AI Drafter 
TaxTMI 
TaxTMI 
2020 (6) TMI 176
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....Rs. In Lakhs) 1. Depreciation on Lease hold land 27491.00 2. Valuation of closing stock of coal (due to impact of overburden removal expenditure) 11840.00 3. CSR Expenses 6130.00 4. CMPDIL Expenses 2029.00 5. Addition u/s.14A 576.90 6. Interest on Income tax refund 1692.00 TOTAL 49758.90 4. That the Ld. Authorities below has further erred in allowing short credit of TDS. 5. That the Learned Authorities below would have provided sufficient opportunity to the assessee to explain its case with proper evidences. 6. That the authorities below would not have made addition/disallowances on different heads of accounts as mentioned above and would have allowed all claims. 7. That the Authorities below would have allowed the total credit of TDS. 8. That the authorities below would have accepted the returned income. 9. That the appellant craves leave to add, amend or alter the aforesaid grounds of appeal before or at the time of hearing of the appeal. 2. In addition to the above grounds of appeal, the assessee has also filed additional grounds of appeal, which read as....
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....er evidences. 6. That the authorities below would not have made addition/disallowances on different heads of accounts as mentioned above and would have allowed all claims. 7. That the Authorities below would have allowed the total credit of TDS. 8. That the authorities below would have accepted the returned income. 9. That the appellant craves leave to add, amend or alter the aforesaid grounds of appeal before or at the time of hearing of the appeal. 3. During the course of hearing, ld. AR of the assessee filed a letter dated 14.01.2020 stating therein that he is withdrawing the additional grounds of appeal and requested for deciding the issue on the basis of grounds of appeal taken in form 36 at the time of filing of the appeal, therefore, on the basis of this letter, we are going to decide the issue as stated in the grounds of appeal taken in Form No.36. Further the ld. AR of the assessee during the course of hearing submitted that he does not want to press the ground of appeal No.3.3 regarding CSR Expenses, accordingly, this ground is dismissed as not pressed. 4. Brief facts of the case are that the assessee is a mini-ratna company engag....
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....see Company works under the direct guidance and control of CR, indirectly Ministry of Coal, Govt, of India. The CR makes Rules & Regulations which is mandatorily to be followed by all its' subsidiaries. Accordingly, as a matter of uniform accounting policy, in the year 2009-10 CIL took a decision not to take into the cost of OBR in the valuation of closing stock of Coal. And since then the Assessee is consistently following the same method of valuation of closing stock. There is no change in the method of valuation of closing stock in comparison to the method applied during the immediate preceding year. In support of our contention we would like to draw your kind attention towards clause 13 & 14 of the Form 3CD of Tax Audit Report, duly certified by the Tax Auditor. Under the facts & circumstances it does not warrant any interfere with the method of valuation as adopted by the Assessee. However, as required by Your Honor, please find herewith enclosed statement showing valuation of closing stock including cost of OBR [Annexure-1]. Further, without prejudice to the afore submission, during the course of Asst. proceedings u/s 143(3) of the Income Tax Act The Ld.....
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....the services received in lieu of which professional charges were paid to the CMPDIL, mere deduction of TDS will not justify the expenses incurred by the assessee in this regard and disallowed to the tune of Rs. 20.29 crores and added to the total income of the assessee. 8. Further it was noticed by the AO that the assessee has claimed interest of Rs. 129.08 crores as exempt income received and tax free bond and mutual bond. In this regard, the assessee was asked to provide the details of expenditure incurred against this income along with supporting evidences. In response to which the assessee submitted that he has not made any investment out of borrowed funds to earn income which does not form part of the total income. The investment in the alleged funds are made only out of accumulate profit and he relied on many case laws. 9. Further on scrutiny of accounts, it was noticed by the AO that the assessee has been paid Rs. 16,92,76,788/- as interest by the Income Tax Department on refund amounting to Rs. 694,03,47,830/- for the assessment year 2011-2012. But the same did not find place in the annual report for F.Y.2014-2015 relevant to A.Y.2015-2016. In this regard, the assesse....
