TaxTMI 
TaxTMI 
2024 (6) TMI 316
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....t granting / allowing amortization of expenses in the form of depreciation as allowed by the jurisdictional bench of Hon'ble Income-tax Appellate Tribunal in appellant's own case. 3. On the fact and circumstances of the case and in law, the additional ground taken up before the learned CIT (A) on 28.11.2019 has not been taken up for adjudication. 4. In the facts and circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) has erred in confirming the disallowance of Rs. 1,24,81,924/- relating to Liquidated Damages which in fact is a capital receipt. 5. In the facts and circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) has erred in confirming the disallowance of Rs. 115,81,27,600/- made on account of Provision for Mine Closure Expenditure which is an accrued liability. 6. In the facts and circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) has erred in confirming the disallowance of Rs. 1198,65,00,000/- made on account of expenditure on Overburden Removal Adjustment without following the decision of Jurisdictional Bench of Hon'ble Incom....
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.... in law and on facts. 16. The Appellant reserves right to add, alter, amend, omit, and withdraw any of the grounds of appeal. ADDITIONAL GROUNDS OF APPEAL : ITA No.12/RPR/2020 (Assessee's Appeal for A.Y.2017-2018) Ground No. 5a "Without prejudice to Ground No.5, if Ground No. 5 is decided against the appellant, then the Honourable ITAT may be pleased to direct the AO to allow the deduction of mine closure expenses in the year of its actual payment" Ground No. 7a "Without prejudice to Ground No. 7, if Ground No. 7 is decided against the appellant, then the Honourable ITAT may be pleased to direct the AO to grant consequential relief of 30% standard deduction from "Income from House Property" from Apollo Hospital Building. Ground No. 10a "Without prejudice to Ground No. 10, if Ground No. 10 is decided against the appellant, then the Honourable ITA T may be pleased to direct the AO to grant consequential relief of 30% standard deduction from "Income from House Property" from Railway Sidings leased to Aryan Coal Beneficiation Private Limited, Spectrum Power and Coal Limited and Gujarat State Electricity Board ....
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.... justified in deleting the addition of Rs. 1,00,000/- made by the A.O. on account Land Crop compensation ? 5. Whether on the facts and circumstance of the case and on the points of the law, the Ld. CIT(A) was justified in restricting the addition of Rs. 187,00,72,955/- to Rs. 93,50,36,478/- made by the AO on account of expenditure incurred on coal transportation without properly appreciating the facts of the case that the assessee company could not justify the rate at which transportation expenses are claimed by the companies run by the Ex-service men vis-å-vis the prevalent market rate of such services and also accordingly could not establish the commercial expediency of such expenditure ? 6. Whether on the facts and circumstance of the case and on the points of the law, the Ld. CIT(A) was justified in allowing credit of TDS of Rs. 32,82,188/- to the assessee. 7. Whether on the facts and circumstance of the case and on the points of the law, the Ld. CIT(A) has erred by giving a finding which is contrary to the evidence on the record, as the Ld. CIT(A) has accepted the submission of the assessee which is factually incorrect, thereby rendering the de....
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....'ble ITAT's order dated 30 October 2023 AO's Order Para 5, Page 2& 3 Amount recovered from the bills of explosive suppliers CIT(A)'s Order Para 3, Page 2& 3 2 Land Compensation & Rehabilitation Expenses Para 5 to Para 11, Page5 to Page 19 of Hon'ble ITAT's Order dated 10 May 2019 Para 24, Page 15 to Page 21 of Hon'ble ITAT's order dated 06 November 2019 and Para 5.10 to Para 5.12, Page 9 to Page 14 of Hon'ble ITAT's order dated 30 October 2023 Amt (Rs.) 308,24,00,000 Ground No. 2 AO's Order Para 6, Page 3 to 8 CIT(A)'s Order Para 4, Page 4to 6 3 Amortization of Land Rehabilitation Para 12 to Para 14,Page 19 to Page 21 of Hon'ble ITAT's Order dated 10 May 2019 Para 27 to Para 29, Page 22 to Page 24 of Hon'ble ITAT's order dated 06 November 2019 and Para 5.5 to Para 5.9,Page 5 to Page 9 of Hon'ble ITAT's order dated 30 October 2023 Amt (Rs.) - 106,90,00,000 Ground No. 3 11 AO's Order - ....
