TaxTMI 
TaxTMI 
2014 (7) TMI 1338
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....ils of prior period adjustments appear in Schedule 19 of the printed Annual accounts. As per this schedule, the assessee has debited an amount of Rs. 176.34 lacs. The assessee adjusts the debit and credit entries and only the net amount is taken to P.L. Account. The AO did not accept this method of accounting. It has been stated by the AO that the assessee has taken steps in separately addling back certain items of prior period expenses on selective basis, like adding back the depreciation to the extent of Rs. 10.84 lacs. It was claimed by the assessee that the above expenses had crystallized during the year under consideration and therefore, the same allowable. It has been observed by the AO that it is only because of non-receipt of expenses details from various units of the assessee or other reasons, the items mentioned in Schedule 19 remains to be adjusted even though they patently pertain to earlier years. While computing the income of a particular assessment year, this type of adjustments on estimate basis is not permissible, since income of a particular year is not influenced by items pertaining to other years unless the liability is fastened upon the assessee. In view of the....
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....s. Out of the above, the appellant has added back an amount of Rs. 10.84 lacs in respect of depreciation. In respect of this issue, the Hon'ble IT AT Jodhpur Bench, Jodhpur vide its decision dated 30-09-2002 in the case of appellant for the assessment year 1992-93 (TTA 693 (JP)/1998-99) has held as under:- "From the above legal position as enunciated by Hon'ble Courts and also the principle of accountancy, when the assessee is following mercantile system of accounting deduction for liability can be allowed only when the year in which it arose or only in the year to which it pertained or during the year when it was crystallized or quantified or determined. The principle of following a particular system which is not as per the provision of accountancy and not as per the provisions of law cannot be allowed to persist. It was also held in the case of CIT v. British India Ltd. (1991) 188 ITR 44 (SC) that even if the assessee had adopted a regular system of accounting it was the duty of the AO to consider that the correct profits and gain could be deduced from the accounts so maintained. It was pointed out by the Hon'ble Supreme Court in the case of Kedarnath Jute Mfg....
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....proper facts of the case have not been appreciated by the lower authorities. There is no dispute that during the year under consideration the assessee company was held by the Government of India and so was subjected to C & AG audit over and above the normal statutory audit under the Companies Act. The company has also been subjected to a separate tax audit under section 44AB of the Act. The company had submitted its return on 30.1.1998 declaring income of Rs. 201,58,70,180/- The assessment was completed on 1.3.2001 on an income of Rs. 249,00,98,883/- by the Additional Commissioner of Income-tax. Various disallowances were made by the Assessing Officer including the disallowance of Rs. 1,65,50,475/- on account of prior period expenses. We noted that one of the contentions of the Assessing Officer was that the concerned liability had crystallized during the year had not been found to be factually correct. This, according to the Assessing Officer, supported by the fact that the assessee had debited depreciation and included in the column of debit which was notional out going and it did not represent any binary transaction. Thus depreciation was required to be adopted in the accounts i....
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....by the Tribunal while rejecting the ground for assessment year 1997-98. However, now we cannot comment/should not comment on the finding given by the Tribunal for assessment year 1997-98. However, the fact remains that the Jodhpur Bench has allowed the identical issue for assessment years 1993-94 to 1995-96. We are also of the view that since these expenses were crystallized during the year under consideration for the reason that they were not approved by the appropriate authorities in the relevant year when these expenses were incurred. However, as stated above, these expenses were approved in this year, therefore, they were claimed during the year under consideration. Accordingly, we are of the considered view that these expenses are allowable as allowed in the past also. However, as stated by Ld. A/R, no details were filed before the AO during the assessment proceedings, therefore, we restore the issue to the file of the Assessing Officer to consider those details which will be filed by assessee and then allow if he feels that they are allowable. It is also a matter of fact that in A.Y. 1994-95 the matter was sent back to the file of Assessing Officer by the Tribunal and after c....
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....d the observation given in the Directors report as under- "Your Company had taken over Degana Tungsten Mine from the Rajasthan State Tungsten Development Corporation, a Govt., of Rajasthan Enterprise in 1991, the poor metal content, accompanied by a crash in the internal price and the inadequate tariff, rendered in operation of this mine, your Board approved, to closure of the mine. The employees who had not opted for voluntary retirement scheme of the company have been suitably deployed in other operating units of the company. All the usable equipment has since been shifted to other units and the necessary statutory formalities have already been initiated. The mine will be handed over to the Govt., of Rajasthan in due course of time as per the applicable provisions." It has been observed by the AO that Degana Unit which was hither to run by the assessee as one of the units for production of Tungsten in contrast to its normal business activity of production of lead/zinc and other concentrates. Thus the assessee's unit at Deganna was its distinct business which stands closed down during the year by write off of its all assets, both fixed assets and stock ....
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....ed deduction for item No. (ii), provision for fixed assets/terminal depreciation. It has been stated that the assessee company is carrying on the business of mining beneficiation, search, prospect, get, win, sell dispose deal, smelt etc. in minerals and metals and alloys of all kinds. The company is carrying on the business though its mining and manufacturing units at various places, central sales office at Delhi and registered office at Udaipur. The Board of Directors is in overall control of entire business activity carried out by the company. There is a common fund from which necessary capital and working funds are supplied to the various units. It has been stated that even if different books of account are maintained and the transactions inter se between the different units were recorded in those books of account, that circumstances would be insignificant once it was found that ultimately there was a common profit and loss account and balance sheet. It has therefore, been stated that there is complete interconnection, interlacing, interdependence and dovetailing of the activities carried on at all units of the assessee and all the activities constituted one and the same busines....
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.... approved, to closure of the mine. The employees who had not opted for voluntary retirement scheme of the company have been suitably deployed in other operating units of the company. All the usable equipment has since been shifted to other units and the necessary statutory formalities have already been initiated. The mine will be handed over to the Govt., of Rajasthan in due course of time as per the applicable provisions." It has been stated by the appellant that the following balances in the books of Degana unit have been written off as a result of this closure and shown as extraordinary items:- Out of above, the assessee has claimed a deduction of Rs. 304.81 lacs for item Nos. (i), (iii) & (iv). The appellant has not claimed the deduction for item No. (ii) relating to provision for fixed assets/terminal depreciation amounting to Rs. 150.87 lacs which has been added back in the computation of total income. In the case of CIT v. Gemini Cashew Sales Corp. [1967] 651 ITR 643, the Hon'ble Supreme Court while deciding the issue of deduction of retrenchment compensation payable on transfer of business has held as under:- "Profits of a business involv....
