M/s. Adani Mining Pvt. Ltd., Ahmedabad V. The DCIT, Circle-1(1)(1), Ahmedabad

CO 12/AHD/2021

AI Insights

The case involves a series of appeals and cross-objections filed by the Revenue and the assessee, M/s. Adani Mining Pvt. Ltd., against the orders of the Commissioner of Income Tax (Appeals), Ahmedabad. The disputes primarily centered around the disallowance of certain expenditures and the treatment of unutilized CENVAT credit and foreign exchange gains. The Tribunal examined the applicability of various sections of the Income Tax Act, 1961, including sections 14A, 35E, and 56, in the context of the expenditures claimed by the assessee and the income reported from various sources including investments and foreign exchange transactions.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 135834 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 22 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 03-10-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 05-07-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 11-03-2021
• Other Referred Cases: CIT vs. Corrtech Energy Private Limited, CIT vs. Winsome Textile Industries Ltd., Pr.CIT vs. Gujarat Gas Company Ltd., CIT vs. Bhogilal Ramjibhai Atara, CIT vs. Mira Processor Pvt Ltd, CIT vs. Nitin S. Garg, CIT vs. Sutlej Cotton Mills Ltd, PCIT vs. Quest Investment Advisors Ltd, CIT vs. Garden Silk Mills Ltd, CIT vs. Essar Steel Ltd
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHRISANJEEVKUMARDEV; ITANOS.AHDWITHC.ONO.AHD
• Assessee Lawyers: HOLDINGTHATTHEBUSINESSOFTHEHAS; USVIDEPARAGRAPHNO.OFTHISORDERINTHE; THEPARENTCOMPANYAEL.SUBSEQUENTLYIT; APPELLATEAUTHORITY; BUTRATIOOFSAIDDECISIONSCANNOTBEMADE
• Keywords: Depreciation

Judgement Text

आयकरअपीलीयअधिकरण , अहमदाबादनयायपीी INTHEINCOMETAXAPPELLATETRIBUNAL, ‘’D’’BENCH,AHMEDABAD BEFORESHRIWASEEMAHMED,ACCOUNTANTMEMBER And SHRISIDDHARTHANAUTIYAL,JUDICIALMEMBER Revenueby:ShriSanjeevKumarDev,CIT.D.R withShriAtulPandey,Sr.D.R Asesseeby:ShriS.N.Soparkar,Sr.Advocate Sl. No(s) ITANo(s)/C.OAsset. Year(s) Appeal(s)by Appellantvs.Respondent AppellantRespondent 1-2ITANo.521/Ahd/2020 withC.O No.5/Ahd/2021 2012-13D.C.I.T., Circle-4(1)(1), Ahmedabad. M/s.AdaniMining Pvt.Ltd.,9 th Floor, ShikharBuilding,Nr. MithakhaliCircle, Navrangpura, Ahmedabad-380009. PAN:AAGCA5276M 3-4 ITANo.562/Ahd/2020 withC.O No.12/Ahd/2021 2013-14D.C.I.T., Circle-4(1)(1), Ahmedabad. M/s.AdaniMining Pvt.Ltd.,9 th Floor, ShikharBuilding,Nr. MithakhaliCircle, Navrangpura, Ahmedabad-380009. PAN:AAGCA5276M 5-6.ITANo.544/Ahd/2020 withC.O No.6/Ahd/2021 2014-15D.C.I.T., Circle-4(1)(1), Ahmedabad. M/s.AdaniMining Pvt.Ltd.,9 th Floor, ShikharBuilding,Nr. MithakhaliCircle, Navrangpura, Ahmedabad-380009. PAN:AAGCA5276M (Applicant)(Respondent) ITAnos.521/AHD/2020withC.ONo.5/Ahd/2021 Asstt.Years2012-13&4others 2 withShriParinShah&Dhrunal Bhatt,A.Rs सुनवाईकीतारीख/DateofHearing:06/07/2023 घोषणाकीतारीख/DateofPronouncement:04/10/2023 आदेश /ORDER PERWASEEMAHMEDACCOUNTANTMEMBER: Thecaptionedappealsandcrossobjectionshavebeenfiledattheinstance ofRevenueandtheassesseeagainsttherespectiveordersoftheLearned CommissionerofIncomeTax(Appeals),Ahmedabadarisinginthematterof assessmentorderpassedunders.143(3)oftheIncomeTaxAct,1961(here-in- afterreferredtoas"theAct")relevanttotheAssessmentYearsasmentionedin thecausetitle. First,wetakeupITANo.521/Ahd/2020,anappealbytheRevenuefor AY2012-13 2.TheRevenuehasraisedfollowinggroundsofappeal: 1.Theld.CIT(A)haserredinlawandonfactsindeletingthedisallowanceu/s.14Ar.w.r8D oftheActforRs.12,264/- 2.Theld.CIT(A),haserredinlawandonfactsindeletingtheadditionofunutilizedCENVAT creditofRs.78,75,505/-u/s.145AoftheAct. 3.TheLd.CIT(A)haserredinlawandonfactsindeletingtheadditionofRs.8,266/-made u/s.41(1)oftheAct. 4.TheLd.CIT(A)haserredinlawandonfactsindeletingthedisallowanceof Rs.367,88,55,328/-madeonaccountoflanddevelopmentexpenditure. 5.TheLd.CIT(A)haserredinlawandonfactsinholdingthatasseseewouldbeentitledto higherdeductionu/s.35Einsubsequentyearswithoutappreciatingthatitwouldbeasubject matterofassessmentinfutureyears,subjecttotheprovisionsoftheAct. 6.TheLd.CIT(A),haserredinlawandonfactsindeletingtheadditionofRs.1,88,50,000/- madeu/s56oftheActbytheAO. ITAnos.521/AHD/2020withC.ONo.5/Ahd/2021 Asstt.Years2012-13&4others 3 7.Theappellantcraves,toleave,toamendand/ortoalteranygroundoraddanewground whichmaybenecessary. 3.ThefirstissueraisedbytheRevenueisthatthelearnedCIT(A)erredin deletingthedisallowancemadebytheAOundersection14Areadwithrule8Dof IncomeTaxRuleforRs.12,264/-only. 4.Thefactsinbriefarethattheassesseecompanyisawhollyowned subsidiaryofAdaniEnterpriseLimitedandengagedintheactivitiesrelatedto developmentoroperationofminessuchasdevelopmentofcoalblocksforthe deliveryofthecoal. 5.TheAOduringtheassessmentproceedingsnoticedthatduringtheyear underconsideration,theinvestmentoftheassesseewasincreasedfromRs. 10,20,000/-toRs.13,20,000/-butnodisallowanceofexpenditureinconnection withtheinvestmentmade,weasdonebytheassesseeasprescribedundersection 14Areadwithrule8DoftheIncomeTaxRule.Thus,theAOinvokedthe provisionsofRule8DofIncometaxruleandworkedouttheamountof disallowanceatRs.12,264/-whichincludesinterestexpensesofRs.6414and administrativeexpensesofRs.5850.00only.TheAOaccordinglymadeadditionof Rs.12,264/-tothetotalincomeoftheassessee. 6.TheaggrievedassesseepreferredanappealbeforethelearnedCIT(A)who deletedtheadditionmadebytheAObyholdingnoexemptedincomeearnedby theassesseefromtheinvestmentmadebyit(theassessee).Therefore,theld. CIT-Aheldthatintheabsenceofexemptedincome,disallowanceundersection 14AoftheActcannotbemade. 7.BeingaggrievedbytheorderofthelearnedCIT(A),theRevenueisin appealbeforeus. ITAnos.521/AHD/2020withC.ONo.5/Ahd/2021 Asstt.Years2012-13&4others 4 8.BoththelearnedDRandARbeforeusvehementlysupportedtheorderof authoritiesbelowtotheextentfavorabletothem. 9.Wehaveheardtherivalcontentionsofboththepartiesandperusedthe materialsavailableonrecord.Fromtheorderoftheauthoritiesbelow,itis undisputedthatnoexemptincomewasearnedbytheassesseeintheyearunder consideration.Thus,thequestionariseswhethertheprovisionofsection14Aof theActcanbeinvokedintheabsenceofexemptedincome.Thequestionhas beenansweredbytheseveralHon’bleHighCourtsincludingthejurisdictionalHigh CourtofGujaratinthecaseofCITvs.CorrtechEnergyPrivateLimitedreportedin 45taxmann.com116.TheHon’bleGujaratHighCourtintheabove-mentioned caseheldthattheprovisionofsection14AoftheActcannotbeappliedinthe absenceofanyexemptedincome.TherelevantobservationoftheHon’bleBench readsasunder: Section14A(1)providesthatforthepurposeofcomputingtotalincomeunderchapterIV, nodeductionshallbeallowedinrespectofexpenditureincurredbytheassesseeinrelation toincomewhichdoesnotformpartofthetotalincomeundertheAct.Intheinstantcase, theTribunalhasrecordedthefindingoffactthattheassesseedidnotmakeanyclaimfor exemptionofanyincomefrompaymentoftax.ItwasonthisbasisthattheTribunalheld thatdisallowanceundersection14Acouldnotbemade.Intheprocesstribunalreliedon thedecisionofDivisionBenchofPunjabandHaryanaHighCourtincase ofCITv.WinsomeTextileIndustriesLtd.[2009]319ITR204inwhichalsotheCourthad observedthatwheretheassesseedidnotmakeanyclaimforexemption,section14A couldhavenoapplication. 9.1RespectfullyfollowingtheorderoftheHon’bleJurisdictionalHighCourtas mentionedabove,wedonotfindanyreasontointerfereinthefindingofthe learnedCIT(A).Therefore,weupholdthesame.Accordingly,thegroundofappeal oftheRevenueisherebydismissed. 10.ThenextissueraisedbytheRevenueisthatthelearnedCIT(A)erredin deletingtheadditionmadebytheAOonaccountofunutilizedCENVATcreditof Rs.78,75,505/-only. ITAnos.521/AHD/2020withC.ONo.5/Ahd/2021 Asstt.Years2012-13&4others 5 11.Theassesseeinitsauditedfinancialstatementhasshownanunutilized CENVATCreditamountingtoRs.78,75,505/-ason31March2012.Theassessee duringtheassessmentproceedingsclaimedthattheimpugnedCENVATCredit representsagainsttheservicesreceivedbyitandassuchitdoesnotpertainto theinventoriesasenvisagedundertheprovisionsofsection145AoftheAct. Accordingly,theassesseeclaimedthattheprovisionsofsection145AoftheAct donotapplytoit. 