TaxTMI 
TaxTMI 
2025 (7) TMI 369
X X X X Extracts X X X X
X X X X Extracts X X X X
....ety, which is welfare expenditure, as per the Coal Wages Agreement, the addition may be deleted. 2. Your Appellant submits that the CIT(A) ought to have appreciated the fact that there is no voluntary contribution to the society, nor it is the case of the assessing Officer that there is transfer of substantial funds while retaining control over the funds, the provision of section 40A(9) of the Income Tax Act, 1961 are applicable, the addition may be deleted. 3. Your Appellant submits that it is an undisputed fact from the account of the society that the funds paid are to mitigate the deficit of funds in running the Scholls or colleges for the year in question as per the obligation vested on Your Appellant as per the Coal Wages Agreement. It is therefore incurred in the course of business and for the purpose of business, cannot be disallowed under section 40A(9) and is allowable under section 37 of the Income Tax Act, 1961. 4. Your Appellant submits that the CIT(A) as well as the Assessing Officer ignored the fact that the payments made to Singareni Educational Society in the past have been allowed as business expenditure u/s 37, ought not to have disallowed Rs. 37,79,77,452/-....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er the CIT(A) ought to have seen that the expenditure incurred was capital in nature and same was for the development of a mine for 'extraction of coal bringing forth an asset in its balance sheet on which depreciation was claimed by the assessee treating the same as "plant" (v) Whether the CIT(A) ought to have seen that expenditure incurred for setting up a new project or for developing a new coast centre represents capital expenditure, which even the assessee accepted and consistently treated the same as capital expenditure in its books of account. (vi) Whether the CIT(A) erred in holding that the civil works carried out by the assessee by way on construction of works for culverts, land leveling, laying of sand and stone, etc as "Plant & Machinery " entailing depreciation @ 15% and ought to have seen that by any standard can such civil works can only be treated as "Building" which entails depreciation @ 10% and not " Plant & Machinery". * (vii) Any other grounds that may be urged at the time of hearing. ITA No.284/Hyd/2024 A.Y (2016-17)- (Assessee) 1. Your Appellant submits that the provision of section 40A(9) are not applicable to the facts of the case, being reimbu....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... disallow the same. 8. Your Appellant submits that the Assessing Officer as well as the CIT(A) without proper application of mind and appreciating the fact that the Hon'ble Supreme Court has held electricity is an article or thing, the production of the same is equal to manufacturing, hence does not need specific inclusion in the Memorandum, therefore the addition is bad in law. For this and for such other grounds that may be urged at the time of hearing your appellant submits that the additions made by the Assessing Officer may be deleted. ITA No.301/Hyd/2024 (A.Y 2016-17) - (Revenue) (i) Whether the Order of the Ld.CIT (Appeal) is erroneous on facts and in law. (ii) Whether the CIT(A) erred in deleting the disallowance in terms of Sec. 40(a)(ia) of the Income-tax Act, 1961, for non-deduction of TDS as required u/s. 194 of the Act and ought to have seen that the assessee, being aware of the identity of the Pattadars, the non-deduction of TDS is not justified and that invoking of the provisions of Sec. 40(a)(ia) in the circumstances is in accordance with law. (iii) Whether the CIT(A) erred in holding that the capital expenditure incurred by the assessee is to be trea....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ell as the Assessing Officer ignored the fact that the payments made to Singareni Educational Society in the past have been allowed as business expenditure u/s 37, ought not to have disallowed Rs. 41,08,54,250/- under section 40A(9) of the Income Tax Act, 1961. For this and for such other grounds that may be urged at the time of hearing your appellant submits that the additions made by the Assessing Officer may be deleted. ITA No.308/Hyd/2024 (A.Y 2020-21) Revenue Whether the Order of the Ld.CIT(Appeal) is erroneous on facts and in law. (II) Whether the CIT(A) erred in holding that the capital expenditure incurred by the assessee is to be treated as revenue expenditure when the capital expenditure does not lead to the creation of asset. Whether the CIT(A) ought to have seen that the expenditure incurred was capital in nature and same was for the development of a mine for 'extraction of coal bringing forth an asset in its balance sheet on which depreciation was claimed by the assessee treating the same as "plant" (Iv) Whether the CIT(A) ought to have seen that expenditure incurred for setting up a new project or for developing a new coast centre represents capital exp....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ee challenged the action of the Assessing Officer before the learned CIT (A) but could not succeed. 