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....demand was reduced to Rs. 113676.70 Lakhs due to rectification of certain mistakes apparent from the record. Being aggrieved the assessee preferred an appeal before the C!TCA), Cuttack and the Ld. CIT(A) disposed off the appeal vide order dated 28.03.2018 giving substantial relief to the assessee. However, the ld. CIT(A) has sustained certain additions / disallowances against which the assessee is in appeal before your honour, details of which is given below: SI. No. Particulars Amount (Rs. In Lakhs) Grounds of Appeal No. Page No. of Asst. order Page No. of CIT(A) order Page No. of this Written Submission 1. Insufficient opportunity ~ 2 - 3 2. Depreciation on Lease hold land 27491.00 3(1) Addl. ground of Appeal No.1,2,3 2-4 3-5 4-14 3. Valuation of closing stock of coal (due to impact of overburden removal expenditure) 11840.00 3(2) 4-6 5-13 15-25 4. CSR Expenses 6130.00 3(3) 5 17-21 26-27 5. CMPDIL Expenses 2029.00 3(4) 6 21-23 28-29 6. Disallowance u/s 14A 576.90 3(5) 21-24 32-36 30-38 7. Interest on Inco....
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....ow-how, patents, copyrights, trademarks, licenses, franchisees or any other business or commercial rights as per the provision made under section 32(1)(ii) of the IT Act 1961. Further the land is not a depreciable assets u/s. 32 of the I. T. Act, whether it is lease hold or free hold". 2.3 In this regard it is submitted that the lease of land is granted to the assessee after a notification under the Coal Bearing Area (Acquisition & Development) Act, 1957 as well as Land Acquisition Act, 1944 with certain terms and conditions. One of the main conditions is prescribed under section 44A of the Land Acquisition Act which prohibits the transfer of land by lessee by way of sale, sub lease or any other means and not to use the land for any other purposes other than for which the lease is granted. 2.4 That to obtain such land on lease the lessee is required to pay one time premium to the State Govt. and certain other expenditure are also incurred in the process of acquiring such leasehold land, like registration expenses etc. These expenditure are appearing in the Schedule of Fixed Assets in the Balance Sheet as "Leasehold Land". The leasehold land is to be handed over ba....
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....ive of claim made by the assessee. 2.8 That the intangible assets include Leasehold interest, mlneral rights as exhibited in the List of Intangible Assets given by Intangible Business Ltd. reproduced in 'The Chartered Accountant' journal of the institute of Chartered Accountants of India. Copy of the same is enclosed at Page No. 125-132 of P/B -Vol-III. B. GROUND OF ADDITION That the relevant portion of the order of Ld. CIT(A) is reproduced below: " I have carefully considered the written submission of the assessee and perused the documents submitted during the appeal hearing. I find that this issue has been adjudicated by the Hon'ble ITAT, Cuttack in their consolidated order for the AYs 1999-2000 to 2002-03 dt. 02.01.2008, for the AYs 2004-05 to 2007-08 dt. 12.09.2011 and in their very recent order dated 20.03.2018 for the Ays 2010-11 to 2014-15 confirming the action of the AD to disallow depreciation claim on lease hold land. Respectfully following the decision of the Hon'ble ITAT for the above assessment years, the disallowance of Rs. 2741.91 crares is hereby confirmed". In this regard it is respectfully submitted as u....
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.... Section 32(1)(ii) of the 1961 Act. As a matter of fact this decision of the Hon' ble Apex court has been relied upon by the Hon' ble Delhi High Court in the case of Areva T&D India Ltd vs. DCIT in arriving at a finding that Business information, contracts, records etc are "intangible assets" & eligible for depreciation U/s.32(l)(ii) of the Income Tax Act, 1961. A photocopy of the Judgment is enclosed at Page No.233-242 of the P /B*VOL-II. It will be pertinent to take note of this relevant portion of the judgement: "In other words, these are intangible assets by, which either the permission to carry on the business or manufacture is received or are used for the manufacture or the sale of the products manufactured. Such intangible assets directly facilitate the profit earning activity. On the other hand, the tenancy rights have no significance whatsoever either with a right to manufacture or actual manufacture of the products or their sale carrying brand name or logo etc. Tenancy rights simply provide a place at which manufacturing or administrative activity is perused. " It is crystal clear that this decision is in respect of "Tenancy Right" only ....
