2023 (1) TMI 715

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....NPV) being the charges paid by the assessee to the Government for restoration mining area to its original status was liable to be treated as capital expenditure as revenue expenditure claimed by the assessee; ii) ld. Pr.CIT was of the view that there was difference between the Form H1 returned filed before the Dy. Director of Mines in respect of valuation of the ores mined and value as shown in the profit and loss account of the assessee and the difference was liable to be brought to tax and this had not been examined by the AO; iii) the closing stock of the opening stock in respect of certain iron ore fines had been shown at the same figure of Rs.5,69,13,648/- and this had not been examined by the AO; and iv) the closing stock of the iron ore was not disclosed by the assessee and consequently the ld. Pr.CIT had directed that the same was to be valued and incorporated in the assessment. 3. It was submitted by the ld. AR in respect of the issue of Net Present Value (NPV), the issue had been considered by the coordinate bench of this Tribunal in assessee's own case for the assessment years 2007-2008 & 2008-2009 in ITA Nos.201&202/CTK/2012, dated 11.05.2012, wherein in para 6, ....

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....herefore was an expenditure on the direction of the Government and not because the assessee derived a long term benefit in doing so. There is no rule of thumb for determining whether the particular expenditure is capital or revenue when the assessee in order to continue enjoying the lease right has to abide by the Government Rules and Regulations as claimed by the DFO. The reason for such compensation is arising out the fact that the assessee has to carry out the deforestation on the lease hold land for making suitable for mining. In the process, the assessee incurs development cost for carrying out the long term mining and therefore, is furthering the cost of having incurred the revenue expenditure being the lease hold rights. We are also concerned on the issue on the premise that over burden charges paid for by the coal miners have been held to be revenue in nature when the coal excavated below the surface is the leasing right which cannot be isolated when overburden charges have to be necessarily incurred first. Unless the surface is scratched the coal could not excavated. Similarly a compensation paid for deforestation for carrying out the mining activities cannot be by any str....

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....year, being the assessment year 2014-2015, this issue was the subject matter of revision u/s.263 of the Act and the same was upheld by the coordinate bench of this Tribunal in ITA No.168/CTK/2019, dated 28.01.2022. It was the submission that in the consequential order the AO vide order dated 27.12.2019 had accepted the claim of the assessee and no addition had been made. It was the submission that the issue was to reconcile the difference between the sales turnover disclosed in its profit and loss account and the Form H1. It was the submission that this method has been consistently followed by the assessee and no deviation has been done by the assessee nor pointed out by the AO. It was the submission that as the reconciliation has been done and clarified for the assessment year 2014-2015 and similar method is being followed consistently, the revision now proposed of this issue is only for verification, which is not permissible in a revisionary proceeding. 8. In reply, ld. CIT-DR submitted that the consequential order for the assessment year 2014-2015 passed by the AO on 27.12.2019 was again a non-speaking order and the same could not be considered. It was the submission that the c....

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....n and only difference could have been brought to tax. This would in effect make adjustment to the immediately succeeding assessment year insofar as the closing stock would become the opening stock of the immediately succeeding year. It was submitted by the ld. AR that the ld. Pr.CIT has not directed the valuation of the opening stock nor the necessary adjustment to be done thereto. It was the submission that this is nothing but shifting the profits from the subsequent year to the current year only. It was the submission that this would only result in the shifting of the profit and the tax rate being the same the consequential adjustment would take place in the subsequent year, the variation if at all, would be the interest leviable u/s.234B & 234C of the Act. It was the submission that the method of accounting followed by the assessee is consistent and such method should not be tampered with unless there is a violation of accounting principles. 11. In reply, the ld.CIT-DR submitted that he had no objection if the Tribunal directed the opening stock to be valued and necessary adjustment to be made. It was submitted that the Tribunal did have the powers to give such directions in mo....