Asstt.Commissioner of Income Tax Circle-2, Nagpur V. Manganese Ore (I) Ltd., Nagpur

ITA 1/NAG/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9576 (ITAT-NAGPUR)
• Duration Of Justice: 2 year(s) 9 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 09-10-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 01-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR MILIND BHUSARI

Judgement Text

ITA NO. 01/ /NAG/2010 MANGANESE ORE (I) LTD., NAGPUR IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH , NAGPUR BEFORE: SHRI P.K. BANSAL , ACCOUNTANT MEMBER AND SHRI D.T. GARASIA , JUDICIAL MEMBER ITA NO. 01 / NAGPUR / 20 10 ASSESSMENT YEAR : 2006 - 07 ACIT, CIRCLE - 2 NAGPUR VS. MANGANESE O RE (I) LTD. NAGPUR (APPELLANT) (RESPONDENT) PAN NO.AAACM 8952A APPELLANT BY: DR. MILIND BHUSARI, CIT(DR) RESPONDENT BY: SHRI K.P. DEWANI, ADVOCATE DATE OF HEARING: 09.10.2012 DATE OF PRONOUNCEMENT: 10.10.2012 ORDER PER P.K. BANSAL, ACCOUNTAN T MEMBER: - THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A) DATED 7.9.2009 BY TAKING THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, WHETHER THE CIT(A) WAS CORRECT IN ALLOWING RELIEF EVEN THOUGH THE LIABILITY OF MINE CLOSURE EXPENSES HAD NOT CRYSTALIZED DURING THE YEAR UNDER CONSIDERATION. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, WHETHER THE CIT(A) WAS CORRECT IN ALLOWING RELIEF EVEN THOUGH THE ACTIVITY OF MINE CLOSURE HAD NOT BEEN CARR IED OUT AND THE PROVISION FOR MINE CLOSURE EXPENSES WAS ONLY AN ESTIMATE. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CLAIMED A SUM OF RS.48,43,384/ - FOR ACCRUED LIABILITIES TOWARDS THE CLOSURE OF MINES. THE ASSESSING OFFICER DISALLOWED THE SAME . THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). THE CIT(A) DELETED THE DISALLOWANCE BY OBSERVING AS UNDER: 8. I HAVE CONSIDERED THE ISSUE CAREFULLY IN THE LIGHT OF THE FACTS AS EMERGING FROM THE ASSESSMENT ORDER AND AS PER THE SUBMISSIONS OF THE APPEL LANT. THE APPELLANT WAS ASKED TO SUBMIT MINERAL CONSERVATION AND DEVELOPMENT RULES UNDER WHICH THE SAID LIABILITY IS CLAIMED. ON GOING THROUGH THE RULES (OBTAINED ON RECORD) I FIND THAT AS PER RULE 23A, 23B AND 23C THE MINING COMPANY IS REQUIRED TO ITA NO.01/ NAG/2010 MANGANESE ORE (I) LTD., NAGPUR 2 SUBMI T PROGRESSIVE MINE CLOSURE PLAN AND FINAL MINE CLOSURE PLAN TO THE IBM FOR ITS APPROVAL. AN APPROVAL FROM THE REGIONAL CONTROLLER OF MINES IS TO BE OBTAINED IN THIS REGARD AND ONLY THEREAFTER THE LIABILITY SHALL BE TREATED AS HAVING ARISEN TO THE ASSESSEE . THE APPELLANT HAS SUBMITTED BEFORE ME THE LETTER ISSUED FROM IBM, NAGPUR REGIONAL OFFICE, DATED 3.6.2005 SUPPORTING ITS CLAIM THAT THE PROGRESSIVE MINE CLOSURE PLAN WAS SUBMITTED AND APPROVED BY THE AFORESAID AGENCY. THIS IS IN RESPECT OF GUMGAON MANGA NESE MINE (SUBMITTED AS A SAMPLE). IN VIEW OF THESE RULES AND APPROVAL OF CLOSURE OF MINES GRANTED TO THE ASSESSEE IT CAN BE SAFELY INFERRED IN THE CASE OF APPELLANT THAT ITS LIABILITY WITH REGARD TO PROVISION DEBITED IN THE BOOKS IS DEFINITE AND CERTAIN AND CANNOT BE TERMED AS CONDITIONAL JUST BECAUSE IT IS TO BE PAID AT A FUTURE DATE. ON THESE FACTS THE JUDGEMENT RELIED UPON BY THE APPELLANT IN THE CASE OF UDAIPUR MINERAL DEVELOPMENT SYNDICATE PVT. LTD. VS. DY. CIT & ANOTHER (RAJ) 261 ITR 706 AND THAT OF BHARAT EARTH MOVERS VS. CIT (SC) 112 TAXMAN 61, METAL BOX CO OF INDIA LTD. VS. THEIR WORKMAN (1969), 739 ITR (SC) ARE SQUARELY APPLICABLE. THUS IN THE LIGHT OF ABOVE DISCUSSION AND THE CASE LAWS (CITED SUPRA) I AM OF THE CONSIDERED OPINION THAT MINE C LOSURE EXPENSES AT RS.48,43,384/ - SHOULD BE ALLOWED TO THE ASSESSEE. BESIDES THE ABOVE FACTS OF THE CASE, THE APPELLANT HAS ALSO SUBMITTED THAT SIMILAR PROVISIONS WAS MADE FOR ASSESSMENT YEAR 2005 - 06 FOR THE TOTAL AMOUNT OF RS.51,77,998/ - . THE LEARNED C OMMISSIONER OF INCOME TAX (APPEALS) - I VIDE HER ORDER