4. Before the Tribunal, the learned Counsel for the assessee submitted that the assessee is engaged in the business of extraction and sale of coal and power generation in the State of Telangana. The assessee is primarily governed by Mines Act, 1952. The operation of the assessee are spread across various remote area in the State of Telangana. In view of the compelling working conditions under which the workers of the assessee are working, the assessee provides with certain welfare benefits to the employees/workers and their family members/children. The service conditions of the workers and employees of the assessee are governed by the National Coal Wages Agreement (NCWA) and therefore, the assessee was under the obligation to establish infrastructure like, hospital, educational institutions and township etc. for its employees as per the employment terms to make available good manpower who are willing to stay in the remote areas. Earlier, the assessee had used to run schools and colleges for their employees incurring expenditure, however, in the year 1999, the assessee formed an educ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er has disallowed the claim of the assessee by holding that the payment in question made by the assessee to the educational society would not be an allowable expenses u/s 40A(9) of the I.T. Act, 1961 as this payment is not made for the expenses provided u/s 36(1)(iv) &(iv) of the Act. The relevant finding in para 9.2 are as under: 9.2 The expenditure incurred does not come in the ambit of the section 40A(9) since the amount contributed is towards the running of schools and colleges meant for the employees of SCCL. The provisions of section 40A(9) of the I T Act are very clear in providing that any payment or contribution made by an employer on behalf of the employees to any fund, trust, society, association or person etc. would not be an allowable expenses except the payment made for expenses provided for under section 36(1)(iv) and (v). Admittedly the payments are not for expenses of the nature under sec. 36(1)(iv) and (v) of the I T Act. If no direct nexus has been established between the expenditure by way of donation and the business of the assessee, such expenditure cannot be allowed deduction under sec. 37 of the I T Act as the same is not expended wholly and exclusively fo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o.17 of 2018 which has been decided on 23.04.2019 and where the Division Bench of the Jharkhand High Court, in paragraph 6, relying upon the aforesaid judgment of the Hon'ble Supreme Court, held as under: "6. We are in agreement with the contention of the appellant that National Coal Wage Agreement is statutory in nature. It is an outcome of tripartite agreement among the Coal Company, Labour Unions and Central Government. It has been held by the Hon'ble Supreme Court in Mohan Mahto Vs. Central Coalfields Ltd. reported in (2007) 8 SCC 549, that it has statutory force. Learned Single Judge came to the aforesaid findings due to following facts and reasons which have been depicted in paragraph 7 of the impugned judgment which reads hereunder: 7. (i) Admittedly, after the death of the deceased-employee, late Laxmi Ravidas on submission of application for compassionate appointment of her eldest son by Samudri Devi (nominee of the petitioner's father), the Management- Company considered the case of the eldest brother of the petitioner, namely, Santosh Ravidas in the year 2004, but, by that time, the said Santosh Ravidas has died, so it cannot be construed that the respond....
X X X X Extracts X X X X
X X X X Extracts X X X X
....assessment order itself records that for assessment year 1995-96, appeal filed by Department in this respect before ITAT was withdrawn. It is not the case of Department that aims and objects of assessee do not permit such expenditure. Fact show that, to provide education towards of its employees who are working at sites which are otherwise away from town, schooling facility is being provided by employer. To provide better facility, the central school organization an undertaking of Union of India is requested to offer it at such site. In this situation, we find that no substantial questions of law as sought to be raised arise out of concurrent finding of CIT and ITAT". 14. The same view was further reiterated in yet another appeal preferred by the Income Tax Department in ITA No.24 of 2019 again before the Division Bench of Nagpur Bench of the High Court of Bombay. Dealing with the fringe benefits and expenses made in the context of value of free issue of coal, medical facilities, educational facilities, grants to school and institutions, sports and recreational facilities, the Nagpur Bench of the Bombay High Court, wherein the deliberation substantially was what is reflected in p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....extended by the appellant/employer is in terms of the clauses that are reflected in the NCWA. The judgments referred to in the preceding paragraphs clearly indicate and lay to rest the issue as to whether it is a statutory document or not, where all the judgments referred to above have clearly held that NCWA is a statutory document and it has binding force of law so far as its enforceability is concerned. 16. Under the circumstances, if we look into the un-amended "Explanation" to Section 115WB(2)(E) of the Act, it would further make it clear that any expenditure which was incurred in order to fulfill a statutory obligation would not be considered as an expenditure for employees welfare. So also, when we look into the subsequent amendment brought to the "Explanation" to Clause E of Sub-Section 2 of Section 115WB, sub-clause (i) it also clearly excludes expenses incurred or payments made to fulfill any statutory obligation. So, under both the circumstances i.e. even prior to the amendment to the explanation w.e.f. 01.04.2009, the expenditure incurred towards the supply of electricity by the appellant to its employees would be excluded for the purpose of treating it as an expenditu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....power generation in the purview of section 32AC of the Act, the benefit of the said provisions has been excluded to the power generation company. The learned AR has submitted that on a plain reading of section 32AC(1) of the Act, if the assessee satisfy the conditions being a company engaged in the business of manufacture or production of any article or