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....e above claim in any case is premature. In view of the above facts, the AO was justified in disallowing the deduction claimed of Rs. 3,04,81,750/-. Accordingly, the addition made of Rs. 3,04,81,750/- on account of above disallowance is confirmed.' 13. The Ld. Counsel of the assessee who appeared before the Tribunal, placed reliance on the written submissions placed on record. 14. On the other hand, the Ld. D/R has placed reliance on the orders of the Assessing Officer and Ld. CIT(A). This appeal was heard on 9.2.2012. Thereafter Ld. Counsel of the assessee requested to re-fix the case by letter dated 17.4.2012 as they want to file further written submissions. The case was re-fixed on 8.5.2012 on which date the Ld. Counsel of the assessee filed an additional written submissions on this point which were taken into consideration. Advance copy of the same was given to Ld. D/R who has again relied on the orders of the Assessing Officer and Ld. CIT(A) and has also filed a chart of additions made, with a brief written submission dated 9.2.2012. 15. We have heard rival submissions and considered them carefully. After considering the submissions and perusing the material on record, w....
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....s no nexus with the other activities of the assessee and this does not constitute expenses as such but it is only notional write off of assets in the books of the assessee just to tamper with the profit of the business to its advantage. While holding so, reliance has been placed by the AO on the decisions Hon'ble Supreme Court and various High Courts in CIT v. Gemini Cashew Sales Corpn. [1967] 65 ITR 643 (SC), J.R. Mehta v. CIT [1980] 126 ITR 476/4 Taxman 522 (Bom.) and Venkatesa Colour Works v. CIT [1977] 108 ITR 309 (Madras). As stated above, the ld. CIT(A) has also confirmed the action of the AO. 16. After considering these facts and submissions of the assessee, we noticed that the action of the AO treating this unit as distinct from other business activity, in our considered view is not correct. The assessee had various mining units i.e. Zawer Mines (Rajasthan), Rampura Dariba Mines (Rajasthan), Agnigundala Lead Project (Andhra Pradesh) and Sargipalli Mines (Orissa) etc. etc. Similarly, assessee owned Degana Tungsten Mine also situated at Rajsthan. All these units producing Zinc and lead, raw phosphate and converting into concentrate. Degana Tungsten Mine producing Tungste....
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.... the written submission. After going through these decisions, we are of the view that the assessee is entitled for various expenses chimed in the Profit & Loss account on account of Degana Unit as Degana Unit is a part of composite unit. Since Assessing Officer has disallowed the claim of the assessee treating the same as a separate and distinct unit and we have held that this is not a separate and distinct and therefore these expenses are allowable. However, we feel that nature of these expenses are to be considered by the AO as the same has not been taken into consideration. Therefore, to consider the allowability of these expenses, we restore the issue to the file of the AO for allowing the same. There are two other type of expenses also. We feel that those expenses should also be taken into consideration by the AO afresh as no detailed reasoning have been given by the AO while rejecting the claim of the assessee on the ground that this is a separate and distinct unit. We order accordingly. 16.5 This ground of the assessee is allowed in part and partly for statistical purposes. 17. Now we will take the appeal of the department. 18. There are seven grounds in the appeal of the....
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.... expenses". (ii) An expenditure of Rs. 125.28 lacs on extension of existing mines as presented in Schedule 4.1 of the annual accounts. This is being amortised in the profit and loss account as per accounting policy III(d)(ii) of the company. It has been stated that the A.O. has disallowed both these amounts by giving the finding that the expenditure on development of mines is allowable u/s. 35E of the Act. It has also been stated that as the expenditure is allowable u/s. 35E, the same is not allowable for deduction u/s. 37(1) of the I.T. Act, 1961. It has been stated by the appellant that no claim has been made u/s. 35E in respect of these expenditure on development of mines incurred during the year. Further Section 35E of the I.T. Act, 1961 allows claim of expenditure on mine development incurred before the commencement of commercial production by an assessee. This section does not apply in the present case as the company had started its commercial activities long back. It has been submitted that Mine Development Expenses of Rs. 568.07 lacs have been incurred for continuation of excavation of minerals from the mines which are already in production. Since the expend....
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...., 1961. It has been pointed out by the appellant that the Mine Development Expenses of Rs. 568.07 lacs have been incurred for continuation of excavation of minerals from the mines which are already in production. This expenditure is a recurring expenditure incurred for continuation of mines under production. In the case of CIT v. J.A. Trivedi Brothers [1979] 117 ITR 983 the Hon'ble Bombay High Court has held that the expenditure incurred for earth digging is an integral part of profit earning process when it is incurred while the business is going on. Since, such expenditure is not for initial outlay or for the purpose of extension of business, the same is allowable as revenue expenditure. Since the above expenditure of Rs. 568.07 lacs has been incurred in respect of the mines which are already under production, therefore the same is a revenue expenditure. Respectfully following the decision of Hon'ble Bombay High Court it is held that the above expenditure of Rs. 568.07 lacs is a revenue expenditure, in view of the above facts the A.O. was not justified in disallowing the above expenditure of Rs. 568.07 lacs. Therefore the addition made of Rs. 568.07 lacs o....
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....in favour of the assessee following the order of Tribunal for assessment year 1996-97 and, therefore, order of ld. CIT(A) does not suffer from any infirmity. It was further submitted that for assessment year 1997-98 the AO has allowed the claim of the assessee for 1996-97 as per direction given by the Tribunal and this fact has been admitted by the department as in column No. 4 of the chart filed by ld. D/R it has been stated 'allowed as per the direction given by the IT AT'. Therefore, the order of ld. CIT(A) does not suffer from any infirmity. 23. After considering the orders of the AO and ld. CIT(A) and submissions of both the parties, we find no infirmity in the finding of ld. CIT(A) as ld. CIT(A) has allowed the issue in favour of the assessee following his own appellate order for assessment years 1996-97 and 1997-98. The order of ld. CIT(A) for assessment year 1996-97 have been affirmed by the Tribunal as admitted by the department in col. No. 4 of the chart filed. Therefore, on the reasoning given by ld. CIT(A), we confirm his order as issue is squarely covered by the order of Tribunal for A.Y. 1996-97. For A.Y. 1997-98 also the Tribunal restored the issue to the fi....
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.... Accounts. It has been stated that in A.Y. 1996-97 the Ld. CIT(A) has allowed the claim of the assessee. Further the Hon'ble ITAT in its order for the A.Y. 1996-97 has allowed the relief to the assessee. In view of this it has been requested to delete the disallowance." 26. After considering the submissions, the ld. CIT(A) has given his finding in para 4.2 as under:-- "4.2 I have considered the observations of the AO and the contentions of the appellant. In the A.Y. 1996-97, the ld. CIT(A) has allowed the above claim except in respect of amounts relating to loss on sale of fixed assets, deferred revenue expenditure and write off lease hold land. The Hon'ble ITAT Jodhpur Bench vide its order dated 24.04.2002 for the assessment year 1996-97 has allowed the deduction for deference revenue expenses and writing off of lease money. Respectfully following the order of Hon'ble ITAT and the order of the ld. CIT(A), the AO is directed to allow deduction in respect of above items except for the item 'others' of Rs. 77,000/- for which no details or basis of write off has been furnished. Accordingly, the disallowance works out to only Rs. 77,000/-. Therefore....
