TaxTMI 
TaxTMI 
2020 (2) TMI 984
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.... that the assessee company falls under Category 'B' of the Mines for which mining was permitted to be continued with payment of penalty/ compensation by the assessee and that the expenditure is punitive in nature and is not allowable u/s 37 of the Act. 4. Any other ground that may be raised at the time of hearing". 2. Brief facts of the case are that the assessee company which is engaged in the business of Mining of Iron Ore, Diamonds etc., and generation of Wind Power, filed its original return of income for the A.Y 2015-16 on 29.09.2015 admitting total income at Rs. 9765,78,96,000/- and book profits u/s 115JB at Rs. 9802,24,54,613/-. Subsequently, it filed a revised return of income on 23.11.2016 admitting total income at Rs. 9942,41,00,630/- and book profit u/s 115JB at Rs. 9802,24,54,613/- stating that there is a mistake in the original computation of total income. In the computation of total income, the assessee company claimed deduction u/s 80IA of the Act amounting to Rs. 481,26,169/-. The return was initially processed u/s 143(1). Subsequently, the case was selected for scrutiny and during the assessment proceedings u/s 143(3) of the Act, the AO observed that the assess....
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....yond the sanctioned lease area as per the directions of the Hon'ble Supreme Court. The assessee has filed a copy of the order of the Hon'ble Supreme Court, which is placed at pages 8 to 88 of the paper book. We find that the illegal mining activity in the State of Karnataka (in Bellary region) had come up before the Hon'ble Supreme Court of India and the Apex Court had formed a Committee viz., Central Empowered Committee (CEC) to examine and suggest the remedial action. The CEC submitted its report indicating large scale illegal mining at the cost and detriment of the environment due to which by order dated 29.07.2011 a complete ban on mining in the district of Bellary was imposed by the Hori'ble Supreme Court. Further, vide order dated 26.08.2011, the ban was extended to Tumkur and Chitradurga Districts. Thereafter, a Joint Team was constituted by the Apex Court vide its order dated 06.05.2011 to determine the boundaries of initially 117 mining leases which has subsequently extended to 166, by inclusion of Tumkur and Chitradurga Districts. The Joint Team revealed a shocking state of depredation of nature's bounty by human greed and therefore, the Hon'ble ....
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....553), M/ s. Gavisiddeshwar Enterprises (ML No. 80) and M/s. Vibhutigudda Mines (Pvt.) Ltd. (ML No. 2469) have been assigned in "Category- B". The numbers of such leases in "Category-B" comes to 72. 30. The "Category-C" comprises of leases wherein (i) the illegal mining by way of (a) mining pits outside the sanctioned lease area have been found to be more than 10% of the lease area and/or (b) over burden/ waste dumps outside the sanctioned lease areas have been found to be more than 15% of the lease areas and/ or (ii) the leases found to be involved in flagrant violation of the Forest (Conservation) Act and/ or found to be involved in illegal mining in other lease areas. The number of such leases comes to 49. RECOMMENDATIONS (as modified by CEC by its Report dated 13.3.2012. Items 1 to IV of the Report dated 3.2.2012 stood replaced by Items A to I of the Report dated 13.3.2012 which are reproduced below along with Items V to XIV of the initial Report dated 3.2.2012). (A) the findings of the Joint Team and as modified after careful examination by the CEC may be accepted and directed to be followed by the concerned authorities and the respective leases, notwithstanding anything ....
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....of the Monitoring Committee will be (a) to monitor the implementation of the various provisions/prescriptions of the R&R Plans, (b) to ensure strict compliance of the conditions on which the environment clearance, the approval under the Forest (Conservation) Act, 1980 and the other statutory approvals/ clearances have been accorded, (c) to ensure that the mining is undertaken as per the approved Mining Plan, (d) to ensure Page 12 12 that the ceiling on annual production fixed for the lease does not exceed, (e) to ensure that the safety zone is maintained around the lease area and in respect of the clusters of mining leases around the outer boundary of such cluster of mining 10 leases and (f) to ensure compliance of the other applicable condition/provisions. Any lease found to be operating in violation of the stipulated conditions/provisions should be liable for closure and/ or termination of the lease; (H) the present Members of the Monitoring Committee should continue for a period of next two years; and (I) in the larger public interest the mining operations in the two leases of M/ s. NMDC may be permitted to be continued. However, it will be liable to deposit penalty/compen....
