TaxTMI 
TaxTMI 
2017 (3) TMI 1870
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.... AO issued notice u/s.153A on 04.02.2013 and the assessee filed its return on 21.03.2013 at the same total income as declared in the original return. Thereafter, the AO made assessment u/s.153A/143(3) of the Act at total income of Rs. 590,83,70,920/-, wherein the AO disallowed (Expenses booked under the head 'Environment & Ecology' in assessee`s profit and loss account), on account of Net Present Value (NPV), of Rs. 12,14,61,050/- on the ground that it was nonrevenue in nature, Rs. 2,30,271/- by invoking Section 2(24)(x) read with section 36(1)(va), Rs. 1,74,827 by invoking section 36(1) (ii) and Rs. 5,37,062/- by applying section 14A, respectively. 3. Aggrieved from the order of AO, the assessee filed an appeal before the ld. CIT(A), who has partly allowed the appeal of the assessee observing the followings :- 7. I have considered the submissions of the Ld. AR and perused the material placed by him on record. I propose to first decide the legal issue raised by ground No.1 that the AO had no jurisdiction while making the search assessment u/s 153A to make additions on items of regular assessment. It is admitted that the assessee filed its original return on 27- 08-2011 ....
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.... existing right to carry on a business, any expenditure made by it during course of business for the purpose of removal of any restriction or obstruction or disability would be on revenue account, provided the expenditure does not acquire any capital asset. Payments made for removal of restriction, obstruction or disability may result in acquiring benefits to the business but that by itself would not acquire any capital asset". The facts of the case clearly suggest that the assessee was compelled to make the payment of NPA to facilitate to continue its mining business and therefore the decision of the Apex Court in the case of Bikaner Gypsums Limited (supra) was squarely applicable in the present case. The Hon'ble Karnataka Bench of the ITAT has expressed similar view in the case of National Aluminium Co Ltd vs DCIT 101 TTJ (CTK) 948 wherein it was held that when a payment is made as per the specific direction of the government of lndia, it would be in the business interest of the assessee to abide by such directions and accordingly the payment being a statutory requirement has to be considered wholly and exclusively for the purposes of the business and has got direct connectio....
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....re profitably while leaving the fixed capital untouched, then the expenditure would be on revenue account even though the advantage may be endured for an indefinite future. The Hon'ble Special Bench of the ITAT, Kolkata has taken similar view in the case of Peerless Securities Limited vs JCIT 93 TTJ 325 (SB). Above all, I find that the issue is squarely covered by the decisions of the jurisdictional ITAT in the case of feegrade & Co (P) Ltd in. ITA No. 934/Kol/2009 and also in assessee's own case for the assessment year 2006-07 in ITA No. 933/Kol/2009. The AO has himself conceded in the impugned order that the jurisdictional ITAT had in the assessment year 2006-07 decided the issue in favour of the assessee. In view of the above, it is to be held that the expenditure of Rs. 12,14,61,050/- incurred by the assessee as NPV is revenue in nature which is allowable as business expenditure u/s 37(1). The addition of Rs. 12,14,61,050/- is deleted. Ground no 3 is allowed. 9. The Ld AR has contended that the disallowance of Rs. 2,30,271/- on account of employees' contribution towards PF by invoking section 2(24)(x) read with section 36(1)(va) was not justified even on the me....
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....l :- (1) In the facts and circumstances of the case, Ld. CIT(A) is erred in treating the NPV as revenue expense whereas its true nature is capital expenditure. (2) In the facts and circumstances and law point of the case, the order of the CIT(A) is erroneous because it relied on the sec. 43B(b) of the Act whereas, the present issue is involved with Sec. 36(1) (va) read with 2(24) (x) of the Act. (3) In the facts and circumstances and law point of the case, Ld. ClT(A) is erred in depending on the case law Vijay Shree Ltd., which is best on another case law Alom Extrusions Ltd., whereas, the issue involved in Alom Extrusions Ltd. is quite different from the present issue. (4) The appellant crave leave to make any addition, alteration, modification etc. of ground or grounds before or in course of appellate proceedings. 5. The first ground raised by the Revenue is whether or not the payment of NPV made by the assessee to carry on its mining activities on forest land is allowable as revenue expenditure. 5.1 Ld DR for the Revenue has vehemently submitted before us that the payment of NPV made by the assessee to carry on its mining activities on f....
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....e under section 37(1) of the Act. Therefore, we uphold the order of ld. CIT(Appeals) by rejecting Ground No. 1 of the appeal taken by the Revenue. 5.4 In the result, the appeal filed by the Revenue on ground No.1, is dismissed. 6. Ground No. 2 and 3 raised by the Revenue relate to addition on account of delayed payment of employee`s contribution to PF of Rs. 2,30,271/-. As per Revenue, the ld CIT (A) erred in relying on the provisions of section 43B (b) of the I.T.Act, whereas the present issue is involved with Section 36(1) (va) read with 2 (24) (x) of the I.T. Act. 6.1 Ld AR for the assessee has submitted before us that as per Tax audit report column No.16(b) Annexure-B, which clarified that employees` contribution to PF Rs. 2,30,271/- for January 2011 was paid on 23.02.2011, that is, next Month. Therefore, the assessee did not commit and default in depositing the PF contribution even as per section 36(1) (va) r.w.s 2(24) (x) of the I.T.Act. In addition to this, the ld AR also relied on the following Judgment: ITAT No.245 of 2011, GA No.2607 of 2011, in case of CIT Vs. M/s Vijay Shree Limited :- "The only issue involved in this appeal is as to whether the del....