12.However,theAOwasnotsatisfiedwiththecontentionoftheassesseeon thereasoningthataspertheprovisionsofsection145AoftheAct,theassesseeis liabletoincludetheamountofduty,cess,taxetc.intheamountofpurchases, salesandtheclosingstock.Accordingly,theAOaddedtheamountofCENVAT Creditasonthebalancesheetdatetothetotalincomeoftheassessee. 13.AggrievedassesseepreferredanappealtothelearnedCIT(A)whodeleted theadditionmadebytheAObyfollowingtheorderofthistribunalinowncaseof theassesseeforA.Y.2011-12inITANo.1972/Ahd/2015. 14.BeingaggrievedbytheorderofthelearnedCIT-A,theRevenueisin appealbeforeus. 15.BoththelearnedDRandtheARbeforeusreliedontheorderofthe authoritiesbelowtotheextentfavourabletothem. 16.Wehaveheardtherivalcontentionsofboththepartiesandperusedthe materialsavailableonrecord.Attheoutset,wefindthattherewasidentical additionmadebytheAOintheowncaseoftheassesseeforAY2011-12andthe disputetravelleduptothisTribunalinrevenue’sappealbearingITANo. 1972/AHD/2015whereinthecoordinatebenchvideorderdated25 th September 2019decidedtheissueagainsttheRevenuebyobservingasunder: ITAnos.521/AHD/2020withC.ONo.5/Ahd/2021 Asstt.Years2012-13&4others 6 9.Wehaveheardtherivalcontentionsofboththepartiesandperusedthematerials availableonrecord.TheallegationoftheAssessingOfficerintheinstantcaseisthatthe assesseewhilevaluingtheclosingstockofitsgoodsason31/03/2011hasnotincluded theamountofCENVATwhichiscontrarytotheprovisionsofsection145AoftheAct. Therefore,theclosingstockoftheassesseewasenhancedbytheamountofCENVAT creditofRs.29,60,018/-asattributabletotheclosingstockoftheassessee. 9.1However,theLd.CIT(A)deletedtheadditionmadebytheAssessingOfficerby observingthattheassesseehasbeenfollowingitsmethodofvaluationconsistentlyand therewasnodissatisfactionoftheAssessingOfficeraboutthecorrectness/completeness ofthebooksofaccountsoftheassessee. 9.2Fromtheprecedingdiscussion,wenotethattheassesseehasbeenrecordingits transactionsofpurchase,sales,andvaluationofinventories,netofCENVATconsistently. Thus,iftheinventoryofclosingstockisenhancedbytheamountofCENVATcredit attributabletoit,thentheamountofcorrespondingpurchasesshouldalsobeincreasedby thesaidamountwhichwillresultintaxneutralexercise.Thus,inourconsideredview,the AssessingOfficererredinenhancingthevalueoftheclosingstockwithoutgivingeffectto thepurchases.Inthisregard,wefindsupportandguidancefromthejudgmentofHon’ble GujaratHighCourtinthecaseofPr.CITvs.GujaratGasCompanyLtd.InTaxAppeal No.90of2017videorderdated07/02/2017,whereinitwasheldasunder: “3.03.Now,sofarasquestionNo.[B]i.e.withrespecttoadditionmadebythe A.O.onaccountofunutilizedmodvat/cenvatcreditofRs.56,08,089/-isconnected, itisrequiredtobenotedthatthelearnedtribunalhastakennotethatwithrespect tomodvatreceivableaccount,thereiscorrespondinglessdebittothepurchase accountandhencetothatextentthereisalreadyincomeofferedfortax.Ifthatbe so,therewasnoquestionoffurtheraddingmodvat/cenvatcredittotheincomeof theassesseefortheyearunderconsideration.Underthecircumstances,wesee noreasontointerferewiththeimpugnedjudgementandorderpassedbythe learnedtribunalsofarasconfirmingtheorderpassedbythelearnedCIT(A) deletingtheadditionmadebytheA.O.onaccountofunutilisedmodvat/cenvat creditofRs.56,08,089/-.Weareincompleteagreementwiththeviewtakenby thelearnedtribunal.” 9.3Thereisnoambiguitythattheassesseehasbeenfollowingtheexclusivemethodof accounting.Inviewoftheabove,weconcurwiththeviewoftheLd.CIT(A)and accordinglydeclinetointerfereinhisorder.Hence,thegroundofappealoftheRevenueis dismissed. 16.1Beforeus,nomaterialhasbeenplacedonrecordbytheRevenue demonstratingthatthedecisionoftheTribunalasdiscussedabovehasbeenset aside/stayedoroverruledbytheHigherJudicialAuthorities.Beforeus,Revenue hasnotplacedanymaterialonitsrecordpointingoutanydistinguishingfeaturein thefactsofthecasefortheyearunderconsiderationandthatofearlieryearnor hasplacedanycontrarybindingdecisioninitssupport.Thus,respectfully followingtheorderofthistribunalintheowncaseofassessee,wedonotfindany infirmityinthefindingofthelearnedCIT(A).Hencethegroundofappealofthe Revenueisherebydismissed. ITAnos.521/AHD/2020withC.ONo.5/Ahd/2021 Asstt.Years2012-13&4others 7 17.ThenextissueraisedbytheRevenueisthatthelearnedCIT(A)erredin deletingadditionofRs.8,266/-madebytheAOundersection41(1)oftheAct. 18.TheAOduringtheassessmentproceedingsfoundthattherewastrading liabilityforRs.8266/-from2partiesoutstandingformorethan3yearsi.e. beyondlimitationperiodasprovidedunderLimitationAct1963.Therefore,theAO proposedtotreatthesameliabilityasceasedtoexistaspertheprovisionof section41(1)oftheAct. 19.Theassesseesubmittedthattheprovisionofsection41(1)oftheAct cannotbeinvokedmerelysincecertainliabilityisoutstandingbeyondthe limitationperiod.Iftheassesseecontinuestotreataliabilityaspayableanddoes notwriteoffthesameinthebooksofaccount,thesamecannotbepresumedas ceasetoexist.Theassesseeinsupportofitscontentionrelieduponthedifferent judgmentsofHon’bleGujaratHighCourtdetailedasunder: 1.CITvs.BhogilalRamjibhaiAtara43taxmann.com55 2.CITvs.MiraProcessorPvtLtd[2012]208Taxman93 3.CITvs.NitinSGarg[2012]208Taxman16 20.However,theAOdisagreedwiththecontentionoftheassesseeandheld thataspertheprovisionofPart-1ofDivision-IoftheLimitationAct1963a liabilitypertainingtothecurrentaccountceasestoexistafterthecompletionof3 yearsfromendoftheyearinwhichlastofitemadmittedintotheaccount.Inthe caseoftheassessee,thetradingliabilityfromwhichbenefitarisestotheassessee isoutstandingformorethan3yearsandtherefore,thesameisliabletobetaxed undertheprovisionsofsection41(1)oftheAct.Thus,theAOaddedthesameto thetotalincomeoftheassessee. 21.TheaggrievedassesseepreferredanappealbeforethelearnedCIT(A)and reiterateditscontentionasmadebeforetheAO. ITAnos.521/AHD/2020withC.ONo.5/Ahd/2021 Asstt.Years2012-13&4others 8 22.ThelearnedCIT(A)concurredwiththesubmissionofassesseeanddeleted theadditionmadebytheAObyholdingthattheassesseecontinuestoshow liabilityinthebooksofaccountaspayable.Furtherthereisnomaterialonrecord whichcouldsuggestthatthepartieshavewaivedoffrighttorecoversuch outstandingamountfromtheassessee. 23.BeingaggrievedbytheorderofthelearnedCIT-A,theRevenueisin appealbeforeus. 24.BoththelearnedDRandtheARbeforeusreliedontheorderofthe authoritiesbelowtotheextentfavourabletothem. 25.Wehaveheardtherivalcontentionsofboththepartiesandperusedthe materialsavailableonrecord.Admittedly,theassesseehasshownacertain tradingliabilityamountingtoRs.8,266/-whichwereoutstandingformorethan3 years.TheAO,byreferringtotheprovisionofLimitationAct1963,heldthat liabilityhasceasedtoexist.Thus,theAO,byinvokingtheprovisionofsection 41(1)oftheAct,treatedthesameasincomeoftheassessee. 25.1Theprovisionofsection41(1)oftheActstatesthatdeductionor allowancesonaccountoftradingliabilityincurredbytheassesseemadeinany yearbuttheassesseesubsequentlyinanypreviousyearderiveanybenefitbeitin cashorinothermannerinrespectofsuchtradingliabilitybywayofremissionor cessationthenthevalueofsuchbenefitshallbedeemedasincomeofthe assesseeinthatpreviousyear.Thus,thecoretotaxthetradingliabilityunder section41(1)oftheActisthattheremustberemissionorcessationoftheliability inthepreviousyear.Ithasnothingtodowiththeprovisionoflimitation.An amountwillbetaxedundersection41(1)oftheActonlyinthecasewherethe conditionprescribedinthesaidsectionisfulfilled.Inthecaseonhand,the assesseeisstillshowingtheamountaspayable,thecreditorhasnowherestated thattheyhavewaivedofftherighttoclaimrecoveryandalsothereisnomaterial ITAnos.521/AHD/2020withC.ONo.5/Ahd/2021 Asstt.Years2012-13&4others 9 onrecordbroughtbytheAOwhichcouldsuggestthatthetradingliabilityshown bytheassesseehasceasedtoexistandthattoointheyearunderconsideration. Thus,inabsenceofanymaterialthattheliabilityhasceasedtoexistintheyear underconsideration,thesamecannotbetaxedundersection41(1)oftheAct.In holdingso,wedrawsupportandguidancefromthejudgmentofHon’bleGujarat