D.C.I.T Cir - 6,kolkata, Kolkata V. M/s Integrated Coal Mining Ltd, Kolkata

ITA 1758/KOL/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4537 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2016
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 11-07-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 05-06-2013
• Court: TRIBUNAL
• Keywords: Depreciation; Additional depreciation; Earning of tax free income; Commercial expediency
• Section: 43B; 143(3); 142(1); 14A; 115JB; 28; 139

Judgement Text

ITA NOS. 1758 & 1804/KOL/13 M/S. INTEGRATED COAL MINING LTD 1 IN THE INCOME TAX APPELLATE TRIBUNAL, A BENCH KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO.1758/KOL/2013 A.Y: 2009-10 D.C.I.T., CIR-6, KOLKATA VS. M/S. INTEGRATE D COAL M INING LTD, PAN: AAACI 5584L (APPELLANT) (RESPONDENT) I.T.A. NO.1804/KOL/2013 A.Y: 2009-10 M/S. INTEGRATED COAL VS. D.C.I.T., CIR-6, K OLKATA MINING LTD (APPELLANT) (RESPONDENT) APPEARANCES BY: SHRI SACHIDNANDA SRIVASTAVA, CIT, SR. D.R FOR TH E REVENUE SHRI J.P.KHAITAN, SR. ADVOCATE, LD.AR FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING : 11-07- 2016 DATE OF PRONOUNCING THE ORDER : 16 -09-2016 O R D E R SHRI S.S. VISWANETHRA RAVI, JM :- THESE TWO APPEALS BY THE REVENUE AND ASSESSEE ARE DIRECTED AGAINST THE COMMON ORDER DATED 28-03-2013 PASSED BY ITA NOS. 1758 & 1804/KOL/13 M/S. INTEGRATED COAL MINING LTD 2 THE COMMISSIONER OF INCOME TAX (APPEALS)-VI, KOLKAT A FOR THE ASSESSMENT YEAR 2009-10. 2. WITH THE CONSENT OF BOTH THE PARTIES, BOTH THE A PPEALS WERE HEARD TOGETHER SINCE THE ONE OF THE GROUNDS IN THESE TWO CROSS APPEALS IS SIMILAR AND ARE DISPOSED OF BY THI S COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NO. 1804/KOL/2013 A.Y 2009-10-BY THE ASSESSEE 3. FIRST WE SHALL TAKE UP THE ASSESSEES APPEAL IN ITA NO. 1804/KOL/2013 FOR THE A.Y 2009-10. 4. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLL OWING EFFECTIVE GROUNDS:- 1. (A) THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LEARNED CIT (APPEALS) ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN INVOKING RULE 8D TO THE INCOME -TAX RULES, 1962 FOR ARRIVING AT THE AMOUNT DISALLOWABLE U/S. 1 4A OF THE INCOME-TAX ACT, 1961 (THE 'ACT'). 1(B) THAT THE LEARNED CIT (APPEALS) ERRED IN CONFIR MING THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING AN ADDITION AL AMOUNT OF INR 92,78,481 BY APPLYING THE PROVISIONS OF SECTION 14A OF THE ACT READ WITH RULE 8D TO THE INCOME-TAX RULES, 1962. 1(C) THAT THE LEARNED CIT (APPEALS) ERRED IN OBSERV ING THAT THE ASSESSING OFFICER HAS CALCULATED THE DISALLOWANCE A S PER RULE 8D SINCE THE APPELLANT IS UNABLE TO ESTABLISH THE CORR ECTNESS OF THE CLAIM IN RESPECT OF EXPENDITURE INCURRED IN EARNING INCOME WHICH DOES NOT FORM PART OF THE TAXABLE INCOME. 1(D) THAT THE FINDING RECORDED BY THE LEARNED CIT ( APPEALS) IN THE APPELLATE ORDER WHILE CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN MAKING THE IMPUGNED FURTHER DISALLOWANCE OF EXPENDITURE AMOUNTING TO INR 92,78,481 U/S. 14A OF THE READ WITH RULE 8D OF THE INCOME-TAX RULES, 1962 IS BASED MERE LY ON CONJECTURE, SURMISE AND PRESUMPTIONS. ITA NOS. 1758 & 1804/KOL/13 M/S. INTEGRATED COAL MINING LTD 3 1(E) THAT THE LEARNED CIT (APPEALS) ERRED IN DISMIS SING THE ADDITIONAL GROUND OF APPEAL TAKEN BEFORE HIM BY THE APPELLANT ON THE ISSUE OF DISALLOWANCE U/S.14A OF THE ACT IN LIM INE. 2(A) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT (APPEALS) ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING A SUM OF RS. 8,14, 000 REPRESENTING AMOUNT DEBITED TO ITS PROFIT & LOSS A/ C. BY THE APPELLANT TOWARDS PROVISION FOR LEAVE ENCASHMENT BA SED ON ACTUARIAL VALUATION, BY INVOKING THE PROVISIONS OF SECTION 43B OF THE ACT. 2(B) THAT THE LEARNED CIT (APPEALS) ERRED IN UPHOLD ING THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING THE IMPUGNE D SUM OF INR 8,14,000 DISREGARDING A BINDING DECISION OF THE HON 'BLE HIGH COURT OF JURISDICTION. 