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....Act, 1961 as was pointed out in the report for the A.Y. 1996-97. During the course of assessment proceedings, it was contended by the assessee that contribution to various funds, clubs, canteen, company cooperative society etc. do come within the ambit of welfare expenses and therefore, these are allowable as such. In view of the past history of the case where this amount have been disallowed, the AO did not accept the contention of the assessee. It has been observed by the AO that the contribution to welfare funds, schools, clubs, community centre, cooperative society, canteen and other welfare activities come under the provisions of Section 40A for which no details were furnished by the assessee. It has been stated by the AO that the extent of such expenses ranges from Rs. 280 lakhs in assessment year 1996-97 to Rs. 337 lakhs in assessment year 1997-98 (wrongly mentioned as Rs. 2.80 lakhs and Rs. 3.37 lakhs). The expenses are also increasing year after year. In the absence of relevant data, the AO estimated these expenses at Rs. 350 lakhs (wrongly mentioned as Rs. 3.50 lakhs). Following the assessment orders of earlier years, the AO disallowed an amount of Rs. 350 lakhs u/s. 40A(....
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....ar from the facts that the assessee has no direct or indirect control over the utilization of these funds as bulk of the fund viz. welfare fund Rs. 29,24,048/- and grant to central schools Rs. 3,84,435/- were directly related to the welfare activities of the staff and also getting admission to the children of the staff members in central school. It is also beach of the agreement worked out under the Industrial Disputes Act, the assessee could have been punished as per Section 29 of the Act. It is also worth noting here that the decision of the Madras and Hyderabad Bench relied upon by the assessee are fully applicable to the facts of this case. Under the circumstances, we have no hesitation in holding that the expenditure in question is clearly allowable. This addition therefore, stands deleted." Respectfully following the above order of Hon'ble ITAT Jaipur Bench, the AO is directed to delete the disallowance of Rs. 3,50,00,000/-. Accordingly the addition made on account of above disallowance is deleted.' 33. The ld. D/R placed reliance on the order of AO. However, it was stated that this issue was set aside by the Tribunal for assessment year 1997-98. However, the....
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....ontentions of the appellant. The ld. CIT(A) vide his order No. 519/IT/98-99, dated 30-06-1999 for the assessment year 1996-97 has deleted the addition on this point. It has been observed by the ld. CIT(A) that "in the present case the realization of interest is not based on realistic manner because recovery of principal amount itself is doubtful". It has therefore, been held by the ld. CIT(A) that the income did not accrue to the appellant. The ld. CIT(A) therefore, deleted the addition. Respectfully following the above decision of the ld. CIT(A) for the assessment year 1996-97, the addition made of Rs. 60,00,000/- on account of accrued interest on advance given to M/s. BGML is deleted." 39. The ld. D/R paced reliance on the order of AO. It was further stated that similar issue came before the Tribunal for A.Y. 1997-98 and the Tribunal has confirmed the addition by reversing the order of ld. CIT(A). 40. On the other hand, the ld. A/R of the assessee stated that though interest has accrued on notional basis but the same has not been received. However, it was further stated that whatever the amount has been received on cash basis, that has already been offered for taxation. It was ....
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....stated by the AO that the ld. CIT(A) has allowed the assessee's claim for technical feasibility report expenses where the major expenses were for mining consultancy. However, this decision has not been accepted by the Department. An appeal has been filed before the Hon'ble ITAT. It has been stated by the AO that by incurring expenses the assessee is going to increase its income earning capacity in terms of its output and quality. In view of the above, the AO treated these expenditure as capital expenditure. Accordingly, the AO did not allow the deduction of Rs. 1,14,16,681/-. 7.1 During the course of appellate proceedings, the appellant has submitted a statement showing the details of each and every item of feasibility expenditure and the nature of these items. It has been stated that the assessee company is engaged in the business of mining as well as smelting operations. So far as India is concerned, the business of the company is unique in itself looking to the size of its operations, the technicalities of its mining and smelting process and also the multi unit operations of different kind/standards dealing with different quality of products. Its mining output al....
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....ding in para 7.2 at pages 17 to 19 by giving following finding:-- 7.2 I have considered the observations of the AO and the contentions of appellant. The details of feasibility report expenses were sent to the AO vide this office letter dated 3-07-02 for submitting his report in accordance with Rule 46-A of I.T. Rules. In this regard, the Jt. CIT, Range 1, Udaipur vide his letter dated 7-8-2003 has stated as under:- "the AO has also given the details of entire expenditure in the assessment order itself and thus the broad details now furnished before your good self has no significance as they are the same. Yet I have examined the details furnished and it is found that the expenditure so claimed is not allowable u/s. 37(1) of the I.T. Act, being no of Revenue nature. The assessee has incurred the expenditure for obtaining the feasibility report for the set up of 100 MW Naptha Based Combined Cycle Power Project in Udaipur District which itself is a new project and expenditure on the same would necessarily be a capital expenditure as the project itself suggest. The expenditure incurred in obtaining the feasibility report would also be capital expenditure. In this....
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....l within the scope of Section 35D and are allowable u/s. 37(1) of the IT. Act, 1961. In my appellate order No. 268/IT/UDR/1999-2000 dated 17-02-04 in the case of the appellant for the assessment year 1997-98 by following the decision of the Hon'ble ITAT, Jodhpur Bench in ITA No. 639/JP/98 dated 30-09-02 in the case of the appellant for the year 1992-93 I have held that the feasibility report expenditure incurred during that year is allowable as a deduction u/s. 37(1) of the IT. Act, 1961. It has been stated by the appellant that the amount of Rs. 11,30,000/- paid to MECON is for the same study which was carried out in assessment year 1997-98. Therefore, following the above appellate order, this expenditure is allowed. In the case of CIT v. Coromandel Fertilizers [1999] 105 Taxman 490, the Hon'ble Andhra Pradesh High Court has held that if the advantage obtained by incurring expenditure consists merely in facilitating the assessee's trading operations or enabling the management and conduct of the assessee's business to be carried on more efficiently or more profitably, the expenditure is revenue. In this case, the feasibility report submitted has not resulted in esta....