thing and acquire/install new assets during the period 1.4.2013 to 31.03.2014, the benefit u/s 32AC is available to the assessee. The learned AR has further submitted that the Hon'ble Supreme Court as well as Hon'ble High Courts have held that the generation and distribution of electricity falls within the meaning of expression "goods" for the purpose of sale tax and therefore, the claim of the assessee cannot be denied on the ground that generation of electricity does not fall in the ambit of provisions of section 32AC(1) of the Act being not in the nature of production or manufacturing of goods and articles. He has relied upon the judgment of the Hon'ble Supreme Court in the case of Tata Consultancy Services vs. State of A.P (271 ITR 401) as well as the judgement in the case of Commissioner of Sales Tax, Madhya Pradesh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e case of ACIT vs. M/s. Hinduja National Power Corporation Ltd in ITA No.235/Hyd/2023, dated 08/01/2025. 13. In rejoinder, the learned AR of the assessee has submitted that the bills referred by the learned DR are in respect of the escalation claimed by the BHEL and not the original invoice/ bills for the supply of plant & machinery and setting up of the same. He has referred to the certificate issued by the Telangana State Power Coordination Committee dated 19/01/2024 regarding the injection of the power generation into State Grid on 12 to 13th March, 2016. 14. We have considered the rival submissions as well as relevant material available on record. For the A.Y 2015-16, the Assessing Officer has considered this issue in para 10.3 as under: The submission of the assessee has been perused. As per Memorandum to Finance Act, 2013, the section 32AC was introduced as a measure to promote socio economic growth. In the memorandum, the power generating companies were not included. In the absence of specific generating companies, and in the absence of specific inclusion of power generating units into the purview of sec. 32AC of the I T Act, the benefits extended as in section 32(i)(ii)....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lation of new asset. Vide this office letter dt.18-12-2018, assessee was asked to submit various certificates which were not complied with. 7.13 i) The assessee could not produce details of type test charges amounting to Rs. 23.98 crores, therefore the dates of acquisition/installation of assets could not be established. It is relevant to note that the asset should have been both acquired and installed in the given period as allowed in the Act. ii) The assessee could not produce certificate as given by project manager on physical verification of Boiler Turbine Generator therefore the date of acquisition could not be established. iii) The assessee could not produce Project manager certificate which verified physical verification BOP supply, therefore the date of acquisition could not be established. 7.14 The information submitted by the assessee indicates only dates of installations of the various new assets and doesn't speak about any dates of acquisition of said assets. Since the construction of power projects takes a minimum period of three to five years. There is likely possibility that the said new assets would have been acquired before the dates mentioned under Section....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed before 31/03/2016. The assessee has relied upon various judgments and most of them are not in respect of the investment allowance u/s 32AC but are on the point of either the generation of power to be considered as production of goods under sales tax or production of goods/articles u/s 32(1)(iia) of the Act. However, in the latest decision, the Coordinate Bench of this Tribunal in case of ACIT vs. Hinduja National Power Corporation Ltd (Supra) has considered this issue and analyzed the provisions of section 32AC visa-vis the provisions of section 32(1)(iia) of the Act in para 15 to 26 as under: "15. We have heard the rival submissions and perused the material on record. Before we deal with the respective contentions and the impact of the decisions cited by both the parties, it is essential to delineate the scheme of the Act, which provides the manner in which the computation of income of business is required to be made. Firstly, we refer to section 32(1)(iia) of the Act, which reads as under : 32. Depreciation. (1) In respect of depreciation of-(i)buildings, machinery, plant or furniture, being tangible assets; (ii) know-how, patents, copyrights, trademarks, licenses, franc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nder clause (iia) shall be allowed under this sub-section in the immediately succeeding previous year in respect of such asset: Provided also that where an asset being commercial vehicle is acquired by the assessee on or after the 1st day of October, 1998 but before the 1st day of April, 1999 and is put to use before the 1st day of April, 1999 for the purposes of business or profession, the deduction in respect of such asset shall be allowed on such percentage on the written down value thereof as may be prescribed. Explanation.-For the purposes of this proviso,-(a)the expression "commercial vehicle" means "heavy goods vehicle", "heavy passenger motor vehicle", "light motor vehicle", "medium goods vehicle" and "medium passenger motor vehicle" but does not include "maxi-cab", "motor-cab", "tractor" and "road-roller";(b) the expressions "heavy goods vehicle", "heavy passenger motor vehicle", "light motor vehicle", "medium goods vehicle", "medium passenger motor vehicle", "maxi-cab", "motor-cab", "tractor" and "road roller" shall have the meanings respectively as assigned to them in section 2 of the Motor Vehicles Act, 1988 (59 of 1988):Provided also that, in respect of the previous ye....