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....9;ble ITAT's Order dated 10 May 2019 Para 7 to Para 11, Page 7 to Page 10 of Hon'ble ITAT's order dated 06 November 2019 and Para 5.19 to Para 5.21,Page 20 to Page 23 of Hon'ble ITAT's order dated 30 October 2023 Amt (Rs.) 935,03,64,78 935,03,64,78 87,16,19,425 Ground No. 9 5 7 AO's Order Para 15, Page 42 to 45 Para 15, Page 42 to 45 Para 10, Page 28 to 31 CIT(A)'s Order Para 13, Page 25 to 30 Para 13, Page 25 to 30 Page 46 to 48 10 Write off / Depreciation of Railway Siding leased out to Aryan Coal Beneficiation (ACB), Spectrum Power and Gujarat State Electricity Board Para 14.6 to Para 14.9, Page 160 to Page 163 of Hon'ble ITAT's Order dated 30 October 2023 Amt (Rs.) 1,19,00,000 1,12,00,000 Ground No. 10 8 AO's Order Para 16, Page 45 to 48 Para 11, Page 31 to 34 CIT(A)'s Order Para 14, Page 30 & 31 Page 48 & 49 11 Actuarial Valuation of Employee Compensation Para 7.3 to Para 7.12,Page 45 to 56 of Hon'ble ITAT's Order dated 30 October 2023 Amt (Rs.) 66,00,000 13,16,00,000....
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.... Page 50 & 51 17 Difference of actual funding of gratuity and actuarial valuation of gratuity New Issue Amt (Rs.) 51,09,00,000 Ground No. 13 AO's Order - CIT(A)'s Order Para 18, Page 37 & 38 18 Inflating the income in computation Not Pressed as the AO has granted relief Amt (Rs.) 1,36,00,000 Ground No. 14 AO's Order - CIT(A)'s Order Para 19, Page 38 & 39 19 Impact of Pay Revision of Executives New Issue Amt (Rs.) 17,65,00,000 Ground No. 11 AO's Order Para 17, Page 48 to 51 CIT(A)'s Order Para 15, Page 32 to 35 20 Non grant of TDS credit due to income mismatch Infructuous as AO has granted relief u/s 154 Amt (Rs.) 32,82,188 Ground No. 6 AO's Order Para 19, Page 53 to 62 CIT(A)'s Order Para 17, Pag....
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.... hereinabove. Additional ground no. 5a, 7a, 10a & 12a of the ITA 12/RPR/2020 of the assessee raised are alternate prayers which are also covered by our observations in the order relied upon by the Ld. AR in ITA No. 201/BIL/2012 & Ors. Dated 30.10.2023, thus, the same are also disposed-off accordingly. 7. Resultantly, ground no. 1, 2,3,4,5,6,7,8,9,10 & 12 and Additional ground no. 5a, 7a, 10a & 12a of the ITA 12/RPR/2020 of the assessee and ground no. 1,2,3,4,& 5 of the ITA 51/RPR/2020 of the department, since the same are squarely covered and thus, are disposed-off in terms of our observations in ITA No. 201/BIL/2012 & Ors. Dated 30.10.2023. Now, we are adverting to the remaining grounds in ITA NO. 12/RPR/2020, for the AY 2017-18, which are not covered by any existing decision, thus, the same are argued, deliberated upon and discussed in the ensuing para's: 8. Ground no. 11 & and 11a: Impact of pay revision of executives Ld. AR on behalf of the assessee submitted that the assessee company had debited an amount of Rs. 17.65 crore in its P& L account on account of pay revision of executives. It is the submissions that such provision was made on account of increase in the ....
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.... an end on 31.12.2016. Therefore, in the current accounting period the company was required to pay three months revised and increased salary commencing from January 2017 to March 2017. Accordingly, and considering minimum rise of the scale, a sum of Rs. 17,65 crores had been provided for increase in Executive salaries. Though booked under the account head of "provisions ", this was an ascertained and determined liability 10 be paid at a later date. In this regard the decision of Hon'ble Bombay High Court in the case of CIT vs. United Motors India Ltd. (181 ITR 347) be perused wherein the assessee had made a provision for additional liability on account of change in the service condition of its workmen pending negotiations with the Trade Unions which was finalized much after the end of the year. The Court ruled the allowability of such provisions made in respect of the impending liability that arose on account of the revision of the service conditions of its workmen in the manner of a prudent businessman who knew that the services conditions would have to be better; the liability was rightly recognized as having accrued. Also, in the case o/ Bharat Earth Movers....