HighcourtincaseofCITvs.BhogilalRamjibhaiAtarareportedin43taxmann.com 55whereinitwasheldasunder: 8.WeareinagreementwiththeviewoftheTribunal.Section41(1)oftheActas discussedintheabovethreedecisionswouldapplyinacasewheretherehasbeen remissionorcessationofliabilityduringtheyearunderconsiderationsubjecttothe conditionscontainedinthestatutebeingfulfilled.Additionally,suchcessationorremission hastobeduringthepreviousyearrelevanttotheassessmentyearunderconsideration.In thepresentcase,bothelementsaremissing.Therewasnothingonrecordtosuggest therewasremissionorcessationofliabilitythattooduringthepreviousyearrelevantto theassessmentyear2007-08whichwastheyearunderconsideration.Itisundoubtedlya curiouscase.Eventheliabilityitselfseemsunderseriousdoubt.TheAssessingOfficer undertooktheexercisetoverifytherecordsofthesocalledcreditors.Manyofthemwere notfoundatallinthegivenaddress.Someofthemstatedthattheyhadnodealingwith theassessee.Inoneortwocases,theresponsewasthattheyhadnodealingwiththe assesseenordidtheyknowhim.Ofcourse,theseinquiriesweremadeexparteandinthat viewofthematter,theassesseewouldbeallowedtocontestsuchfindings.Nevertheless, evenifsuchfactswereestablishedthroughbi-parteinquiries,theliabilityasitstands perhapsholdsthattherewasnocessationorremissionofliabilityandthattherefore,the amountinquestioncannotbeaddedbackasadeemedincomeundersection41(c)fthe Act.Thisisoneofthestrangecaseswhereevenifthedebtitselfisfoundtobenon- genuinefromtheveryinception,atleastintermsofsection41(1)oftheActthereisno cureforit.Bethatasitmay,insofarastheordersoftheRevenueauthoritiesare concerned,theTribunalnothavingmadeanyerror,thisTaxAppealisdismissed. 25.2Inviewoftheabovedetaileddiscussion,wedonotfindanyinfirmityinthe orderofthelearnedCIT(A).Hencethegroundofappealoftherevenueishereby dismissed. 26.ThenextissueraisedbytheRevenueisthatthelearnedCIT(A)erredin deletingtheadditionmadebytheAOonaccountoflanddevelopmentexpenditure forRs.367,88,55,328/-andfurthererredinholdingthattheassesseewouldbe entitledtohigherdeductionundersection35EoftheActinthesubsequentyears. 27.ThenecessaryfactsarethattheGovernmentofIndia(Ministryofcoal) allottedcoalminetoRajasthanRajyaVidhyutUtpadanNigamLtd(RRVUNL)in ITAnos.521/AHD/2020withC.ONo.5/Ahd/2021 Asstt.Years2012-13&4others 10 ParsaKentecoalblockChhattisgarhintheyear2007.TheRRVUNLformajoint venturewithM/sAdaniEnterpriseLtd(AEL)underthenameandstyleM/sParsa KenteColleriesLtd(PKCL).RRVUNLawardedthecontracttodevelopandoperate thecoalminestoPKCL.Subsequently,theassesseecompany(awhollyowned subsidiaryofAEL)enteredintoanagreementwithPKCLtodevelopandoperate thesaidcoalminesonasub-contractbasis.Aspertheagreement,theassessee undertakesthefollowingresponsibilities: 3.2.1ScopeofWork Thecontractorshallperformthescopeofworkandundertaketheobligationssetout hereinbelow(theWorks) Thescopeofworkofthecontractorwouldbetocarryoutallworksstatedhereunder: FixingoftheBlockBoundary Obtainingofprospecivelicence Exploring&GeologicalReport LandAcquisition Preparationandapprovalofminingplan Obtainngclerances/approvalsfromtheMinistryofEnvironmentandForest Executionofmininglease PreparationofDRP ObtainingLicenses/permissionsrequiredcommencingminingoperations Settingupofcoalwasheryandwashingofcoaloftherequiredspecificationsrequiredby RVUNLthermalpowerstationsand CoalmininganddeliveringCoaltoRVUNL’’sThermalPowerStations. SettingupRailwaysidingbyitselforunderaspecialpurposevehicle/jointVenture AllexpensesincurredfortheworksshallbebornebytheContractor,includingallexpenses inrelationtothecostofacquisitionofland/leaseofland,rehabilationandresettlement; feesandarrangingallclearances,reportsandlicensesfortheTermofAgreementandno expense/liabilitiesshallbeborne/sharesbyPKCL/RVUNLatanystage. 27.1Fromtheabove,thejoboftheassesseecomprisesworkstartingfrom prospecting/explorationofcoalblock,acquisitionofland,developmentformining, mining/extractionofcoal,washingofcoalinrequiredspecificationofRRVUNLand deliveryofcoal.Theassesseefromsuchmineswillgeneraterevenuebasedon pertonofcoalextracted. 27.2Theassesseeinrelationtosuchcoalminesincurredvariousexpenseson accountoflandacquisition,differentcompensationtoforestdepartment, developmentofplanandtheirapprovaletc.whichweredescribedas“Land developmentexpenses”.Assuch,theassesseeduringtheyearclaimedland developmentexpensesofRs.367,88,55,328/-whichwereshownascapitalwork ITAnos.521/AHD/2020withC.ONo.5/Ahd/2021 Asstt.Years2012-13&4others 11 inprogressinthebooksofaccounts.However,theassesseeinthereturnof incomefiledfortheyearunderconsiderationclaimedlanddevelopmentexpenses tothetuneofRs.366,89,51,134/-outsuchlanddevelopmentexpensesas businessexpensesundersection37oftheAct. 27.3Theassesseeduringtheassessmentproceedingcontendedthatcoalblock isitsbusinessunitfromwhichitwillgeneraterevenueonbasisofpertonofcoal extracted.Assuch,ittakestheresponsibilityofseriesofworkessentialfor extractionofcoal.Anyactivitycarriedoutwhichisessentialtobetakenoutbefore commercialextractionwillamounttobusinessactivityorcommencementof businessactivity.Assuch,thebusinessinrelationtosuchcoalminesstartedin theyear2009whenitcarriedtheactivitylikesexploratorydrilling,preparationof geologicalreport,submissionofminingplanttoMinistryofCoalwhichultimately approvedinmonthofJuly2009.Activitiessuchasexplorationoflandand exploratorydrillingandbasedonwhichthepreparationofgeologicalreportofthe landareveryessentialtoextractthecoal.Thus,expenditureondevelopmentof suchcoalblockwhichmainlycomprisesoftheexpensesincurredongeological report,compensationpaidtoMinistryofEnvironmentandForestandamountpaid forlandacquisitionetc.areliabletobeallowedasbusinessexpensesintheyear underconsiderationonthegroundofcommercialexpediency.Theassessee referredtotheprovisionofsection3(1)oftheActwherethepreviousyearhas beendefinedfornewlysetupbusinessorprofessionvideprovisotosaidsection. Theassesseeaccordingtosaidprovisioncontendedthatthecommencementof businessshallbeconsideredfromthepointofsetupofthebusinessbutnotfrom thedateoffirstcommercialsale.Assuch,businessisacontinuouscourseof essentialactivitieswhichgoestoestablishthesourceofincome.Theassessee regardingthetreatmentoflanddevelopmentexpenditureinthebooksofaccount submittedthatthetreatmentgivenofcertaintransactionsinthebooksofaccount isnotconclusiveevidencewithregardtoallowances/claimofdeductionunderthe Act.Assuch,theallowabilityofsuchaclaimshallbeconsideredinrelationtothe provisionsoftheIncomeTaxAct. ITAnos.521/AHD/2020withC.ONo.5/Ahd/2021 Asstt.Years2012-13&4others 12 28.However,theAOdisagreedwiththecontentionoftheassessee.TheAO foundthattheassesseeintheauditedbooksofaccounttreatedtheland developmentexpenditureascapitalworkinprogressandnote(12)tobalance sheetclearlyshowstheassessee’sintentionthattheexpensesincurredwere meantforcapitalization.TheAuditoralsoinnote32(a)ofthereportalsoreported thatsaidexpenditureonprojectdevelopmentistobecapitalizedandwillbe apportionedtotheassetsonthestartofbusiness.Thecommentmadebythe auditorhasbeendulyapprovedbythemanagement.TheAOfurtherfoundthat theassesseeintheimmediatelyprecedingassessmentyearalsotreatedthe expensesincurredinrelationdevelopmentofcoalmineascapitalworkinprogress inthebooks.Theexpendituresincurredintheimmediatelyprecedingassessment yearweretreatedasCWIPinthereturnofincome.Theassesseecannotgive differenttreatmentofthesametransactionunderdifferentActasperits convenience.Themethodorprincipleadoptedbytheassesseeinaccountancy shouldbeconsistent. 28.1TheAOwithoutprejudicetoabovefurtherfoundthattheassesseehasnot recognizedanyincomefromthecoalmineprojecttilltheyearunderconsideration. Therefore,anyclaimundersection37oftheActcannotbeallowedunless businessoperationstarts.Theapplicabilityofsection35EoftheActshallalsobe examinedintheyearinwhichcommercialproductioncommences.Assuch, commercialproductionisthepreconditionundertheprovisionsofsection35Eof theAct.Thus,theAOinviewoftheabovedisallowedtheclaimoftheassessee forlanddevelopmentexpenditureamountingto3,67,88,55,328/-andaddedthe sametothetotalincome. 