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..... CIT(A) does not suffer from any infirmity. Accordingly we confirm the order of ld. CIT(A) for the year under consideration. 48. Ground No. 6 is against deleting the addition of Rs. 25,99,76,000/- made on account of under valuation of stock of Zinc concentrate. 48.1 The brief facts of the case are that during the year, the assessee company changed the method of valuation of Zinc and lead concentrate and work in progress. In this regard, the auditor in the tax audit report has commented as under:-- "(ii) In the following cases the company has made change in method of valuation of stock as compared to the method employed in the immediately preceding previous year:- (A) In case of valuation of closing stock of concentrates other than bulk and bought out concentrates from weighted average cost of weighted average cost or net realizable value whichever is lower has resulted in decrease in inventory as well as profits of the company by Rs. 1050.05 lakh. (B) In case of accounting policy 1(c) and 1(I) regarding valuation of work-in-process from weighted average cost to weighted average cost or net realizable value whichever is lower has resulted in decrease in in....
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....ork in progress at cost. It has been stated that in accordance with the principles followed in the revised mandatory Accounting Standard on "Valuation of Inventories" it has valued the WIP at net realizable value which is much lower to the cost. It has been submitted that the revised mandatory Accounting Standard on "Valuation of Inventories" suggest the method of valuation of closing stock i.e. cost or net realizable value whichever is lower in respect of finished goods raw, material and work in progress. It has been submitted by the assessee company that it has switched over from the policy of "valuing at cost" to policy of "valuing at cost or net realizable value, whichever is lower". In other words, the assessee has switched over to a more appropriate and judicially recognized accounting policy. Even The Institute of Chartered Accountants of India (ICAI) recommends this policy as is evident from the following:- (i) Opinion of Expert Advisory committee of ICAI on query No. 5 published in volume XVIII of compendium of opinions published by ICAI, on the subject valuation of work in process. (ii) Opinion of Expert Advisory Committee of ICAI on Query No. 29 published....
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.... has resulted in decrease in inventory as well as profits of the company by Rs. 1050.05 lakh. (B) In case of accounting policy 1(e) and 1(I) regarding valuation of work-in-process from weighted average cost to weighted average cost or net realizable value whichever is lower has resulted in decrease in inventory as well as profits of the company by Rs. 1549.71 lakh. A similar note is mere is Note No. 9 of the Notes on Accounts appearing in Schedule 20 of the Annual Accounts. It has been observed by the A.O. that in so far as the stock of work in progress is concerned the term "Net Realisable Value" is of no significance at all for the simple reason that it is not a saleable commodity but it is a product of the assessee company which is yet to be processed to yield a saleable commodity in the form of metal concentrate. It has been further stated by the A.O. that the company has artificially under valued its closing stock by changing the method of valuation of closing stock. In view of the above the A.O. did not accept the change in valuation and made the addition of Rs. 25,99,76,000/-. In the remand report the Jt. CIT Range 1, Udaipur has stated that in the A.Y. 1996-....
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....lier years, the assessee has the option to change the method of valuation of the closing stock at cost or market price, whichever is lower, provided the change is bona fide and followed regularly thereafter. Keeping in view the above facts and the facts stated by the appellant it is clear that the change in the method of valuation of closing stock is a bona fide change. As mentioned above it has been stated by the appellant that in succeeding years it has consistently followed the changed method adopted by it. Respectfully following the above decision of the Hon'ble Delhi High Court it is held that the A.O. was not justified in making the addition of Rs. 2599.76 lacs on account of under valuation of closing stock of the lend concentrate and work in process. Accordingly the addition made of Rs. 2599.76 lacs is deleted."' 48.3 The ld. DR had placed reliance on the order of the AO. It was further submitted that similar issue has been decided by the Tribunal while deciding the appeal for the assessment year 1997-98 in ITA No. 249/JU/2004 dated 24-07-2009. It was further submitted that appeal of the Department for the assessment year 1996-97 has been allowed by the Hon'ble ....
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....assessment years 1996-97 and 1997-98 or a different method is adopted. The change of method is not bar either on the fads or in the eye of law as held by various Courts. The decision of Hon'ble Delhi High Court in the case of CIT v. Dalmia Cement (Bharat) Ltd. [1995] 215 ITR 441/82 Taxman 255 had been followed by the ld. CIT(A) on this aspect. In view of the decision of Hon'ble Delhi High Court (supra), if there is a bona fide intention of the assessee then the method can be changed. Keeping in mind all these facts and circumstances of the case, we set aside the order of the ld. CIT(A) on this issue and restore the matter back to the file of the AO for examining the same afresh after affording reasonable opportunity of being hear to the assessee. We order accordingly. 49. Ground No. 7 is against directing to adopt the gross turnover for 80HHC purposes after deducting the sales-tax payable. 50. The brief facts have been discussed by Ld. CIT(A) in para 11 and 11.1 at page-30 of his order are as under:-- "11. The tenth ground of appeal is regarding the inclusion of sales tax collected as a part of turnover for the purpose of calculation of deduction u/s. 80HHC of the....
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.... the Hon'ble Rajasthan High Court has held as under:- "it is now well settled that the incidence of sales tax is really on the consumer and it is in substance a tax imposed on the goods on the occasion of sale. The statutory liability, however for payment of sales tax is raised on the dealer on his total turnover, whether or not he realizes the tax from the purchasers. Thus, the price charged by the dealer would be inclusive of sales tax, for it is in his interest to pass on the burden of tax to the purchaser. Thus, the sales-tax or Excise Duty collected by the assessee is not income or receipt. It is collected on fiduciary capacity refundable to the customer or payable to the State and as such, does not form part of the turnover. Rule 44 of the Rajasthan Sales Tax Rules permits collection of sales tax and to show such collection in the invoice to be credited to the sales tax account. Thus, where sales tax is collected separately, it does not constitute part of the turnover. Thus the Tribunal was justified in accepting the assessee's contention that sales tax. Excise Duty and octroi on local sales should not form part of the total turnover for the purpose of computa....
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.... then you may frame the questions as you think fit. Sanjay Arora, Member (A) 56. I have perused the proposed order by my ld. brother, JM in the captioned appeals, and also discussed the same with him. However, with respect, I am unable to persuade myself to be in agreement therewith on some of the issues arising before the Tribunal for adjudication and, accordingly, propose my separate order in respect thereof as under, which, qua two grounds of the Revenue's appeal, i.e., Gds. Nos. 2 & 4, being guided by a different considerations than that prevailed with my ld. brother, is an assent order:- I. Prior period expenses (Rs. 1,65,50,474/-) 56.1 The matter was argued before us at length. The assessee's case, as made before the authorities below as well as before us, and as would also be apparent from the proposed order by the ld. brother, is that the impugned liability has in fact crystallized during the relevant year, i.e., the financial year 1997-98. However, both the authorities below have per their respective orders given a categorical finding of it being not so, with the liabilities under reference, i.e., for which deduction is being claimed, being not disputed or show....