DATED 14.11.2007 IN APPEAL NO.CIT(A) - I/1207/2006 - 07 HAS ALLOWED THE APPEAL IN FAVOUR OF ASSESSEE AND HELD AS UNDER: THUS IN THE LIGHT OF ABOVE DISCUSSION AND THE CASE LAWS (CITED SUPRA) I AM OF THE CO NSIDERED OPINION THAT THE MINE CLOSURE OF RS.51,77,998/ - SHOULD BE ALLOWED TO THE ASSESSEE. THE APPEAL CONTENTS IS ACCEPTED AND ADDITIONS OF AFORESAID AMOUNT IS DELETED AND THE GROUND NO.2 AND 3 ARE ALLOWED. THE INCOME TAX DEPARTMENT BEING AGGRIEVED HA D FILED THE SECOND APPEAL BEFORE THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR. PRESENTLY THE APPEAL OF THE DEPARTMENT WAS SUMMARILY DISMISSED SIMPLY ON THE GROUND THAT THE DEPARTMENT DID NOT PRODUCE THE PERMISSION FROM COD. HOWEVER, THE DEPARTM ENT IS AT LIBERTY TO FILE THE MISCELLANEOUS APPLICATION AS AND WHEN THE PERMISSION IS GRANTED. IN SUPPORT OF THESE CONTENTS HE HAS ENCLOSED COPY OF ORDER OF CIT(APPEAL) AND COPY OF ORDER OF ITAT NAGPUR BENCH IN APPEAL NO.44/NAG/2008 DATED 28.4.2009. I H AVE CAREFULLY EXAMINED THE FACTS OF THE CASE AS PER THE ASSESSMENT ORDER AND THE APPELLANT S SUBMISSION AND IN VIEW OF THE FACTS THAT THE SAME ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY MY LEARNED PREDECESSOR FOR ASSESSMENT YEAR 2005 - 06 VIDE ORDER DATED 14.11.2007 IN APPEAL NO.CIT(A) - I/1207/2006 - 07. AT PRESENT NO APPEAL IS PENDING BEFORE TRIBUNAL, AND AS THE MATTER IS ALREADY DECIDED IN FAVOUR OF THE ASSESSEE IN EARLIER YEAR BY MY LEARNED PREDECESSOR I AM INCLINED TO RELY ON THE SAME AS THE FACTS OF AY 2005 - 06 AND THAT OF THIS IMPUGNED ASSESSMENT ITA NO.01/ NAG/2010 MANGANESE ORE (I) LTD., NAGPUR 3 YEAR ARE SAME AND THERE IS NO NEW MATERIAL BROUGHT ON RECORD. THEREFORE, RELYING ON THE ORDER OF MY LEARNED PREDECESSOR I AM OF THE CONSIDERATE OPINION THAT THE MINES CLOSURES EXPENDITURE AMOUNTING TO RS. 48,43,384/ - SHOULD BE ALLOWED TO THE ASSESSEE, AND THE AO WAS NOT JUSTIFIED IN DISALLOWING THE SAME CLAIM. ACCORDINGLY, THE APPELLANT S CONTENTION IS ACCEPTED AND ADDITION OF AFORESAID AMOUNT OF RS.48,43,384/ - IS HEREBY DELETED. 3. LD. D.R. RELIED ON T HE ORDER OF THE ASSESSING OFFICER , WHILE THE LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE THE CIT(A). WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS ALONG WITH THE ORDER OF THE TAX AUTHORITIES BELOW. IN OUR OPINION, THE PROVISION MADE BY THE ASSES SEE REPRESENT THE LIABILITY ACCRUED IN VIEW OF RULE 23A, 23B & 23C OF THE MINERAL REVISION AND DEVELOPMENT RULES, A COPY OF WHICH WAS FILED BEFORE US. UNDER THESE RULES, MINING COMPANY IS REQUIRED TO SUBMIT PROGRESSIVE MIN E CLOSURE PLAN AND FINAL MINE CLO SURE PLAN TO THE IBM FOR ITS APPROVAL. AN APPROVAL FROM THE REGIONAL CONTROLLER OF MINES IS TO BE OBTAINED IN THIS REGARD AND ONLY THERE AFTER THE LIABILITY SHALL BE TREATED AS HAVING ARISEN TO THE ASSESSEE, MERELY THAT THE QUANTUM OF THE LIABILITY IS NOT CERTAIN THAT WILL NOT POSTPONE THE ACCRUAL OF THE LIABILITY. THE BASIS OF CALCULATION OF PROVISIONS MADE BY THE ASSESSEE HAS NOT BEEN DISPUTED BY THE REVENUE. UNDER THESE FACTS, IN OUR OPINION, NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE CIT(A) AN D CIT(A) HAS RIGHTLY DELETED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. THIS IS NOT A FIT CASE , WHICH WARRANT OUR INTERFERENCE. WE ACCORDINGLY DISMISS THE GROUND TAKEN BY THE REVENUE AND CONFIRM THE ORDER OF THE CIT(A). 4. IN THE RESULT, THE APPEA L FILED BY THE REVENUE STAND DISMISSED. PRONOUNCED IN THE OPEN COURT ON 10.10 .20 1 2 SD/ - SD/ - ( D.T. GARASIA ) (P.K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER VG/SPS NAGPUR DATED 10 TH OCTOBER , 20 1 2 ITA NO.01/ NAG/2010 MANGANESE ORE (I) LTD., NAGPUR 4 COPY TO 1 ACIT, CIRCLE - 2, NAGPUR 2 MANGANESE ORE (I) LTD., MOUNT ROAD EXTENSION, SADAR, NAGPUR 4 THE CIT (A) , NAGPUR 5 THE DR, ITAT, NAGPUR 6 GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL NAGPUR