29.AggrievedassesseepreferredanappealbeforethelearnedCIT(A)and madesimilarcontentionsasmadeduringtheassessmentproceedings. ITAnos.521/AHD/2020withC.ONo.5/Ahd/2021 Asstt.Years2012-13&4others 13 30.ThelearnedCIT(A)afterconsideringthefactsintotalitydeletedthe additionmadebytheAO.TherelevantfindingofthelearnedCIT(A)inthisregard arecontainedatpage51to71videparagraphsNos.9.5to9.13ofhis/herorder. ThefindingofthelearnedCIT(A)canbroadlybesummarizedasunder: (a)Theassesseecompanywasincorporatedwithobjecttoexploringand miningandthebusinessactivityinconnectionwithextractionandsupplyof coal&relatedminerals. (b)Theassesseehascarriedouttheworkinrelationtoexplorationofmines, varioustypesofapprovalsetc.wereobtainedwhichwereessentialfor developmentofminesandextractionofminerals.Thelawhasbeenfairly settledbythevariousCourtthatforthecommencementofbusinessitis notnecessarythatentirebusinessshouldgotsetupandcommercial productionstarted.Assuch,itshallbeconsideredfromthepointwherethe essentialactivitygotstarted.Therefore,theexpenditureincurredinsetting upthebusinessisanallowablededuction. (c)Theassesseeduringtheassessmentproceedingsexplainedandestablished thattherewerevariousessentialactivitiesinrelationtothedevelopmentof minewhichhavebeencarriedout.Suchactivitieswerealsonotdoubtedby theAO. (d)Intheimmediatepreviousyear,theassesseeclaimedexpenditureon developmentofsuchcoalprojectforRs.99.04lacsrelatingtoexploration, prospecting,andmining.Theissueofclaimhasbeendiscussedbythe predecessorAOintheassessmentorderundersection143(3)forA.Y. 2010-11dated19 th March2013andafterelaborateddiscussion,theAO acceptedtheclaimoftheassesseebyholdingthatthebusinessofthehas beensetup.Thus,oncetheAOinearlieryearacceptedtheclaimofthe assesseeafterdetaileddiscussionandapplicationofmind,thesamecannot bechangedinsubsequentassessmentyears.ThefindingoftheAOinthe currentassessmentorderthattheassesseehasnotclaimeddevelopment expenditureasrevenueinearlieryearisfactuallyincorrect. ITAnos.521/AHD/2020withC.ONo.5/Ahd/2021 Asstt.Years2012-13&4others 14 (e)TheAOmainlydisallowedtheclaimoftheassesseebasedonthe presentationmadeinthefinancialstatement.Assuch,nodoubtraisedby theAOaboutgenuinenessoftheexpenditureincurred.Aspertheprinciple laiddownbytheHon’bleSupremeCourtinthecaseofM/sSutlejCotton MillsLtdreportedin116ITR1andotherseriesofjudgment,thetreatment giveninbooksofaccountisimmaterial. (f)Theassesseeduringtheassessmentproceedingsexplainedthenatureof expenses,submittedrelevantdocuments,andrelieduponvariouscaselaws. TheAOneitherrebuttedthecontentionmadeandmaterialsuppliedbythe assesseenorpointedouthowthecaselawsreliedonbytheassesseewere notapplicable. (g)Onceithasbeenheldthatbusinessoftheassesseehasalready commenced,thereforetheprovisionofsection35EoftheActalsobecame applicableinthegivenfactsandcircumstances. 31.BeingaggrievedbytheorderoftheleanedCIT(A),theRevenueisin appealbeforeus. 32.ThelearnedDRbeforeusreferredtotheassessmentorderandreiterated thefindingsoftheAOcontainedtherein. 33.Ontheotherhand,thelearnedARbeforeusfiledanoteonthesetupof thebusinessactivitiesvideletterdated13-07-2023,inter-aliacontendingthatthe assesseehasalreadystarteditsmajoractivitiesandthisfactwasalsoadmittedby theRevenueintheearlierassessmentorder.Theld.ARalsoreliedonvarious judicialpronouncementsinsupportofhiscontentionswhichareavailableon record.Theld.ARvehementlysupportedtheorderoftheld.CIT-A. 34.Wehaveheardtherivalcontentionsofboththepartiesandperusedthe materialsavailableonrecord.Inthepresentcase,theassesseehasclaimeda deductiononaccountofanexpenditureof₹366,89,51,134/-undertheheadland ITAnos.521/AHD/2020withC.ONo.5/Ahd/2021 Asstt.Years2012-13&4others 15 developmentexpenditureinthecomputationofincomewhichwereclassifiedas capitalworkinprogressinthebooksofaccounts.First,wenotethattheamount ofexpenditureis₹366,89,51,134/-buttheAOinadvertentlyhasmadethe disallowanceof₹Rs.367,88,55,328/-only.Aspertheassessee,theamountof ₹99.04lakhsbeingthedifferenceintheamountasdiscussedaboverepresents theamountclaimedasdeductioninthepreviousassessmentyearwhichwasalso allowedbytheAOintheassessmentframedundersection143(3)oftheAct. Thus,accordingtoourunderstandingtheamountwhichisindisputestandsat₹ 366,89,51,134/-andnotRs.367,88,55,328/-onlychallengedbytherevenuein thegroundofappeal. 34.1The1 st controversyrelateswhethertheentriesrecordedinthebooksof accountscanbeconsideredforthepurposeofthedisallowanceoftheclaimmade bytheassessee.Ithasbeenjudiciallypronouncedtimeandagainbythevarious Hon’bleCourtsthattheentriesrecordedinthebooksofaccountscannotbetaken asconclusiveevidencefordecidingwhethertheassesseeiseligiblefordeduction. Assuch,whethertheassesseeiseligiblefordeductionornot,itmustbetestedin accordancewiththeprovisionsoflawandnotasperthebooksofaccountsuntil andunlessitisprovidedsounderthespecificprovisionsoftheAct.Thereisno disputethattheassesseehasclassifiedlanddevelopmentexpenditureascapitalin natureinitsfinancialstatement.Buttheassesseehasclaimedthesameas revenueexpenditurereturnofincomefiledundertheAct.Toourunderstanding, theclaimoftheassesseecannotbedeniedmerelyonthereasoningthatthe assesseehasrecordedthetransactionsinthebooksofaccountsinaparticularor differentmanner.Itisbecauseaccountingentriesarenottheparameterfor drawinganyinferenceabouttheexpensesorthedeductionclaimedbythe assesseewhetherallowableornot.Inholdingso,wedrawsupportandguidance fromthejudgementofHon’bleSupremeCourtinthecaseofM/sSutlejCotton MillsLtdreportedin116ITR1whereinitwasheldasunder: “Itisnowwellsettledthatthewayinwhichentriesaremadebyanassesseeinhisbooks ofaccountisnotdeterminativeofthequestionwhethertheassesseehasearnedanyprofit orsufferedanyloss.Theassesseemay,bymakingentrieswhicharenotinconformity ITAnos.521/AHD/2020withC.ONo.5/Ahd/2021 Asstt.Years2012-13&4others 16 withtheproperaccountancyprinciples,concealprofitorshowlossandtheentriesmade byhimcannot,therefore,beregardedasconclusiveonewayortheother.” 34.2Thenextcontroversyrelatestowhetherthebusinessoftheassesseehas commencedintheyearunderconsiderationornot.Aspertherevenue,the assesseehasnotcommenceditsbusinessactivitiesintheyearunder consideration.However,thefindingoftheAOonthisissueiscontrarytothefacts availableonrecord.TheAOintheassessmentorderundersection143(3)ofthe ActforA.Y.2010-11dated19 th March2013hasheldthatthebusinessactivityof theassesseehascommenced.Thus,thereremainsnoambiguitytothefactthat theAOintheowncaseoftheassesseeintheearlierassessmentyearhas admittedthattheassesseehascommenceditsbusiness.Inourconsideredview oncetheAOhimselfhasadmittedthecommencementofthebusinessofthe assesseethentherevenuecannottakeadifferentstandinthelateryear. 34.3WealsonotethattheHon’bleGujaratHighCourtinvolvingidenticalfacts andcircumstancesinthecaseofCommissionerofIncome-tax,GandhiNagarv. GujaratPortsInfrastructureandDevelopmentCo.Ltd.reportedin20 Taxmann.com10hasheldasunder: 14.Onthebasisofsuchmaterials,ifwerevertbacktothedecisionoftheTribunal underchallengewenoticethattheTribunalhadcometotheconclusionthatthe assesseehadsetupitsbusiness.WeareoftheopinionthattheTribunalcommitted noerror.Asalreadynoted,themainobjectsofthecompanyincludedwidevariety ofsubjectsprincipallyconcernedwiththedevelopmentofminorportsinand outsideStateofGujarat.Thiscouldbedonebyactingaspromoters,organizers, managersanddevelopersoftheportsoralsothroughenteringintojointventure undertaking.Thesubsidiaryobjective,incidentaltothemainobjectsalsoenvisaged thecompanytoworkandactasagentoftheGovernment,MunicipalLocalBoards, RailwayContractorsetc. 15.Infurtheranceofsuchobjects,principalaswellasancillary,theassessee companyhavingenteredintoajointventurewithanothercompany,whichwas developingportsatMundra,itcannotbestatedthatthebusinessofthecompany wasnotsetup. 