X X X X Extracts X X X X
X X X X Extracts X X X X
....achinery, plant or furniture;(b)intangible assets, being know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature [, not being goodwill of a business or profession]. Explanation 4.-For the purposes of this sub-section, the expression "know-how" means any industrial information or technique likely to assist in the manufacture or processing of goods or in the working of a mine, oil-well or other sources of mineral deposits (including searching for discovery or testing of deposits for the winning of access thereto). Explanation 5.-For the removal of doubts, it is hereby declared that the provisions of this sub-section shall apply whether or not the assessee has claimed the deduction in respect of depreciation in computing his total income;(iia)in the case of any new machinery or plant (other than ships and aircraft), which has been acquired and installed after the 31st day of March, 2005, by an assessee engaged in the business of manufacture or production of any article or thing or in the business of generation, transmission or distribution of power, a further sum equal to twenty per cent of the actual cost of suc....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... that where the actual cost of a motor car is, in accordance with the proviso to clause (1) of section 43, taken to be twenty-five thousand rupees, the moneys payable in respect of such motor car shall be taken to be a sum which bears to the amount for which the motor car is sold or, as the case may be, the amount of any insurance, salvage or compensation moneys payable in respect thereof (including the amount of scrap value, if any) the same proportion as the amount of twenty-five thousand rupees bears to the actual cost of the motor car to the assessee as it would have been computed before applying the said proviso;(2)"sold" includes a transfer by way of exchange or a compulsory acquisition under any law for the time being in force but does not include a transfer, in a scheme of amalgamation, of any asset by the amalgamating company to the amalgamated company where the amalgamated company is an Indian company or in a scheme of amalgamation of a banking company, as referred to in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949) with a banking institution as referred to in sub- section (15) of section 45 of the said Act, sanctioned and brought into force by ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....owed a deduction of a sum equal to fifteen per cent. of the actual cost of such new assets for the assessment year relevant to that previous year: [Provided that where the installation of the new assets are in a year other than the year of acquisition, the deduction under this sub-section shall be allowed in the year in which the new assets are installed:] [Provided further that] no deduction under this sub-section shall be allowed for the assessment year commencing on the 1st day of April, 2015 to the assessee, which is eligible to claim deduction under sub- section (1) for the said assessment year. (1B) No deduction under sub-section (1A) shall be allowed for any assessment year commencing on or after the 1st day of April, 2018.] (2) If any new asset acquired and installed by the assessee is sold or otherwise transferred, except in connection with the amalgamation or demerger, within a period of five years from the date of its installation, the amount of deduction allowed under sub-section (1) [or sub- section (1A)] in respect of such new asset shall be deemed to be the income of the assessee chargeable under the head "Profits and gains of business or profession" of the pre....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... or clause (xiv) of section 47, within a period of five years from the date of its installation, the amount of deduction allowed under sub- section (1) in respect of such new asset shall be deemed to be the income of the assessee chargeable under the head "Profits and gains of business or profession" of the previous year in which such new asset is sold or otherwise transferred, in addition to taxability of gains, arising on account of transfer of such new asset. (3) Where the new asset is sold or otherwise transferred in connection with the amalgamation or demerger or re- organization of business referred to in clause (xiii) or clause (xiiib) or clause (xiv) of section 47 within a period of five years from the date of its installation, the provisions of sub-section (2) shall apply to the amalgamated company or the resulting company or the successor referred to in clause (xiii) or clause (xiiib) or clause (xiv) of section 47, as the case may be, as they would have applied to the amalgamating company or the demerged company or the predecessor referred to in clause (xiii) or clause (xiiib) or clause (xiv) of section 47. (4) For the purposes of this section, "new asset" means any n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he specified states. 