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..../31075/20 has been received by the assessee company from its holding company i.e. CIL which Clearly quantifies the amount of liability to be incurred and payable by the assessee company in case of non-executive employees. CIL has asked the assessee company to have an estimated lump sum provision @ Rs 8000/- per employee (non-executive) per month, considering total impact of increase in all elements of salary & wages (including the employer's PF contribution), other employee benefits and all superannuation benefits like gratuity etc. Assessee Company has followed the norms provided by the holding company based on the above-mentioned communication. 17.4 However, regarding provision of Executive pay revision (w,e.f. 01.01.2017), communication from the holding company i.e. CIL to the assessee company has been received after the end of tile relevant financial year. CIL's communication vide letter no. CIL/C-3A/31075/200 has been dated 18.04.2017, which is outside the ambit of the FY 2016-17. Facts of the issue are similar to the facts of the issue dealt by the honourable ITAT in its order in Assessee's own case for the AY 1994-95 in Appeal No. ITA No. 20/NAG/2001, in....
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....e issue is decided against the assessee. The relevant portion of the decision by Ld. CIT(A) is extracted here under for completeness of the fact: 15.3 I have considered the grounds of appeal and observations made by 'the AO and written submissions of the appellant. I am in agreement with the view of the AO who has comprehensively dealt with this issue in the assessment order by referring to the National Coal Wage Agreement and the various communications received by the assessee company from its holding company CIL which has clearly quantified the amount of liability to be incurred mod payable by the assessee company in the case of non-executive employees. The AO has correctly relied upon the order of the Hon'ble Nagpur ITAT on the issue of provisions made for executives' pay revision in which the Hon'ble Nagpur Tribunal in ITA No.20/NAG/2001 held as under;- "So far as the provision of Rs 62.49 lacs made in respect of employees covered by the executive rules for the period from 1-1-92 to 31-3-94 017 recount of interim relief is concerned, the position however, appears to be entirely different inasmuch as the negotiations with the concerned union rea....
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....e to non-executives employees and has upheld the decision made on account of payable to executives employees. It is further submitted by the Ld. AR that the basis for sustaining the disallowance by Ld. Revenue authorities was that the tribunal has held that the letter regarding the crystallization of liability has been received in the relevant accounting year and therefore, the deduction was admissible to the assessee in respect of the said liability w.r.t. non-executives employees. Tribunal has further observed that I regarding provision of executive pay revision communication from the holding company i.e., coal Indian ltd. to the assessee company has been received after the end of the relevant financial year 1993-94 i.e., on 03.05.1994 and also further communication dated 28.07.1994, accordingly, it is observed that in absence of information about pay revision, it is not possible for the assessee company to anticipate the liability to pay interim relief the concerned employees and, therefore, it cannot be said that the liability have definitely arisen in the relevant previous year. Which such observations the tribunal has denied the claim of assessee by disallowing the provision ....
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....008 beyond the close of the instant financial year relevant to A. Y. 2007-08 and accordingly, the provision of such revision of pay amounting to Rs. 1,60,00,000;- is unascertained liability which is not eligible for deduction for the year under consideration. Even from the documents filed during fresh proceedings along with its reply dated 30-11-2012 in the form of a note marked as annexure-III and further marked as ''Finance Wing;" with the subject: Provision against pay revision of Executives, clearly states that ''during discussions regarding Annual Account for the year 2006-07 on 10-10-2007 in CMD's Chamber when DF was also present, it was decided that suitable provision on account of pay revision of Executives w.e.f. 01-1-2007 should also be made in the Annual accounts for the year 2006-07. Accordingly, an ad hoc provision of Rs. 1.60 crores is proposed to be made in the accounts for the period of three months for executives only from 01-1-2007 to 31-3-2007. On the back side of the said note it is mentioned as under:- Note No. Existing Note Suggested Note II (b) The Pay Revision of Public Sector executives was due w.e.f. 01-1-2007 an....