16.Itisnotindisputethatanyexpenseincurredpriortothesettingupofa businesswouldnotbeapermissiblededuction.InthecaseofPremConductorsPvt. Ltd.v.CIT[1977]108ITR65,theDivisionBenchofthisCourtrelyingonand referringtothedecisionoftheBombayHighCourtinthecaseofWesternIndia VegetableProductsLtd.v.CIT[1954]26ITR151observedthatfordecidingwhen ITAnos.521/AHD/2020withC.ONo.5/Ahd/2021 Asstt.Years2012-13&4others 17 acompanycouldbesaidtohavesetupitsbusiness,whattheCourthastoconsider iswhetherthebusinessoftheassesseeconsistsofdifferentcategoriesandwhether theactivity,whichwasstartedearlierissaidtohavebeentheessentialpartofthe businessactivityoftheassessee.TheCourtheldandobservedasunder:- "Thus,itisclearinthelightofthedecisionsofthisHighCourtinSaurashtra CementandChemicalIndustries'case[1973]91ITR170(Guj)andSarabhai ManagementcorporationLtd.'scase[1976]102ITR25(Guj)thatwhatthe courthastoconsideris,whetherthebusinessoftheassesseeconsistsof differentcategoriesandwhethertheactivitywhichwasstartedearlierthanthe actualcommencementoftheproductionintheinstantcasecouldbesaidto havebeenanessentialpartofthebusinessactivityoftheassessee.The companycanbesaidtohavesetupitsbusinessfromthedatewhenoneofthe categoriesofitsbusinessactivityisstartedanditisnotnecessarythatallthe categoriesofitsbusinessactivitiesmuststarteithersimultaneouslyorthatthe laststagemuststartbeforeitcanbesaidthatthebusinesswassetup.Again, asBhagwatiC.J.HasemphasizedinSaurashtraCementandChemical Industries'case[1973]91ITR170(Guj),thetesttobeappliedisastowhena businessmanwouldregardabusinessasbeingcommencedandtheapproach mustbefromacommonsensepointofview." 17.Inviewoftheabovejudicialpronouncement,thefindingsoftheTribunaland ourobservationsmadehereinabove,weseenoreasontointerfere.Wemayalso noticethatintheearlieryears,thecaseoftheassesseethatithadsetupthe businesswasnotquestionedbytheAssessingOfficer. 34.4Besidestheabove,wenotethatthelearnedCIT-Aappealhasgiven detailedandreasonedfindingthattheactivityoftheassesseehascommenced whichhasnotbeencontrovertedbythelearnedDRappearingonbehalfofthe revenue. 34.5Regardingthegroundofappealraisedbytherevenueconcerningtothe provisionsofsection35EoftheAct,wenotethatwehavealreadytreatedthe expenditureof₹366,89,51,134.00asrevenueinnatureandallowedthededuction ofthesameundertheprovisionsofsection37oftheAct.Therefore,theissue raisedbytherevenueconcerningtheprovisionsofsection35EoftheActbecomes infructuous.Assuch,noseparateadjudicationisrequired. 34.6Thus,inviewoftheabovewerefrainourselvesfrominterferinginthe findingofthelearnedCIT-A.Accordingly,weupholdthefindinggivenbythe ITAnos.521/AHD/2020withC.ONo.5/Ahd/2021 Asstt.Years2012-13&4others 18 learnedCIT-A.Hence,thegroundofappealoftherevenueisherebydismissed. 35.ThenextissueraisedbytheassesseeisthatthelearnedCIT(A)erredin deletingtheadditionofRs.1,88,50,000/-madeundersection56oftheAct. 36.Attheoutset,wenotethattheissueraisedbytherevenuerelatestothe issueraisedbytheassesseevidegroundNo.2ofCONo.05/AHD/2021fortheAY 2012-13,thereforethesamehasbeenadjudicatedalongwiththegroundof objectionraisedbytheassesseebyusvideparagraphNo.46ofthisorderinthe favouroftheRevenue.Fordetaileddiscussion,pleaserefertotheaforesaid paragraphofthisorder.Hence,thegroundoftheRevenue’sappealishereby allowed. 37.Intheresult,theappealoftheRevenueisherebyPartlyallowed. ComingtoCONo.05/AHd/2021bytheassesseeforA.Y.2012-13 38.Theassesseehasraisedfollowinggroundsofobjections: 1.Onthefactsandinthecircumstancesofthecase,theLd.CIT(A)erredinupholding disallowanceofemployeescontributiontoprovidentandESICforRs.6,01,071/-u/s.36(1)(va) oftheActwithoutappreciatingthefactthatpaymentwasalreadymadebeforeduedateof filingofreturnofincome. 2.Onthefactsandinthecircumstancesofthecase,theLd.CIT(A)erredinupholding interestincomeofRs.10.28,54,901/-asincomefromothersourceswhensuchincomeought tohavebeenreducedfromprojectdevelopmentexpenditure. 3.Onthefactsandinthecircumstancesofthecase,thelanddevelopmentexpenditureheld tobecapitalexpenditurebytheAssessingOfficerasagainstclaimofappellantfortreatingit asrevenueexpenditureandheldtobebyCIT(Appeals),incaseiseligiblefordeduction underSection35EoftheAct. 4.Theappellantcravesleavetoadd,alteroramendand/orwithdrawanygroundorgrounds ofappealeitherbeforeorduringthecourseofhearingoftheappeal. 39.ThefirstobjectionraisedbytheassesseeisthatthelearnedCIT(A)erred inconfirmingtheadditionofRs.6,01,071/-madeonaccountoflatedepositof employee’scontributiontowardsEPF&ESI. ITAnos.521/AHD/2020withC.ONo.5/Ahd/2021 Asstt.Years2012-13&4others 19 40.Attheoutset,wenotethatthelearnedARfortheassesseeatthetimeof hearingbeforeussubmittedthathewasinstructedbytheassesseenottopress theissueraisedinthecaptionedgroundofobjection.Hence,thesameishereby dismissedasnotpressed. 41.ThenextissueraisedbytheassesseeisthatthelearnedCIT(A)erredin confirmingtheadditionofinterestincomeforRs.10,28,54,901/-only. 42.ThenecessaryfactsarethattheAOduringtheassessmentproceedings foundthattheassesseehasearnedinterestincomeforRs.16,01,70,492/-only. However,suchinterestincomewasadjustedwithcapitalworkinprogress. Accordingly,theAOsoughtclarification,buttheassesseefailedtoreply.TheAO furtherfoundthatintheimmediatepreviousassessmentyearalso,theassessee adjustedinterestincomewiththecapitalworkinprogresswhichwasdisallowed andaddedtothetotalincomeasincomefromtheothersources.Hence,theAO addedtheinterestincomeofRs.16,01,70,492/-tothetotalincomeofthe assessee. 43.Aggrieved,assesseepreferredanappealbeforethelearnedCIT(A). 43.1TheassesseebeforethelearnedCIT(A)submittedthatinterestincomeRs. 16,01,70,492/-addedbytheAOincludeincomefromfollowingsources: ParticularsAmount(InRs.) InterestincomeonSecuritydepositfor CoalWasheryAgreement(Chendipada coalblock) 9,02,46,575 InterestIncomeonfixedDepositswith Axisbankwhichhadtobemadefor obtainingaBankGuaranteeinfavourof GujaratMineralDevelopment CorporationLtd. 13,29,978 InterestincomeonfixedDepositunder TrustandRetentionaccountinliueof borrowingmadefromICICIbank(Parse KanteCoalblock) 1,01,77,234 ITAnos.521/AHD/2020withC.ONo.5/Ahd/2021 Asstt.Years2012-13&4others 20 Otherinterestincome11,01,114 UnrealisedForeignExchangeGain1,88,50,000 TotalInterestincomeearnedduringthe year(A) 12,17,04,901 Errorintaxingearlieryear(s)interest income(B) 3,84,65,592 Total(A)+(B)16,01,70,492 43.2TheassesseebeforethelearnedCIT-Afurthersubmittedthattheinterest incomefortheyearunderconsiderationfromdifferentsourceswasRs. 12,17,04,901/-only.Assuch,theAOalsoincludedtheopeningamountofRs. 3,84,65,592/-only.Theassesseefurthermadesubmissionregardingeachsource ofinterestincomementionedinabovetableinthefollowingmanner: InterestincomeofRs.9,02,46,575/-FromsecuritydepositforCoal washerycontract. 43.3Itwassubmittedthattheholdingcompanyoftheassesseecompany namely,AdaniEnterprisesLtd(‘AEL)wasawardedacontractfordevelopmentand operationofChindipadacoalblocksituatedinOdisha.Thereafter,suchacontract wasassignedtoit(assessee)bytheparentcompanyAEL.Subsequentlyit (assessee)enteredinacoalwasheryagreementwithM/sGVIInfosolutionsPvt Ltd(GVI)whereintheGVIwastoperformfollowingactivities: (i)Construct,operateandmanagethecoalwasherywith40MTperannum capacityatmineheadwithintimelinetoenableAMLtodelivercoal undertheContracttoUCM.Thetotalcapacityofthecoalwasheryshall berequiredundertheContract. (ii)TransportofcoalfromMinetoWasherythroughbeltconveyorsystem. (iii)Thewashingtechnology,otherequipmenttechnologyandcostshallbe mutuallydiscussedandfinalizedbyAMLandGVLinconcurrence. (iv)Tomakeavailablefordispatchwiththeagreedquantityofwashedcoal parameters. ITAnos.521/AHD/2020withC.ONo.5/Ahd/2021 Asstt.Years2012-13&4others 21 (v)Tooperateandmaintainthewasheryasperthebeststandardsinthe industry. (vi)GVIshallmaintainalltherequisiterecordsproperlyfortheinspectionby Governmentagenciesconcernedwithrespecttothedetailsofrunning ofminecoal,washedcoalandrejectsetc. 43.4Inpursuancetosuchwasheryagreement,itmadesecuritydepositof₹150 crorewithGVIandearnedinterestincomeattherateof6%perannum amountingto₹9,02,46,575/-onthesame.Inthebooksofaccount,suchinterest incomehasbeenadjustedagainsttheprojectdevelopmentexpenses.The assesseeaccordinglyclaimedthatimpugnedinterestincomeof₹9,02,46,575/- directlyrelatedtodevelopmentofChindipadacoalblockandrightlyadjustedwith thevalueofcapitalworkinprogress. InterestincomeofRs.13,29,978/-FromfixeddepositwithAxisBank. 