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....set at its realizable amount in the final accounts. In fact, the assessee has itself disallowed depreciation, debited at Rs. 10.84 lacs to prior period expenses, and claimed only the balance of Rs. 165.80 lacs toward the said account head per its return of income, only on the same basis, i.e., it not representing a binary transaction. There is, further, even no internal procedure or check in operation; the assessee stating of there being an elaborate and comprehensive mechanism in place for according approval which leads to a delay in booking the expenditure and, thus, inability to claim the same for the year in which it is incurred or the liability in its respect accrues. The foregoing, rather, indicates a clear lack or absence of proper accounting procedure, what with the assessee's records being internally inconsistent, and which indicates inefficiency, which is also borne out by the fact that this issue arises in the assessee's case year after year, as apparent from the orders by the tribunal in the assessee's case for A.Ys. 1996-97 & 1997-98. No other entry in the said statement (PB pg. 44-52) was pointed out by the ld. AR to controvert the clear finding by the aut....
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....dating, rather, booking of all known losses and liabilities, even as the 'provision' in its respect in accounts has to be informed and based on best available information. It is, thus, only where the sanction is (to be) accorded prior to entering the contract that it assumes significance as an effective check, in which case, however, there is no scope for any delay in booking the relevant expenditure. Execution (of contract) problems could, in any case, arise, but then that is a different matter altogether and, rather, also stand to be largely reduced, if not eliminated, by stringent pre-contract negotiation and review of all aspects of the work. The same, in any case, would fall under the category of 'disputed liability', where the principle of 'crystallization of liability' shall operate. 56.3 In sum, the assessee's argument is to no consequence as the internal procedures are, for all intents and purposes irrelevant, once the liability is incurred and/or assumed, and which only is material from the stand point of its claim for deduction. As afore-noted, both accountancy as well as the law, per the Accounting Standard (ASI) notified by the Central Gov....
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....ision that the respective rights of the parties can be said to have been determined and/or ascertained. The source case law on the subject, which the decision in the case of Swadeshi Cotton & Flour Mills' case (supra) can be considered to be, it would be noted, is much prior to the prescription of Accounting Standards (AS I and AS II) by law. Clearly, accountancy and law may not always march step in step, in which case the latter would prevail. However, where the two are in unison, could there be a scope for a different view as such, an actual controversy could arise, as where (say) an assessee claims the un-admitted claim on it, while the Revenue contends for its allowance only in the year, and to the extent, of its resolution, being only a contingent liability prior thereto. It is here that one would be required to take a call as to which of the two alternatives accords with the law, and perhaps presents some scope for noting and drawing on the ratio of the decision in the case of CIT v. Nagri Mills Co. Ltd. [ 1958] 33 ITR 681 (Bom.), that there is no water tight compartmentalization, so as to preclude claiming an expenditure where it is on a reasonable, definite basis extern....
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....se of J.K. Woollen Manufacturers Ltd. (supra); Escorts (Agents) (P.) Ltd. v. CIT [1971] 80 ITR 61 (Delhi) in view of the judgment by the Apex Court in Swadeshi Cotton & Flour Mills (P.) Ltd. (supra), and which is again not met or controverted by the assessee. The said finding has been on verification found to be correct. The tribunal for the earlier years had followed the decision in the case of Nagri Mills Co. Ltd. (supra) without noticing the subsequent decisions holding it to have been over-ruled and not representing good law. The reliance by the assessee thereon, therefore, cannot stand. In fact, the tribunal for the later years (assessment years 1996-97 and 1997-98) can only be considered as having noticed and considered its earlier orders in the assessee's own case, and which as per the statement filed by the ld. DR has been followed by the tribunal (in the assessee's own case) for the subsequent years as well, i.e., A.Ys. 1999-00 to 2002-03. Further, though the assessee has per its written submissions stated that these decisions were relied, upon by the tribunal (i.e., for the assessment years 1996-97 and 1997-98) without confronting the same thereto, it has before u....
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....bunal itself (for the current year). 56.7 In the result, Ground # 1 of the assessee's appeal is dismissed. II. Extraordinary Items (Rs. 3,04,81,750/-) 57.1 This is the subject matter of the assessee's Ground # 3 before us. The break-tip of the expenditure, claimed per the 'Profit and Loss Account', is as under and, further, pertains to the write off of various assets in accounts on the closure of Degana Tungsten Mines:- The primary and basic facts are not in dispute. The company had taken over Degana Tungsten Mines from Rajasthan State Tungsten Development Corporation (RSTDC), a Government of Rajasthan enterprise, in 1991. However, poor metal content, accompanied by crash in international prices and inadequate tariff, rendered the operation of the Mine uneconomical, so that the Board of Directors accorded approval for its closure. The usable equipment was shifted to the other operating Units and, likewise, the employees who did not opt for VRS were suitably deployed in other operating Units of the company. The Mine, on completion of the statutory formalities, since initiated, is to be handed over to the Govt., of Rajasthan. The Assessing Officer (AO) was of the ....
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....er if the Tungsten Unit constitutes a separate business or not? The issue, thus, is not whether or not the same constitutes a separate or distinct business, and which, therefore, is of no consequence. But whether the write off constitutes a revenue expenditure of the said Unit or of the assessee's business. This is for the reason that the same arises only in consequence to the closure of the said Unit or a part of the assessee's business. Reliance by the AO on the case law, discussed by the first appellate authority in his order, is toward this end only. Further, in his view, mine development expenses and capital work-in-progress were only capital expenditure and write off of tungsten ore only a notional expense; the assessee's dominion over the said ore being neither disputed nor disrupted, so that it continues to be its property, as the relevant Unit is yet to be transferred to the Govt., of Rajasthan, and only upon which would the expenditure arise in its respect as also stand to be quantified. That is, the write off is inconsistent with the underlying facts. The foregoing, to my mind, defines or enumerates the Revenue's case in rejecting the assessee's case....
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.... fructified into a complete asset, not to speak of a functional one. The ld. AR, on being questioned in its respect during hearing, submitted that he would furnish the break-up details. None surfaced. As the matter was posted for hearing again, and only at the assessee's instance, he on being reminded of his earlier statement, conceded to it being only a capital expenditure, and one that had as yet not resulted or materialized in to a' capital asset. His concession apart, the same is admittedly only so per the assessee's audited accounts, and there is nothing on record contrary thereto. The relevant expenditure, it may be appreciated, stands already incurred, and the instant claim arises only on account of its write off in accounts, being no longer representing any value to the assessee 's enterprise, and which is equally applicable to the other two items comprising the impugned claim also. The same is clearly not of revenue nature and, thus, not deductible as a business expense or even as a business loss. B. Mine Development Expenses (Rs. 91,39 lacs): On being questioned, the ld. AR would submit that the same, though capital in nature, qualifies for a claim for te....
