TaxTMI 
TaxTMI 
2023 (10) TMI 1397
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....and circumstances of the case, the learned CIT (Appeals) erred in upholding the action of the Assessing Officer in not allowing an amount of Rs. 6193.10 lacs representing expenses incurred on rehabilitation of people/villagers & payments to State Government for obtaining use of land for mining purpose for a limited period. 1(b) That on the facts and circumstances of the case, the learned CIT(Appeals) erred in not appreciating that expenditure represents payments made to State Government for obtaining use of land for mining purpose for a limited period is an allowable revenue expenditure. 1(c) That no the facts and circumstances of the case, the learned CIT (Appeals) erred in not appreciating that expense incurred on rehabilitation of people/villagers is revenue in nature hence allowable. 1(d) Without prejudice to above grounds no. 1(a) to 1(c), the learned CIT(Appeals) should have directed the Assessing Officer to allow income tax depreciation on such expenditure. 2. That on the facts and circumstances of the case, the learned CIT(Appeals) erred in confirming disallowance of Rs. 1.21 lacs on account of guest house expenses. ....
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....enditure on assets not belonging to company (roads etc.) iv) Disallowance of coal transportation expense paid to ESM companies; and v) Provision for leave encashment. 4. The assessee has also taken the additional ground filed on 29.04.2019 as ground No. 1E, which reads as under :- 1(E) Disallowance of Amortization of land rehabilitation. "1E. Without prejudice to our contention that the deduction is a revenue expenditure allowable dully in AY 2009-10, in view of the decision of the Hon'ble ITAT, Cuttack in East India Minerals Limited Vs. JCIT (ITA No. 224/CTK/2012), the assessee company should be permitted to claim the said expenditure over the limited period of the lease of land for mining," 5.1 Brief facts of the case are that the assessee is a Public Sector Undertaking, a domestic company, in which the public are substantially interested. It is wholly owned subsidiary of Coal India Ltd. The assessee company is engaged in the activities relating to the development of mines and extraction of coal from various mines under its control and sale of coal. The assessee had filed its original return of income electronically for the year....
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....ns of the parties and perused the material available on record. Considering the facts and circumstances of the case, we uphold the contention of the learned Counsel for the assessee for the simple reason that the denial of claim of depreciation has been made on misinterpretation of law and the applicability thereof. Explanation to Section 32(1)(ii) leans in favour of the assessee to the extent that it is the actual action of put to use which entitles the assessee to claim depreciation. A straight line method of claiming the writing off of lease hold rights for the period of lease cannot be denied to the assessee for the simple reason it being intangible asset has been written off which pertains to land being a intangible asset. It is nobody's case that the land either belonged to the lessee or to the Government. This simply indicates that a depletion of the land against the payment of premium it was leased has to be claimed after capitalization thereof by the assessee which is for the purpose of its main business. All expenses are incurred for the purpose of business and are incidental to the holding of rights were claimed u/s. 32(1)(ii) being the license to carry out the ....
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....of the revenue has submitted their respective status reports on 07.08.2023, showing status of departmental appeals filed before the Hon'ble Jurisdictional High court. On perusal of the reports furnished, it was revealed that the issue raised by the assessee in the additional ground number '1E' qua "Amortization of Land compensation and rehabilitation expenses", as referred herein above, which was allowed to the assessee for statistical purposes, have been admitted vide Appeal No. TAXC/10/2020 by Hon'ble High court against the order Tribunal in ITA 141/NAG/2001 and is pending for adjudication. Under such circumstances, de hors any specific direction of the Hon'ble High court qua the issue in hand, following the principle of consistency, the observation of the Tribunal in assessee's own case hold good and, thus, needs to be followed. Once the issue will be decided by Hon'ble High court, the same will be binding to be adhered to. 5.8 Our aforesaid view is duly fortified by the order of Co-ordinate Bench of ITAT, Delhi, "D" Bench, in the case of Concentrix CVG Customer Management Group Inc. Vs, DCIT ( International Taxation), IT Appeal Nos. 1086 and 1281 (Delhi) of 2022 dated 0....
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....nt. It has been observed by Their Lordships that "it is only after 1st April, 2000 that computation machinery came to be inserted in s. 48 which deals with mode of computation." Ground No. 1 : Disallowance of Land Compensation & Rehabilitation Expenses 5.10 At the outset, on perusal of the chart provided by the assessee, it is found that with regard to this issue, the ld. AR of the assessee has made a reference to the decision of the coordinate bench of the Tribunal in assessee's own case for A.Y. 1997-1998 in ITA No. 141/NAG/2001, order dated 10.05.2019 and for A.Y. 1998-1999 in ITA No. 187/JAB/2008, order dated 06.11.2019. Ld. CIT-DR also submitted that in both the decisions of the coordinate bench of the Tribunal, the issue has been held against the assessee. Therefore, ld. CIT-DR submitted that following the consistency, this issue also be decided in favour of the revenue. 5.11 We have considered the rival submission and perused the relevant documents on record. On perusal of the order of the coordinate bench of the Tribunal in assessee's own case for A.Y. 1997-1998 in ITA No. 141/NAG/2001, order dated 10.05.2019, in para 11, the Trib....
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.... rehabilitate the villages in order to acquire a right to possession in the leasehold land to facilitate the enjoyment of surface rights in respect of the leasehold land. We are, therefore, of the opinion that the present case is distinguishable on facts from the case of R.J. Trivedi (supra) and, therefore the said decision cannot help the assessees case. Reliance was also placed by the learned counsel for the assessee on the decision of Honble Supreme Court in the case of Gotan Lime Syndicate v. CIT (supra) wherein the payment of royalty was made by the assessee in relation to the raw material, i.e., limestone to be obtained from mines taken on lease and the same was not referable to the acquisition of the mining lease. Considering these facts, the Honble Apex Court found the said expenditure incurred in relation to the raw material, which was going to be excavated or extracted by the assessee, and accordingly treated the same as revenue expenditure. The facts in the present case, however, are different inasmuch as the impugned expenditure has been incurred by the assessee-company to acquire the surface rights as well as the right to possession in respect of the leasehold land for....
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....Similarly, the case of Plantation Corporation of Kerala v. Commr.Agrl. IT (supra) is also distinguishable on the similar line. 11.8. The learned counsel for the assessee has also contended before us that the assessee-company did not acquire any right or interest in respect of relocated villages which were built up and handed over to the villagers and ultimately became the property of the said villagers. In this regard, we may observe that the said expenditure on rehabilitation and relocation of the villages was incurred by the assessee-company to acquire the right to possession in the leasehold land in respect of surface rights obtained by it and the very purpose of incurring the said expenditure was to acquire such rights in the said immovable property. This being so, it cannot be said that the said expenditure did not result in the acquisition of enduring benefits in the capital asset, the rights or interest in the relocated villages notwithstanding. 11.9. In the case of Assam Bengal Cement Co. Ltd. v. CIT (supra) relied upon by the revenue, the Honble Apex Court observed that the aim and object of the expenditure would determine the character of expenditure whe....
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.... obtaining a right of an enduring character which in the case of mining leases is to acquire rights over a land for winning the mineral is of a capital nature. Before us the learned counsel for the assessee has contended that the said decision in the case of R.B. Seth Moolchand Suganchand (supra) has been distinguished by the Honble Apex Court in its subsequent decision in the case of Bikaner Gypsums Ltd. v. CIT (supra). A perusal of the subsequent judgment of the Honble Apex Court, however, reveals that the facts involved in the case of R.B. Seth Moolchand Suganchand (supra) were found to be totally different from the facts involved in the case of Bikaner Gypsums Ltd. inasmuch as in the latter case the expenditure was incurred by the assessee for the removal of a restriction which was obstructing his business operation of mining within a particular area. We have already observed that the existence of village was not obstructing the mining operations of the assessee-company and the expenditure in question was incurred to acquire the right to possession in respect of the leasehold land to facilitate the enjoyment of surface rights. Moreover, as the said acquisition resulted into acc....
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....er order passed in assessee's own case for A.Y. 1997-1998 in ITA No. 141/NAG/2001, order dated 10.05.2019 after observing in para 24. Respectfully following the above observations of the coordinate bench of the Tribunal, we have no reasons to deviate in absence of any further contrary information or decision on the issue but to uphold the findings recorded by the ld. CIT(A) in this regard. Accordingly, we dismiss the Ground No. 1 of the assessee. Ground No. 2 : Disallowance of Guest House Expenses 5.13 The AO during the course of hearing found that though the assessee has filed the details or expenditure station wise in respect of guest houses for Rs. 94.71 lakhs but he could not produce the register/records of occupants. It was also noted that the assessee could not establish with the evidence that its guest houses are being wholly and exclusively used as transit camp for the officers/employees of the assessee company during their tours as claimed in the written submissions. Accordingly, the AO restricted the claim of the assessee company to 50% of the total expenditure. In appeal, the CIT(A) further reduced and restricted the addition made by the AO....
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....he addition to the extent of Rs. 2.10 Lacs as the assessee company has failed to file the requisite details regarding their claim to that extent. Hence, we uphold the findings of the Ld.CIT(A) and the same does not require any interference. Thus, ground No. 4 raised in appeal by the assessee is dismissed. 5.15 Respectfully following the above observations of the coordinate bench of the Tribunal, we do not see any reason to interfere with the findings recorded by the ld. CIT(A). Thus, this ground raised by the assessee is dismissed. Ground No. 3: Disallowance of repair and maintenance expenditure on assets not belonging to company (roads etc.) 5.16 Ld. AR before us submitted that the assessee incurred an aggregate sum of Rs. 954.62 lakhs on assets not belonging to the assessee. The operational area of the assessee stretches across vast landscapes, roads, tunnels, culverts, lights etc. belonging to the State Government pass through such area which are extensively used by the assessee for the purpose of its business. As the roads, etc. are vital to the operations of the assessee, the said roads etc. are maintained by the assessee depending upon requirement....
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....Railway station to mines of the assessee at Sarashatali, West Bengal. Whether this is a business expenditure or not? We find that this issue has been answered by Hon'ble Apex Court in the case of L. H. Sugar Factory & Oils Mills (P) Ltd. Vs. CIT (1980) 125 ITR 293 (SC), wherein the Apex Court at pages 297 and 299 has held as under: "The amount of Rs. 50,000 was contributed by the assessee under the Sugarcane Development Scheme towards meeting the cost of construction of roads in the area around the factory. Now, there can be no doubt that the construction of roads in the area around the factory was considerably advantageous to the business of the assessee, because it facilitated the running of its motor vehicles for transportation of sugarcane so necessary for its manufacturing activity. It is not as if the amount of Rs. 50,000 was contributed by the assessee generally for the purpose of construction of roads in the State of Uttar Pradesh, but it was for the construction of roads in the area around the factory that the contribution was made and it cannot be disputed that if the roads are constructed around the factory area, they would facilitate the transport....
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.... for construction of a road around its factory is an expenditure in the revenue field as it was incurred for the purpose of facilitating the conduct of the business of the assessee and making it more efficient and profitable without the assessee getting an advantage of an enduring benefit to itself. We find that in the present case also, there is no dispute to the fact that the assessee has made the contribution of Rs. 3.57 crores during the relevant previous year to Burdwan Zilla Parishad for the purpose of up-gradation/construction of a link road from its mines at Sarasthali to the Barabani railway station in order to facilitate transportation of coal mined so that the business of the assessee could be conducted more efficiently and profitably. There is also no dispute to the fact that the said road is a public road and belongs to the Burdwan Zilla Parishad and the assessee is not owner of the road. In view of the settled position on the issue, we find that the sum of Rs. 3.57 cr. incurred during the relevant previous year by the asses 'see towards contribution for up-gradation/construction of the link road belonging to the Burdwan Zilla Parishad is allowable as revenue....
