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2024 (6) TMI 316
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.... 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 Income-tax Appellate Tribunal in appellant's own case. 7. In the facts and circumstan....
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....F 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 Ground No. 11a "Without prejudice to Ground No. 11, if Ground No. 11 is decided against the appellant, then the Honourable ITAT may be pleased to direct the AO to allow the deduction of the provision pay re....
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.... 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 decision, which is perverse ? 8. The order of the Ld. CIT(A)[ to the extent of Grounds 1 to 7 as discussed above] is erroneous in both i.e. law and on facts of the case. 9. The appellant reserves the right to amend, alter, add, delete any ground or grounds of appeal depending upon the facts and c....
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....39;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 - Para14, Page 43 &44 CIT(A)'s Order Para 4.6 to 4.8, Page 6 to 8 Page 51 & 52 4 Accumulated Liquidated Damages Penalty Para 7.34 to Para 7.36,Page 76 to Page 78 of Hon'ble ITAT's Order dated 30 October 2023 Amt (Rs.) 1,24,81,924 Ground No. 4 AO's Order Para 7, Page 8 to 10 CIT(A)'s Order Para 5, Page 8to 10 5 Provision made for Mine Closure Para 10.7 to Para 10.....
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....#39;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 Ground No. 12 9 AO's Order Para 18, Page 52 & 53 Para 12, Page 34 & 35 CIT(A)'s Order Para 16, Page 35 & 36 Page 49 & 50 12 Disallowance of Guest House Expenses Para 38 to Para 41, Page 26 to Page 27 of Hon'ble ITAT's Order dated 06 November 2019 and Para 5.13 to Para 5.15,Page 14 to Page 16 of Hon'ble ITAT's order dated 30 October 2023 Amt (Rs.) 1,61,50,000 Ground No. 14 AO's Order Para 17, Page 47 CIT(A)'sOrder Page 55 & 56 13 Grants to Schools and Institutions Para 63 to Para 67,Page 40 to Page 43 of Hon'ble ITAT's Order dated 06 November2019 Para 13.1 to Para 13.3 of Hon'ble ITAT's order dated 28 Febr....
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....ge 53 to 62 CIT(A)'s Order Para 17, Page 36 to 37 21 Amortization of deferred grant New Issue Amt (Rs.) 47,00,000 Ground No. 12 AO's Order Para 15, Page 44 & 45 CIT(A)'s Order Page 52 to 54 22 Levy of Interest under section 234A of the Act New Issue Amt (Rs.) 10,36,70,850 Ground No. 16 AO's Order - CIT(A)'s Order 57 Additional Grounds filed on 08 December 2023 1 Provision for mine closure Amt (Rs.) 115,81,27,600 107,49,46,600 Additional Ground 5(a) 2 Depreciation on Hospital Building Amt (Rs.) 54,00,000 54,00,000 Additional Ground 7(a) 15(a) 3 Write off / Depreciation of Railway Siding leased out to Aryan Coal Beneficiation (ACB), Spectrum Power and Gujarat State Electricity Board Amt (Rs.) 1,19,00,000 1,12,00,000 Additional Ground 10(a) 8(a) 4 Actuarial Value of Employee Compensation Amt (Rs.) 66,00,000 13,16,00,000 Additional Ground 12(a) 9(a) 5 Differ....
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....sion of Ld. AO while making the impugned addition. For the sake of clarity para 17 of the Assessment Order is extracted as under: 17. Note 28 to the Profit and Loss account revealed that the assessee company had Debited expenses on account of National Coal Wage Agreement X-Provision to the tune of Rs. 417,69,00,000/- and Pay Revision-Executives to the tune of Rs. 17,65,00,000/-. Assessee was asked to provide the jurisdiction of the same. 17.1 The assessee in its reply explained that: "In the audited annual accounts of the company for F. Yr. 2016-17, a sum of Rs. 417.69 crores has been provided as provisions for increase in salary & wages in respect of the unionized employees governed by the National Coal Wage Agreement (NCWA) and a sum of Rs. 17.65 crores for the increase of salaries and other benefits in respect of the executives of the company. After nationalization of the coal industries of the unionized employees salaries and wages and other fringe benefits were regulated by the terms and conditions as formulated under the NCWA which Lad a terms of Jive years from the date of commencement of the agreement. Thus, from the commencement of NCWA I, after every five years....