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.... January 2007, since the effective date of implementation was not known. The report of the PRC was implemented later in September, 2008; nevertheless, this would not render the expenditure to become "unascertained liability", making it ineligible for deduction for the year under consideration i.e. 2007-08. The appellant has placed on record a note of the Finance Wing relating to aforesaid provision which reads as under: "Finance Wing" with the subject: Provision against pay revision of Executives, clearly states that "during discussions regarding Annual Account for the year 2006-07 on 10-10-2007 in CMD 's Chamber when DF was also present, it was decided that suitable provision on account of pay revision of Executives w.e.f. 01-1-2007 should also be made in the Annual accounts for the year 2006-07. Accordingly, an ad hoc provision of Rs. 1.60 crores is proposed to be made in the accounts for the period of three months for executives only from 01-1-2007 to 31-3-2007. On the back side of the said note it is mentioned as under:- Note No. Existing Note Suggested Note II (b) The Pay Revision of Public Sector executives was due w.e.f. 01-1-2007 and a pay revisi....
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....ence, interim pay commissions of govt. employees, available pay commission reports of public sector employees, union demands and other relevant factors required for a scientific computation. Obviously, when one wage agreement comes to an end and other is executed, there would be a passage of time, but the new wage agreement would come into effect from the end of the earlier wage agreement. This being so, the liability is certain in the assessee's case though the quantum of such liability is variable and it is further noticed that the assessee has categorically admitted that the provision as done is invariable short of the final agreement and the difference as ultimately emerging are always booked as expenses in the year in which the payment is made. This being so, we are of the view that the provisions made on account of wage revision is not a contingent liability and is allowable in the year of making such provisions made. In the circumstances, this issue is held in favour of the assessee and the addition on this account stands deleted." [Emphasis Supplied] 14. In Bharat Earth Movers (supra), the Supreme Court has held that it is not the date of signing of th....
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....rd and the judicial pronouncements placed before us. In the present case the AO and Ld. CIT(A) has relied upon the judgment of ITAT in assessee's own case wherein the issue in hand has been decided against the assessee. The assessment order in the present case was passed on 17.03.2019 & the appellate order by Ld. CIT(A) have been completed on 05.12.2019. The order of the Hon'ble Delhi High Court in the case of Housing and Urban Development Corporation Ltd. (supra) was passed on 06.02.2020, accordingly, both the revenue authorities at the time of deciding the issue were not having the availability of principle of law decided by Hon'ble Delhi High Court on the identical issue subsequently, so, their decision cannot be held as erroneous. However, since now the position of on the issue is squarely covered by the order of Hon'ble Delhi High Court, we cannot subscribe to the decisions of the revenue authorities, thus, respectful following the judgment of Hon'ble Delhi Court having similar facts, are of the considered view that the provision of Rs. 17.65 crore made by the assessee company was required to effect the pay revision from Jan 17 to March 17 for executives' salaries and fringe b....
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....d in this respect becomes infructuous and, therefore, no further adjudication is required. Ld. CIT DR also have fairly agreed to the contention of the Ld. AR, thus, the ground no. 6 of the revenue is dismissed. 20. Ground no. 7, 8 & 9 are general and academic in nature, therefore, in absence of any specific argument advanced by the revenue, no separate adjudication of the same is required. In the result, ITA No.51/RPR/2020 of the revenue is partly allowed for statistical purposed in terms of our aforesaid observations. 21. ITA No.58/RPR/2023 (Assessee's Appeal for A.Y.2018-2019) 1. That on the facts and in the circumstances of the case, the Learned Assessing Officer ('Ld. AO') erred in assessing income at INR 60,47,74,24,430 under normal provisions of the Income Tax Act, 1961 ('Act') as against returned income of INR 46,57,57,57,290. 2. That on the facts and in the circumstances of the case, the Learned Commissioner of Income Tax (Appeals), National Faceless Assessment Centre ['Ld. CIT(A), NFAC'] erred in confirming the disallowance of the provision on mine closure without appreciating the fact that the said provision is an ascerta....
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....its obligation under the National Coal Wage Agreement in this regard. (c) That on the facts and in the circumstances of the case, the Ld. CIT(A), NFAC erred in confirming the disallowance without appreciating the fact that major portion of the expenditure was incurred for common areas of township, hence, was incurred for the purposes of business and a very small percentage is incurred for the employees of the company which is subsequently recovered from them. (d) That on the facts and in the circumstances of the case, the Ld. CIT(A), NFAC failed in appreciating that even if such expenditure was to be treated as perquisite, it could be taxed in the hands of each recipient employee, but the entire expenditure is a business expenditure in the hands of the Appellant. 6. (a) That on the facts and in the circumstances of the case, the Ld. CIT(A), NFAC erred in confirming the disallowance of expenditure incurred on environment and tree plantations without appreciating the fact that the said expenditure was allowed in the Appellant's own case in earlier years by the Ld. CIT(A) thereby not following the principle of consistency. 21,54,41,824 (b) That ....