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....ribution business of the transferor. Aforesaid intangible assets, the assessee would have had to commerce business from scratch and go through the gestation period whereas by acquiring the aforesaid business rights along with the tangible through the gestation periods whereas by acquiring the aforesaid business along with the tangible assets, the assessee got an up and running business. This view is fortified by the ratio of the decision of the Supreme Court in Techno Shares and Stocks Ltd. V. CIT, 327 ITR 323 wherein it was held that intangible assets owned by the assessee and used for the business purpose which enables the assessee to access the market and has an economic and money value is a "license" or "akin to a license" which is one of the items falling in s 32(1)(ii) of the Act and were accordingly eligible for depreciation under that Section. In view of the above, it is not necessary to decide the alternative submission made on behalf of the assessee that goodwill per se is eligible for depreciation under s32(1) (ii) of the Act. The substantial question of law is decided in the affirmative and this appeal is allowed in favour of the assessee and the against the Re....
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....reement i.e. PCA, the assessee company has been granted licenses by Russian government to explore and produce hydrocarbons in the agreement area. There is no dispute to the fact that assessee has incurred expenditure of Rs. 1559. 09 crores for obtaining the right and license for exploration of oil. It is not possible to say that such expenditure was neither capital nor revenue in nature. If it is held to be capital, then it is obvious that what the assessee has acquired was a participating right which is in the nature of commercial right of carrying on of business of exploration and production of mineral oil. It also cannot be said that the right so acquired was not an asset. If it is an asset being the right then it is obvious that same is commercial right, therefore in the nature of asset in the form of license. This right had been granted to the assessee by way of license and the assessee became owner of such right i.e. license to have an access and to carry on of business of exploration Page 8 ITA No. 5054/Del/2010 - A. Y. 2004-05 ITA No. 1140/Del/2011 - A. Y. 2005-06 CO. No. 104/Del/2011 (In ITA 1140/Del/ll) A.Y. 2005-06 O.N.G.C Videsh iid., New Delhi and. development....
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.... assessee for the earlier years this Hon'ble Tribunal has not considered its own decision in the case of East India Minerals Ltd. Vs. lCIT, Range-l, Sambalpur (ITA No.224/CTK/2012). The fact & circumstances of the case is squarely applicable to the present case. That this Hon' ble Tribunal vide its order dated 25.06.12 has held as under: "We have heard the rival contentions of the parties and perused 'the material available on record. Considering the facts and circumstances of the case, we uphold the contention of the learned Counsel for the assessee for the simple reason that the denial of claim of depreciation has been made on misinterpretation of law and the applicability thereof. Explanation to Section 32(1)(ii) leans in favour of the assessee to the extent that it is the actual action of put to use which entitles the assessee to claim depreciation. A straight line method of claiming the writing off 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 ....
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.... either on lease or for fixed tenure and presently shown under lease hold land be changed and disclosed as "Land-others" with a foot note (reference) below Note 10. The existing accounting policy on amortization of the land will however continue. Note to be inserted below Note 10:- Land - others also includes Land acquired under Coal Bearing Areas Act, 1957 and Land Acquisition Act 1894. The above change in presentation of accounts in respect to leasehold land also clarifies that such asset is Intangible asset. 2.17. Therefore, your honour is requested to kindly allow the claim of depreciation on lease hold land as mining rights u/s. 32 (1) (ii) of the IT. Act, 1961. 2.18. That the assessee has submitted additional grounds of Appeal vide its letter dated 12/07/2018; copy of which is enclosed herewith at Page No. 12-13. That without prejudice to our submission above the explanation in this regard is as under: i. That as stated above the assessee is a subsidiary of Coal India Ltd. under the administrative control of Ministry of Coal, Government of India. The core objective of formation of the enterprise is to secure availability of coal to....
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....at there is no change in the valuation of closing stock during the year under consideration. The assessee is following the same method of valuation consistently over the years. 3.3. At the outset Let us appreciate the provisions of section 145A which deals with the valuation of inventory: Sec. 145A: Notwithstanding anything to the contrary contained in section 145,- (a) the valuation of purchase and sale of goods and inventory for the purposes of determining the income chargeable under the head "Profits and gains of business or profession" shall be- (i) in accordance with the method of accounting regularly employed by the assessee; and (ii) further adjusted to include the amount of any tax, duty, cess or fee (by whatever name called) actually paid or incurred by the assessee to bring the goods to the place of its location and condition as on the date of valuation.. Explanation. -For the purposes of this section, any tax, duty, cess or fee (by whatever name called) under any law for the time being in force, shall include all such payment notwithstanding any right arising as a consequence to such payment. (b) interest rec....