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.... 10% of the sale proceeds to be retained by the Monitoring Committee for being transferred to the SPV d) The balance amount, if any, may be allowed to be disbursed to the respective lessees. (ii) Conditions which have been suggested for opening of Category 'A' mines and additionally the R& R Plans for Category 'B' mines 43. The conditions subject to which Category 'A' and 'B' mines are to be reopened and the R&R Plans that have been recommended as a precondition for reopening of Category 'B' mines are essentially steps to ensure scientific and planned exploitation of the scarce mineral resources of the country. The details of the preconditions and the R&R plans have already been noticed and would not require a repetition. Suffice it would be to say that such recommendations are wholesome and in the interest not only of the environment and ecology but the mining industry as a whole so as to enable the industry to run in a more organized, planned and disciplined manner. FIMI was actively associated in the framing of the guidelines and the preparation of the R&R Plans. There is nothing in the preconditions or in the details of the R&R plans ....
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....el for the Assessee placed reliance on various case law, particularly the decision of the Coordinate Bench of the ITAT, Kolkata in the case of Essel Mining & Industries Ltd vs. Addl. CIT (ITA No. 352/Kol/2011 and others, dated 20.05.2016); ACIT vs. Freegade & Co. Ltd (ITA No.934/Kol/2009, dated 05.08.2011) and also the decision of the Hon'ble Calcutta High Court in the case of Shyam Sel Ltd vs. DCIT (72 Taxmann.com 105) (Cal.). On going through the said decisions, we find that the Hon'ble Calcutta High Court has considered the case of an assessee who failed to install Pollution Control Device within factory premise within prescribed time and that the assessee had to pay Rs. 12.50 lakh for compensating damage to environment and the same was recovered by State Pollution Control Board on the principle of 'polluter pays' and the A.O. had treated it as penalty and did not allow the same as business expenditure. The Hon'ble High Court had taken note of the fact that the assessee's business was not illegal and that compensation was paid because of its failure to install pollution control device within prescribed time and therefore, such payment was undoubtedly for ....
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.... sale proceeds to be retained for being transferred to the Spv, the balance amount, if any may be reimbursed to the respective lessees;" The fact that the compensation is proportionate to area of illegal mining outside the leased area and that the assessee has paid the proportionate compensation for mining in the areas outside the sanctioned area allotted to it and that 1 0% of sum is to be transferred to Spy and the balance 10% is to be reimbursed to the respective lessees, according to us, proves that it is a payment made as 'compensation' for extra mining, without which the assessee could not have resumed its activities. Therefore, we are inclined to accept the contention of the assessee that it is compensatory in nature and is a 'business expenditure' and is allowable ix] s 37(1) of the Act. Thus, Grounds No.2 and 3 raised by the assessee are allowed. 4. Respectfully following the same, we do not see any reason to interfere with the orders of the CIT (A) and the grounds 1 & 3 on this issue are accordingly dismissed. 5. As regards the ground No.2 against the deletion of the addition of Rs. 264,78,210/- made by the AO by disallowing the expenditure incurred to....
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....x Court in the case of Malabar Industrial Co. Ltd. Vs. CIT reported in 243 ITR 83 as well as CIT Vs. Max India Ltd. reported in 295 ITR 282 has held that when there are two views possible and the AO has taken one view, the order of the AO cannot be considered as erroneous and hence the CIT cannot exercise revisional power u/s 263. As pointed out above, the provisions for an accrued existing liability, even though, the actual expenditure may take place at a later date, is an allowable deduction and the CIT erred in treating it as an unascertained liability. Therefore, we set aside the order of the CIT passed u/s 263 and the order of the AO is restored." 9.1 The above decision relied upon by the AR of the assessee, though, it was delivered in assessee's own case for AY 2006-07 cannot be applied to the facts of the case as that order was delivered by the Tribunal in connection with the order passed u/s 263. The order passed u/s 263 read with section 143(3) and the order passed u/s 143(3) read with section 251 are standing on different footing. The scope of section 263 is not par with the provisions of section 251 of the Act. Being so, we cannot borrow support from the order of t....
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....Tribunal in assessee's own cases for other years noted above, we hold that the mine closure obligation is not a contingent liability but an ascertained liability. Since the quantum of such ascertained liability has to be determined year-wise, as observed in the order for assessment year 2010-11, extracted above, we direct the assessee to furnish the relevant data to the Assessing Officer towards mines closure obligation. The Assessing Officer shall verify such data and recompute the disallowance, if any, warranted, in accordance with law and after giving reasonable opportunity of hearing to the assessee. Assessee's grounds on this issue are treated as allowed for statistical purposes". 7. Respectfully following the same, we reject the grounds of appeal No. 1 & 2. 8. As regards Ground of appeal No.3, we find that the Tribunal in the assessee's own case for the A.Y 2009-10 has considered this issue at length and held as under: "22. The next effective ground of the assessee in this appeal relates to addition of Rs. 10,66,56,599 made by the Assessing Officer and sustained by the CIT(A), by disallowance of assessee's claim for depreciation on lease hold land. 23. We ....