43.5Theassesseeclaimedthatithasalsoenteredintoanagreementwith GujaratMineralDevelopmentCorporationLtd(forshortGMDCL)forcarryingout theactivityofcoredrilling,non-coredrillingandwellloggingforallexplorationat Morga-IIinChattisgarh.Aspertheagreement,ithasprovidedasecuritydeposit of₹1,25,00,000/-fordueperformanceinfavorofGMDCLbywayoffurnishing thebankguarantee.Theassesseefurtherclaimedthattoobtainabankguarantee itmadeafixeddepositwiththebankandearnedinterestontheimpugned depositwiththebank.Thus,theearningsofinterestareinextricablylinkedwith theimpugnedprojectandthecommercialoperationinrespectofsuchaproject whichhasnotcommencedintheyearunderconsideration.Therefore,theinterest earnedonbankdepositof₹13,29,978/-wasrightlyreducedfromtheproject developmentexpenditure. InterestincomeofRs.1,01,77,234/-fromfixeddepositundertrustand retentionaccountandUnutilizedforeignexchangegainofRs. 1,88,50,000/- ITAnos.521/AHD/2020withC.ONo.5/Ahd/2021 Asstt.Years2012-13&4others 22 43.6Theassesseeabouttheaboveinterestincomesubmittedthattodevelop andoperatethe“ParsaEastandKenteBasinCoalBlock”,itobtainedforeign currencytermloanfromICICIBankLimited.AspertheloanagreementwithICICI BankLimited,theassesseewasrequiredtoopen“TrustandRetentionAccount” (TRA).TRAisatoolusedbythebankinthefinancingofhighscaleinfrastructure projects.AsperTRA,theunutilizedamountofborrowedfundmustbeparkedin certainpermittedinvestment.Assuch,theamountofunutilizedborrowingwas invested,andinterestincomeaccruedonsamewasnotthechoiceoftheassessee, butitwasforabidingthecompellingrequirementoffinancingbank.Theassessee furthersubmittedthatnoexpenditurewasincurred(exceptlanddevelopment) regarding“ParsaEastandKenteBasinCoalBlock”whichhasbeenclaimedas revenueexpenditure.Therefore,theincomederivedfromparkingofutilized borrowedfunddirectlyrelatestoimpugnedprojectwhichwillgotoreducethe capitalexpenditure. 43.7Likewise,theoutstandingbalanceofimpugnedforeigncurrencyloanwas markedtomarketaspertherequirementofaccountingstandard-11and accordinglyearnedforexgainofRs.1,88,50,0000/-andsuchgainwasadjusted againsttheprojectdevelopmentexpenses. 44.ThelearnedCIT(A)afterconsideringfactsintotalitydeletedtheaddition madebytheAOonaccountofopeningbalanceofRs.3,84,65,592/-andgainof foreigncurrencyexchangeforRs.1,88,50,000/-andconfirmedtheremaining additionofRs.10,28,54,901/-only.TherelevantfindingoflearnedCIT(A)is extractedasunder: 10.4Onperusalofrelevantfactsonrecords,itisobservedthatinauditedannualaccounts, appellanthasreducedinterestincomefromScheduleofCapitalWorKInProgressforRs 3,84,65,5927-upto31 st March2011.Duringtheyearunderconsideration,appellanthas earnedinterestincomeofRs12,17,04,9017-astabularizedhereinaboveandevensuch amountisreducedfromCapitalWorkInprogress.Theauditedannualaccountsreflects cumulativefigureofcostandinterestincomereducedfromsuchcosthencefigureofRs 16,01,70,4927-consideredbyAOasincomeofyearunderconsiderationisactual cumulativeinterestincomeearnedbyappellantandreducedfromcapitalworkinprogress. ITAnos.521/AHD/2020withC.ONo.5/Ahd/2021 Asstt.Years2012-13&4others 23 ThecontentionofappellantthatinterestincomeofRs3,84,65,5927-isnotearnedinyear underconsiderationisfoundacceptableasitpertainstoearlieryearandsameisalready consideredasincomeby AOinearlierassessmentyearshenceonthisground,additionmadebyAOtothe extentofRs3,84,65,592/-isdeleted. 10-5SofarasadditionmadebyAOfortreatinginterestincomeasIncomefrom OthersourcesforRs10,28,54,901/-(9,02,46,575+13,29,978+1,01,77,234+11,01,114} isconcerned,itisobservedthatinprecedinggroundwhiledecidingissueofallowabilityof landdevelopmentexpenditureasrevenueexpenditure,itwasalreadyheldthatbusinessof appellantcompanyissetupandoncebusinessis:;etup,interestincomecannotbe reducedfromCapitalWorkInProgressbutsameisrequiredtobetaxedasincomefrom othersources.Thoughinprecedingassessmentyears,identicalissuewasdecidedin favourofappellantbyappellateauthority,butratioofsaiddecisionscannotbemade applicableincurrentyearastherewasnoissueofwhetherbusinessissetupornotvisa visinterestincomeearnedduringpreconstructionperiod.Asperdecisionsreferredin precedingparaswhiledecidingissuewhetherbusinessissetuporno!,itisobservedthat onceitisheldthatbusinessissetupandanyinterestincomeearnedbyappellantis requiredtobetaxedasincomefromothersources.Onthisfact,additionmadebyAOfor Rs1Q,28,54,901/-isconfirmed.Itisobservedthatappellanthasreducedinterestincome fromgrossamountofCapitalWorkinProgressandsuchnetamountmaybeconsidered forclaimingdeductionu/s35EoftheActinsubsequentyears.Onceinterestincomeis consideredasincomeofyearunderconsideration,appellantwouldtaeentitledtohigher deductionu/s35EoftheActinsubsequentyearsifsuchdeductionisclaimedennet expenditure.Subjecttothisobservation,additionmadebyAOtotheextentof interestincomeofRs10,28,54,901isconfirmed. 10.6SofarasadditionofUnrealisedForeignExchangeGainforRs1,88,50,000is concerned,itisobservedthatsuchgainisM2Mgainearnedbyappellantonoutstanding foreigncurrencyloanasatyearend.Theappellanthasalreadycapitalizedinterest incomepertainingtosuchexpenditureaspartofCapitalWorkinProgressandconsidered aspartofdeductionu/s.35Einsubsequentassessmentyears,unrealizedforeign exchangegainiscapitalreceiptasheldbyJurisdictionalHighcourtincaseof..GardenSilk MillsLtd.320ITR720[2010]andHon'bleAhmedabadITATincaseofEssarSteelltd.97 ITD125(supra).Itisalsoobservedthatduringtheyearunderconsideration,appellanthas alreadycapitalizedunrealizedforeignexchangelossofRs1,38,19,000fromsimilar transactionforaforesaidloantakenfromICjCIBanklimitedwhichisacceptedbyAOtobe correcthenceonsameground,unrealizedforeignexchangegaincannotbetaxedas taxableincomeinyearunderconsideration.Onthisfact,additionmadebyAOforRs 1,88,50,000isdeleted. 10.7Innutshell,additionmadebyAOforRs16,01,70,492isrestrictedtoRs 10,28,54,901.Thisgroundofappealispartlyallowed. 45.BeingaggrievedbytheorderofthelearnedCIT(A),boththeassesseeand theRevenueareinappeal/crossobjectionbeforeus.Theassesseeisincross againsttheconfirmationofadditionofinterestincomeforRs.10,28,54,901/- whereastherevenueisinappealagainstthedeletionofadditionofforexgainof 1,88,50,000/-only. ITAnos.521/AHD/2020withC.ONo.5/Ahd/2021 Asstt.Years2012-13&4others 24 45.1ThelearnedARbeforeussubmittedthatintheeventtheassesseeis allowedthedeductiononaccountoflanddevelopmentexpenditure,thentheissue fortreatingtheinterestexpenditureascapitalinnatureonthereasoningthatthe businesshasnotcommencedwouldstanddismissed.Otherwise,thesamecannot betreatedasincomeundertheheadincomefromothersources.Assuchinterest shouldbeallowedtobesetoffagainstthecapitalwork-in-progress. 45.2Ontheotherhand,thelearnedDRbeforeussubmittedthatinterest incomeandincomefromtheforexexchangeshouldbetreatedasincomefrom othersourcesundertheprovisionsofsection56oftheAct. 45.3BoththelearnedARandtheDRbeforeusvehementlysupportedtheorder oftheauthoritiesbelowasfavourabletothem. 46.Wehaveheardtherivalcontentionsofboththepartiesandpursuedthe materialsavailableonrecord.Admittedly,theissueraisedbytherevenue concerningthelanddevelopmentexpenditurehasbeendecidedinfavourofthe assesseeandagainsttherevenuevideparagraphnumber34ofthisorder.Forthe detaileddiscussion,pleaserefertotherelevantparagraph.Onceithasbeenheld thatbusinessoftheassesseehascommenced,theassesseeisnotentitledtoset offtheinterestincomeandforeignexchangegainasdiscussedabovetobe adjustedagainstthecapitalworkingprogress.Hence,thegroundofappealofthe assesseeisherebydismissedwhereasthegroundofappealoftherevenueis allowed. 47.Thelastobjectionraisedbytheassesseeisthatincase,theland developmentexpenditureheldascapitalinexpenditurethendeductionunder section35EoftheActshouldbeprovidedtoit. ITAnos.521/AHD/2020withC.ONo.5/Ahd/2021 Asstt.Years2012-13&4others 25 48.Attheoutset,wenotethatthelearnedARfortheassesseeatthetimeof hearingbeforeussubmittedthathewasinstructedbytheassesseenottopress theissueraisedinthecaptionedgroundofobjectionineventiftheassessee succeedsontheissueoflanddevelopmentexpenditureraisedbytheRevenuein ITANo.521/Ahd/2020.TheassesseehascertainlysucceededbyparagraphNo. 