18. In light of the above, we are of the opinion that the language used in Section 32 is a plain, simple and unambiguous. Each word of the section is required to be given due interpretation and meaning. In our view, the proviso to Section 32(1)(iia) of the Act is conspicuously silent on including the "business of generation, transmission, and distribution of power" within the scope of the proviso, and such exclusion of Parliament cannot be ignored by including "business of generation, transmission, and distribution of power" by interpretation or by way of stretching the definition of 'manufacturing' or 'article' to include what is not explicitly included in the Proviso to Section 32(1)(iia) of the Act. 18.1 At this stage, we would like to reproduce the scope of proviso to the provision. In this regard, the scope of proviso to the Provision has been discussed by Bennion on Statutory Interpretation Book at page 674 as under : "Section 242 The proviso A proviso is a formula beginning 'Provided that .......', which is placed at the end of section or subsection of an Act, or of a paragraph or sub- paragraph of a Schedule, and the intent....
X X X X Extracts X X X X
X X X X Extracts X X X X
....her than ships and aircraft), which has been acquired and installed after the 31st day of March, 2005, by an assessee engaged in the business of manufacture or production of any article or thing or in the business of generation, transmission or distribution of power. However, the Proviso as only given the benefit to an assessee who sets up an undertaking or enterprise for manufacture or production of any article or thing, on or after the 1st day of April, 2015 in any backward area notified by the Central Government in this behalf, in the State of Andhra Pradesh or in the State of Bihar or in the State of Telangana or in the State of West Bengal. 18.4. Thus, the Proviso has restricted the grant of benefit of 35% only to an undertaking or enterprise for manufacture or production of any article or thing, whereas, in the main Provision, the benefit of 20% was available to business of manufacture or production of any article or thing or in the business of generation, transmission or distribution of power. 19. In the present case, the assessee is engaged in the business of generation, transmission, and distribution of power. Consequently, it does not qualify for the enhanced addition....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ich are engaged in the business of manufacture of production of any article of thing acquires any new assets etc. In our view, the law is required to be read in context and is required to be applied for the purposes it was enacted. The Tribunal or the Court are not permitted to extend the benefit of this beneficial/deduction/exemption provision to the class of assessee which do not specifically fall in the specified category. Therefore, following the same logic and reasoning given hitherto while discussing the scope and ambit of Section 32(1)(iia) of the Act, we are of the opinion that the assessee which is engaged in the business of generation, transmission and distribution of power is not entitled to the benefit as available to other Sections 32AC and 32AD of the Act. 22. The amendment to Section 32(1)(iia) of the Act was carried out w.e.f. 01.04.2013 whereby a distinct class i.e., "the business of generation, transmission, and distribution of power" was added to the already existing class of assessee engaged in "the business of manufacturing or production of any article or thing". However, despite this, when the legislature introduced Sections 32AC and 32AD w.e.f. 01.04.2014 a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the issue involved, whether the time limit within which the declaration is to be filed as provided under Section 10B (8) is mandatory or directory, Section 10B (8) is required to be referred to, which reads as under: "10B (8) Notwithstanding anything contained in the foregoing provisions of this section, where the assessee, before the due date for furnishing the return of income under sub-section (1) of Section 139, furnishes to the Assessing Officer a declaration in writing that the provisions of this section may not be made applicable to him, the provisions of this section shall not apply to him for any of the relevant assessment years." On a plain reading of Section 10B (8) of the IT Act as it is, i.e., "where the assessee, before the due date for furnishing the return of income under sub-section (1) of section 139, furnishes to the Assessing Officer a declaration in writing that the provisions of Section 10B may not be made applicable to him, the provisions of Section 10B shall not apply to him for any of the relevant assessment years", we note that the wording of the Section 10B (8) is very clear and unambiguous. For claiming the benefit under Section 10B (8), the twin condi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of furnishing the declaration before the due date of filing the original return of income under section 139(1) of the Act. As observed hereinabove, for claiming the benefit under section 10B (8), both the conditions of furnishing the declaration and to file the same before the due date of filing the original return of income are mandatory in nature. 