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....atures in the facts of the year under consideration and that of the earlier year. However, we are of the view that distinct features are not so glaring which would necessitate as to take a different view than the view taken by us in earlier year. That apart the CIT(A) while deciding the issue has also categorically given a finding in the order that the necessary details were not filed by assessee and this fact has not been controverted by the Ld. AR before us. We find that in order of Tribunal (supra) in paras 107 to 112 had similarly remitted this issue back to the file of Assessing Officer. The relevant findings of Tribunal are as under:- "112. We have perused the case records and heard the rival contentions. The records suggest that no documentary evidences as called for by the Assessing Officer were filed by the assessee to prove the genuineness of the transactions. The Assessing Officer is not definitely an Authority to say to the assessee how to run its business but at the same time the Assessing Officer is a responsible custodian of Revenue to examine, consider or judge the various aspects of the expenditure claimed by the assessee to come to the conclusion whether ....
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....hat even if there is an audit report filed by the assessee that does not prevent the Assessing Officer to ask for relevant documentary evidences and details from the assessee to check the genuineness of the transaction and the entire conduct of the assessee. In the present case before us, when the Assessing Officer called for relevant documentary evidences regarding identity, rates and genuineness of the transactions with regard to ESM companies, the assessee has not furnished requisite details before the Assessing Officer and that for the reasons as opined by the Hon'ble Delhi High Court, the power to call for details is an inherent power with the Assessing Officer within the scheme of Income Tax Act. That further the claim of TDS deduction u/s. 194C of the Act by the assessee, no evidence was furnished before us to demonstrate the payment of taxes after TDS deduction. In view of the matter, we set aside the order of the Ld. CIT(Appeals) on this issue and restore the matter back to the file of Assessing Officer to verify whether necessary TDS have been deducted and other issues, regarding the genuineness of the transactions. Needless to say the Assessing....
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....e case of Exide Industries Ltd., reported in 425 ITR 1 (SC). On the other hand, ld. CIT-DR relied on the order of the lower authorities. 5.23 We have considered the rival submissions and perused the record carefully. During the course of assessment proceedings, the AO found that the assessee has claimed provision for leave encashment for the relevant year as fully deductible business expenditure ignoring the provisions of Section 43B(f) of the Act and accordingly he disallowed and added the same to the total income of the assessee. In appeal, the ld. CIT(A) observed that in view of the statutory provisions of section 43B(f) of the Act and in view of the pendency of the civil appeal before the Hon'ble Supreme Court challenging the judgment of Hon'ble Calcutta High Court wherein the provisions of the Section 43B(f) being arbitrary are struck down, the AO is justified in denying provision for leave encashment as admissible expenditure and upheld the view taken by the AO. The Hon'ble Supreme Court also decided the issue in favour of the revenue in the case of Union of India Vs. Exide Industries limited, reported in (2020) 425 ITR 1 (SC) holding therein that, "an employer seeking ded....
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....at the guest houses are being wholly and exclusively used as transit camp for the officers and the officials during the tours as claimed in the submissions. (b) That in reaching the aforesaid decision, the learned CIT(A) failed to bring on record any admissible evidence justifying the same and in spite of the facts on records that the assessee was categorically asked by the AO to give details of the tour undertaken by the officers and officials etc. who have utilized the guest house. 3 That on the facts and in the circumstances of the case, the learned CIT(A) erred in law and on fact in deleting the addition amounting to Rs. 6796.88 lakhs which had been made by disallowing the expenditure incurred on social overheads (fuel & Power) in spite of the facts on record that the assessee company failed to furnish the mode of electricity charges recovered from the employees, furnish types of quarters, electricity points in each type of quarter, rates of electricity per unit charged by CBDT and recovered from the employees before the AO 4. That on the facts and in the circumstances of the case, the learned CIT(A) erred in law and on fact in deleting the addit....
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.... to verify the allegation against the company that it had paid loading and transportation charges at a very high rate i.e. almost 70 to 80 % more than what was paid to non-ESM company. 9. That on the facts and in the circumstances of the case, the learned CIT(A) erred in law and in fact in deleting the addition amounting to Rs. 43017.28 lakhs which had been made by disallowing of overburden removal expenses by treating the same as capital expenditure because access to the coal itself being durable in nature cannot be debited to the profit & loss account. Further, the assessee has made provision to the future removal of overburden and the provision made is not crystallized into the liability and also to devoid of any particular year. 10. That the Ld CIT(A)'s order being erroneous, perverse and contrary to the facts on record, the same may be reversed while that of the AO restored. 11. That the appellant Assessing Officer reserves the right to amend, modify or add any of the grounds of appeal preferred. 6.2 Though the revenue has raised as many as 11 grounds of appeal in Form 36, however, ld. CIT-DR has argued that the ld. CIT(A) has erred in de....
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....A No. 141/JAB/2001 & Ors., order dated 10.05.2019 and also in ITA No. 187/JAB/2008 & Ors dated 06.11.2019, specifically the issue was dealt with for the assessment year 1998-1999 in ITA No. 22/JAB/2002, order dated 10.05.2019, wherein the Tribunal following its earlier order dated 28.02.2002 passed in ITA Nos.18-22/NAG/2001, allowed the issue in favour of the assessee. Further the coordinate bench of the Tribunal in assessee's own case in ITA No. 03/BLPR/2012 for A.Y. 2008-2009, order dated 06.11.2019 has following its earlier order dated 10.05.2019, have allowed the issue in favour of the assessee, rendering the following observations :- 54. We have heard the rival contentions and perused the record. We find that the issue of allowance of expenditure towards Community Development is squarely covered by the decision of Nagpur Bench of Tribunal in the case of South Eastern Coalfields Ltd. Vs. JCIT in ITA Nos.18 to 22/Nag/2001, for assessment years 1989-90, 1990-91, 1994- 95, 1995-96 and 1996-97, order dated 28.02.2002. The Tribunal has deliberated on this issue vide paras 18.1 to 18.6 and decided the issue in favour of assessee by holding as under: ....
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....ar to the facts and issue before the Tribunal (supra). Following the same parity of reasoning, we find no reason to interfere with the order of CIT(A) and thus, the ground No. 1 raised by the Revenue is dismissed. 6.6 In view of the observations of the coordinate bench of the Tribunal, we do not see any reason to interfere in the findings recorded by the ld. CIT(A) in this regard and we uphold the same. Accordingly, this ground of revenue stands dismissed. 6.7 Apropos, status of the issue pertaining to community development expenditure the department has preferred an appeal before the Hon'ble Jurisdictional High Court in ITA No. TAXC/11/2020 against the order of ITAT in ITA No. 22/JAB/2002 dated 10th May, 2019 and the same has been admitted for adjudication, however, no specific direction are issued pertaining to the issue, therefore, till the issue is decided by the Hon'ble High Court, the decision of Tribunal following the principle of consistency shall prevail and thus, has been followed. Ground No. 2: Disallowance of Guest House Expenses 6.8 This issue has already been decided by us while deciding the ground No. 2 in appeal of the assessee i....
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.... him. Therefore, in the same manner, this ground is decided in favour of revenue. 6.10 Ld. AR before us submitted that the assessee has incurred expenses on Power and Fuel, which mainly consists of expenditure incurred on electricity. While part of the expenses was incurred on Industrial Power, other part of the expenses was of the cost of Power consumed in various townships maintained by the assessee as well as incurred on maintenance of general services. It was also submitted by the ld. AR that general services include Township lightning, dispensaries, educational institutions, crèche and canteens, office consumption, pumps and filtration plants, parks and gardens, etc. These expenses also include expenses incurred on electricity supplied to the residential quarters of its employees. With regard to electricity provided to the residential quarters of the employees, ld. AR of the assessee submitted that as per National Coal Wage agreement entered from time to time, executive and nonexecutive employees, 1 % of basic salary (after allowing a deduction of Rs. 100 from basic monthly salary / wage) is deducted as cost of electricity supplied to their residence as this is ....
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....ss consumption is as per agreement entered into by the assessee that the use and excess consumption is recovered from the respective employees. However, considering the fact that the matter pertains to assessment year 2008-09 and the number of employees involved and the practicality of the situation, we are of the considered view that the matter will remain undecided. In such a situation and to curtail the uncertainty, we are of the view that the ends of justice shall be met if the disallowance made by the Assessing Officer is restricted to 25% of expenses incurred by the assessee towards social overheads instead of 50% disallowed by him. We therefore direct accordingly. Thus, the ground No. 3 raised by Revenue is partly allowed. 6.12 In view of the observations made by the coordinate bench of the Tribunal above, we are of the opinion that the disallowance of 50% made by the AO is on higher side which is restricted to 25%. The CIT(A) has not discussed the issue in detail and only relied on its earlier order and allowed the claim of the assessee, which in our opinion, is not justified and sustainable. Accordingly, we set aside the order of CIT(A) and restrict the disallowanc....
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....t accepted the decision of the ITAT, Nagpur Bench in ITA No. 20/Nag/2002 dated 28.02.2005, in its case itself for the A.Ys. 1994-95, on the very same issue, the department has preferred appeal u/s. 260A before the Hon'ble High Court, Bilaspur on 10.07.2002 which is still pending for decision. Accordingly, the Assessing Officer disallowed the expenses on grants to school under the head „Social Overheads" at Rs. 1135.86 Lakhs. 65. When the matter was contested by the assessee before CIT(A), the Ld. CIT(A) provided the relief to the assessee following the order of his predecessor for the assessment year 2002-03. Further, the Ld. CIT(A) observed that this issue has been decided in favour of Western Coalfields Limited in its order ITA No. 486/NAG/1996 dated 04.04.2002 for the assessment year 1992-93. Aggrieved by the order of CIT(A), Revenue is now in appeal. 66. Before us, Ld. DR supported the order of Assessing Officer. 67. The Ld. AR on the other hand reiterated the submissions made before lower authorities and further submitted that this issue is squarely covered by the decision of the Co-ordinate Bench of the Tribunal, Nagpur in ....
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.... incurred by the assessee-company on account of grants made to various schools was an admissible business expenditure and the learned CIT(A) was not justified in confirming the disallowance made by the AO on this count. His impugned order on this issue is, therefore, reversed and the AO is directed to allow the said expenditure." Following the same parity of reasoning as rendered in the aforesaid decision (supra), we find no reason to interfere with the order of CIT(A) and thus, decide the issue in favour of the assessee and against the Revenue. 6.15 Respectfully following the above observations of the Tribunal, we dismiss this ground of revenue. 6.16 Apropos, status of the issue pertaining to grants to schools and institutions, the department has preferred an appeal before the Hon'ble Jurisdictional High Court in ITA No. TAXC/23/2020 against the order of ITAT in ITA No. 03/BLPR/2012 for the A.Y. 2008-09, however, the admission of the same was not reflected on the website of Hon'ble High Court as on 31st July, 2023, therefore, till the issue is admitted and decided by the Hon'ble High Court, the decision of Tribunal following the principle of consisten....
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....e on assets not belonging to company (roads etc.) 6.20 This issue has already been decided by us while considering the ground No. (iii) of the assessee's appeal in ITA No. 201/BIL/2012 for the assessment year 2009-2010, wherein we have allowed this issue in favour of the assessee following the decision of the coordinate bench of the Tribunal in assessee's own case in ITA No. 141/NAG/2001 & Ors, wherein specifically this issue was dealt with in A.Y. 2001-2002 in ITA No. 83/JAB/2004, wherein the Tribunal following the decision of the ITAT Kolkata Bench of the Tribunal in the case of Integrated Coal Mining Ltd. ITA No. 788/Kol/2010 for A.Y. 2003-2004, has allowed this issue in favour of the assessee. In view of the above, we are of the opinion that the assessee is eligible for deduction of expenses incurred on the assets not belonged to the assessee. This ground of appeal of the revenue is dismissed in terms of our observations in ground No. 3 of the assessee's appeal in ITA No. 201/BIL/2012 for the assessment year 2009-2010. Ground 7: Provision for land reclamation/Exp. On reclamation of mining land & disallowance of expenditure on p....