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.... and discharged at a future date. Further, in the company's own case for the Assessment year 1994/95, the Income Tax Appellate Tribunal, Nagpur Bench in Appeal No. ITA No. 20/NAG/2001 had allowed such provisions pending finalization of the agreement. Therefore, sit is our sincere submissions before your good self that the liabilities provided for in respect of the two classes of employees be allowed as deduction as though they appear as provisions, it is an ascertained and crystallized liability for the relevant assessment year. 17.2 Following the order delivered by honourable ITAT in Assessee's own case for the AY 1994-95 in Appeal no. ITA no. 20/NAG/2001, in which Hon'ble ITAT has deleted the addition made on account of "Interim relief" payable to non-executive employees and has upheld the addition made on account of "Interim relief" payable to executive employees. Hon'ble ITAT reasoned that:- "The provision of Rs 3266.00 lacs made by the assessee company in respect of interim relief payable to the employees governed by the National Coal Wage Agreement was based on a letter bearing NO. CIL.C-SB-IR-CM587 issued by the holding company i.e. Coal India Ltd on 11....
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....94 on account of interim relief is concerned, the position however, appears to be entirely different inasmuch as the negotiations with the concerned union reached that stage only after the end of the relevant accounting year which is evident from the fact that the letter intimating such settlement was forwarded by Coal India Ltd only on 3/05/1994.Moreover, the further upward revision in the monthly interim relief amount agreed upon by the concerned parties was also intimated by CIL vide its letter dated 28-7-94. It is thus clear that during the relevant accounting year, it was not possible for the assessee company to anticipate the liability to pay interim relief to this class of employees and the liability on this account, therefore cannot be said to have definitely arisen in the relevant previous year. "Although the assessee company provided for this liability on the basis of event occurring after the balance sheet date but before the finalization of accounts in accordance with Accounting Standard (AS) issued by the Institute of Chartered Accountants of India, it is a settled position of law that such accounting treatment given by the assessee company is not decisive or conclu....
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....nt agreed upon by the concerned parties was also intimated by CIL vide its letter dated 28-7-94. It is thus clear that during the relevant accounting year, it was not possible for the assessee company to anticipate the liability to pay interim relief to this class of employees and the liability on this account, therefore cannot be said to have definitely arisen in the relevant previous year. "'Although the assessee company provided for this liability' on the basis of event occurring after the balance sheet dale but before the finalization of accounts in accordance with Accounting Standard (AS) 4 issued by the Institute of Chartered Accountants of India, it is a settled position of law that such accounting treatment given by the assessee company is not decisive or conclusive to determine a question of admissibility of a particular deduction for the purpose of Income Tax and the same has 10 be decided in accordance with the relevant provisions of the Act and not in accordance with the accounting practice. " "Rs 62.49 lacs payable 10 the employees governed by executives rules was not allowable in the said year". Coming to alternate plea of the appellant company that t....
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....(2020) 115 taxman.com 166 (Delhi) has held that "Provision made by assessee PSU for revision of pay of its employee as per recommendation of committee appointed by government was to be allowed as business expenditure." Ld. AR further drew our attention to para 7, 11, 13, 14 & 19 of the order by Hon'ble Delhi High Court. For clarity on the issue the relevant para's from the said order are extracted as under: QUESTION I & II: 7. The appellant claimed deduction of Rs. 1.60 crores on account of the provision for revision of pay in the books of account. The deduction was made in light of the Pay Revision Committee (hereinafter referred to as "PRC") appointed by the Government of India. The AO disallowed the claim, holding that the expenditure was purely a provision against unascertained liability and could not be claimed as expenditure for Assessment Year 2007-08. The relevant findings of the AO on this issue are as under: 'Neither, the said liability accrued nor crystallized during the year under consideration. As per the recommendations of the central Sixth Pay Commission/Ministry of Finance etc. It was decided that 60% of arrears worked out on the implementation of Sixth ....