10. Even the submission on behalf of the assessee that it was not necessary to exercise the option under section 10B(8) of the IT Act and even without filing the revised return of income, the assessee could have submitted the declaration in writing to the assessing officer during the assessment proceedings has no substance and the same cannot be accepted. Even the submission made on behalf of the assessee that filing of the declaration subsequently and may be during the assessment proceedings would have made no difference also has no substance. The significance of filing a declaration under section 10B (8) can be said to be co- terminus with filing of a return under section 139(1), as a check has been put in place by virtue of section 10B (5) to verify the correctness of claim of deduction at the time of filing the return. If an asse....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rpretation of taxing statute on one hand and exemption notification on the other, have broadly assumed (we are justified to say this) that the position is well settled in the interpretation of a taxing statute: It is the law that any ambiguity in a taxing statute should ensure to the benefit of the subject/assessee, but any ambiguity in the exemption clause of exemption notification must be conferred in favour of revenue - and such exemption should be allowed to be availed only to those subjects/assesses who demonstrate that a case for exemption squarely falls within the parameters enumerated in the notification and that the claimants satisfy all the conditions precedent for availing exemption. Presumably for this reason the Bench which decided Surendra Cotton Oil Mills Case (supra) observed that there exists unsatisfactory state of law and the Bench which referred the matter initially, seriously doubted the conclusion in Sun Export Case (supra) that the ambiguity in an exemption notification should be interpreted in favour of the assessee." 26. Similarly, the Delhi Tribunal in the case of Vedanta Ltd. Vs. ACIT (supra) has relied on the decision of NTPC reported in AIR 2002 SC 18....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the amendment in section 32(1)(iia) of the Act, no corresponding amendment is made in section 32AC of the Act and therefore, the intention of the Legislature is clear that the benefit of section 32AC(1) is not available to a company engaged in the business of generation of power. To maintain the rule of consistency, we follow the earlier decision in the case of ACIT vs. Hinduja National Power Corporation Ltd and consequently, this issue is decided against the assessee and the impugned order of the learned CIT (A) for the A.Ys 2015-16 and 2016-17 are upheld. REVENUE's APPEALS 18. In Revenue's appeal, Ground Nos 1 for all the 3 A.Ys is general in nature and does not require any specific adjudication. 19. Ground No.2 for the A.Ys 2015-16 and 2016-17 is regarding the disallowance made by the Assessing Officer u/s 40(a)(ia) of the Act which was deleted by the learned CIT (A). 20. We have heard the learned DR as well as the learned AR and considered the relevant material available on record. At the outset, we note that this issue is covered by the decision of this Tribunal in assessee's own case for the A.Y 2009-10 to 2011- 12 and further for the A.Ys 2012-13 to 2014-15 vide orders ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... not attract TDS provisions." 9.1 After considering the submissions of the assessee, the AO held that the contention of the assessee that the responsibility of making TDS vests with the authority distributing the compensation to the end beneficiary is not acceptable and, therefore, the interest debited to the P&L Account is disallowed by invoking provisions of section 40(a)(ia) wherein it was stated that any amount of interest exceeding prescribed limit paid or credited without deducting tax at source or deducting tax at source but failed to remit the TDS to the Govt. account, such interest has to be disallowed. .............................................................. 9.5 We have considered the rival submissions and perused the material on record as well as gone through the orders of revenue authorities. The assessee has deposited the interest as per the court directions on the enhanced compensations to be paid to the pattadars. There is no doubt that the assessee was much aware in regard to the payment of interest to the pattadars, but, the assessee has not paid directly to the pattadars. From the submissions made by the assessee, it is clear that this amount has to be....