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.... its write off would be akin to a claim for terminal depreciation, while qua a revenue asset the question would have to be further examined as to whether the same (write off) is incidental or integral to the business or not, besides from the standpoint of any specific provision/s of the Act, if any, impinging thereon. Reference in this context may also be profitably made to the decision by the apex court in the case of Hasimara, Industries Ltd. v. CIT [998] 230 ITR 927/98 Taxman 303. Mine exploration and development expenditure, as well as CWIP, are only capital expenditure/assets, and the loss on their write off, a capital loss. C. Tungsten Ore: Finally, coming to the last (third) item of the assessee's claim qua extraordinary items, i.e., for Tungsten Ore at Rs. 154.06 lacs. The Revenue's case is that it is not understandable as to how the same amounts to an expense inasmuch as Degana Mines are yet to be transferred to the Government of Rajasthan, so that they continue to be the assessee's property. Further, how could it be presumed that the transfer price shall be nil The argument is impressive, and neither has the assessee rebutted the same in any manner, much less....
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....least a prima facie case against it made out. However, another and more important question remains, and that is as to the nature of the expenditure. The assessee claims it to be a loss in the value of stock-in-trade arising on account of a business decision and, thus, only a business loss inasmuch as it continues to be in business, and it is not the case of discontinuance of business. The question, in my humble view, however, is if it could nevertheless be considered as a loss in value of stock-in-trade. It is nowhere claimed, and it is not the assessee's case that the loss is on account of its deterioration or a decline in its market price and, thus, the net realizable value of the ore, which, rather, is not sold as such but only on further processing. The (tungsten) ore was no doubt the assessee's stock-in-trade, but only up to the point in time it was held for the purpose/s of its trade, i.e., for being either processed further or for sale. The fundamental accounting assumption of a going concern and the principle of conservatism would then operate, making it liable to be valued at cost or net realizable value, whichever is less. However, the moment assessee decides to ....
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....pital, as it would be for any other capital asset, whether representing an erstwhile 'fixed' or 'current' asset of the business. A 'current asset' is so classified as it is liable to be turned into account within a period of up to a year. It is, however, as much a part of the capital structure or the profit making apparatus of the assessee's enterprise as is a fixed asset, leading to an impairment of the firm's capital on its relinquishment. As such, any loss arising on its relinquishment, which is only one of the defined modes of 'transfer' u/s. 2(47) of the Act, is a loss suffered on capital account, assessable u/s. 45 of the Act, and not a business loss assessable u/s. 28 of the Act. The same, in fact, represents an exit cost in contradistinction to the set up costs, suffered on establishment of a Unit, both of which are on capital account. Rather, the classification, i.e., 'fixed' or 'current', is no longer valid or applicable where it ceases to be held for the purpose of business, so that the consideration as to whether it arises on account of abandonment of an erstwhile fixed or current asset is immaterial. There is, thu....
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....mission; the same being again independent of whether the business continues to exist in the relevant year or not. Further, that the abandonment was occasioned by a business decision is of no consequence or relevance. All decisions on or qua capital account, viz., to set up, dispose of, transfer, merge, demerge, etc. a Unit, representing a business or a part thereof, it may be appreciated, are only business decisions, but that by itself would not alter the character of the receipt, if any, arising thereon as a capital receipt, which shall continue to be so, with incidental and concomitant consequences with regard to taxability or otherwise, which would only be as per and in terms of the provisions of the Act. In a particular case, the assessee may sell his undertaking, including all its assets, whether fixed or current, for a lump sum price. The entire receipt would be a consideration arising on transfer, and it would matter little even if a separate price is attributed to the erstwhile current assets of the said enterprise. The entire consideration - though arising in consequence to a business decision to dispose of the Undertaking - is assessable u/s. 45 of the Act, and which may....
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.... assets of its erstwhile enterprise, on its closure. In a given cases it may be at a profit/gain, which though would again be a value realized on transfer on capital account, and not a business receipt u/s. 28. No case has been made out by the assessee before any authority, including before us, of the formal transfer of the Mines to the Government being at a value, which would rather run counter to its avowed stand of the said assets being of no value to it and, therefore, written off in books; the permission for closure having been obtained from the competent authority, i.e., the Ministry of Mines, Govt., of India, during the relevant year. In fact, if it is to be at a value, which of course would be in contradiction to the writing off of the entire value, would only go to reduce the loss, since accrued, to that extent. This is also borne out by another claim (albeit, under the head 'Prior Period Expenses') for Rs. 1,40,769/- in respect of 'Raw Material Consumed', which bears the narration "Value of Tungsten concentrate taken over by RSTDC finalized", appearing at page 49 of the assessee's paper-book. The same, though under a different head, makes it unequivoca....
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....al. The said sum itself comprises of two separate claims, i.e., for Rs. 568.07 lacs and Rs. 125.28 lacs. The two add up to Rs. 693.35 lacs, the sum disallowed by the AO. The appeal by the Revenue at Rs. 688.62 lacs is for the reason that disallowance to the extent of Rs. 4.73 lacs, being depreciation forming part of the assessee's claim for Rs. 125.29 lacs (supra), stands confirmed by the ld. CIT(A) and against which the assessee is not in appeal. It would, therefore, be both relevant and necessary to, before proceeding further, .understand the manner in which the said expense has been accounted for and claimed by the assessee. 58.2 The claim for Rs. 568.07 lacs is by way of debit to the profit and loss account as development expenditure on mines under the grouping 'Manufacturing and Other Expenses' (Schedule 14 to the annual accounts). Rs. 125.28 lacs is stated to be in respect of extension of existing mines (units), as incurred during the year. The said expenditure is accounted for under the account head 'Mine Exploration and Development Expenses' ("ME & D expenses') and amortized in accounts. Schedule 4.1 to its final accounts reads as under:- Further f....
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....sallowed the third amount of Rs. 91.39 lacs as capital expenditure. Qua the second component (Rs. 125.29 lacs), which is in line with his order for the assessment years 1996-97 and 1997-98, it has since been disturbed by the tribunal, holding it not to be exigible u/s. 37(1) of the Act, but only u/s. 35E of the Act for examination of the satisfaction of which section, it restored the matter back to the file of the AO. With regard to MDE (Rs. 568.07 lacs), as afore-noted, the same falls for consideration by the tribunal for the first time for the current year. Findings 59.1 The facts, including precedents, having been explicitly laid out, I may proceed to adjudicate each of the assessee's three claims. First, the claim for Rs. 125.29 lacs, which in fact stands reduced, as also for the preceding years, in respect of depreciation component thereof - allowed separately, to Rs. 120.56 lacs (Rs. 125.29 lacs minus Rs. 4.73 lacs). The same is clearly covered by the decision by the tribunal in the assessee's case for the preceding as well as for the succeeding years. As would be apparent from Schedule 4.1 to the assessee's annual accounts (supra), Rs. 125.29 lacs and Rs. 91.39....