34ofthisorder.Hence,thesameisherebydismissedasnotpressed. 49.Intheresult,thecrossobjectionfiledbytheassesseeisherebydismissed. ComingtoITANo.562/Ahd/2020,anappealbytherevenueforAY 2013-14 50.TheRevenuehasraisedfollowinggroundsofappeal: 1.Theld.CIT(A)haserredinlawandonfactsindeletingthedisallowanceu/s.14Ar.w.r8D oftheActforRs.4,67,859/- 2.TheLd.CIT(A)haserredinlawandonfactsindeletingthedisallowanceofRs. 106,92,68,808/-madeonaccountoflanddevelopmentexpenditure. 3.TheLd.CIT(A)haserredinlawandonfactsindeletingthedisallowanceofRs. 3,89,60,631/- 4.TheLd.CIT(A)haserredinlawandonfactsinholdingthatasseseewouldbeentitledto higherdeductionu/s.35Einsubsequentyearswithoutappreciatingthatitwouldbeasubject matterofassessmentinfutureyears,subjecttotheprovisionsoftheAct. 5.Theappellantcraves,toleave,toamendand/ortoalteranygroundoraddanewground whichmaybenecessary. 51.ThefirstissueraisedbytheRevenueisthatthelearnedCIT(A)erredin deletingthedisallowancemadeundersection14Areadwithrule8DofIncome TaxRuleforRs.4,67,850/-only. 52.Attheoutset,wenotethattheissueraisedbytherevenueintheabove groundofappealisidenticaltotheissueraisedbytherevenueinitsgroundsof appealfortheAY2012-13inITANo.521/AHD/2020.Therefore,thefindings ITAnos.521/AHD/2020withC.ONo.5/Ahd/2021 Asstt.Years2012-13&4others 26 giveninITANo.521/AHD/2020shallalsobeapplicablefortheyearunder considerationi.e.A.Y.2013-14.TheappealoftherevenuefortheA.Y.2012-13 hasbeendecidedbyusvideparagraphNo.9ofthisorderagainsttherevenue. ThelearnedARandtheDRalsoagreedthatwhateverwillbethefindingsforthe assessmentyear2012-13shallalsobeappliedfortheassessmentyear2013-14. Hence,thegroundofappealsfiledbytherevenueisherebydismissed. 53.ThenextissueraisedbytheRevenuevidegroundNos.2&4isthatthe learnedCIT(A)erredindeletingtheadditionmadeonaccountofland developmentexpenditureforRs.106,92,68,808/-andfurthererredinholdingthat theassesseewouldbeentitledtohigherdeductionundersection35EoftheActin thesubsequentyears. 54.Attheoutset,wenotethatissuesraisedbytherevenueintheabove groundsofappealareidenticaltotheissueraisedbytherevenueinitsgroundsof appealfortheAY2012-13inITANo.521/AHD/2020.Therefore,thefindings giveninITANo.521/AHD/2020shallalsobeapplicablefortheyearunder considerationi.e.A.Y.2013-14.TheappealoftherevenuefortheA.Y.2012-13 hasbeendecidedbyusvideparagraphNo.34ofthisorderagainsttherevenue. ThelearnedDRandtheARalsoagreedthatwhateverwillbethefindingsforthe assessmentyear2012-13shallalsobeappliedfortheassessmentyear2013-14. Hence,thegroundsofappealsfiledbytherevenueareherebydismissed. 55.ThenextissueraisedbytheassesseevidegroundNo.3isthatthe learnedCIT(A)erredindeletingthedisallowanceofdepreciationforRs. 3,89,60,631/-only. 56.TheAOfoundthattheassesseehasclaimeddepreciationallowanceforRs. 3,89,60,631/-only.However,thebusinessoftheassesseehasnotcommenced. Therefore,theAOdisallowedthesameandaddedtothetotalincomeofthe assessee. ITAnos.521/AHD/2020withC.ONo.5/Ahd/2021 Asstt.Years2012-13&4others 27 57.Onappealbytheassessee,thelearnedCIT(A)deletedthedisallowance madebytheAObyobservingasunder: 8.3Decision:IhavecarefullyconsideredtheAssessmentOrderandthe submissionmadebytheAppellant.TheAOhasmainly•disalloweddepreciation onthegroundthatbusinessofappellanthasnotcommercialcommenced.Itis observedthatwhileadjudicatingtheissueofwhetherlanddevelopment expenditureisrevenueexpenditureornot,Ihavealreadyreferredassessment orderpassedinappellant'sowncaseforA.Y.2010-11whereinAOhimselfhas acceptedthefactthatbusinessofappellantisalreadycommenced.Inviewof detaileddiscussedmadeinprecedinggrounds,Ihavealreadyaccepted contentionofappellantthat businessofappellanthasalreadycommencedandallowedlanddevelopment expenditureasrevenueexpenditure.OnperusalofProfit&lossaccount,itis apparentthatappellanthasclaimedemployeesbenefitexpensesandvarious otherexpenditureincludingrent,professionalfees,travellingexpenditureas revenueexpenditureandsuchclaimisacceptedbyAOassuchwhilepassingthe assessmentorderitself.Itisobservedthatsimilarclaim-ofdepreciationisallowed byAOwhilepassingtheassessmentorder-forA.Y.2012-13.and2014-15.Once AOhimselfhasalloweddepreciationinearlieryearandappellanthasclaimed depreciationonopeningWDVofassetsasincreasedbyadditionsmadeduringthe year,AOwasnotjustifiedindisallowingdepreciationonthegroundthatbusiness hasnotcommerciallybegun.Hon'bleBombayHighCourtinthecaseofPCITVs. QuestInvestmentAdvisorsLtd.reportedin96taxmann.com157heldasunder: "Oncethisprinciplewasacceptedandconsistentlyapplied;mdfollowed, therevenuewasboundbyit.Unlessofcourseitwantedtochangethe practicewithoutanychangeinlaworchangeinfactstherein,thebasisfor thechangeinpracticeshouldhaveboenmentionedeitherinthe assessmentorderoratleastpointedouttotheTribunalwhenitpassedthe impugnedorder.Noneofthishashappened.Infact,allhaveproceededon thebasisthatthereisnochangointhe.principlewhichhasboon consistentlynppliodfortheearlierassessmentyearsandalsoforthe subsequentassessmentyears.Therefore,theviewoftheTribunalin nllowingthtsrespondent'sappealontheprincipleofconsistencycannotin thepresentfactsbufaultedwith,asitisinaccordwiththeApexCourt decisioninBharatSancharNiqamLtd.v.UnionofIndia[2006]282ITR 273.[Para9]'.' EvenonperusalofProfit&lossaccount,itisapparentthatappellanthasdisclosed labourincomeofRs33.52lacsandRs62.67lacsbeingdrillingincomewhich provesthatappellanthasevenearnedincomeinyearunderconsideration. Consideringthefactsdiscussedhereinabove,disallowanceofdepreciationmade byAOforRs.3,89,60,631/-isdeleted.Thisgroundofappealisallowed. 58.BeingaggrievedbytheorderofthelearnedCIT(A)theRevenueisin appealbeforeus. ITAnos.521/AHD/2020withC.ONo.5/Ahd/2021 Asstt.Years2012-13&4others 28 58.1ThelearnedDRbeforeussubmittedthattheassesseecannotclaimthe depreciationasthebusinesshasnotbeencommenced.Theld.DRvehemently supportedtheorderoftheAO. 58.2Ontheotherhand,thelearnedARsubmittedthattheactivityofthe assesseehasalreadycommencedwhichwasalsoacceptedbytheRevenueinthe earlieryear.Therefore,thedepreciationcannotbedisallowedduetonon- commencementofcommercialactivityoftheassessee.Theld.ARvehemently supportedtheorderoftheld.CIT-A. 59.Wehaveheardtherivalcontentionsofboththepartiesandperusedthe materialsavailableonrecord.Admittedly,theAOdisallowedtheclaimof depreciationbyholdingthatthebusinessoftheassesseehasnotbeen commenced.Ontheotherhand,thelearnedCIT(A)hasgivencategoricalfinding thatthebusinessoftheassesseehasalreadybeenstartedinearlierassessment yearandthisfacthasbeenacceptedbytheAOwhileframingtheassessment orderundersection143(3)oftheActforA.Y.2011-12.Beforeus,thefinding giventhebythelearnedCIT(A)hasnotbeencontrovertedbythelearnedDR.The AOhasnowheredoubtedthegenuinenessofclaim.Therefore,inthegivenfacts wedonotfindanyinfirmityintheorderofthelearnedCIT(A).Hence,theground ofappealraisedbytherevenueisherebydismissed. 60.Intheresult,theappealfiledbytheRevenueisherebydismissed. ComingtoCONo.12/Ahd/2021filedbytheassesseefortheA.Y.2013- 14 61.Theassesseehasraisedfollowinggroundofobjections: 1.Onthefactsandinthecircumstancesofthecase,theLd.CIT(A)erredinupholding disallowanceofemployeescontributiontoprovidentandESICforRs.23,62,571/-u/s.36(1)(va) ITAnos.521/AHD/2020withC.ONo.5/Ahd/2021 Asstt.Years2012-13&4others 29 oftheActwithoutappreciatingthefactthatpaymentwasalreadymadebeforeduedateof filingofreturnofincome. 2.Onthefactsandinthecircumstancesofthecase,theLd.CIT(A)erredinupholding interestincomeofRs.12,21,61,133/-asincomefromothersourceswhensuchincomeought tohavebeenreducedfromprojectdevelopemtnexpenditure. 3.Onthefactsandinthecircumstancesofthecase,thelanddevelopmentexpenditureheld tobecapitalexpenditurebytheAssessingOfficerasagainstclaimofappellantfortreatingit asrevenueexpenditureandheldtobebyCIT(Appeals),incaseiseligiblefordeduction underSection35EoftheAct. 