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....nt of expenses on trees plantation and others. Thus, the ground No. 7 raised by the Revenue is dismissed. 6.22 Respectfully following the above observations of the Tribunal, this ground of revenue is dismissed. 6.23 Apropos, status of the issue pertaining to provision for land reclamation/Exp. On reclamation of mining land & disallowance of expenditure on plantation of trees, the department has preferred an appeal before the Hon'ble Jurisdictional High Court in ITA No. TAXC/23/2020 against the order of ITAT in ITA No. 03/BLPR/2012 for the A.Y. 2008-09, however, the admission of the same was not reflected on the website of Hon'ble High Court as on 31st July, 2023, therefore, till the issue is admitted and decided by the Hon'ble High Court, the decision of Tribunal following the principle of consistency shall prevail and thus, has been followed. Ground No. 8: Coal transportation expenses paid to ESM companies: 6.24 This issue has already been considered by us while deciding the appeal of the assessee in Ground No. 4 wherein we have remitted the issue to the file of AO for determining the allowability of expenses in view of the direction given....
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....burden only at the surface level and should be, therefore, treated as capital expenditure. Similarly, while declining the deduction of overburden removal as capital expenditure, the Assessing Officer, as also the CIT(A), has not treated any part of this expenditure, which essentially includes the expenditure incurred on removing overburden in the process of coal mining and production, as revenue expenditure. It seems to be more or less an undisputed position, given the nature of overburden removal expenses as we have discussed earlier, that a part of the overburden removal expenses is admittedly revenue expenditure, but if we have to uphold the stand of the authorities below, entire overburden removal expenses is required to be treated as capital expenditure eligible only for amortization under section 35D. In any case, there is nothing on record to establish, or even suggest, that expenses incurred on removal of overburden at the surface level, which were capital expenditure in nature, have been claimed as revenue deduction on the strength of coal mining in another piece of land within that coal mine. 41. In view of these discussions, as also bearing in mind entirety of t....
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....ant of TDS/TCS credit 12 Levy of interest u/s. 234 B,C D of the Act. Ground No. 1 : Non consideration of revised return. 7.2 The Ld. AR of the assessee at the very outset submitted that they do not wish to press this ground, therefore, the same has been permitted to be withdrawn and thus, stands dismissed. Ground No. 2 : Disallowance of expenditure on actuarial valuation of employee compensation: 7.3 Facts of the issue, as emanated from the orders of the lower authorities, are that during the year under consideration, the assessee had created provision towards fatal accident under the actuarial valuation done by Coal India Limited, i.e. parent entity of the assessee. he Assessing Officer observed that the provision made by the assessee towards the actuarial valuation of employee compensation on fatal accident is a mere provision and not actual expenses and, therefore, he disallowed the same. On first appeal, the action of the AO was upheld by the Ld CIT(A). 7.4 Ld AR of the assessee submitted that the assessee had created provision towards fatal accident under the actuarial valuation. Similar, provisions were created in subsequent years for th....
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....ery year) could be considered to represent a real liability of the employer to the employees. Accordingly, the Board decided that such provision would not be a contingent liability and may be treated as admissible deduction under section 37(1). Further the provisions created on the basis of actuarial valuation are made on scientific basis because field of actuary is named as "actuarial Science". Moreover, AS 15 used by the Institute of the Chartered Accountants of India deal with employee benefits. Para 64 of the said AS provides for the measurement of the employee benefit on actuarial valuation. Further under section 211 *3A) of the companies Act, all companies are mandatorily required to comply with Accounting Standards. Therefore, provision created on the basis of actuarial valuation should be considered to have been created on scientific basis and allowable deduction." 7.5 To support the aforesaid arguments, Ld AR, relied on the following judicial pronouncements: i) CIT vs Insilco Ltd, (2009) 320 ITR 322 (Delhi) ii) Rotork Controls Ltd vs CIT, (2009) 314 ITR 62 (SC) follows Metal Box India Ltd. (73 ITR 53 (SC), iii) PCIT vs Nokia India Pvt Ltd., [2....
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.... receipts shown in the P&L a/c. The observation of the Supreme Court being pertinent are extracted hereinbelow : "But the contention was that though Sch. VI to the Companies Act may permit a provision for contingent liabilities, the IT Act, 1961, does not, for under s. 36(v), the only deduction from profits and gains permissible is of a sum paid by an assessee as an employer by way of his contribution towards and approved gratuity fund created by him for the exclusive benefits of his employees under an irrevocable trust. This argument is plainly incorrect because s. 36 deals with expenditure deductible from out of the taxable income already assessed and not with deductions which are to be made while making the P&L a/c. In our view, an estimated liability under gratuity schemes such as the ones before us, even if it amounts to a contingent liability and is not a debt under the WT Act, if properly ascertainable and its present value is fairly discounted is deductible from the gross receipts while preparing the P&L a/c. It is recognised in trading circles and we find no rule or direction in the Bonus Act which prohibits such a practice." 6. In the case of Shree Sajja....
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....company had estimated its liability under two gratuity schemes and the amount of liability was deducted from the gross receipts in the profit and loss account. The company had worked out its estimated liability on actuarial valuation. It had made provision for such liability spread over to a number of years. In such a case it was held by this Court that the provision made by the assessee-company for meeting the liability incurred by it under the gratuity scheme would be entitled to deduction out of the gross receipts for the accounting year during which the provision is made for the liability. The same principle is laid down in the judgment of this Court in the case of Bharat Earth Movers (supra). In that case the assessee company had formulated leave encashment scheme. It was held, following the judgment in Metal Box Company of India (supra), that the provision made by the assessee for meeting the liability incurred under leave encashment scheme proportionate with the entitlement earned by the employees, was entitled to deduction out of gross receipts for the accounting year during which the provision is made for that liability. The principle which emerges from these decisions is ....
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....to the aforesaid decisions relied upon by the assessee, it was the contention of the assessee that the provision made for employee's compensation on fatal accident on the basis of actuarial valuation as directed by the holding company i.e. Coal India Ltd., copy of sample actuarial valuation pertaining to various employee benefit liabilities including fatal mine accidental benefit duly signed by Mr. Bhudev Chatterjee, actuary as on 31.03.2015 issued on 27th April, 2015 was furnished. The certificate issued by the actuary was the certification of actuarial valuation as supplied by the company and the data was accepted by the actuary for valuation purpose. The total amount of liability as at 31.03.2015 was Rs. 41,08,83,271/-. The certificate by the actuary was not supported with the actual working data. Also, the amount of actual payment incurred during the relevant assessment year i.e. A.Y. 2010-11 was not submitted for our perusal. Coming to the issue pertaining to disallowance of provision created on account of actuarial valuation of employee's compensation on fatal accident, after going through the aforesaid decision placed by the Ld. AR in support of assessee's contenti....
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....(f) any sum payable by the assessee as an employer in lieu of any leave at the credit of his employee, shall be allowed (irrespective of the previous year in which the liability to pay such sum was incurred by the assessee according to the method of accounting regularly employed by him) only in computing the income referred to in section 28 of that previous year in which such sum is actually paid by him: Inconsistency of clause (f) and absence of nexus with Section 43B 31. The High Court has supported its finding of invalidity by recording two observations vis-a-vis the previously existing (unamended) clauses of Section 43B - first, that clause (f) is inconsistent with other clauses and nature of deduction targeted in clause (f) is distinct from other deductions. Second, that clause (f) has no nexus with the objects and reasons behind the enactment of original Section 43B and therefore, the objects and reasons attributed to Section 43B cannot be used to deduce the object and purpose of clause (f). 32. At the outset, we observe that both the grounds are ill founded. In the basic scheme of Section 43B, there is no direct or indirect limitation upon the powe....
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....n a different context. In view of this, the earlier instruction of Board referred to above stands withdrawn with immediate effect. Under such circumstances, assessee's claim to allow provision for employee compensation on fatal accident within the provisions of Section 37(1) does not deserves to be acceptable. 7.12 Under such facts and circumstances, the analogy articulated by Hon'ble Apex Court in the case of M/s. Excide Industries Ltd. (supra) would be the most appropriate ratio of law that has to be adopted wherein Hon'ble Apex Court has held that "concededly, it is a provision to attach conditionality on deductions otherwise allowable under the Act in respect of specified heads, in that previous year in which the sum is actually paid irrespective of method of accounting", though the observations of the Hon'ble Apex Court in the said case was pertaining to admissibility of payment in lieu of leave to the employees by the employer under section 43B(f), but the same is squarely applicable in the case of present issue in the hand i.e. provision for employee compensation of fatal accident. Accordingly, we are of the considered view that provision made for employee's compensation ....
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....for its employees, depreciation has been claimed by the assessee company as eligible business expenditure. Ld AR relied on the following decisions: i) Indusind Bank Ltd vs ACIT, 135 ITD 165 (Mum) ii) Chennai Properties & Investments Ltd., 373 ITR 673 (SC) iii) Sultan Brothers Pvt Ltd. vs CIT, 51 ITR 353 (SC) iv) CIT vs National Newsprints & Paper Mills Ltd., 114 ITR 388 (MP) v) CIT vs Wamer Hindustan Ltd., 364 ITR 208(AP) 7.14 Further, ld AR relied on the decision of Hon'ble Supreme Court in the case of ICDS Ltd vs CIT, 212 Taxman 550, wherein, it has been held that "if there is a specific stipulation in lease agreement that in case of default committed by the lessee, the lessor is empowered to repossess plant and machinery and on termination of lease, leased plant and machinery will be returned to lessor in the same condition in which they are taken, except normal wear and tear, it cannot be said to be a financial lease; it is a case of operating lease and the lessor will be entitled to depreciation on leased assets". He further submitted that in view of the agreement between SECL and Apollo Hospital, it is clear that SECL is the own....
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.... AO held that rental income received from Apollo Hospital should be asseseed as "income from house property" and not "income from business" as treated by the assessee company. D. Assessee's arguments before the Hon'ble Tribunal Before adverting to the arguments on applicable law, it might be useful to appreciate the facts. which are listed as under: 1) The assessee company has undertaken to fulfil its obligation of striving for construction of hospital for its employees, which arises from each successive National Coal Wage Agreements signed with employees. 2) It obtained lease of the land from the State Government, on which construction of only hospital is permitted by the State Government. 3) It has almost completed construction of the hospital, when it signed licence agreement with Apollo Hospital for running hospital because as stated, initially it wanted to run the Hospital. 4) The assessee signed licence agreement with the Apollo Hospital after obtaining "No Objection' from the State Government. Argument 1 5) The nature of the transaction from the assessee's point of view is NOT of renting of the pr....
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....g the following questions: Was it the intention in making the lease-and it matters not whether there is one lease or two. that is, separate leases in respect of the furniture and the building-that the two should be enjoyed together? Was it the intention to make the letting of the two practically one letting? Would one have been let alone and a lease of it accepted without the other? If the answers to the first two questions are in the affirmative, and the last in the negative then, in our view, it has to be held that it was intended that the lettings would be inseparable." As stated, providing advanced medical care to its employees to fulfil its obligation under National Coal wage Agreement is the assessee company's dominant objective under this agreement. Accordingly, rental income should be assessed as business income. Argument 3 Income earned from renting out is business asset for efficient conduct of its business is assessed as "Income from Business" and hence, corresponding depreciation is a business expense. Depreciation claimed on company's residential quarters, employee residential township assets etc. are allowed as a business ex....
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....4 (Mad)], which held that The Tribunal has primary jurisdiction to prevent miscarriage of justice. Further, the Tribunal is duty bound to grant relief to which the assessee is entitled even though there was no plea in that regard. E. Case laws relied on (Copies attached) * Universal Plast Ltd v CIT [(1999) 237 ITR 454 (SC)], copy placed as Attachment M1 * Sultan Brothers (P) Ltd v CIT [(1964) 51 ITR 353 (SC)], copy placed as Attachment M2 * CIT v National Newsprint & Paper Mills Ltd [(1978) 114 ITR 388 (MP)], copy placed as Attachment M3 * CIT v Mcleod & Co Ltd [(1993) 203 ITR 290 (Calcutta)], copy placed as Attachment M4 * Vyline Glass Works Ltd v ACWT [(2012) 20 taxmann.com 32 (Chennai)], copy placed as Attachment M5 * ITO v Shanaya Enterprises [ITA No 3647/Mum/2010, dated 30.06.2011] (Page 5, 2nd para) copy placed as Attachment M6 * ITO V Tejmalbhai & Co [(2006) 99 ITD 399 (Rajkot)] (para 8), copy placed as Attachment M7 * DCIT v Tewari Warehousing Co [(2018) 92 taxmann.com 168 (Kolkata - Trib.)] (para 8.1 and 8.2), copy placed as Attachment M8 * ITO v RR Industries Ltd [(2012) 21 ....