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....ferent years. In fact, the assessee ought to, but has not, stated as to how the AO has applied himself for both the said preceding years under reference consequent to the set aside by the tribunal, and what have been the findings by the assessing authority, which, being essentially findings of fact, are relevant. Also, that being the case, I find that there is nothing in the decision in the case of CIT v. Pioneer Minerals (supra) which is or may be construed as inconsistent with what is stated either in this order or by the tribunal for the preceding two years. 59.2 The claim for the write off of the said ME & D expenditure at Rs. 91.39 lacs on the closure of the Degana Mines, which (claim) is specific to the current year, stands already discussed and adjudicated upon, holding it to be in the nature of a capital loss, assessable u/s. 45 of the Act (refer para 2.3(C), 2.4 of this order). 59.3 Coming to the last claim, i.e., Mine Development Expenses (MDE), claimed separately in the sum of Rs. 568.07 lacs through debit to the profit and loss account (Schedule 14 to the annual accounts). The basis of the assessee's claim, as understood, is that the same is firstly in respect of ....
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.... adjudicating the matter, which he shall by issuing specific findings of the fact and in accordance with law. I direct accordingly. 60. In the result, the Revenue's Ground # 1 is allowed for statistical purposes. IV. Write off of stock, etc. (Rs. 8,82,69,155/-) 61.1 This is the subject matter of Ground No. 2 of the Revenue's appeal. The AO found the assessee's claim, preferred per Schedule 18 to the annual accounts for the relevant year in the sum of Rs. 976.50 lacs, as untenable in view of the assessee being unable to substantiate its different claims comprised therein before him. The assessee found favour with the ld. CIT(A) on the basis of the decision by the tribunal in the assessee's case for the assessment year 1996-97 dated 24-04-2002 (refer para 4.2, pg. 11,12 of the appellate order). He, therefore, confirming the disallowance for Rs. 77,000/-, i.e., for which, assessee could not furnish the basis of its claim, deleted the balance, so that the Revenue; is in appeal therefore. Clearly, therefore, the first appellate authority has only followed the order by the tribunal in the assessee's own case. However, at the Revenue-appellant's instance, we fin....
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....enue nature and business purpose of which is not in doubt, allowed. True, just because the assessee could not prove an expenditure in the past is no basis for it being unable to do so for the current year as well. However, merely making a bald assertion would not help the assessee's case or cannot form the basis or by itself a material, much less proven, for disturbing the clear findings on which assessment order rests, and which are also the same for the immediately two preceding years as found by the tribunal as the final fact finding authority. The impugned order, as afore-stated, also cannot stand and would be required to be set aside. So, however, the matter being factual, so that it may well be that the assessee has material to establish/substantiate its claim/s for different expenses comprised in its impugned claim, and whose cause should not stand to be prejudiced in view of the tribunal's finding for the preceding years, it is only considered fit and proper in the interest of justice that the matter is restored back to the file of the AO to decide the same afresh per a speaking order and in accordance with law and after allowing opportunity of being heard to both t....
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....e the matter back to the file of the AO for a decision in accordance with law. 62.2 No doubt, the Auditor has not reported adversely in this respect for the current year, as was the case for the assessment year 1996-97, but even as pointed out by the hon'ble High Court in the assessee's own case for the preceding years, being assessment years 1989-90 to 1991-92 (i.e., including the year for which the order by the tribunal stands followed by the ld. CIT(A)), reported at Hindustan Zinc Ltd. v. Union of India [2005] 194 CTR (Raj.) 121, that the opinion of the Auditor cannot substitute the adjudication of the issue by the AO or CIT(A). The same stood also noted by the tribunal and forms the basis of its decision to set aside the adjudication back to the file of the AO for the immediately preceding two years, even as was done by the hon'ble High Court, albeit to the file of the tribunal. There is no question of the tribunal deciding the issue for the current year, where even the AO has been constrained for want of proper details. Accordingly, it is considered fit and proper to restore back the matter to the file of the AO for adjudication afresh in accordance with law as fo....
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.... Corpn. (P.) Ltd. v. CIT [1993] 203 ITR 1001/[1994] 72 Taxman 328 (Raj.), to which the tribunal has also adverted to. Clearly, the law in the matter is trite; the hon'ble jurisdictional High Court in fact itself referring to and following the decision by the hon'ble Apex Court in the case of Morvi Industries Ltd. v. CIT [1971] 82 ITR 835 (SC) in its decision in the case of SMS Investment Corporation (P.) Ltd. (supra). In fact, as noted by the tribunal in its order for the assessment year 1996-97 (supra) (vide para 29), the ld. counsel for the assessee fairly conceded that the principal sum stands adjusted by the assessee against the work done for the subsequent years. How could, in such circumstances, the principal amount be considered as doubtful for recovery? Also, if so, there is nothing untoward or amiss in the amount so realized as having been offered" and assessed as income for the relevant assessment year, as being sought to be made out by him. The deposit is a transaction on capital account, so that where a part thereof is adjusted against the work got done, the same assumes the character of revenue and, thus, liable to be taxed as income. Further, when a part of th....
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....r these circumstances that the hon'ble court found no basis to disturb the finding by the tribunal that no interest for the relevant year, reckoned by the Revenue at Rs. 68.25 lacs, had in fact accrued. REFERFNCE UNDER SECTION 255(4) OF THE INCOME-TAX ACT, 1961 As we were unable to agree on the questions representing truly and fully the exact points of difference in the opinions expressed by the Members per their respective orders, I state my separate set of such questions for reference to the Third Member by the Hon'ble President u/s. 255(4) of the Act, as under: 1. (a) Whether the finding by the authorities below that the assessee's claim qua prior period expenses (for Rs. 165.50 lakhs) does not represent any disputed liability crystallized during the relevant year is correct on facts and has also not been suitably met before the Tribunal, as was also found by it for the immediately two preceding years, meriting its dismissal, or it is not so, so that the matter would require a set aside to the file of the assessing authority for verification? (b) In any view of the matter, is there any scope for application of the decisions in the case of Nagri Milk....