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....eing consistently followed in all subsequent years. Moreover, there is no change in the method of valuation' of inventory during the year as the company continues to follow the 'Lower of cost or Net realizable value' method for valuation of inventories. Only an improved and more accurate method of ascertaining cost has been adopted during the year. It was taken as a misnomer as change in accounting policy in respect of method of valuation of inventories whereas this change was nothing but an inventory error on which the company was paying tax for all the past year. 3.9. It may also be noted here that till the assessment year 1997-98 assessee company was valuing its stock at 'Net Realizable Value' as the coal was regulated by Govt. of India and the sales price was assured. 3.10. Subsequently, under de-regulation regime it was felt that the method of 'lower of cost or net realizable value' is the most appropriate method of valuation of inventories and accordingly a change in accounting policy with respect to change in method of valuation was adopted in the AY 1997-98 and the same method is being followed consistently in all subsequent yea....
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....losing stock" and sites of its arising or accrual is where the valuation is made." The valuation of unsold stock at the close of an accounting period is a necessary part of the process of determining the trading result of that period, and can in no sense be regarded as the "Source" of such profit. d) * Method of Valuation: Section 145(1) of the 1. T. Act, provides for computation of income from business in same method of accounting regularly followed by assessee which will of course include, the method of valuing closing stock, such as; a. Cost price method; b. Market price method/net selling value method; c.. Cost or market price whichever is lower;. d. First in and First out method; e. Last in and First out method; f. Direct cost and uncost method etc. e) General Principle: It would be reasonable that stock at the relevant period should be valued at cost price. But as a concession to the tax payer, it has long been accepted that where market value is less than cost price, the lower figure can be taken for the purpose of valuation. It is the assessee who is given the choice to value his stock and even....
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....s for little relevance only in the year where the change in the method of accounting is introduced for the first time, the change introduce is meant to be regularly followed or not, it is in this context only with the express good faith, bonafide, occur in the observation in Judicial presence; thus, where it is found that the assessee had change his regular method of accounting by recognised method and as followed later regularly thereafter, does not open to the revenue authority to go into the question of bonafide of the introduction and continuance of change (Sangh Wheat Product Ltd. Vs CIT IR 254). The bonafide of act have to be found of facts and such finding of facts must be specific. Further, it has been clearly held in the case of CIT vs Ganga Charitable Trust Fund IR 252 indeed a bonafide assessee should not be precluded from switching over to another system of accounting which he find convenient and which would reflect real Income. g) Method must be applied consistently: No particular basis of valuation is suitable for all types of business, but whatever the basis adopted, it should be applied consistently. If a method has been applied consistently in the....
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....the assessee has an option to change the method of valuation of closing stock provided the change is bona fide and followed regularly thereafter. * CIT vs National &Grindlays Bank Ltd. [145 ITR 457 (Cal.)] * CIT vs National &Grindlays Bank Ltd. [202 ITR 559 (Cal.)] In these cases, the Calcutta High Court upheld the case of the assessee for change in method of valuation of closing stock to market price or cost price whichever is lower as the change in method adopted was bona fide as well as the changed system was being followed subsequently thereafter. * P. Balalkrishnanvs Travancore Cochin Chemicals Ltd. [243 ITR 2847 (Ker.)] In this case, the assessee company changed its method of valuation of stock under direction of the Accountant General of Kerala. The Kerala High Court, while upholding the change in the method of accounting held that the assessee followed the same changed method of valuation in the subsequent years. Whenever there is a change in the method of valuation, there is bound to be some distortion in the calculation of profits in the year in which the change takes place. The change adopted by the assessee was bona fide and ....
