessment year 2008-09 in ITA No.73CTK/2012 order dated 3.1.2018, wherein, the Tribunal has observed that the credit of TDS should have been allowed to the assessee on the basis of original TDS certificates submitted by the assessee. Since the facts being identical for the present assessment year under consideration, we confirm the order of the CIT(A) and dismiss the ground of appeal of the assessee. 39. Ground No.4 reads as under" "That the AO has further erred in not allowing interest u/s.244A of the I.T.Act, 1961." 40. At the time of hearing, ld A.R. did not press this ground, hence same is dismissed as not pressed. 4q. In the result, appeal filed by the assessee is partly allowed. 42. Now we take up the appeal filed by the revenue in ITA No.377/CTK/2013. 43. In Ground No.1 of appeal, the grievance of the revenue is that the CIT(A) was not justified in giving relief on HEMM expe....
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....cluding service charge if any. Thus it is apparent that in this case expenditure are being incurred upto the level of 40% of the current basic price. It is an admitted fact that repairs & overhaul are major in nature. Now the extend of such repairs and overhauls is found to be pegged at a maximum of 40% of the current basic price. Thus 'the expenditure incurred partakes the character of a capital expenditure' From the aforesaid finding it becomes clear that the Ld. AO has considered the expenditure as Capital in nature just on the ground that there is a guideline of CIL which prescribes that such repair expenditure should not exceed 40% of the current basic price of equipment. By no stretch of imagination this guideline can be used to justify the expenditure as Capital in nature for income tax purposes. We also invite your honour's kind attention at Para 6 of the Director's Report (appearing in Page 7 of the Printed Annual Accounts) where the data relating to population and performance of HEMM is given. From such data (para 7.1) your honour may appreciate that the assessee is having 533 Heavy earth moving machineries (HEMM). Your honour may very we....
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....(A) for Asst.Yr.2003-04 apparently has been accepted by the Department and no appeal has been preferred before ITAT as is clear from the order of ITAT for that year. Considering the overall facts of the case as discussed above, more particularly the fact that the expenditure has not resulted in replacement of the asset, I see no reason to differ from the view taken by the AO earlier and my predecessor in office. Therefore, the disallowance of Rs. 633.19lacs is deleted. Ground No.3(4) is thus decided in favour of the appellant." 47. Ld D.R. submitted that the CIT(A) has erred in granting relief of HEMM expenses of Rs. 663.19 lakhs without going into the merits of the case. Ld D.R. submitted that the Assessing Officer has made a categorical observation in respect of HEMM rehabilitation expenses and dealt on the accounting standards. The Assessing Officer found that the assessee has claimed replacement of machineries as current repairs and further observed that over haul expenses claimed to the extent of 40% of the current basic price and such expenses increases the performance and efficiency of the machineries, which is capital in nature and not allowable as revenue expenditure an....