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....orm of assets to be purchased by the licensee and to deployed at the said premises, which shall continue to vest with the licensee and the licenser shall not have any right or interest on the same and the licensee shall be free to use them or remove them or hypothecate or charge them in any manner as it desires. Provided however that it shall not affect the right of licensor under the said agreement. The licensee was also restricted by Clause No. 4.9 to mortgage the said premises with any bank or financial institution or other entity as security for loans or otherwise so long as the agreement is subsisting. On further perusal of the license agreement in Para 5 under the head "Covenants and obligations of licensee" the licensee was under obligation to arrange additional power facilities at its own cost after depositing necessary fee/ deposits to the electricity board. The licensee was required to employ its own staff including doctors, nurses, technicians for running of the hospital, the persons so employed shall have no nexus or connection with the licensor or Coal India or any of its group companies. Such covenants / obligations cast upon the licensee clearly shows that the l....
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....r the head "income from house property" should be allowed to the assessee. Respectfully following the decision in the case of CIT Vs. Ramnath Goyenka (supra), we direct the A.O to compute the assessable income under the head "income from house property" in accordance with extant law. In the result ground No. 3 of the assessee is partly allowed for statistical purposes. Ground of appeal No. 4 : disallowance of expenditure on account of land revenue 7.18 The next ground relates to disallowance of expenditure on account of land revenue. In this regard, ld. AR submitted that the expenditure incurred by the assessee as compensation paid to displaced persons on acquisition of their land in lieu of their employment. It was also submitted that the expenditure on account of land revenue is revenue expenditure and not capital in nature because there is neither acquisition of any capital asset nor any enduring benefit arising to the assessee. The aforesaid expenditure has been incurred purely as a matter of condition precedent to conduct its business. The ld. AR further submitted that the assessee has to incur such expenses on a continuous basis and hence the same is revenue i....
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....ted by the Government for removal of these encroachers and rehabilitate them at other places, if the assessee had paid the amount that amount is not for acquisition of new assets. The payment was made to facilitate its smooth functioning of the business i.e. in relation to carrying on the business in a profitable manner. 14. We are therefore of the opinion that the Division Bench of this Court in Airport Authority of India (supra) does not lay down the correct law. We accordingly over rule the same holding that such an expenditure if incurred by the assessee would be on revenue account and is not capital in nature. Having held so, we turn to the reasons given by the Tribunal in denying this expenditure. 7.21 On the issue of payment of compensation, Hon'ble High Court of Calcutta in the case of Shyam Burlap Company Ltd. Vs. CIT, reported in (2016), 380 ITR 151 (Cal.) has held that where rental income earned by the assessee was taxable as business income, compensation paid to existing tenants to obtain vacant possession of building so as to earn higher rental income by letting it out to new tenants had arisen out of business necessity and commercial expediency which was t....
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....ystalized during relevant assessment year 2010-2011. However, the claim of assessee company was not allowed by the Ld. AO in absence of any corroborative evidence which were requested but not furnished by the assessee. Ld. CIT(Appeals) also observed the same fact and on account of no material provided with respect to crystallization of expenses during the year, the disallowance made by the A.O was upheld. Ld. AR of the assessee submitted that the expenditure was crystalized during the A.Y. 2010-11 on account of write off of stores and towards contractual liability for employee wages arising from national coal agreement. The assessee placed reliance on Saurashtra Cement and Chemical Industries Ltd. Vs. CIT (1995) 213 ITR 523 ( Guj) wherein the Hon'ble High Court has held that: "merely because an expense relates to a transaction of an earlier year it does not become a liability payable in the earlier year unless it can be said that the liability was determined and crystallized in the year in question on the basis of maintaining accounts on the mercantile basis. In each case where the accounts are maintained on the mercantile basis it has to be found in respect of any cl....
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.... directed to assist in the set-aside assessment proceedings before the A.O making all the requisite compliances and submissions so as to satisfy the Ld. AO with respect to this aspect. Thus, this ground is partly allowed for statistical purposes. Ground No. 6 : disallowance of Land Compensation & Rehabilitation Expenses 7.26 The issue of disallowance of Land Compensation & Rehabilitation Expenses is identical to the issue raised by the assessee in ground No. 1 in assessment year 2009-10(supra) in ITA No. 201/BIL/2012. In line with our decisions in that appeal, this issue is decided against the assessee. Consequently, this ground of the assessee is dismissed. Additional Ground No. 6E : amortization of land rehabilitation 7.27 This issue is also identical to the ground raised by the assessee in additional ground No. 1E for the assessment year 2009-10 in ITA No. 201/BIL/2012 (supra). While adjudicating this issue, we have restored the matter to the file of the AO to decide the same afresh in line with the decision of the Co-ordinate Bench of this Cuttack Tribunal in the case of East India Minerals Limited (supra) after providing reasonable opp....
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....nted to the assessee to furnish the requisite evidence before the AO, the AO is directed to consider the claim of the assessee as per law. Thus, this ground of assessee is allowed for statistical purposes. Ground No. 8 : addition in respect of expenditure on assets not belonging to company (roads, etc). 7.32 The issue of addition in respect of expenditure on assets not belonging to company (roads, etc) is identical to the issue raised by the assessee in ground No. 3 in assessment year 2009-10(supra) in ITA No. 201/BIL/2012. In line with our decision and observation in that appeal, this issue is decided in favour of the assessee. In line with our above decision, for this year also, accordingly this ground of the assessee is allowed. Ground No. 9 : coal transportation expenses paid to ESM companies. 7.33 This ground is identical to the issue raised by the assessee in ground No. 4 in assessment year 2009-10 (supra) in ITA No. 201/BIL/2012. In line with our decision and observation in the said appeal, we also direct the AO to determine the allowability of expenses as directed in the above observations of the Tribunal. This ground is allowed for....
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....ensation paid for the delay in procurement of capital asset amounted to sterilization of the capital asset of the assessee as supplier had failed to supply the plant within time. The amount received by the assessee towards compensation for sterilization of the profit earning source and not in the ordinary course of its business, was a capital receipt in the hands of the assessee." E. Case laws relied on * EID Parry Ltd. Vs. Commissioner of Income Tax (233 ITR 335 (Mad.) * CIT Vs. Saurashtra Cements Ltd. (2010) (192 Taxman 300) * CIT Vs. Barium Chemicals (1987) 168 ITR 164 (AP)"t 7.36 According to aforesaid submissions of the assessee, respectfully following the judgments, the settled position of law is that if the compensation relates to delay in procurement of capital assets, the same should be treated as capital asset, therefore, if the amount received by the assessee towards compensation for sterilization of the profit earning source and not in ordinary course of its business, the same should be treated as capital receipt in the hands of the assessee. Considering the nature of receipt explained by the assessee towards liquidated damages on ....
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....stified in deleting the addition of Rs. 743.27 lacs made by the A.O. on account of corporate social responsibility. 6. Whether the Ld.CIT(A) was justified. in deleting the addition of Rs. 1355.95 lacs made by the A.O. on account of environment expenses, expenditure on plantation on trees and reclamation of land. 7. Whether the Ld.CIT(A) was justified in deleting the addition of Rs. 493.02 lacs made by the A.O. on account of expenditure on assets not belongings to the assessee. 8. Whether the Ld.CIT(A) was justified in deleting the addition of Rs. 9933.04 lacs made by the A.O. on account of disallowances of transportation charges paid to ESM companies. 8.2 Ground No. 1 is general in nature which does not require any adjudication. Ground No. 2 : disallowance of overburden removal expenses 8.3 Ground No. 2 relates to deleting the disallowance of overburden removal expenses. This ground is similar to the ground No. 9 raised by the revenue in its appeal for A.Y. 2009-2010 in ITA No. 204/BIL/2012, wherein the Tribunal following the decision of the Jabalpur Bench of the Tribunal in the case of Northern C....
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.... by the assessee under the head corporate social responsibility, but the ld. CIT(A) has wrongly deleted the addition in spite of failure on the part of the assessee to discharge its primary duty of furnishing relevant names, addresses and deduction of TDS on qualifying items. Therefore, the claim of assessee under the head corporate social responsibility can never be allowed. 8.7 On the other hand, ld. AR vehemently supported the order of the ld. CIT(A) and submitted that for the earlier assessment years also the claim of the assessee was accepted in the appellate proceedings. The assessment year under consideration having the similar facts, thus the claim deserves to be allowed, the ld. CIT(A) has also accepted the same. It was requested that the findings of the ld. CIT(A) recorded in this regard are to be upheld. 8.8 We have considered the rival submissions and perused the relevant material available on record along with the assessment order and appellate order. On perusal of the assessment order, as per the Ld. AO the assessee company is being harping on the same issue on the guidelines issued by the Government of India for past several years, but the assessee failed to fu....
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....ervations made by us both the grounds of revenue are dismissed. Ground No. 7 : disallowance on account of expenditure on assets not belonging to the assessee ( roads etc.) 8.10 This ground relates to disallowance on account of expenditure on assets not belonging to the assessee. This issue has already been decided by us while deciding the appeal of revenue in Ground No. 6 in ITA No. 204/BIL/2012 for A.Y. 2009-2010, wherein we have dismissed this ground of revenue holding therein that the assessee is eligible for deduction of expenses incurred on the assets not belonging to the assessee. Respectfully following the reasoning and observations given by us in the appeal of revenue for A.Y. 2009-2010, we also dismiss this ground. Ground No. 8 : disallowance made on account of expenditure claimed on transportation charges paid to ESM 8.11 This ground relates to disallowance made on account of expenditure claimed on transportation charges paid to ESM companies. This issue has already been considered by us while deciding the appeal of the revenue in Ground No. 8 for A.Y. 2009-2010 in ITA No. 204/BIL/2012, wherein we have remitted the ....
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....d premise or factory. 2(c) That on the facts and in the circumstances of the case, the Ld. CIT(Appeals) have erred in treating caterpillars as motor vehicles and ignoring the fact that caterpillars are chain mounted machineries and exclusively used for excavation of minerals in mining areas. 3 That the appellant craves leave to add, alter, amend, modify or rescind the grounds hereinabove either before or during the course of appellate proceedings." 9.2 As per the aforesaid grounds raised by the assessee before us, there are twofold contentions raised by the assessee, first with regard to validity of assessment proceedings invoked u/s. 147 of the Act by reopening of the assessment and second, admissibility of additional depreciation on heavy caterpillar machine. The contentions of the assessee are described and dealt with in the following paras. Ground No. 1 (a & b) : order u/s. 143(3) /147 was bad in law and void ab initio and initiating the reassessment proceedings on mere change of opinion based on the information /material already available with the A.O. 9.3 The Ld. AR before us, on the legal contention raised in ground No. 1 of ....
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.... assessment and, Therefore, the assessment needed to be reopened. On the other hand, if the Assessing Officer did not apply his mind and committed a lapse, there is no reason why the assessed should be made to suffer the consequences of that lapse." * CIT v Eicher Ltd [(2007) 294 ITR 310 (Delhi)] Further, Hon'ble Supreme court in a recent decision has held as under: The assessee has no role to play and is not the author of the assessment order and hence the manner and contents of the assessment order as framed is not determinative whether or not it is a case of change of opinion. * JCIT v Cognizant Technology Solutions India Pvt Ltd [TS-06-SC-2023 dated 03.01.2023] * Re-assessment Proceedings cannot be initiated on the basis of audit objections raised The assessee also would like to draw attention to the supplementary paper book filed on 9 July-2022 (Pg 5) on perusal of which it is evident that reassessment proceedings were initiated in the case of the assessee because of the audit objections raised. It is a well settled law that notice under section 148 of the Act cannot be issued on the basis of an audit objection. The Assessi....