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.... and scrutinised by both the Statutory Auditor and the Comptroller and Auditor General of India (CAG). The change in method of valuation of stock adopted in FY 2009- 10 was duly approved by both the Statutory Auditor and CAG. 3.17. Further, as aforesaid, the changed method of valuation has been followed by the appellant company consistently in subsequent years. 3.18. We may draw the attention of your honour to the decision of the Hon'ble ITAT, Nagpur in the case of South Eastern Coalfields Ltd. vs JCIT [260 ITR 1, 101-105 (AT) (Nag.)] which is a case of another subsidiary of CIL, wherein the Tribunal has upheld the change in method of valuation of stock undertaken by the company pursuant to the policy framed by CIL in respect of all its subsidiaries. In that case the Hon'ble Tribunal held that as the change in method of valuation was made upon modification/change in accounting policy approved by the Board of Directors of CIL and the said change was made applicable not only to the assessee company but also to other subsidiary of CIL, the Assessing Officer in fact has no reason to dispute the bona fide change made by the assessee company as per the resolutio....
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....dships to follow the wrong path until you fall over the edge of the cliff" 3.22. The assessee also relies on the judgement given in the case Cl'T vs. Atu/ Products Ltd(2002) 125 Taxmann 727 (Guj.)-where it has been observed that if the method of stock valuation is changed by the assessee and if the change is bona fide, even if the taxable income is reduced on account of such change, it is not open to the revenue to add any amount in the taxable income of the assessee which is the resultant effect of the change in method of valuation, especially when the new method which was adopted has been continuously followed in subsequent years but the revenue has not objected to the changes in subsequent years. 3.23. It is a well settled principal decided in the case of Reform Flour Mills P Ltd vs. CIT [1978] 114ITR 227(Cal.) that section.145(1) does not postulate any agreement or contract regarding the method of accounting to be employed by a tax payer. This section also does not lay any embargo on him to alter his method of accounting. An assessee can change the method of accounting unilaterally in respect of a source of income. 3.24. That the Ld. AO has made t....
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.... b) Project Planning & Design; c) Engineering Services; d) Laboratory Services; e) Environmental Services F) Geometrics & Remote Sensing; g) Ventilation & Gas survey in mines; h) Controlled Blasting; i) Performance evaluation of new explosives; j) Mine capacity Assessment; k )Mine Support Design, Rock Mass Rating (RMR); I) Measurement of Coal and OBR etc 5.3. CMPDIL is providing different types of services out of which expenditure relating to the existing revenue mines such as Ventilation and Gas testing Survey in mines, Laboratory facilities, Studies for Environmental Impact Assessment (EIA) / Environmental Management Plan (EMP), Slope Stability and Soil Conservation Studies, Back-up Engineering Services, Rain water harvesting, Land use planning, Preparation of the tender specification, evaluation of bids, assistance in finalization of contracts etc relating to existing revenue mines are being booked as "CMPDIL Expenses". 5.4 That similar additions were made by the Ld. AO during the AYs 2010-11 to 2014-15, but the same were deleted by the Ld. CIT (Appeals). 5.5. In ....
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....99.95 499.95 4. 7.22% Secured Redeemable REC Bond Tax free 150.00 150.00 It is crystal clear from the aforesaid details extracted from the Note*ll- Non Current Investment to the Audited Financial Statement that there was no fresh investment during the year. Hence, no expenditure was incurred during the year in respect of Tax Free interest of Rs. 7410 Lakhs from such Bonds. The relevant page of Audited Financial Statement is enclosed at Page No. 26. ii. Similarly, there was a investment of Rs. 42 crore only in Mutual Funds during the year 2014-15 i.e. Rs. 22 crore in Cahra Robeco Liquid Fund & Union KBC. In case of other Mutual Funds namely SBI Premier Liquid Fund & UTI Money Market Fund the closing balance was reduced to 101 crore & 79 crore respectively from the opening balance of 277 crore & 373 crore respectively. The details of investment and dividend there from is as under: (Rs. In Crore) SI. No Particulars Amount of Investment as at 31/03/15 Amount of Investment as at 31/03/14 Increase during the FY 2014-15 Dividend during FY- 2014-15 1. Canra Fund Robeco Liquid 25 3 22 2.78 2. SBI Fu....