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....t of which is pending. Ad hoc provision of Rs. 1.60 crores has been made in the accounts for the financial year 2006-07. Submitted for approval please. Sd/- ACF(S) 13-10-2007" This note was finally approved on 15-10-2007. The accounts for the year under consideration are from 1-4-2006 to 31-3-2007 and are closed on 31-3-2007. That the deduction claimed is on account of creation of provision. Additionally, the ''Provision'' is an ''an ad hoc provision". Neither the liability for revision of pay accrued during the year before 31-3-2007 nor crystallized before 31-3-2007. Additionally, no payment of the same was made before 31-3-2007. All proposals were made in the month of October 2007 after the close of the accounting year. As per the recommendations of the Central Sixth Pay Commission the assessee should have claimed such expenses of revised pay of its employees only in the assessment year 2009-10 and 2010-11. Hence, the provision rather ad hoc provision of Rs. 1,60,00,000/-is hereby disallowed'. [Emphasis Supplied] 11. We have given our due consideration to the submissions advanced by both the learned counsels on the aforesaid issue. Before ex....
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....n made in the accounts for the financial year 2006-07. Submitted for approval please. Sd/- ACF(S) 13-10-2007" 13. Having noted the facts of the case, we now turn to the judgments relied upon by the parties. Appellant has relied upon Bharat Heavy Electrical Ltd (supra), which is squarely applicable to the facts of the present case. The relevant paragraph is reproduced as under: "Question No.1 - Whether the provisions made claiming deduction for wage revision, allowed by the Tribunal was justified in the circumstances of the case? The assessee, BHEL, had during the relevant assessment years 1988-89 and 1998- 99 claimed, in its schedule in the balance sheet, addition of its liability on account of wage revision. Accordingly, a provision for wage revision was factored. The assessee submitted that even though the wage revision proposals had been submitted to the competent bodies or authorities, the liability was certain and ascertained on the basis of its past experience and after taking into consideration the previous Pay Commission's reports, union demands and the ability of the employer to bear the additional burden. These provisions also took into account factors such as pr....
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....date. What should be certain is the incurring of the liability. It should also be capable of being estimated with reasonable certainty though the actual quantification may not be possible. If these requirements are satisfied, the liability is not a contingent one. The liability is in praesenti though it will be discharged at a future date. It does not make any difference if the future date on which the liability shall have to be discharged is not certain." 19. The position in the current case is that the liability had already arisen with certainty. The committee was constituted for the purpose of wage revision. That the wages would be revised was a foregone conclusion. Merely because the making of the report and implementation thereof took time, it could not be said that there was no basis for making the provision. In view of the above, we hold that the ITAT and CIT(A) have fell in error by disallowing the expenditure of Rs. 1.60 crores on account of anticipated pay revision in Assessment Year 2007-08. The first and second questions of law are thus answered in favour of the appellant. Accordingly, it is directed that the revenue shall now pass consequential orders accepting the ....
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....cumstances, merely because the communication w.r.t. implementation of pay revision has took time, the same could not be construed as there was no basis for making provision. Accordingly, the provision made by the assessee is allowed in terms of our aforesaid observations. Resultantly, ground no. 11 of the assessee is allowed. 16. Since, ground no. 11 of the assessee is decided in favour of the assessee the additional ground no. 11a alternatively raised by the assessee under the presumption that in case ground no. 11 decided against the appellant then the liability may be allowed in the year in which it is paid, become infructuous and, therefore, stands dismissed. 17. Ground no. 15 & 16 are general and academic in nature, therefore, in absence of any specific argument advanced by the assessee, no separate adjudication of the same is required. In the result, ITA No.12/RPR/2020 of the assessee is partly allowed for statistical purposed in terms of our aforesaid observations. 18. Now, we shall be taking up the remaining grounds in ITA NO. 51/RPR/2020 of the revenue , for the AY 2017-18, which are not covered by any existing decision, thus, the same are argued, deliberated upon and....
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....the facts and in the circumstances of the case, the Ld. CIT(A), NFAC erred in not following the decision of the Hon'ble 'ITAT in own case in the earlier years deleting the disallowance made on this issue without recording any change in facts during the year under consideration. 2,56,80,73,933 4. (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 grants given to school and institutions 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. (b) 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 said expenditure was incurred for employees' welfare i.e. incurred for the benefit of the children of the employees, who resides in the nearby areas. (c) That on the facts and in the circumstances of the case, the Ld. CIT(A), NFAC erred in not following the decision of the Hon'ble ITAT in own case in the earlier years deleting the disallowance made on th....