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....Tax Vs. Bajrang Enterprises [(2004) 134 Taxman 0659 (Ntad HC)} * Commissioner of Income Tax Vs. Sibson Construction & Co. [(1997) 90 Taxman 0175 (Gauhati HC)] * Agrawal Flooring Stone Co v CIT [(1995) 216 ITR 757 (Raj)] * ITO v Ghuge & Co (1993) [47 TTy 33 (Pune)} It is submitted that mining of iron ore is 'production' as per Hon'ble Supreme Court in CIT v Sesa Goa Ltd [(2004) 271 ITR 331 (SC)]. Further, Hon'ble Calcutta High Court has held that coal mining is 'production' in CIT v G S Atwal {(2002) 254 ITR 592 (Calcutta)]. The assessee submits that it has disclosed such dumpers under plant and machinery in its financial Statements and tax audit report. Further, additional depreciation was claimed in the preceding and Subsequent years also. Therefore, it is submitted that the assessee is eligible to claim additional depreciation under section 32(1)(iia) of the Act. Without prejudice to the above, if Your Honours consider dumpers as ineligible for additional depreciation, assessee humbly submits before Your Honours to direct the AO to increase the Closing WDV to the block of asset and grant consequential....
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.... and A.O did not make any addition on the issue queried in the original assessment order, merely because of change of opinion on reappraisal of the same facts. It further submitted that the reason to believe provided to the assessee refers to the details of addition in plant and machinery and the additional depreciation claimed thereon before the A.O during the assessment proceedings, Ld. AR submitted that reopening action u/s. 147 should be based on valid reasons and not on the basis of mere change of opinion. Ld. AR further placed reliance on the judgment in the case of Rasalika Trading and Investment Company Pvt Ltd. (supra) wherein Hon'ble Delhi High Court has held that reassessment proceedings cannot be initiated based on stale information which were available at the time of original assessment proceedings u/s. 143(3) of the Act. It was also the submissions of the Ld. AR that the assessee's duty does not extend beyond true and full disclosure of primary facts. It is for the A.O to decide what inference or facts can be reasonably drawn and what legal inference have ultimately to be drawn. On this aspect, reliance was placed Kolkata Discount Company Ltd. (supra) and CI....
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....ather the information which the Ld. AR has referred to stating that the information was furnished before the Ld. AO available at Page 4 of the small 8 pages supplementary paper book filed by the assessee on 22nd July, 2022, was found to be submission of the information in response to proposal u/s. 263 of the Act, such submission cannot be considered as submission against the question No. 54 to 56 raised by the Ld. AO vide questionnaire dated 16.10.2012. No information or evidence that such information was also furnished before the AO have been furnished before us, in absence of any response before the AO, it can be believed that the assessee has failed in furnishing the response to queries raised by the A.O in original assessment pertaining to the issue of additional depreciation. Similarly, Ld. CIT(A) also has observed that there is no discussion on the issue of Motor Vehicle Act in the assessment order, therefore, there was no opinion formed by the A.O about the nature of Dumper as motorable vehicle even when they are used in the mines. With such observations the Ld. CIT(A) further noted that he does not agree with the submissions of the Ld. AR that there is a change of....
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....ase. The assessee's contention that no adverse opinion can be drawn merely because A.O is silent on the issue in the assessment order wherein reliance was placed on Eicher Ltd. (supra) and Cognizant Technology (supra). On the perusal of the said judgments, we find that simply because A.O choose not to give any findings the same cannot be a reason to reopen the assessment but along with this aspect there should be application of mind to the material and acceptance to the view canvassed by the assessee. However, in the present case, neither there was any finding by the A.O on the issue in the assessment order nor there was any response by the assessee to the queries of A.O on the relevant issue, thus application of mind on the issue by the AO in original assessment proceedings is farfetched thought of the assessee, hence, the same does not worth acceptance. Accordingly, the judgments relied upon by the assessee are found to be on different on facts and thus, are not suitable to be pursued in the present case. With regard to assessee's reliance on the judgment of CIT Vs. Simbholi Sugar Mills (supra) wherein Hon'ble Delhi High Court has held as under: "The sum and substance of....
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....s [(2004) 134 Taxman 0659 (Mad HC)] * Commissioner of Income Tax Vs. Sibson Construction & Co. [(1997) 90 Taxman 0175 (Gauhati HC)] * Agrawal Flooring Stone Co v CIT [(1995) 216 ITR 757 (Raj)] * ITO v Ghuge & Co (1993) [47 TTJ 33 (Pune)] 9.10 In continuity, the ld. AR submitted that the mining of iron ore is 'production' as per Hon'ble Supreme Court in CIT v Sesa Goa Ltd [(2004) 271 ITR 331 (SC)]. It was also submitted by the ld. AR that the Hon'ble Calcutta High Court has held that coal mining is 'production' in CIT v G S Atwal [(2002) 254 ITR 592 (Calcutta)]. As per the ld. AR the assessee has disclosed such dumpers under plant and machinery in its financial statements and tax audit report. It is submitted that the additional depreciation was claimed in the preceding and subsequent years also, therefore, the assessee is eligible to claim additional depreciation under section 32(1)(iia) of the Act. 9.11 Even otherwise, ld. AR also submitted that if the Tribunal considers dumpers as ineligible for additional depreciation, the AO may be directed to increase the closing WDV to the block of asset and grant consequential deprecia....
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....accommodation in the nature of a guest-house; or (C) any office appliances or road transport vehicles; or (D) any machinery or plant, the whole of the actual cost of which is allowed as a deduction (whether by way of deprecation or otherwise) in computing the income chargeable under the head "Profits and gains of business or profession" of any one previous year;]" 9.14 According to Sub Clause (c) of Clause (ii) of the provision of Section 32(1), the additional depreciation shall not be allowed in respect of any office appliances or road transport vehicle. The addition/disallowance made by the A.O was on account that the caterpillar and Dumpers used by the assessee are held to be road transport vehicles the Hon'ble Bombay High Court in the case of Western Coalfields Ltd. Vs. State of Maharashtra & Ors, (2016) 11 SCC 613, wherein Hon'ble Mumbai High Court following the decision of in the case of Central Coalfields Ltd. Vs. State of Orissa and also decision of the Hon'ble Apex Court in the case of Baloni Ores Ltd. Vs. State of Orissa, AIR (1975) SC 17 has held as under: "6. According to Mr. Shanti Bhushan, learned Senior Counsel, since the dimension of th....
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.... for us to hold that the vehicles are not adapted or suitable or capable of being used on public roads, even though for most of the time they might actually be used within the mining areas on the roads prepared by the mining owners. Following the two earlier judgments of this Court in Central Coal Fields Ltd. and Union of India v. Chowgule & Co. we hold that the dumpers in question are motor vehicles and are taxable within the ambit of the Taxation Act." 9.15 Ld. AR on the contention that Dumpers are not transport vehicle has relied upon judgment of various Hon'ble High Courts, wherein it is held that, Dumpers, tippers and hydraulic excavator- are not road transport vehicles and construction equipment vehicles- not being road transport vehicles are entitled to investment allowance. [Gaton Lime Stone (supra)]. Allowability of investment allowance and additional depreciation on Dumpers-necessary facts relevant to the issue whether Dumpers are road transport vehicles or part of machinery not brought on record, therefore, matter rightly remitted back to the A.O for necessary enquiries.[ Agarwal Florring Stone (surpa)]. Investment allowance/additional depreciation on trucks, Dumpers,....
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....unds as taken in the chart are decided in the following paragraphs. i) Non-consideration of revised return; ii) Disallowance of Land Compensation & Rehabilitation Expenses; iii) Disallowance of expenditure on accumulated liquidated damages penalty; iv) Disallowance of provision made for mine closure; v) Disallowance of expenditure on actuarial valuation of employee compensation; vi) Disallowance of non-grant of TDS credit due to income mismatch; vii) Disallowance of provision for leave encashment & disallowance of reversal of interest on disputed deposits received from coal customers; viii) Disallowance of reversal of interest on disputed deposits w.r.t. MPGATSVA/Terman Tax; ix) Disallowance of depreciation on Apollo Hospital Building; x) Disallowance of expenditure on account of land revenue; xi) Disallowance of coal transportation expense paid to ESM companies; xii) Short grant of TDS/TCS credit without any explanation; and xiii) Levy of interest u/s. 234B, 234C & 234D of the Act. 10.2 Apart from the above grounds, the assessee has also raised an additional....
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....y following the same, we allow this ground of appeal for statistical purposes. Ground No. 4 : provision made for mine closure. 10.7 With regard to this issue, ld. AR drew our attention to the Enclosure-I of the paper book, wherein he submitted as under :- The Assessee has provided this amount on account of mine closure. The said amount was provided in pursuance to the guidelines issued by the Government of India and in compliance with AS 29. The Government issued these Guidelines to ensure that fly- by- night private mine operators discharge their duty to restore open cast mines in 'as it was' condition after lifespan of the mine is over. Therefore, the Government mandated that operator need to provide for certain amount every year in accordance with the pre-approved Plan of mine-closure, to ensure that operator has required substantial amount is available with it by the time, mine closes after its life span to restore it back in its original condition and make good environmental damage caused by the mining activity during lifetime of mine. The claim is also being made in line with the guidelines issued by the Ministry of Coal vide No 5501-01-2009-CPAM ....
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....the basis of the disallowance is absence of the Escrow account, has continued with the disallowances even after the assessee company had opened the Escrow account in November 2014 (i.e. AY 2015-16). Once the expenses are incurred, the company makes an application for the withdrawal of funds from the Escrow account, if needed. The amount is released by the CCO after the submission of necessary compliance report and is restricted to expenditure incurred on the progressive mine closure in past five years or 80% whichever is less. The balance amount shall be released to the mine owner at the end of the final Mine Closure on compliance of all provisions of the Closure Plan. B. AO's reasons for making disallowance or addition (para numbers of the assessment orders of the respective years are as in the above table) The learned AO stated that the fund so created as per this norm would be used, if at all, sometime in an indefinite future, at the time of mine closure process. The learned AO further stated that thus, it can be inferred that such fund was built up for eventuality. These were neither any specific expense to be incurred nor any specific time frame coul....
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.... control over provided money was with the assessee. Secondly, the learned CIT(A) held that the liability was not ascertainable. The learned AO failed to appreciate that reason for not opening the Escrow account was of the absence of the procedural notification. Escrow account could only be opened only after issue of the communication by Coal India Limited on 26 June 2013. Even otherwise, the learned CIT(A) failed to appreciate that noncompliance of the procedural guidelines will not take away the fundamental character that provision was crated for the liability, which was ascertainable and scientifically computed in accordance with the Government Guidelines, hence it was an allowable expenditure. Reliance is placed in the case of Udaipur Mineral Development Syndicate Pvt. Ltd v. DCIT [261 ITR 706], the Rajasthan High Court ('HC') noted that there was a clause in the lease deed which obliged the taxpayer to restore the surface land as far as possible to its original condition. The HC, therefore, held that as soon as the taxpayer dug pits it was under obligation to fill those pits and hence the estimated cost of filling the pits was an accrued liability. In....
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....ite Mining Co v DCIT [ITA No 510/JP/2017 dated 12.10.2017] (Para 15) - copy placed as Attachment I5 * Rajasthan States Mines and Minerals Ltd v ACIT [ITA no 144/JP/2014 & 124/JP/2014 dated 12.02.2016] (Para 29- 30.3 to 30.5) - copy placed as Attachment I6 * Mahanadi Coal Fields Ltd v DOT, [ITA 397 and 421/Ctk/2013 dated 20.03.2018] (Para 130-131, Page 56).. - copy placed as Attachment I7 * Gujarat Mineral Development Corporation Limited vs. DCIT [ITA No. 1880/Ahd/2019 dated 19 Oct 2022] - copy placed as Attachment I8 F. Paper Book references PB for ITA 115/RPR/2015 - AY 2011-12 Page 112 Annexure 3 - Copy of Guideline dated 27 August 2009 issued by the Ministry of Coal with respect to Mine closure Para 9 of the Guideline on PB page 122 deals with the requirement of 'provision of mine closure" Page 190 Annexure 1 - Statement of Mine Closure Plan for FY 2010-11 PB for ITA 102/RPR/2017 - AY 2012-13 Page 149 Copy of Guideline dated 07 January 2013 issued by the Ministry of Coal with respect to Mine closure Page 228 Order of Hon'ble Bombay High Court, Nagpur Bench, dated 8 August 2013 in ITA No. 2 of 2013 in the ....