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....in relation to income which does not form part of the total income under this Act.. (3) The provisions of sub-section (2) shall also apply in relation to a case where an assessee claims that no expenditure has been incurred by him in relation to income which does not form part of the total income under this Act. 6.5. Sub section 2 of section 14A clearly speaks that- The Assessing Officer shall may be prescribed, if the Assessing Officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act. 6.6. Sub-section (2) of section 14A does not enable the Assessing Officer to apply the method prescribed by rule 80 without determining in the first instance the correctness of the claim of the assessee, having regard to the accounts of the assessee. Sub-section (2) of section 14A mandated that it is only when having regard to the accounts of the assessee, the Assessing Officer is not satisfied with the correctness of the claim of the assessee in respect of expenditure incurred in relation....
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....and mechanically applied the rule and computed the expenditure as per method prescribed in said rule. 6.11. For the sake of discussion, let us also analyse the Rule 80 of the Income Tax Rules, 1962. The rule read as under: Rule BD. (1) Where the Assessing Officer, having regard to the accounts of the assessee of a previous year, is not satisfied with- a) the correctness of the claim of expenditure made by the assessee; or b) the claim made by the assessee that no expenditure has been incurred in relation to income which does not form part of the total income under the Act for such previous year, he shall determine the amount of expenditure in relation to such income in accordance with the provisions of sub-rule (2). 6.12. Sub-rule(l) of rule 80 of the Income-tax Rules, 1962 has also incorporated the essential requirements of sub-sections (2) of section 14A before the Assessing Officer proceeds to apply the method prescribed under sub-rule(2). 6.13. In view of the aforesaid your honour may appreciate that the application of rule 80 resorted to by the Ld. AO is totally unjustified, unwarranted and bad in law, especially i....
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....hile adjudicating the Departmental Appeal in the matter for the A Year 2012-13 and 2013-14 your honour has set-aside with a direction to the AO for verifying the borrowings and others as given in Para 129 at Page No. 155 of PB-Vol. I. 6.18 That the assesee company's Shareholder's Funds i.e. Share Capital and Reserve & Surpluses was much more than the amount of investment as on 31/03/2014 as well as 31/03/2015. The details extracted from the Annual Report & Accounts for the financial year 2014-15 already submitted with your honour are reproduced below: (Rs.In crore) SI. No. FY ended on Shareholder's Funds Borrowings Total Investment- (Non-Current +Current) Investment in Assets generating Tax Free Income 1. 31/03/15 4477.57 6.90 1075.38 247.70 1323.08 1183.70 2. 31/03/14 5563.42 9.14 1098.07 675.71 1773.78 1611.70 It is clear from the above details that the assessee company's Shareholder's Funds i.e. Share Capital and Reserve & Surpluses was much more than the amount of investment as on 31/03/2014 as well as 31/03/2015. ; which substantiate that investment generating tax free income w....
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....ission and recent judgments of Hon'ble Supreme Court, it is prayed before your honour to kindly delete the addition made by Ld. AO. 7. Interest on Income Tax refund Rs. 1692.00 lakhs Grounds of Appeal No.3(6) 7.1 The Ld. AO has added the aforesaid sum on the ground that the assessee company could not offer any reasonable explanation for not including the said amount of Interest received in his total income. 7.2 In the aforesaid matter it is to be submitted that alleged amount of Rs. 694.03 Cr, including interest u/s 244A Rs. 16.93 Cr, relevant to AY 2011-12, has been credited in the books of account under the head Income Tax paid under protest account. Due to the fact that as a result of Asst. Order u/s 143(3) for the said AY the assessee had paid a sum of Rs, 761.60 Cr. Including interest u/s 234B, 234C & 2340 of Rs. 182.68 Cr. Being dissatisfied, the assessee preferred an Appeal before the appropriate authority and debited the amount to the Income Tax paid under protest account. 7.3 That as a continuous practice the company recognizes the interest on income tax refund, once the same is finalized and no dispute is pending. In this case a ....