X X X X Extracts X X X X
X X X X Extracts X X X X
....c under the Land Acquisition Act. Circular : No. 526, dated 5-12-1988. JUDICIAL ANALYSIS EXPLAINED IN - In Special Tehsildar and Land Acquisition Officer v. Dandu Saraswatamma [1994] 205 ITR 587 (AP), the Commissioner addressed a D.O. letter dated 1-3-1987 to the then Revenue Secretary requesting him to issue instructions to all the officers concerned with land acquisition to deduct income- tax on payment of interest and to follow the provisions as laid down under section 194A and other provisions of the Act. In paragraph 2 of that D.O. letter, it was stated that while paying interest, income-tax was deductible at the rates in force during that financial year with effect from 1-4-1975, if the amount exceeded Rs. 1,000. Pursuant to those instructions, the Land Acquisition Officers, while depositing the enhanced compensation amounts in various execution petitions filed before the Subordinate Judge, Kovvur, had deducted income-tax on the interest accrued on the compensation amount. The Court held that the Supreme Court in Rama Bai v. CIT [1990] 181 ITR 400 held that the interest on enhanced compensation for land compulsorily acquired under the Land Acquisition Act awarded by the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....visions of the Act are made applicable. CLARIFICATION TWO I am directed to say that it had recently come to the notice of the Board that there was no uniform practice in vogue in the matter of the deduction of tax at source from interest payments awarded by the Courts of Law in land acquisition cases. At certain places such deduction was being made by the land acquisition authority who was responsible for paying the compensation (along with interest) to the persons whose land had been acquired under the Land Acquisition Act, while at other places, such deduction was being made by the Court of Law which awarded the compensation (with interest), after the concerned authority had deposited the entire amount with the Court, for payment to the concerned parties in accordance with the decree passed by the Court. In the latter case, it is observed that certain Courts were seeking assistance of the concerned Income-tax Authorities for effecting tax deduction at source. It has now been decided in consultation with the Ministry of Law & Justice that the responsibility for making deduction of tax at source undersection 194A of the Income-tax Act, 1961, should be that of the Collector (Lan....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... be required by the court to deposit the entire amount of compensation and interest with it and if the Collector deducts tax from that amount it would be regarded as disobedience of the Court's order. In this connection the following observation made by the Supreme Court in Lt. Col. K.D. Gupta v. UOI [1989] 46 Taxman 124 is considered very relevant : "We see no justification to initiate any contempt proceeding against the respondents for withholding a sum of Rs. 1,20,000 out of the sum of Rs. 4 lakhs directed to be paid to the petitioner. Rs. 1,20,000 have been withheld on the plea that under Chapter XVII of the Income-tax Act, 1961 ('the Act'), the Union of India has the obligation to deduct income- tax at source. The intention of the payer in the facts of the case for withholding the amount cannot be held to be either malafide or is there any scope to impute that the respondents intended to violate the direction of this Court." If out of the decretal amount the Land Acquisition Officer pays the TDS amount to the Central Government and deposits only the balance amount with the Court, in view of the aforesaid ruling, the Court may not hold it as disobedience of its orders. 9.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....#39;ble Delhi High Court has held that the provisions of section 194A do not apply to fixed deposits made in the name of Registrar General of the Court on the directions of the Court during the pendency of proceedings before the Court. In such cases, till the Court passes appropriate orders in the matter, it is not known who the beneficiary of the fixed deposits will be. Amount and year of receipt is also unascertainable. The Hon'ble High Court thus held that the person who is ultimately granted the funds would be determined by orders that are passed subsequently. At that stage, undisputedly, tax would be required to be deducted at source to the credit of the recipient. The High Court has also quashed Circular No 8 of 2011. 3. The Board has accepted the aforesaid judgment. Accordingly, it is clarified that interest on FDRs, made in the name of the Registrar General of the Court or the depositor of the fund on the directions of the Court, will not be subject to TDS till the matter is decided by the Court. However, once the Court decides the ownership of the money lying in the fixed deposit, the provisions of section 194A will apply to the recipient of the income. 22. Accordin....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 5.1 The AO after considering the submissions of the assessee and analyzed the issue elaborately with case law, inter-alia, observed that the contentions of the assessee in this regard are treated as untenable and held that the deduction claimed for the expenditure represented by mine development work-in-progress written off due to closure of the mine is not in accordance with the and accordingly, disallowed the assessee's claim of deduction amounting to Rs. 14,54,302/-, which was confirmed by the CIT(A) when the assessee preferred an appeal before him. ..................................................................... 