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.... appeal of the assessee in Ground No. 2 for A.Y. 2010-2011 in ITA No. 401/BIL/2014, wherein we have set aside this issue following the reasonings and observations given by us. Respectfully following the same, we allow this ground of appeal for statistical purposes. Ground No. 6 : Non grant of TDS credit due to income mismatch 10.11 The ld. AR of the assessee with regard to the above ground submitted as under :- The Assessee would like to humbly submit that the credit of deduction made in accordance with the relevant provisions of the Act and paid to the credit of the Central Government Exchequer, shall be given for the amount so deducted on the production of the certificate furnished under section 203 for the assessment made under this Act for the assessment year for which such income is assessable. However, in the amended provisions in the section 199 of the Act by Finance Act 2008, the words "for the assessment year for which such income is assessable'' have been omitted, meaning thereby, that the legislature was quite conscious about the facts and hardships faced by some assessees, while making the amendments in section 199 of the Act ....
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....and 7) * Supreme Renewable Energy Ltd v ITO [(2010) 3 ITR (Trib) 339 (Chennai)] (para 6 to 10) * AO cannot recover taxes from assessee, if deductor does not deposit taxes. - Ashok Kumar Chowatia v JCIT [(2021) 128 taxmann.com 230 (Mad)] Without prejudice to the above, if the above ground is held against the Assessee, then. Learned AO may be directed to grant TDS credit in a year in which corresponding income is declared. E. Case laws relied on * Kartik Vijaysinh Sonavane v DCIT [(2021) 132 taxmann.com 293 (Gujarat)], copy placed as Attachment Q1 * ACIT v Om Prakash Gattani [(2001) 117 Taxman 549 (Gauhati)], copy placed as Attachment Q2 * Yashpal Sahni v Rekha Hajarnavis [(2007) 165 TAXMAN 144 (Bom)], copy placed as Attachment Q3 * ACIT v Peddu Srinivasa Rao, [ITA 324/Vizag/2009 dated 03.03.2011] (para 8 to 10), copy placed as Attachment Q4 * Vijay Bhavani Constructions Pvt Ltd v DCIT [(2017) 9 ITR (Trib) 99 (Hyd)] (para 9 to 12.1) * Sadbhav Engineering Ltd v DCIT, [ITA no 610, 1834, 1835, 2053, 2054 and 2055/Ahd/2009 dated 19.12.2013] (para 23 to 26) * Greatship (India) Ltd v DCIT, [I....
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....leave encashment 10.14 This ground relates to provision for leave encashment. This issue has already been considered by us while deciding the appeal of the assessee in Ground No. 5 for A.Y. 2009-2010 in ITA No. 201/BIL/2012, wherein considering the prayer of the assessee and in view of the judgment of the Hon'ble Supreme Court in the case of Exide Industries Limited (supra), we remit the issue to the file of AO to verify and examine as to whether the payment towards leave encashment have been made to the employee in the year of actual payment of leave encashment. If the same has been paid before the due date of filing of the return for the relevant assessment year, then the expenditure is allowable and to such extent, if the payment has been made after the due date of filing of the return of income, the amount is to be disallowed. Accordingly, this ground of assessee is partly allowed for statistical purposes. Ground No. 7 (Part) : disallowance of reversal of interest on disputed deposits received from coal customers and Ground No. 8 : reversal of interest disputed deposits w.r.t. MPGATSVA/Terminal Tax 10.15 Since ground No. 7 (part) and gr....
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....income in the earlier years and reversed during the impugned year under the head "prior period" and addition of Rs. 9,75,024 pertaining to interest accrued in the current year but was not offered to tax by the Assessee. Thus, the learned Aa made the total addition of Rs. 11,37,248 and of Rs. 9,75,025 totalling Rs. 21,12,000. The assessee had received deposits from certain purchasers against coal purchased by them from it. Subsequently, the assessee stopped selling coal to them and retained part of their deposits with it after the assessee learnt that these purchasers had used fake papers for making purchases for their non- existent brick kilns. Aggrieved by stoppage of sale of coal to them, Shri Basant Jain and Shir Subhash Gupta - middlemen - approached Hon'ble MP high court for getting refund of their balance deposits. Hon'ble High Court directed the assessee to deposit money with Collector, Shahdol directing him to return money to original depositors. The depositors appealed in a SLP to the Hon'ble Apex Court against the decision of the Hon'ble MP High Court. The Hon'ble Apex court vide its order dated 25 Nov 2007 directe....
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....e of the customers challenged the constitutional validity of the Act in the Court. Subsequently, the assessee company invested the collected tax amount in "Corporate Liquid Term Deposits." The assessee earned total interest of Rs 20,94,71,000 over the years, which it duly declared every year as its income in its return of income and paid tax on it. The case between M/s Jai Prakash Associates Ltd v State of M P went up to the Hon'ble Supreme Court, in which the said company had contested constitutional validity of such levy of Rural Infrastructure and Road Development Tax by the state of MP. The case filed before the Hon'ble Supreme Court of India was tagged with the case of M/s Jai Prakash Associate Ltd vide No 2055/2007 and was disposed of by a common interim order dated 02.08.2010. It was observed that the Hon'ble Supreme Court in its interim order dated 02.08.10 had directed, "each of the assessee-company(s) to file its respective returns under 2005 Act in respect of each year". (Page 207 of PB for ITA 115/RPR/2015) As per the directives of the Hon'ble Supreme Court of India, the assessee company filed the respective returns under Madhya Pradesh....
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....ked corresponding liability by debiting the Profit and Loss statement. D. AO's reasons for making disallowance or addition (para numbers of the assessment orders of the respective years are as in the above table) The learned AO stated that the assessee did not enclose the copy of the opinion given by the Solicitor General of India along with its reply submitted to the learned AO. He stated that in his opinion, the ASG has clearly stated that the Agents are not entitled to claim interest on balance deposits lying with the assessee company. Accordingly, the learned AO has made the addition of Rs 21,12,000, which consisted of the disallowance of reversal of interest made by the assessee of Rs 11,37,248 declared in earlier years as its income under the year "prior period" and made the addition of Rs 9,75,024 accrued in the current year but was not offered to tax. W.r.t, MPGATSVA, the Learned AO stated that, it is seen on perusal of Audit Query that the CAG has nowhere advised to reverse interest income, which was offered to tax in earlier years. Neither did it suggest that accrued interest of Rs 13,77,00,000 should not be routed through P&L account. The l....
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....nal tax legislation. F. Assessee's arguments before the Hon'ble Tribunal The Assessee's arguments consist in following parts: * Whether interest income earned from FDs made out of money not belonging to the assessee, can constitute its income? * TDS credit claimed by the assessee on interest income declared in the years prior to AY 2011-12 and consequences on reversal of interest * TDS credit claimed by the assessee in the years subsequent to the AY 2011-12 but corresponding income not declared to tax Whether interest income earned from FDs made out of money not belonging to the assessee, can constitute its income? W.r.t interest on disputed deposits of coal customers, the assessee company is holding deposits of third parties as trustee. Interest income earned on such deposits can never be considered as its own money. If the assessee is not the owner of the money in the deposits, then interest earned thereon also is its liability. W.r.t. interest on deposits of MPGATSVA and terminal tax, the learned AO and Learned CIT(A) both have not adjudicated the fundamental question as to whether the deposits o....
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....expiry of period of limitation prescribed under the Limitation Act cannot extinguish the debt but it will only prevent the creditor from enforcing the debt is well-settled." Further, in the case of PCIT v New World Synthetics Ltd [(2018) 97 Taxmann.com 399 (Delhi)] held that non-payment of outstanding liability which is admitted and acknowledged as due and payable by an assessee does not indicate remission or cessation of liability. The assessee company acknowledges its debt towards purchasers of coal and towards the Government for the taxes collected on its behalf. Therefore, debt exists in the eyes of law. The creditors have not granted remission w.r.t. interest liability on disputed deposits of coal customers. Similarly, the government has not granted remission on interest liability w.r.t. disputed deposits of MPGATSVA and Terminal Tax. As held by the Honourable Apex court that creditor can initiate a proceeding for enforcement of the debt even after expiry of the normal period of limitation as provided in the Limitation Act. Therefore, interest income on deposits of third party cannot constitute the assessee's Income. Accordingly, the addition mad....
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....must in every case be given to the assessee from whose income tax was deducted at source and paid to the credit of the Central Government. If the recipient of the income considers that he is not liable to tax in respect of the income, wholly or partly, therefore, does not disclose the amount of such income in his return, the IT Department cannot refuse to give credit merely by contending that the income had not been disclosed in the return filed by the assessee for the assessment year. The assessee may as per relevant provisions of IT Act, consider the income either as not taxable in his hands or as being relatable to a different assessment year and he may even claim set off of loss or other deductions against such income. The assessee may also be not chargeable to tax on the income because of the overriding provisions of Double Taxation Avoidance Agreement and/or because of the provision for exemption of such income, whether wholly or partly, under some provisions of the IT Act. It would be, therefore, improper and even impermissible for the Revenue to swallow the amount of TDS after having received and enjoyed the same. It cannot be ignored that every item of TDS carries with it ....
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.... avoid all sorts of complications in the year of deduction of the TDS" * The Mumbai IT AT in its recent case of Hampi Expressways Pvt Ltd vs DCIT [ITA No. 895/Mum/2022 dated 18 October 2022] had the occasion to adjudicate on a similar issue where the Assessee was raising invoices to its client, NHAI on the basis of invoices received from its subcontractor, without any markup. Since the transactions with the NHAI were of the same amount as that of transactions with the Sub-Contractor, the balance in the above said ledger account was 'Nil'. On account of back-to-back arrangement and there was no profit accruing to the Assessee. With this background, after considering the amended section 199 of the Act, as well as amended Rule 37BA, the Hon'ble Tribunal directed the AO to allow the TDS credit, even though the corresponding receipts were not offered to tax. Similar decisions are also rendered by the Hon'ble IT AT in the following cases: * Vijay Bhavani Constructions Pvt Ltd v DCIT [(2017) 9 ITR (Trib) 99 (Hyd)] (para 9 to 12.1) (credit not granted on TDS made on mobilisation advance- follows Peddu Srinivasa Rao) * Sadbhav Enginee....
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....Solicitor General. 10.17 Ld. CIT-DR strongly supported the orders of revenue authorities, however, have also submitted that this issue should be restored to file of AO for fresh adjudication of the issue pertaining to the claim made by the assessee. 10.18 On perusal of the assessment order as well as the appellate order along with the submissions of the assessee, according to which during the A.Y. 2011-12 the assessee has reversed the income on account of interest received on disputed deposits of coal customers for Rs. 11,37,248/- which was declared as income in the earlier year and reserved during the impugned year under the head "prior period". The interest accrued during the current year for Rs. 9,75,024/- was also not offered to tax by the assessee. Both these figures in aggregate were added back to the income of the assessee by the Ld. A.O for the reason that the TDS credit corresponding to the said interest income was claimed by the assessee. The reason for such reversal of income explained by the Ld. AR was that the assessee company had received certain deposits from the purchaser of coal subsequently when the assessee company has learnt that those purch....
