TaxTMI 
TaxTMI 
TaxTMI 
2021 (7) TMI 284
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....led. 3. It has been submitted that the order passed under section 263 was received by assessee on 29/01/2018 and the orders for the assessment years under consideration passed by the Ld.CIT(A) was received by assessee on or about 29/11/2018. It has been submitted that the appeals ought to have been filed before this Tribunal on or before 26/01/2019. From the affidavit it appears that, the delay was due to the preoccupation of assessee's counsel between 28/01/2019 and 29/01/2019 and that, the appeals could not be filed on or before 28/01/2019, thereby causing a delay of 4 days. 4. We note that 4 days delay in filing the present appeals cannot be attributed to assessee. In order to render substantial Justice, we condoned the delay of 4 days in filing the present appeals before this tribunal. Accordingly application dated 11/07/2019 for can donation of delay stands allowed. Assessment year 2012-13 5. The Ld.AR submitted that for assessment year 2012-13 assessee has filed two appeals before this Tribunal, one against the order passed under section 263 of the Act, and the other against the Ld.CIT(A) dated 09/01/2018, which is been passed in lieu of consequential order passed by the....
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....ale proceeds for year under consideration was recognised in 2014-15 and accordingly offered to tax in 2014-15, which was not acceptable to the Ld.AO as assessee was following mercantile system of accounting. 10. The Ld.AO also disallowed sundry expenses and other maintenance expenses amounting to Rs. 3,50,000/- and disallowance of CSR activity expenses amounting to Rs. 14,63,62/- for want of documentary evidences of having incurred the said expenses. In respect of the CSR expenses being disallowed, the Ld.AO was of the opinion that the same is not allowable as expenditure under section 37 of the Act, which was acceptable to the assessee as has been recorded by the Ld.AO in the assessment order. 11. Aggrieved by the additions made, the assessee preferred appeal before the Ld.CIT(A). 12. Before Ld.CIT(A) assessee has only challenged the disallowance towards SPV expenses. The Ld.CIT(A) upheld the observations of Ld.AO. 13. Aggrieved by the order of Ld.CIT(A), assessee is in appeal before us now. 14. At the outset, the Ld.AR submitted that, this issue stands squarely covered by decision of coordinate bench of this Tribunal in case of M/s.Ramgad Minerals and Mining Ltd., in ITA No.....
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....deposited in nationalised bank. It was submitted in the report that, where there is no illegal mining, 80% of sale proceeds to be released and 20% to be retained. MC was to be constituted to supervise and control E- Auction, size of lot, transportation etc. It was submitted therein that, MC would utilise sale proceeds for payment of royalty, taxes etc. * Subsequently, a plea by Karnataka Iron and Steel Manufacturers Association was raised regarding shortage of supply of minerals due to suspension of mining activity, before Hon'ble Apex Court. The association also sought for a direction to reopen Category 'A' mines. * Thereafter, by order dated 03/09/2012 Hon'ble Apex Court in case of Samaj Parivartana Samudaya vs state of Karnataka, reported in (2013) 8 SCC 219 approved report dated 29/08/2012 filed by CEC. Hon'ble Apex Court ordered for reopening of category 'A' mines, and vacated order dated 29/07/2011 passed in case of GOl vs. Obulapuram Mining Co. Put. Ltd., (supra) and order dated 26/08/2011 in case of Samaj Parivartana Samudaya vs State of Karnataka (supra). * Thereafter, by order dated 28/09/2012, CEC filed detailed report dated 03/02/2012, ....
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....ed for illegal overburden dumps, roads, offices etc beyond the sanctioned lease area. In case, any leaseholder defaults in implementation of the R&R plan, it will be open to CEC is to carry out the R&R plan for that leasehold to some other proper agency from the guarantee money deposited by the leaseholder. However, on the full implementation of the R&R plan to the complete satisfaction of CEC and subject to the approval of the court, the guarantee money would be refundable to the leaseholder. 5.3 in addition to the above, each leaseholder must pay a sum equivalent to 15% of sale proceeds of its iron oversold through the monitoring committee as per the earlier orders of this court. In this regard, it may be stated that though the Amicus suggests the payment at 10% of the sale proceeds, having regard to the overall facts and circumstances of the case, we have enhanced this payment is to 15% of sale proceeds. 5.3.1. Here it needs to be clarified that CEC/ monitoring committee is holding the sale proceeds of the iron ores of the leaseholders, including the 63 leasehold being the subject of this order. In case, the money held by CEC/ monitoring committee on the account of any lease....