5.4 We have considered the rival submissions and perused the material on record as well as gone through the orders of revenue authorities. We find that substance in the submissions made by the ld. AR. From the orders of the authorities below, it is clear that the assessee has debited to the capital expenditure in the P&L account in respect of those mines which are not in operation or the mines were unsuccessful for coal mines. It is also clear that the breakups were filed before the CIT(A) which has been incorporated by him in his order. We find that in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....xistence any capital asset of enduring in nature. The Tribunal further found that the decision of the Calcutta High Court in the case of Hindustan Aluminum Corporation Ltd. v. CIT (1986) 55 CTR (Cal.) 237: (1986) 159 ITR 673 (Cal) was applicable and following that decision held that the expenditure was allowable as incurred wholly and exclusively for the purpose of the assessee's business. Therefore, the Tribunal deleted the disallowance. The case relied upon by the Tribunal was subsequently followed in the case of Asiatic Oxygen Ltd. v. CIT (1991) 190 ITR 328 (Cal). This Court in the said case reiterated the view taken in Hindustan Aluminum Corporation Ltd.'s case (supra ). According to us, question No. 4 in this reference stands concluded by the aforementioned two decisions. We, accordingly, answer question No. 4 in the affirmative and in favour of the assessee and against the Revenue." 2. Mr. Bajoria further relied on two decisions of the Supreme Court being respectively the decision in CIT v. A. Gajapathy Naidu [1964] 53 ITR 114 and CIT v. Swadeshi Cotton & Flour Mills (P.) Ltd. [1964] 53 ITR 134 (SC). In A. Gajapathy Naidu (supra ) on the question of power of the ITO....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t stage is not reached-no asset having come into existence-the capital-work-in-progress had to be written off as such." 9. There was no challenge to such finding on facts before the learned Tribunal or even before us. 10. The decision in Delhi Tourism & TDC Ltd. (supra ) is distinguishable on facts in as much as in that case the Delhi High Court had held that the electricity charges for power consumed was a known expenditure and the assessee, on the basis of average, could make a provision for that expenditure in every year of assessment even if no bill was received in a particular year of assessment. 11. Following the judgment in the case of A. Gajapathi Naidu (supra ) the question to be asked is when did the expenditure claimed by way of deduction arise? There would have been no occasion to claim the deduction if the work-in-progress had completed its course. Because the project was abandoned the work-in-progress did not proceed any further. The decision to abandon the project was the cause for claiming the deduction. The decision was taken in the relevant year. It can therefore be safely concluded that the expenditure arose in the relevant year. 12. Reference in this reg....
X X X X Extracts X X X X
X X X X Extracts X X X X
....On appeal to the Supreme Court, held as under: The understanding of the agreement was correct. Once it was so, the amount paid by the assessee to the British company could not be treated as capital expenditure. It was nothing but revenue expenditure and had been rightly held so by the High Court." Respectfully following the above judgments, we set aside the order of the CIT(A) on this issue and accordingly, allow the grounds raised by the assessee on this issue in the respective AYs." 7.2.2 All the facts of the case, Grounds of appeal, statement of facts, online submissions of the appellant, the case laws cited and the assessment order are considered. The submission of the appellant is examined. It is noted that the Hon'ble ITAT, Hyderabad bench in appellant's own case in earlier years has adjudicated the issue in appellant's favour. In view of the decision reproduced as above and respectfully following the higher authorities decision on the issue, the grounds of appeal no. 4 to 5 are allowed." 25. Accordingly, in view of the earlier decisions of this Tribunal in assessee's own case, we do not find any error or illegality in the impugned order of the learned CIT (A) qua t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g, construction of Inter Seam Tunnels, Construction of Steel Bunkers, Construction of Water Dams, construction of water tankers for sand stowing, building retention wall for sand stowing, construction bunkers in mines for workers, construction of check dams in mines to prevent water gushing etc. The entire expenditure was incurred within the mines, which are categorized as plant and machinery for the purpose of depreciation. Functionally the expenditure assumes the nature of plant and machinery in the coal mines. The rate of depreciation has been prescribed as per new Appendix -I - Part - A on tangible assets. Looking at the nature of business of the assessee the mine development expenditures spent by the assessee are to be treated as plant & machineries. There can be different type of expenditures for the different nature of business. In the Income Tax Act, the word "plant & machinery" has not been defined, but, the various courts have defined the plant and machinery as per the conditions existed in given cases. Further on perusal of the submission of the AR of the assessee it has been observed that in assessee's own case while granting investment allowance U/s 32A of the IT A....