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.... is noticed that both the learned Members have differed on four points. The first point of difference is about allowability or otherwise of prior period expenses. In my considered opinion, the controversy on this issue will be properly reflected through following question. "Whether on the facts and in the circumstances of the case and as per law, the learned CIT(A) was justified in confirming the disallowance of Rs. 1,65,50,474/- on account of prior period expenses?" 65. Briefly stated the facts of this issue are that the assessee claimed deduction for prior period expenses amounting to Rs. 1.65 crores, which was not allowed by the Assessing Officer by relying on the view taken by him for the A.Ys. 1996-97 and 1997-98. The learned CIT(A) upheld the disallowance. When the matter came-up before the Tribunal, the learned J.M. observed that the learned CIT(A) confirmed the disallowance by relying on the Tribunal order for A.Y. 1992-93. He noticed that the learned CIT(A) ignored the Tribunal orders for A.Ys. 1993-94 to 1995-96 on the same issue. He also took into consideration the Tribunal order for A.Y. 1997-98 by which the claim of the assessee was rejected. However, relying ....
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....s also cannot canvass a third view before the Third Member contrary to what was held by the two Members who initially heard the appeal. If the parties are allowed to argue a case from a third angle or the Third Member canvasses a view different from those taken by the two Members who earlier heard the appeal, no majority of opinion would ever be formed. In that view of the matter, it is crystal clear that the Third Member is supposed to agree with either of such two views. He can neither entertain nor lay down a third view. 68. Coming back to the point in question, it is seen that the learned J.M. restored the matter to the file of Assessing Officer for deciding it afresh in conformity with the Tribunal order for A.Y. 1995-96, whereas the learned A.M. decided the issue against the assessee by relying on the Tribunal orders for the A.Ys. 1996-97 and 1997-98. As such, the contention of the learned A.R. that the deduction for prior period expenses be allowed by the Third Member, cannot be accepted, which is neither the case of the ld. JM or ld. A.M. 69. Adverting to the facts of the instant case, it is seen that the assessee claimed before the Assessing Officer that prior period exp....
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....of the Assessing Officer instead of the ld. AM upholding the disallowance. 70. The second point on which both the learned Members have differed is about deductibility or otherwise of extraordinary items. Here again, both the ld. Members have referred their separate questions. In my considered opinion, the controversy is properly highlighted through the following question:-- "Whether on the facts and in the circumstances of the case and as per law the learned CIT(A) was justified in confirming the disallowance of Rs. 3,04,81,750/- on account of disallowance of extra ordinary items?." 71. The facts apropos this issue are that the assessee claimed deduction for a sum of Rs. 304.82 lacs towards extraordinary items written off as a result of the closure of Degana Tungsten Mine. The Assessing Officer held that since Degana Mines were closed during the year, which constituted a distinct business, the assessee was not entitled to write off its assets, both fixed assets and stock in trade against its profit from remaining business of mining and manufacturing etc Without going into the details of Rs. 304.82 lacs, the Assessing Officer disallowed such expenditure. The learned CIT(A)....
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....he facts of the instant case, I find that since the Assessing Officer did not have any occasion to apply his mind from the perspective as discussed above, it would be more appropriate to send the matter back to the file of the Assessing Officer for considering deductibility of expenses or otherwise as per law, instead of taking up the details of such expenses and rendering decision at the Tribunal's end. I, therefore, agree with the view taken by the learned J.M. on this point and hold that the learned CIT(A) was not justified in confirming the disallowance of Rs. 3,04,81,750/- on account of disallowance of extraordinary items. 73. The next point of difference between the Hon'ble Members is on the disallowance of Rs. 6,88,62,383 made by the AO on account of Mines development expenses. Here again, both the ld. Members have referred their separate questions. In my considered opinion, the controversy is properly highlighted through the following question:-- "Whether the learned CIT(A) was justified in deleting the disallowance of Rs. 568.07 lacs and Rs. 120.55 lacs on account of mine development expenses?" 74. The facts of this issue are that the assessee claimed ded....
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....rlier two years. In the final analysis, I agree with the view taken by the learned A.M. and hold that the learned CIT(A) was not justified in deleting the disallowance of Rs. 568.07 lacs and Rs. 120.55 lacs on account of mine development expenses. 76. The last point of difference between the Hon'ble Members is on the addition of welfare expenses u/s. 40A(9) amounting to Rs. 3.5 crore. Here again, both the ld. Members have referred their separate questions. In my considered opinion, the controversy is properly highlighted through the following question:-- "Whether on the facts and in the circumstances of the case and as per law, the learned CIT(A) was justified in deleting the disallowance of Rs. 3.50 crores made by the Assessing Officer U/s. 40A(9) of the Act." 77. The Assessing Officer made disallowance u/s. 40A(9) of the Act amounting to Rs. 3.50 crores. The learned CIT(A) deleted this disallowance. When the matter came up before the Tribunal, the learned J.M. observed that the Tribunal has decided this issue in assessee's favour for the A.Y. 1990-91. It was further seen that the Tribunal for the A.Y. 1996-97 restored the matter to the file of the Assessing Offi....
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.... written off on account of other adjustments. 3. Under the facts and circumstances of the case, learned Commissioner of Income-tax (Appeals), Udaipur has erred in making the following disallowance of Rs. 304.82 lacs out of extraordinary items relating to amounts written off as a result of closure of Degana Mines:- 4. The assessee craves the right to add, amend, alter or modify any of the grounds of appeal." Grounds of ITA No. 298/JU/2004 "A. On the facts and in the present circumstances of the case, the learned CIT(A) has erred in:- 1. deleting the disallowance of Rs. 6,88,62,383/- being mines development expenses, ignoring the facts and other material brought on records by the A.O. 2. deleting the addition of Rs. 8,81,92,155/- out of Rs. 8,82,69,155/- made by the A.O. in respect of amount written off on account of loss of stock of raw material, finished goods, stores and spares etc. ignoring the facts and other material brought on records by the A.O. 3. deleting the disallowance of Rs. 3,50,00,000/- made by the A.O. u/s. 40A(9) of IT Act, 1961, ignoring the facts aid other material brought on records by the A.O. 4 del....
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....sue in respect of deleting the disallowance of Rs. 6,88,62,383/- being the Mine Development Expenses is liable to be deleted or to be set aside to the file of the learned CIT(A)? 4. Whether on the facts and in the circumstances of the case, the issue in respect of deleting the disallowance of Rs. 3.50 crores made by the A.O. u/s. 40A(9) of I.T. Act is liable to be deleted or to be set aside to the file of the A.O.? We also request your good-self that if the above mentioned questions are not suitable then you may frame the questions as you think fit. Questions framed by the learned A.M. 1.(a) Whether the finding by the authorities below that the assessee's claim qua prior period expenses (for Rs. 165.50 lakhs) does not represent any disputed liability crystallized during the relevant year is correct on facts and has also not been suitably met before the Tribunal, as was also found by it for the immediately two preceding years, meriting its dismissal, or it is not so, so that the matter would require a set aside to the file of the assessing authority for verification? (b) In any view of the matter, is there any scope for application of the ....