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....ay, acceptance of the recommendations made by CEC on the basis of which orders of the court are formulated is upon the satisfaction of the court. We, therefore, close the issue by holding the contentions made to be wholly untenable." 7.8.5. In aforestated para, Hon'ble Apex Court refers to order dated 1411212016 passed in case of TN Godavarman Thirmulpad vs Union of India reported in (2013) 8 SCC 204. Hon'ble Apex Court dealt with acceptability of recommendations of CEC with regard to;- 1. Categorization; 2. Reclamation and Rehabilitation (R&R) Plans; 3. Reopening of Categories 'A' and 'B' mines, subject to conditions 4. Closure/ reopening of Category 'C' mines ; and 5. Future course of action in respect of Category 'C' mines, if closure thereof is to be ordered by the court. 7.8.6. Hon'ble Apex Court in para 51 of its order, observed that, IA Nos. 74 and 4 of 2012 filed by Federation of Indian Mineral Industries, a body, that claimed membership of vast number of lessees involved in proceedings, unequivocally accepted findings of survey conducted by joint team and recommendations of CEC, insofar as categorisation of lease, and....
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....s, roads, offices etc beyond the sanctioned lease deed along with guarantee money for implementation of R&R plan. * Compensation to be borne by lessee for carrying out illegal mining outside sanctioned lease area, at the rate of Rs. 5 crore per hectare of land found by joint team to be under illegal mining pit; and, * Compensation for illegal mining by way of overburden dumps road, office etc., outside sanctioned lease area at the rate of Rs. 1 crore per hectare of land found to be under illegal overburden dumps etc., Hon'ble Apex Court directed balance amount, if any, to be reimbursed to respective lessee. 7.8.9. In present appeals, only issue raised for our consideration is in respect of 15% contribution made to SPV for assessment year 2013-14 and 2014-15; and issue in respect of R&R expenses incurred during assessment year 2013 - 14. First of all, we summarise objections of Ld.AO as in respect of SPV expenses as under:- (a) This is one of the objections of the AO that the SPV Expenses is not allowable because it is not compensation but it is penal in nature for contravention of law as observed by him in para 4.3 of the assessment order for AY:2013-14. (b) Second ob....
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....ting of R & R plan, which would be deducted from sale proceeds. This was one of the conditions for resuming mining operations under Category 'B'. We refer to and rely on observations by Hon'ble Supreme Court in case of CIT vs Sitaldas Tirathdas reported in (1961) 41 ITR 367. Hon'ble Supreme Court laying down following principal referred to various rulings that illustrated aspects of diversion of income by overriding title. "These are the cases which have considered the problem from various angles. Some of them appear to have applied the principle correctly and some, not. But we do not propose to examine the correctness of the decisions in the light of the facts in them. In our opinion, the true test is whether the amount sought to be deducted, in truth, never reached the assessee as its income. Obligations, no doubt, there are in every case, but it is the nature of the obligation which is the decisive fact. There is a difference between an amount which a person is obliged to pay out of his income and an amount which by the nature of the obligation cannot be said to be a part of the income of the assessee. Whereby the obligation income is diverted before it reach....
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....ond sanctioned lease area were carried out. Here, we also note that, Hori'ble Supreme Court directed CEC to refund any leftover guarantee money, after completion of implementation of R& R plan, subject to satisfaction of CEC and approval by Hori'ble Supreme Court. For this peculiar reason, amount so contributed towards SPV being 15% of sale proceeds, under Category B, cannot be treated as penal in nature. We, therefore, reject observations of authorities below that, such sum having contributed by assessee fall within ambit of explanation 1 to section 37 (1) of the Act. 7.8.16. The decisions relied upon by Ld. CIT (A) has also been perused by us. We note that those decisions deal with expenses which are in the nature of penalty. In the present situation, contribution towards SPV is a requirement to be incurred to continue its business activities. In our view, these payments in present case do not fall within the category of penalty. Hori'ble Supreme Court has quantified rate for the mass tort, that has occasioned due to illegalities committed in the operation of mines separately. We also note that assessee has suo moto disallowed the payments that fall within the cat....
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....toring committee towards SPV charges claimed as expenditure. As the facts for these issues are identical with that considered by us for assessment year 2012-13, the observation hereinabove are applied mutatis mutandis. We thus hold that the 20%/10% contribution to SPV as the case may be, out of the sale proceeds is an allowable expenditure for year under consideration. Accordingly ground 2-6, 8 raised by assessee stands allowed. 25. We note that Ground 7 raised by assessee does not arise out of the order passed by the Ld.CIT(A) and accordingly the same is dismissed. 26. Nothing has been argued in respect of ground No. 9 raised for year under consideration and the same is dismissed. 27. Ground No. 10 and 11 are general in nature and therefore do not require any adjudication. Assessment year 2014-15 28. We note that identical issue has been raised by assessee for assessment year 2012-13 being grounds 2-6 pertaining to the 20% contribution of sale proceeds retained by monitoring committee towards SPV charges claimed as expenditure. As the facts for these issues are identical with that considered by us for assessment year 2012-13, the observation hereinabove are applied mutatis m....