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....isallowance on account of amortization of leased land compensation expenses without appreciating the fact that the Hon'ble ITAT in the Appellant's own case has allowed the said expenditure to be claimed in the form of amortization over the period of lease. 36,99,59,520 12. That on the facts and in the circumstances of the case, the Ld. CIT(A), NFAC erred in confirming the disallowance relating to amortization of deferred grant without appreciating the fact the Appellant already offered to tax the subsidy amount of INR 2.32 crores in the earlier year, and INR 0.47 crores pertained to amortization of the subsidy thus, the disallowance made by the learned AO has resulted into double taxation.16,26,576 13. That on the facts and in the circumstances of the case, the Ld. CIT(A), NFAC erred in confirming the disallowance of expenditure incurred on land crop compensation paid to farmers without appreciating the fact that said expenditure is revenue in nature and is incurred for the purpose of business and is recurring in nature. 5,53,728 14. That on the facts and in the circumstances of the case, the Ld. CIT(A), NFAC erred in confirming the disallowance o....
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....11 of AY 2017-18 (ITA 12/RPR/2020) is decided against the appellant, then the Honourable ITAT may be pleased to direct the AO to allow the deduction of provision of the pay revision of executives, in the present year, on the basis of payment" 22. In terms of our aforesaid observations in ITA no. 12/RPR/2020, wherein certain grounds were disposed-off as covered by order of ITAT Raipur, in assessee's own case vide ITA no. 201/BIL/2001 dated 30.10.2023, for which details are available in the chart submitted by the Ld. AR, which is extracted hereinabove (supra). Accordingly, ground no. 2,3,4,5,6,7, 8,9,10, 11,13,14 & 15 and additional ground no 8a, 9a & 15a of ITA 58/RPR/2023 are covered (refer column 3 of the chart) having identical issues, thus, are disposed-off in terms of observations in ITA no. 201/BIL/2001 dated 30.10.2023. 23. Ground No 1 and 17 are general / academic in nature thus are not adjudicated separately. 24. Additional Ground No 18 is disposed-off in terms of our aforesaid observations in ITA 12/RPR/2020 in ground No 11 & 11a in the present order, therefore, our decision in the said ground shall be applicable in additional ground no. 18 of the ITA No. 58/RPR/2....
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....and Stowing & Protective Works. [Refer Note 24 - Revenue from Operations and point 5(a) of Note 38 - Additional Notes to Financial Statements]. The same is the subsidy received from the Coal Controller for building of roads and other purposes against the stowing excise duty paid by SECL. There is no specific expenditure on assets not belonging to the company which are debited by the company as a separate line item in the Profit & Loss Account. The said expenditure is in the nature of repairs carried out by the company in respect of existing State Government roads plying through the various coalfields of the company. The State Governments does not repair these roads in proper time causing damage to the roads and hence movement of coal traffic transportation of materials is seriously affected because of damaged roads. In this context, the expenditure is incurred by the company even though the roads are not belonging to the company. In connection with road development, the company makes a claim before the CCDA under section 9 of the Coal Mines (Conservation & Development) Act, 1974 for providing financial assistance. On the basis of claim received from the company, CCDA provides subsi....
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....ation of facts and to re-adjudicate on merits, which is not objected by the LD. CIT DR. We, therefore, under such facts and circumstances in all fairness following the principle of natural justice are of the view that since there are other issues which are restored back for re-adjudication to the files of AO, the issue regarding amortization of deferred grant wherein the claim of he assessee was denied only on the basis of assumption that assessee have not submitted plausible explanations without pursuing with the assessee with further enquiries, should also be restored back to the files of AO to verify the fact and re-adjudicate the same. Needless to say, reasonable opportunity of being heard should be allowed to the assessee. In the result ground no. 12 of the assessee's appeal for AY 2018-19 is partly allowed for statistical purposes. 31. Ground no. 16: Leavy of interest u/s 234A of the Act The issues are with regard to levy of interest u/s. 234A of the Act is consequential in nature, which needs to be calculated and charged in accordance with the provisions of law. The AO is directed to work out the amount of interest, accordingly. 32. In the result, ITA No.58/RPR/2023 of....