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....ue. The AO has rightly calculated as per rule 8D of Income Tax Rules, 1962. The assessee could not establish that there was no any expenses have been incurred by the assessee towards earning of the exempt income. He further submitted in respect of interest on income tax refund, it is a nature of revenue income which must have been included while calculating the taxable income of the assessee. The interest on income tax refund is paid by the income tax department only when the assessee paid more than the tax to be paid and it is taxable only in the year of receipt. It is taxable under the head income from other sources in the year of receipt. It is not affected by the system of maintaining books of accounts. 14. After considering the rival submissions of both the sides and perusing the entire material available on record along with the paper book filed by the assessee, we observe from the grounds of appeal taken by the assessee that the ground No.3 relates to the merits of the case. Therefore, we are deciding ground No.3 15. Ground No.1 : Depreciation on lease hold land, we find that this issue is covered by decision of the Tribunal in assessee's own case for the previous asse....
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.... said rights. 46. We find that the assessee has raised these additional grounds as per the direction of Hon'ble High Court of Orissa, Cuttack in W.P (C) No.24 of 2013 and Misc. Case No.5716 of 2013 order dated 20.3.2013. In view of above, we admit these additional grounds for our consideration. 47. On merits also, we find force in the submission of ld D.R. that the depreciation is not allowable u/s.32(1)(iii) of the Act in respect of intangible assets, which is supported by judicial pronouncements cited above. In view of above, we dismiss these grounds filed by the assessee." 31. In view of above, we hold that the lease hold rights are not eligible for depreciation u/s.32(1)(ii) of the Act considering it as intangible rights and, accordingly, dismiss the ground of appeal of the assessee. Respectfully following the above observations of the Tribunal, we dismiss this ground of appeal of the assessee. 16. Ground No.2: Valuation of closing stock of coal (due to impact of overburden removal expenditure). We find that this issue is covered by decision of the Tribunal in assessee's own case for the previous assessment year i.e. A.Y.2014-2015 in ITA Nos....
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....have heard the rival submissions, perused the orders of lower authorities and materials available on record. This dispute is interconnected with the method of valuation of closing stock. Valuation of closing stock has been changed due to Uniform Accounting Policy of Coal India Limited. We found that a reference made by the Assessing Officer on the audited accounts that Reduction in value of stock is due to overall adjustment is as per the Uniform Accounting Policy adopted by the Coal India Limited. Ld A.R. demonstrated before us with a copy of letter of Uniform Accounting Committee recommendation and supported with paper book. Accordingly, we consider it appropriate to restrict our view on the method of valuation of closing stock mine-wise and the valuation of closing stock of coal are interconnected and since we have discussed on the applicability of the provisions, facts and reasons for valuation of stock centre on the first disputed issue. Therefore, we remit this disputed issue to the file of the Assessing Officer for appropriate adjudication afresh and the ground of appeal of the assessee is allowed for statistical purposes. Hence, this issue for the assessment years 2010-11 t....
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....eleted the addition by observing as under: "46. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. 47. We have noted that these expenses have been treated as capital expenses by the Assessing Officer only on the ground of the 'enduring benefit in nature' which by implication suggests that it's a preparatory work for mine development but then what such an approach overlooks is that all the mines are revenue mines and the extraction of coal, on commercial basis, has already started in these cases. Therefore, Assessing Officer's observation to the effect that "extraction of coal is a long process and the nature of work done have an enduring benefit to the assessee" could have been relevant when coal extraction process had not started but that is not the case here. We have noted that the CMPDIL (i.e. Central Mine Planning & Design Institute), a subsidiary of the Coal India Limited, is admittedly providing technical support and services to the assessee it the mining operations. It conducts mine survey in the existing mines in order to ensure that the mi....
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.... of the Tribunal, we find that the CIT(A) has granted relief with regard to addition made by the AO on account of CMPDIL expenses, which has been approved by the Tribunal by holding as above. In the instant case, the CIT(A) has confirmed addition made by the AO. In our opinion, when the Tribunal has upheld the findings of the CIT(A) thereby deleting the addition made on account of CMPDIL expenses in the assessee's own case for the immediately previous assessment year as cited above, therefore, respectfully following the decision of the Tribunal, we direct the AO to delete the addition made under the head CMPDIL expenses. This ground of appeal of the assessee is allowed. 19. Ground No5: Addition made u/s.14A of the Act. We find that this issue is covered by decision of the Tribunal in assessee's own case for the previous assessment year i.e. A.Y.2014-2015 in ITA No.268/CTK/2017, order dated 20.03.2018 and while deciding the appeal of Revenue, Tribunal has observed as under :- "126. The next issue relates to deletion of disallowance u/s.14A of the Act of Rs. 189.74 lakhs and Rs. 516.59 lakhs towards for the assessment year 2012-13 and 2013-14, respectively. 127. ....