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.... allowed by the Hon'ble ITAT in the Appellant's own case in earlier years. 7. That on the facts and in the circumstances of the case, the Ld. CIT(A), NFAC erred in confirming the disallowance of 25% of total expenditure incurred on coal transportation through ex-servicemen (ESM) transport companies on an ad- hoc basis without appreciating the fact that said expenditure is incurred wholly and exclusively for the business expenditure of the Appellant. 30,16,50,051 8. That on the facts and in the circumstances of the case, the Ld. CIT(A), NFAC erred in confirming the disallowance of depreciation on railway siding leased to M/S Aryan Coal Beneficiation Pvt. Ltd, M/s Gujarat State Electricity Board and M/s Spectrum Coal & Power Limited without appreciating the fact that the said asset is owned by the appellant company when lease rent received by the appellant is its business income because the Appellant has commercially exploited these assets. 38,76,096 9. That on the facts and in the circumstances of the case, the Ld. CIT(A), NFAC erred in confirming the disallowance of provision made for compensation paid to employees- based on actuarial valuation without a appreciating ....
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....llant. 18,68,832 16. (a) That on the facts and in the circumstances of the case, the Ld. AO erred in computing the interest u/s 234A of the Act for 11 months without appreciating the fact that the delay in filing the return was only 1 month from the original due date prior to extension. 10,36,70,850 (b) That on the facts and in the circumstances of the case, the Ld. AO may be directed to recompute the interest u/s 234A of the Act to give effect to directions of order of Hon'ble ITAT. 17. That the appellant craves leave to add and/or alter, amend, modify or rescind the grounds hereinabove before or at the hearing of this appeal. ADDITIONAL GROUNDS OF APPEAL : ITA No.58/RPR/2023 Ground No. 8a "Without prejudice to Ground No. 8, if Ground No. 8 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 Railway Sidings leased to Aryan Coal Beneficiation Private Limited, Spectrum Power and Coal Limited and Gujarat State Electricity Board. Ground No. 9a "Without prejudice to Ground No. 9, if Ground No. 9 is decided against the appellant, then ....
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....ssessee was asked to provide documentary evidence and satisfactory explanation regarding the said expenses. The assessee submitted his reply furnished item of expenditure was incurred for business purpose. Subsidy for Sand Stowing & Protective Works (Rs 47.86 crores) During FY 2017-18, the company has credited an amount of Rs. 47.86 crores in the profit and loss account under the head 'Other Operating Revenue' on account of 'Subsidy for Sand Stowing & Protective Works' [Refer Note 24 Revenue from Operations]. During FY 2016-17, the company was granted a subsidy of Rs 2.32 Crores by Coal Controller Development Authority ('CCDA') on account of capital nature works. The same has been recognized as deferred income and is amortized in the ratio of depreciation of the assets funded therefrom. Out of the above amount of Rs. 47.86 crores credited to the profit and loss account during FY 2017-18, Rs. 0.47 crores pertains to amortisation of subsidy granted by CCDA during FY 2016-17 [Refer Note 22 - Deferred Income and point 5(a) of Note 38 - Additional Notes to the Financial Statements]. Since the entire amount of Rs. 2.32 crores had already been offered to tax in AY ....
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....grant expenses is disallowed and added back to the total income of the assessee for the year under consideration by the AO is confirmed and appeal on this ground is dismissed. 27. On perusal of the order of Ld. CIT(A) w.r.t. aforesaid query, assessee's submission and decision of the revenue authorities, it is transpired that the query raised by Ld. AO was answered by the assessee however, the same was disregarded by the Ld. AO by stating that the assessee has not furnished the exact basis and computation for its claim of such expense, no further enquiry or explanation have been called. Such observation of the Ld. AO is summarily accepted by Ld. CIT(A) without any further enquiry or specific observation. 28. Ld. AR of the assessee submitted that since the assessee has tried to submit the information to the best of its knowledge and belief however, in case there was any further clarification required Ld. AO should have advised the assessee to furnish the same, but no such intimation was given to the assessee. Ld. CIT(A) also reiterated the facts from the order of Ld. AO without any further specific observation. Ld. AR, therefore, has submitted that the issue may be restored back t....