4.Theappellantcravesleavetoadd,alteroramendand/orwithdrawanygroundorgrounds ofappealeitherbeforeorduringthecourseofhearingoftheappeal. 62.ThefirstobjectionraisedbytheassesseeisthatthelearnedCIT(A)erred inconfirmingtheadditionofRs.23,62,571/-madeonaccountoflatedepositof employee’scontributiontowardsEPF&ESI. 63.Attheoutset,wenotethatthelearnedARfortheassesseeatthetimeof hearingbeforeussubmittedthathewasinstructedbytheassesseenottopress theissueraisedinthecaptionedgroundofobjection.Hence,thesameishereby dismissedasnotpressed. 64.ThenextissueraisedbytheassesseeisthatthelearnedCIT(A)erredin confirmingtheadditionofinterestincomeforRs.12,21,61,133/-only. 65.Attheoutset,wenotethattheissueraisedbytheassesseeintheabove groundofobjectionisidenticaltotheissueraisedbytheassesseeinitsgrounds ofobjectionfortheAY2012-13inCONo.05/AHD/2021.Therefore,thefindings giveninCONo.05/AHD/2021shallalsobeapplicablefortheyearunder considerationi.e.A.Y.2013-14.TheobjectionraisedbytheassesseefortheA.Y. 2012-13hasbeendecidedbyusvideparagraphNo.46ofthisorderagainstthe assessee.ThelearnedARandtheDRalsoagreedthatwhateverwillbethe findingsfortheassessmentyear2012-13shallalsobeappliedfortheassessment ITAnos.521/AHD/2020withC.ONo.5/Ahd/2021 Asstt.Years2012-13&4others 30 year2013-14.Hence,thegroundofobjectionfiledbytheassesseeishereby dismissed. 66.Thelastobjectionraisedbytheassesseeisthatincase,theland developmentexpenditureheldascapitalexpenditure,thendeductionunder section35EoftheActshouldbeprovided. 67.Attheoutset,wenotethatthelearnedARfortheassesseeatthetimeof hearingbeforeussubmittedthathewasinstructedbytheassesseenottopress theissueraisedinthecaptionedgroundofobjectionineventiftheassessee succeedsontheissueoflanddevelopmentexpenditureraisedbytheRevenuein ITANo.562/Ahd/2020.TheassesseehascertainlysucceededbyparagraphNo. 54ofthisorder.Hence,thesameisherebydismissedasnotpressed. 68.Intheresult,thecrossobjectionfiledbytheassesseeisherebydismissed. ComingtoITANo.544/Ahd/2020,anappealbytherevenueforA.Y. 2014-15 69.TheRevenuehasraisedfollowinggroundsofappeal: 1.Theld.CIT(A)haserredinlawandonfactsindeletingthedisallowanceu/s.14Ar.w.r8D oftheActforRs.27,82,900/- 2.TheLd.CIT(A)haserredinlawandonfactsindeletingthedisallowanceof Rs.1,16,53,200/-madeonaccountoflanddevelopmentexpenditure. 3.TheLd.CIT(A)haserredinlawandonfactsinholdingthatasseseewouldbeentitledto higherdeductionu/s.35Einsubsequentyearsinrespectofinterestincomedeductedfrom CapitalWIPappreciatingthatitwouldbeasubjectmatterofassessmentinfutureyears, subjecttotheprovisionsoftheAct. 4.Theappellantcraves,toleave,toamendand/ortoalteranygroundoraddanewground whichmaybenecessary. ITAnos.521/AHD/2020withC.ONo.5/Ahd/2021 Asstt.Years2012-13&4others 31 70.ThefirstissueraisedbytheRevenueisthatthelearnedCIT(A)erredin deletingthedisallowancemadeundersection14Areadwithrule8DofIncome TaxRuleforRs.27,82,900/-only. 71.Attheoutset,wenotethattheissueraisedbytherevenueintheabove groundofappealisidenticaltotheissueraisedbytherevenueinitsgroundof appealfortheAY2012-13inITANo.521/AHD/2020.Therefore,thefindings giveninITANo.521/AHD/2020shallalsobeapplicablefortheyearunder considerationi.e.A.Y.2014-15.TheappealoftheRevenuefortheA.Y.2012-13 hasbeendecidedbyusvideparagraphNo.9ofthisorderagainsttheRevenue. ThelearnedDRandtheARalsoagreedthatwhateverwillbethefindingsforthe assessmentyear2012-13shallalsobeappliedfortheassessmentyear2014-15. Hence,thegroundofappealfiledbytherevenueisherebydismissed. 72.ThenextissueraisedbytheRevenuevidegroundNos.2&3isthatthe learnedCIT(A)erredindeletingtheadditionmadebytheAOonaccountofland developmentexpenditureforRs.1,16,53,200/-andfurthererredinholdingthat theassesseewouldbeentitledtohigherdeductionundersection35EoftheActin thesubsequentyears. 73.Attheoutset,wenotethattheissuesraisedbytherevenueintheabove groundsofappealareidenticaltotheissueraisedbytherevenueinitsgroundsof appealfortheAY2012-13inITANo.521/AHD/2020.Therefore,thefindings giveninITANo.521/AHD/2020shallalsobeapplicablefortheyearunder considerationi.e.A.Y.2014-15.TheappealoftherevenuefortheA.Y.2012-13 hasbeendecidedbyusvideparagraphNo.34ofthisorderagainsttherevenue. ThelearnedARandtheDRalsoagreedthatwhateverwillbethefindingsforthe assessmentyear2012-13shallalsobeappliedfortheassessmentyear2014-15. Hence,thegroundsofappealfiledbytherevenueareherebydismissed. 74.Intheresultappealfiledbytherevenueisherebydismissed. ITAnos.521/AHD/2020withC.ONo.5/Ahd/2021 Asstt.Years2012-13&4others 32 ComingtoCONo.6/Ahd/2021filedbytheassesseefortheA.Y.2014-15 75.Theassesseehasraisedfollowinggroundofobjections: 1.Onthefactsandinthecircumstancesofthecase,theLd.CIT(A)erredin upholdingdisallowanceofemployeescontributiontoprovidentandESICfor Rs.14,69,278/-u/s.36(1)(va)oftheActwithoutappreciatingthefactthatpaymentwas alreadymadebeforeduedateoffilingofreturnofincome. 2.Onthefactsandinthecircumstancesofthecase,theLd.CIT(A)erredin upholdinginterestincomeofRs.9,89,85,073/-asincomefromothersourceswhensuch incomeoughttohavebeenreducedfromprojectdevelopmentexpenditure. 3.Onthefactsandinthecircumstancesofthecase,thelanddevelopment expenditureheldtobecapitalexpenditurebytheAssessingOfficerasagainstclaimof appellantfortreatingitasrevenueexpenditureandheldtobebyCIT(Appeals),incaseis eligiblefordeductionunderSection35EoftheAct. 4.Onthefactsandinthecircumstancesofthecase,theDepartmentalappealisnot maintainableinviewofCBDTCircularNo.17/2019dated8 th August,2019,astaxappeal effectinvolvedinsuchappealislessthanRs.50lacs. Theappellantcravesleavetoadd,alteroramendand/orwithdrawanygroundorgrounds ofappealeitherbeforeorduringthecourseofhearingoftheappeal. 76.ThefirstobjectionraisedbytheassesseeisthatthelearnedCIT(A)erred inconfirmingtheadditionofRs.14,69,278/-madeonaccountoflatedepositof employee’scontributiontowardsEPF&ESI. 77.Attheoutset,wenotethatthelearnedARfortheassesseeatthetimeof hearingbeforeussubmittedthathewasinstructedbytheassesseenottopress theissueraisedinthecaptionedgroundofobjection.Hencethesameishereby dismissedasnotpressed. 78.ThenextissueraisedbytheassesseeisthatthelearnedCIT(A)erredin confirmingtheadditionofinterestincomeforRs.9,89,85,073/-only. 79.Attheoutset,wenotethatissueraisedbytheassesseeintheabove groundofobjectionisidenticaltotheissueraisedbytheassesseeinitsgroundof ITAnos.521/AHD/2020withC.ONo.5/Ahd/2021 Asstt.Years2012-13&4others 33 objectionfortheAY2012-13inCONo.05/AHD/2021.Therefore,thefindings giveninCONo.05/AHD/2021shallalsobeapplicablefortheyearunder considerationi.e.A.Y.2014-15.TheobjectionraisedbytheassesseefortheA.Y. 2012-13hasbeendecidedbyusvideparagraphNo.46ofthisorderagainstthe assessee.ThelearnedARandtheDRalsoagreedthatwhateverwillbethe findingsfortheassessmentyear2012-13shallalsobeappliedfortheassessment year2014-15.Hence,thegroundofobjectionfiledbytheassesseeishereby dismissed. 80.Thelastobjectionraisedbytheassesseeisthatincase,iftheland developmentexpenditureisheldascapitalexpenditure,thenadeductionunder section35EoftheActshouldbeprovided. 81.Attheoutset,wenotethatthelearnedARfortheassesseeatthetimeof hearingbeforeussubmittedthathewasinstructedbytheassesseenottopress theissueraisedinthecaptionedgroundofobjectionineventiftheassessee succeedsontheissueoflanddevelopmentexpenditureraisedbytheRevenuein ITANo.544/Ahd/2020.TheassesseehascertainlysucceededbyparagraphNo. 73ofthisorder.Hence,thesameisherebydismissedasnotpressed. 82.Intheresultcrossobjectionfiledbytheassesseeisherebydismissed. 83.InthecombinedResults, Sr No. AppealA.YAppealByResult 1ITANo. 521/Ahd/2020 2012-13 DepartmentPartly allowed 2CONo. 05/Ahd/2021 2012-13 AssesseeDismissed 3-4ITANo. 562/Ahd/2020&Co No12/Ahd/2021 2013-14 Department& Assessee Dismissed ITAnos.521/AHD/2020withC.ONo.5/Ahd/2021 Asstt.Years2012-13&4others 34 5-6ITANo. 544/Ahd/2020&CO No.06/Ahd/2021 2014-15 Department& Assessee Dismissed OrderpronouncedintheCourton04/10/2023atAhmedabad. Sd/-Sd/- (SIDDHARTHANAUTIYAL)(WASEEMAHMED) JUDICIALMEMBERACCOUNTANTMEMBER (TrueCopy) Ahmedabad;Dated04/10/2023 Manish