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....serve & surplus amount and redecide the issue afresh as per law and after giving opportunity of hearing to the assessee. This ground of appeal of the revenue is allowed for statistical purpose for the assessment year 2012-13 and 2013-14, respectively." 20. The coordinate bench of the Tribunal in the case of NALCO, ITA No.106/CTK/2018, for the A.Y.2014-2015, vide order dated 23.09.2019 while deciding the issue of addition made u/s.14A of the Act, has observed as under :- "13. We find that this issue has been decided by the Tribunal in assessee's own case for the assessment year 2010-2011 in ITA No.211/CTK/2016 along with other connected appeals, order dated 29.06.2018 for the assessment year 2013-2014, wherein the Tribunal relying its earlier order dated 27.04.2018, passed in ITA No.352/CTK/2016 for the assessment year 2010-2011 along with other connected appeals has observed as under :- 22. From the above judicial decisions, we find that the Tribunal has restored the disputed issue to the file of AO for re- examination and re-verification and apply the provisions of Section 14A r.w.rule 8D and in the instant case, the issue being similar, we find that the AO ha....
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....round No.4 is allowed for statistical purposes." Respectfully following the above observations of the Tribunal, we restore this issue to the file of AO for fresh adjudication. This ground of appeal of the assessee is allowed for statistical purposes. 21. Ground No.6:Interest on Income Tax Refund : We find that the AO made addition on the ground that the assessee company failed to offer any reasonable explanation for not including the amount of interest received during the year on income tax refund. In appeal, the CIT(A) observed that interest on income tax refund is clearly taxable and confirmed the addition holding as under :- 12.3 I have considered the matter. It is a fact the assessee has received interest of Rs. 16.92 crores on income tax refund for the AY 2011-12 and the same has not been offered for taxation in the return of income. The argument of the assessee is that since interest paid u/ss.234B, 234C &. 234D is not allowable as a deduction from taxable income, interest received should also not be taxed as income. This contention of the assessee is not at all acceptable. Interest on income tax refund is clearly taxable. Hence, the addition of Rs. 16.92 crore....
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....rame and lay down the guidelines in the similar lines as are laid down by the Apex Court in the case of Anil Rai (supra) and to issue appropriate administrative directions to all the benches of the Tribunal in that behalf. We hope and trust that suitable guidelines shall be framed and issued by the President of the Appellate Tribunal within shortest reasonable time and followed strictly by all the Benches of the Tribunal. In the meanwhile (emphasis, by underlining, supplied by us now),all the revisional and appellate authorities under the Income-tax Act are directed to decide matters heard by them within a period of three months from the date case is closed for judgment". In the rules so framed, as a result of these directions, the expression "ordinarily" has been inserted in the requirement to pronounce the order within a period of 90days. The question then arises whether the passing of this order, beyond ninety days, was necessitated by any "extraordinary" circumstances. 25. We also find that the aforesaid issue has been answered by a coordinate Bench of the Tribunal viz; ITAT, Mumbai 'F' Bench in DCIT, Central Circle-3(2), Mumbai vs JSW Limited & ors (ITA No.6264/Mum/18 da....
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....appropriate, following the due procedure...". The term 'force majeure' has been defined in Black's Law Dictionary, as 'an event or effect that can be neither anticipated nor controlled' When such is the position, and it is officially so notified by the Government of India and the Covid-19 epidemic has been notified as a disaster under the National Disaster Management Act, 2005, and also in the light of the discussions above, the period during which lockdown was in force can be anything but an "ordinary" period. 10. In the light of the above discussions, we are of the considered view that rather than taking a pedantic view of the rule requiring pronouncement of orders within 90 days, disregarding the important fact that the entire country was in lockdown, we should compute the period of 90 days by excluding at least the period during which the lockdown was in force. We must factor ground realities in mind while interpreting the time limit for the pronouncement of the order. Law is not brooding omnipotence in the sky. It is a pragmatic tool of the social order. The tenets of law being enacted on the basis of pragmatism, and that is how the law is required to interpreted. The....