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....upreme Court dated 1.1.8.1994 and the Special Leave Petition No. 7841/1992 - South Eastern Coalfields Ltd. & ors. Vs. Subhash Kumar Gupta & anr, and the order made thereafter on 25.11.1997 in the same matter. A perusal of these two orders would cl indicate that the Querist, who were petitioners in these proceedings were not required to surrender the amounts deposited with them on behalf of 21 brick kiln units to the respondents in these proceedings, who are Shri Subhash Kumar Gupta and Shri Basant Kumar Jain. The order of 11.8.1994 clearly reflects that the position taken by the Querist that they will be willing to refund the deposit directly to the actual users, i.e., the brick kiln owners, rather than the respondents, who claim to act as the del credere agents:, The Court accepted the stand of the petitioners (Querist) and directed that the amount of deposit be disbursed amongst the brick kiln owners and for this purpose appointed a two-member committee consisting of the General Manager, District Industries Centre, Sheopuri and the District Collector-cum-District Magistrate, Sheopuri. That committee reported back to the Hon'ble Supreme Court that "...none of these 2....
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....titioner's office record is concerned, it showed that it had received from 21 different applicants separate bank drafts of varying amounts. The office record does not show that the amounts were paid by the two respondents herein on whose behalf the request is being made for the refund of the amount. In the circumstances, he contended that if the amount deposited in the Court is paid over to the respondents, the petitioner will not be validly discharged of its liability to the 21 applicants who had paid the amounts. However, he submitted that without prejudice to all Its contentions, the petitioner was willing to make payment individually to the 21 applicants against their valid receipts. The learned counsel for the respondents equally vehemently opposed this suggestion and contended that since the 21 applicants have filed. their Individual affidavits in this Court stating In categorical terms that the amounts were paid by the two respondents and that they had no objections to the amounts being refunded to the respondents who were their gel erecters agents, the amount should no longer be paid to the 21 applicants individually. He further stated that if now the payments are made ....
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....to consider the request for payment of any interest on the amount of deposit in the event the Querist decide to make the refund of the deposit to them. In regard to question 3, 1 am of the opinion that it is for the claimants of the deposit to assert and establish their rights by adducing credible evidence and the Querist in the meantime would be entitled to retain the money in terms of the directions made by Hon'ble Supreme Court in its order dated 25.11.1997 directing the committee of the General Manager,. District Industries Centre, Sheopuri and .he District Collector-cum-District Magistrate, Sheopuri, to refund the money forthwith to the Querist, If, after the Querist is satisfied upon evidence adduced by S/Shri Subhash Kumar Gupta and Basant Kumar Jain that they are entitled to the release of the amount of deposit, the Querist must, before actually releasing the amount of deposit, secure bonds of indemnity from them against any possible claims, which be put forward by brick-kiln owners for refund in their favour for an amount of deposit. It is only after the necessary indemnity bonds have been secured from them that the amount of deposit may be released in their f....
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....e evidence the querist in the meantime would be entitled to retain the money in terms of directions accorded by Hon'ble Supreme Court in its order dated 25.11.1997. In view of such advisory provided by the Ld. Addl. Solicitor General of India, the assessee is not liable to pay any interest to the identified claimants of the deposits a/w the amount of deposit retained by the assessee at the time of refund of the same in compliance to the order of Hon'ble Apex Court. Accordingly, the interest income received by the assessee on such deposits which would not be a liability for the assessee in any eventuality, the same should be considered as income of the assessee company. However, since the assessee company has perceived a different interpretation from the impugned opinion that the interest income earned on the deposits of third parties cannot constitute its income. If such perception of the assessee company is validated in that case, the right and fair approach would be that, the assessee company have to set apart such receipt of or accrual of interest income as the same pertains to third parties and also preserve an amount equivalent to TDS on such interest being the tax on income o....
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....aforesaid observations that the assessee company who had holds the deposits and has received interest income under trust on behalf of third parties is held to be representative assessee as per the provisions of Sections 160 r.w.s. 161 & 162 of the Act and therefore, the assessment of the assessee shall be completed under the provisions of said sections. For the sake of clarity provisions of section 160, 161 and 162 are carved out as under: Representative assessee. 160. (1) For the purposes of this Act, "representative assessee" means- (i) ...... (ii) ...... (iii) ...... (iv) ....... (v) in respect of income which a trustee appointed under an oral trust receives or is entitled to receive on behalf or for the benefit of any person, such trustee or trustees. Explanation 1.-A trust which is not declared by a duly executed instrument in writing [including any wakf deed which is valid under the Mussalman Wakf Validating Act, 1913 (6 of 1913),] shall be deemed, for the purposes of clause (iv), to be a trust declared by a duly executed instrument in writing if a statement in writing, signed by the trustee or trustees, ....
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....s Chapter in the capacity of a representative assessee, he shall not, in respect of that income, be assessed under any other provision of this Act. Right of representative assessee to recover tax paid. 162. (1) Every representative assessee who, as such, pays any sum under this Act, shall be entitled to recover the sum so paid from the person on whose behalf it is paid, or to retain out of any moneys that may be in his possession or may come to him in his representative capacity, an amount equal to the sum so paid. (2) Any representative assessee, or any person who apprehends that he may be assessed as a representative assessee, may retain out of any money payable by him to the person on whose behalf he is liable to pay tax (hereinafter in this section referred to as the principal), a sum equal to his estimated liability under this Chapter, and in the event of any disagreement between the principal and such representative assessee or person as to the amount to be so retained, such representative assessee or person may secure from the Assessing Officer a certificate stating the amount to be so retained pending final settlement of the liability, and the cer....
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.... 10.26 This issue relates to disallowance of expenditure on account of land revenue. This issue has already been decided by us in Ground No. 4 in ITA No. 401/BIL/2014 for A.Y. 2010-11, wherein respectfully following the judicial precedence, we have allowed this issue directing the AO to allow the claim of the assessee subject to the verification in terms of our observations in ground No. 4 of the said appeal. Accordingly, this ground of appeal is allowed for statistical purposes. Ground No. 11 : disallowance of coal transportation expenses paid to ESM companies. 10.27 This ground relates to disallowance of coal transportation expenses paid to ESM companies. This issue has already been decided by us while considering the similar ground raised in assessee's appeal in Ground No. 4 for A.Y. 2009-2010 in ITA No. 201/BIL/2012, wherein following the decision of coordinate bench of the Tribunal, as accepted by both the parties, in assessee's own case for A.Y. 1998-1999 in ITA No. 187/JAB/2008, order dated 06.11.2019, has remitted the issue back to the file of AO for determining the allowability of expenses as claimed by the assessee.....
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....nies; 8. of ITA No. 204/BIL/2012 8, 9 & 10. General in nature No adjudication requires. 11.2 In the result, appeal of the revenue in ITA No. 103/BIL/2015 is partly allowed for statistical purposes in terms of our aforesaid observations. ITA No. 102/BIL/2017 (AY: 2012-2013) (Assessee's appeal) 12.1 On perusal of the grounds of appeal in ITA No. 102/BIL/2017 (AY : 2012-2013) filed by the assessee, it is found that the following effective grounds raised by the assessee were similar to the grounds raised by assessee/revenue in the assessee's case for the earlier years, therefore, instead of deciding those issues again we are furnishing hereunder a table showing grounds of present appeal covered by our decision in the respective grounds of appeals already decided in terms of our observations hereinabove. Accordingly, our decision rendered in the foregoing paras of this order under respective grounds of the appeal No. referred in the table below will mutatis mutandis applicable and accordingly, are disposed off. The ground which were not covered by our aforesaid observations, are dealt with separately after the table as me....
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....M companies; 4 of ITA No. 201/BIL/2012 for A.Y. 2009-10 18. Levy of interest u/s. 234B, 234C and 234D of the Act 12 of ITA No. 401/BIL/2014 for A.Y. 2010-11 Ground No. 4 : Disallowance u/s. 14A read with rule 8D; 12.2 Ld. AR before us submitted that in the instant case, the assessee had 8.5% tax-free bonds, which it had to accept as one time settlement of the dues from the electricity Boards, however, the AO observed that for handling investments in mutual fund of such proportion, there has to be man, material and management. Therefore, the AO expected that for leach of these activities, the assessee has incurred cots on personnel, overheads and other related costs. Accordingly, the AO made disallowance u/s. 14A by invoking Rule 8D. The CIT(A) upheld the above findings of the AO. It was the submission that the AO has considered the expenditure relatable to earning tax-free income from investments made in mutual funds for the disallowance u/s. 14A of the Act. It was submitted that the AO has not compared year-end investment value with the amount of the dividend earned in a year. It was further submitt....
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....espectively. The words used by the learned AO of 'has to'and 'It is expected...' show his guess and not his satisfaction arrived at by examining correctness of the assessee's accounts in light of the assessee's explanation. Further, usage of the same copy-paste text in all 3 years after changing only figures, show learned AO's lack of application of mind and mechanical approach. Such conclusion cannot be considered as satisfaction arrived at by considering the facts of the year. Therefore, disallowance made u/s 14A be deleted on account of the learned AO's failure to satisfy mandatory pre-condition of recording satisfaction before making disallowance u/s 14A. Relance is placed on following decisions: * PCIT v TV Today Network Ltd (2022) 141 taxmann.com 275 (Delhi), - copy placed as Attachment S1 * Kesoram Industries Ltd v PCIT (2022) 441 ITR 642 (Cal), - copy placed as Attachment S2 * PCIT v Bajaj Finance Ltd (2019) 110 taxmann.com 303 (Bombay), - copy placed as Attachment S3 * PCIT v Hindusthan Aeronautics Ltd (2022) 143 taxmann.com 357 (Karnataka), - copy placed as Attachment S4 The learned AO has not established proximate nex....
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....Paper Book references AY 2013-14 ITA 102/RPR/2017 (Assessee's appeal) Page 19 Balance sheet showing 'Reserves and Surplus" Page 36 Investment in Mutual Funds, Note-14 AY 2013-14 ITA 103/RPR/2017 (Assessee's appeal) Page 10 Balance sheet showing 'Reserves and Surplus" Page 36 Investment in Mutual Funds, Note-14 AY 2014-15 ITA 204/RPR/2017 (Assessee's appeal) Page 10 Balance sheet showing 'Reserves and Surplus" Page 36 Investment in Mutual Funds, Note-14 12.3 Ld. CIT-DR, on the other hand, relied on the orders of the authorities below and has specifically drawn our attention at Para 7.7 of the assessment order wherein, the Ld. AO after considering various judgments, had calculated the amount of addition u/s. 14A read with clause (ii) & (iii) of Rule 8D, also Ld. AO has categorically mentioned that the provision of statute is very clear and the assessee deliberately tried to circumvent disallowance of expense in order evade higher tax liability. Penalty u/s. 271(1)(c) of the Act was also separately initiated. Therefore, the order of the A.O cannot be said to be without....
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....he considered opinion that this issue should be restored back to the file of the A.O for adjudicating the same afresh in light of the various binding judicial pronouncements by the Hon'ble Courts, applying the provisions of extant law. The assessee is directed to assist in the set-aside assessment proceedings by furnishing requisite details and also, the judicial pronouncements upon which they have placed their reliance in support of their contentions, failing which, revenue would be at liberty to decide the issue as per law. Thus, the ground No. 4 is partly allowed for statistical purposes in terms of our observations hereinabove. Ground No. 15 : Disallowance of expenditure on computer software 12.6 It was submitted by the ld. AR that the computer software purchased by the assessee during the year are mainly annual licensing software, which are required to be renewed every year or every two years. Further, the expenditure incurred by the assessee on acquiring the computer software are not of enduring nature. During the course of assessment proceedings, the AO observed that the computer software is an asset and eligible for 60% tax depreciation, hence, he added back....
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....e appeal No. referred in the table below will mutatis mutandis applicable and accordingly, are disposed off. Ground No of ITA No. 98/BIL/2017 Grounds of appeal Covered by corresponding grounds of ITA Remarks 1. Disallowance of expenditure under the head grants to schools and institutions; 4 of ITA No. 204/BIL/2012 for A.Y. 2009-10 2. Disallowance of expenses on social overheads- fuel & power 3 of ITA No. 204/BIL/2012 for A.Y. 2009-10 3 to 6. Disallowance of CSR Expenses 5 of ITA No. 382/BIL/2014 for A.Y. 2010-11. 7 & 8 Disallowance of expenditure on planation of trees & Disallowance of environmental expenses; 7 of ITA No. 204/BIL/2012 for A.Y. 2009-10 9. Disallowance of Expenditure on assets not belonging to company (roads. Etc. 3 of ITA No. 201/BIL/2012 for A.Y. 2009-10 10. Disallowance of coal transportation expenses paid to ESM companies; 4 of ITA No. 201/BIL/2012 for A.Y. 2009-10 13.2 Thus, the appeal of the revenue in ITA No. 98/BIL/2017 for A.Y. 2012-2013 is partly allow....
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....ed in the ensuing paras of this Order 11. Disallowance of expenditure on assets not belonging to company (roads. Etc.); 3 of ITA No. 201/BIL/2012 for A.Y. 2009-10 12. Addition made on account of short credit of interest income w.r.t. disputed deposits 7 & 8 of ITA No. 115/BIL/2015 A.Y. 2011-12 13. Disallowance of coal transportation expenses paid to ESM companies; 4 of ITA No. 201/BIL/2012 for A.Y. 2009-10 14. Disallowance of Write off/Depreciation of Railway Siding leased out to Aryan Coal Beneficiation (ACB) Adjudicated in the ensuing paras of this order 15. Levy of interest u/s. 234B, 234C and 234D of the Act. 12 of ITA No. 401/BIL/2014 A.Y. 2010-11 Ground No. 10 : disallowance of land crop compensation. 14.2 It was submitted by the ld. AR that heavy blasting conducted in the coal mines by the assessee to loose coal and remove overburden, there may be subsidence in nearby agricultural areas and cracks may get developed in soil bed. As a result of the same, crop grown by the adjacent villages to the mine boundary get damaged / land....
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....l in ITA No. 18-22/Nag/2001, which according to the assessee was not on the similar facts and thus, nowhere covers the issue with respect to the expenses paid for land crop compensation incurred by the assessee. The order passed by the ITAT Nagpur Bench of the Tribunal is dated 28.02.2002. However, subsequently in ITA No. 475/Nag/2007, vide order dated 10.08.2009 in the case of assessee's sister concern has deleted the disallowance/addition made under the head crop compensation. Since the expenditure incurred and disallowed on account of land crop compensation is on the basis of facts and was dealt with by the Nagpur Tribunal in assessee's own case and in the case of M/s. Western Coalfields Ltd. (supra) i.e. sister concern of the assessee in different manner, which suggests that the facts under these two appeals were on different footings and therefore, the facts in the present case needs to be examined whether those are similar with the nature and facts similar to which one of these two orders. In such facts and circumstances, it would be appropriate to send this issue back to the file of the A.O to verify the nature of the expenditure incurred, if the same is in lieu of....
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....n this aspect, however, we do not consider It necessary to deal with them In a specific manner as this proposition Is a settled one. Another objection of the - Revenue authorities Is that the assessee has capitalized this payment In the past and has also claimed the same as of capital nature even in the return of Income, hence, principles of consistency was to be applied. In this regard, first of all,-the assesses has submitted that the Impugned expenditure was Incurred and paid-only when the land mines so acquired have become revenue mines. In this regard, we have also perused the remand report of the A.O, wherein et one place the A.O. has Stated that the assessee did not produce documentary evidence to show that-such expenditure was connected with, revenue mines and in the very next Jine, he has stated that even though these conditions were fulfilled but the approval of the Board of Directors was not there. Both these findings are self-contradictory and rather show a state of uncertainty In the mind of the A.O. which makes It a case of mere doubt only and for this reason, the claim of the assessee that impugned expenditure was Incurred In respect of revenue mines cannot be reject....
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....vides coal washing services to the SEBs and other customers before assessee company despatches coal by loading it in railway. Thus, the assessee company has leased its asset in course of its business of Mining to facilitate sales by providing value added service, which ACB provides to SEBs as an independent of the assessee company. Railway siding are used by the assessee company to load coal into wagons for despatching coal to different customers. The Railways siding leased to ACB is one the sidings owned by the assessee company. Thus, railway siding is assessee's commercial asset. It was also submitted by the ld. AR that railway siding is assessee company's commercial asset therefore income earned from commercial asset is assessed as income from business, with the result, depreciation should be allowed. Ld. AR also placed following case laws to support his contentions :- Reliance is placed on the following decisions: * Universal Plast Ltd v CIT [(1999) 237 ITR 454 (SC)], copy placed as Attachment M1 * CEPT v Shri Lakshmi Silk Mills Ltd [(1951) 20 ITR 451 (SC)], copy placed as Attachment N1 * Scientific Instrument Co Ltd V CIT [(2011) 14 taxmann.....
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....or depreciation of railway siding leased out to M/s Aryan Coal Beneficiation (ACB). Thus, we dismiss this ground of assessee. 14.9 Thus, the appeal of the assessee for A.Y. 2013-2014 in ITA No. 103/BIL/2017 is partly allowed for statistical purposes. ITA No. 99/BIL/2017 (Department's Appeal for A.Y. 2013-2014) 15.1 On perusal of the grounds of appeal in ITA No. 99/BIL/2017 (AY : 2013-2014) filed by the department, it is found that the following effective grounds raised were similar to the grounds raised by assessee/revenue in the assessee's case for the earlier years, therefore, instead of deciding those issues again we are furnishing hereunder a table showing grounds of present appeal covered by our decision in the respective grounds of appeals already decided in terms of our observations hereinabove. Accordingly, our decision rendered in the foregoing paras of this order under respective grounds of the appeal No. referred in the table below will mutatis mutandis applicable and accordingly, are disposed off. The ground which were not covered by our aforesaid observations, are dealt with separately after the table as mentioned in remark column....
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....stated guidelines cover activities relating to "ecological balance, conserving environment and resource optimization". Thereafter, on 02 March 2013, Coal India Limited, the parent company of the Assessee had issued a communication to all its subsidiaries, mandating creation of such reserve and incurrence of such expenditure. Copy of such communication is placed in the paper book as Attachment K2. The AO disallowed the Sustainable expenses incurred by the Assessee on various contentions. On appeal, the Ld. CIT(A) passed the order in favour of the Assessee during AY 2013-14 by observing that the said expenditure is shown under the welfare expenses and the same had been allowed in earlier years in Assessee's own case. Therefore, the ld. AR submitted that the order of the ld. CIT(A) deserves to be upheld. 15.4 We have considered the rival submissions, perused the material evidence carefully. On perusal of the order of the ld. CIT(A) we found that the ld. CIT(A) has allowed the claim of the assessee after having the following observations :- Decision - Since the welfare expenses are included as environmental expenses, sustainable development expenses and tree plantation, the....
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....ly, are disposed off. The ground which were not covered by our aforesaid observations, are dealt with separately after the table as mentioned in remark column. Ground No of ITA No. 204/RPR/2017 Grounds of appeal Covered by corresponding grounds of ITA Remarks 1. General ground Separate adjudication not required. 2. Addition made on account of short credit of interest income w.r.t. disputed deposits from coal customers; 7 & 8 of ITA No. 115/BIL/2015 A.Y. 2011-12 3. Disallowance u/s. 14A read with rule 8D; 4 of ITA No. 102/BIL/2017 A.Y. 2012-13 4. Disallowance on account of actuarial valuation of employee compensation; 2 of ITA No. 401/BIL/2014 for A.Y. 2010-11 5. Disallowance of land compensation & rehabilitation expenses; 1 of ITA No. 201/BIL/2012 A.Y. 2009-10 5A. Amortization of land rehabilitation expenses. 1E of ITA No. 201/BIL/2012 A.Y. 2009-10 6. Disallowance on accumulated liquidated damages penalty; 10 of ITA No. 401/BIL/2014 for A.Y. 2010-11 7. Disallowance....
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....control of the Government, the assessee was bound to comply with all the Government orders. Therefore, an expenditure directed to be incurred by it by the Government is allowable expenditure. Accordingly, ld. AR submitted that that the payment made to Coal India Sports Promotion Fund may be allowed. To support his contention, ld. AR relied on the decision in the case of CIT v Travancore Titanium Products Ltd (2010) 187 Taxmann 81 (Kerala). The relevant part of the decision is reproduced as under: "the claim of deduction was to be considered with reference to the peculiar circumstances of the company in which it had no discretion in regard to the payment of the service charges to the Government, as it was bound to comply with the Governmental orders. So much so, the parameters applicable to the case of a private company, that too with respect to the claim for business expenditure, are exactly not applicable to the case of a public sector company, whether it is under the control of the State Government or the Central Government. In fact, many public sector companies are not formed just to make profit alone, but are supposed to achieve larger objectives for the society and th....
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....cies of Government are mandatory and beyond the control of the assessee. Thus, the same cannot be said to be nonbusiness in nature and accordingly, we hold that such expenses deserves to be allowed. Thus, the ground of No. 12 of the assessee is allowed in terms of our aforesaid observations. 16.5 Thus, the appeal of the assessee in ITA No. 204/RPR/2017 is partly allowed for statistical purposes. ITA No. 188/RPR/2017 (Department's Appeal for A.Y. 2014-2015) 17.1 On perusal of the grounds of appeal in ITA No. 188/RPR/2017 (AY : 2014-2015) filed by the revenue further concise and submitted in form a chart, it is found that the following effective grounds raised were similar to the grounds raised by assessee/revenue in the assessee's case for the earlier years, therefore, instead of deciding those issues again we are furnishing hereunder a table showing grounds of present appeal covered by our decision in the respective grounds of appeals already decided in terms of our observations hereinabove. Accordingly, our decision rendered in the foregoing paras of this order under respective grounds of the appeal No. referred in the table below will mutati....
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....-11 3. Disallowance of land compensation & rehabilitation expenses; 1 of ITA No. 201/BIL/2012 A.Y. 2009-10 3A. Amortization of land rehabilitation expenses 1E of ITA No. 201/BIL/2012 A.Y. 2009-10 4. Disallowance on accumulated liquidated damages penalty; 10 of ITA No. 401/BIL/2014 A.Y. 2010-11 5. Disallowance of provision made for mine closure. 4 of ITA No. 115/BIL/2015 A.Y. 2011-12 6. Disallowance of claim for OBR adjustment; 9 of ITA No. 201/BIL/2012 A.Y. 2009-10 7. Disallowance of depreciation on Appollo Hospital Building 3 of ITA No. 401/BIL/2014 A.Y. 2010-11 8. Disallowance of coal transportation expenses paid to ESM companies; 4 of ITA No. 201/BIL/2012 A.Y. 2009-10 9. Disallowance of Write off/Depreciation of Railway Siding leased out to Aryan Coal Beneficiation (ACB) 14 of ITA No. 103/BIL/2017 A.Y. 2013-14 18.2 Thus, the appeal of the assessee in ITA No. 169/RPR/2018 for A.Y. 2015-2016 is partly allowed for statistical purpo....
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....inabove. Accordingly, our decision rendered in the foregoing paras of this order under respective grounds of the appeal No. referred in the table below will mutatis mutandis applicable and accordingly, are disposed off. Ground No of ITA No. 33/RPR/2019 Grounds of appeal Covered by corresponding grounds of ITA Remarks 1. Addition made on account of short credit of interest income w.r.t. disputed deposits from coal customers 7 & 8 of ITA No. 115/BIL/2015 A.Y. 2011-12 2. Disallowance of land compensation & rehabilitation expenses; 1 of ITA No. 201/BIL/2012 A.Y. 2009-10 2A. Amortization of land rehabilitation expenses 1E of ITA No. 201/BIL/2012 A.Y. 2009-10 3. Disallowance on accumulated liquidated damages penalty; 10 of ITA No. 401/BIL/2014 A.Y. 2010-11 4. Disallowance of provision made for mine closure. 4 of ITA No. 115/BIL/2015 A.Y. 2011-12 5. Disallowance of claim for OBR adjustment; 9 of ITA No. 204/BIL/2012 A.Y. 2009-10 6. Disallowance of depreciation on Appollo Hospital Building ....