2(C) THAT THE LEARNED CIT (APPEALS) ERRED IN HOLDIN G THAT THE HON'BLE SUPREME COURT HAS STAYED THE DECISION RENDE RED OF THE HON'BLE HIGH COURT OF JURISDICTION RENDERED IN THE CASE OF EXIDE INDUSTRIES LTD. VS. UOL REPORTED IN 292 ITR 470 (CA L). 3(A) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT (APPEALS) ERRED IN CONFIRMING THE DISAL LOWANCE OF RURAL EMPLOYMENT CESS (RE CESS) OF INR 31,53,02,826 AND PRIMARY EDUCATION CESS (PE CESS) OF INR 7,88,25,718 AGGREGATING IN ALL TO INR 39,41,28,544. 3(B) THAT THE LEARNED CIT (APPEALS) ERRED IN NOT FO LLOWING HIS PREDECESSOR'S ORDER FOR THE ASSESSMENT YEAR 2003-04 (FIRST YEAR) ON THE SAME ISSUE WHICH HAS BEEN ACCEPTED BY THE DE PARTMENT. 3(C) THAT THE LEARNED CIT (APPEALS) FAILED TO APPRE CIATE THAT BOTH RE CESS AND PE CESS HAVING NOT STATUTORILY ACCRUED DURING THE FINANCIAL YEAR UNDER CONSIDERATION, ARE OUTSIDE THE AMBIT OF SECTION 43B OF THE ACT. 3(D) THAT THE LEARNED CIT (APPEALS) ERRED IN OBSERV ING THAT THE RE CESS AND PE CESS AGGREGATING TO INR 39,41,28,544 CO LLECTED ARE NOTHING BUT TRADING RECEIPTS OF THE APPELLANT AND T AXABLE IN THE PREVIOUS YEAR UNDER CONSIDERATION. 4(A) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT (APPEALS) ERRED IN DIRECTING THE ASSESS ING OFFICER TO RE-COMPUTE THE FIGURES OF COLLECTION UPTO THE YEAR END OF ASSESSMENT YEARS 2008-09 AND 2009-10 AND THEN OUT O F THE TOTAL COLLECTION ALLOW PAYMENTS MADE UPTO 30 TH SEPTEMBER AS DEDUCTION. ITA NOS. 1758 & 1804/KOL/13 M/S. INTEGRATED COAL MINING LTD 4 4(B) THAT THE LEARNED CIT (APPEALS) EXCEEDED HIS JU RISDICTION IN DIRECTING THE ASSESSING OFFICER TO EFFECTIVELY BRIN G TO TAX IN THE YEAR UNDER APPEAL, COLLECTIONS OF RE & PE CESS MADE BY THE APPELLANT IN EARLIER YEARS. 4(C) THAT THE LEARNED CIT (APPEALS) WHILE DIRECTING THE ASSESSING OFFICER AS ABOVE, HAS ERRED IN EFFECTIVELY SEEKING TO REVERSE/ NULLIFY THE APPELLATE ORDER PASSED BY THE LEARNED C IT (APPEALS) FOR THE AY 2003-04 ON THE ISSUE OF DISALLOWANCE OF RE & PE CESS. 5. FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COM PANY AND IS ENGAGED IN THE BUSINESS OF MINING OF COAL AND FI LED ITS RETURN OF INCOME ON 26-09-2009 BY DECLARING A TOTAL INCOME AT RS.15,77,22,068/-. UNDER SCRUTINY NOTICES U/S. 143( 2) AND U/S. 142(1) WERE ISSUED, IN RESPONSE TO WHICH, MANAGER ( FINANCE) OF THE ASSESSEE APPEARED BEFORE THE AO. 6. GROUND NOS-1(A) TO 1(D) RAISED ABOVE IS REGARDI NG THE DISALLOWANCE U/S. 14A. THE ASSESSEE CLAIMED THAT IT EARNED EXEMPT INCOME AGGREGATING TO RS.55,89,232 IN ITS RE TURN OF INCOME AND OFFERED AN AGGREGATE SUM OF RS.94,312 A S DISALLOWABLE U/S. 14A IN PURSUANCE OF THE TAX AUDIT REPORT. THE AO DID NOT ACCEPT THE SAME AND MADE COMPUTATION AS PER RULE 8D TO THE IT RULES, 1962 AS UNDER:- OPENING VALUE OF INVESTMENTS 920,887,174 CLOSING VALUE OF INVESTMENTS 1,167,840,919 TOTAL 2,088,728,093 AVERAGE VALUE (B) 1,044,364,047 OPENING VALUE OF ASSETS 1,498,820,757 CLOSING VALUE OF ASSETS 1,638,178,749 TOTAL 3,136,999,506 AVERAGE VALUE OF ASSETS (C) 1,568,499,753 ITA NOS. 1758 & 1804/KOL/13 M/S. INTEGRATED COAL MINING LTD 5 INTEREST (A) 6,234,224 1. AXB/C 4,150,973 2. % OF AVG VALUE OF INVESTMENT 5,2 21,820 TOTAL 9,372,793 7. THE AO DETERMINED THE TOTAL AMOUNT AT RS.93,72,7 93 AS INADMISSIBLE AND DISALLOWED THE AMOUNT OF RS.92,78, 481 (RS.93,72,793 RS. 94,312) U/S. 14A R/W RULE 8D OF THE RULES. 8. THE ASSESSEE CHALLENGED THE DISALLOWANCE MADE BY THE AO AND THE CIT-A HELD THAT THE IMPUGNED AMOUNT OF RS.92,78,481/- CANNOT BE ADDED WHILE COMPUTING INCO ME U/S. 115JB AND THAT DISALLOWANCE CALCULATED AS PER RULE 8D AMOUNTING TO RS.92,78,481/- LIABLE TO BE ADDED IN T HE NORMAL COMPUTATION OF INCOME AND THE FINDING OF WHICH IS R EPRODUCED AS UNDER: 36. RESPECTFULLY, FOLLOWING THE DECISION OF THE HO NBLE INCOME TAX APPELLATE TRIBUNAL, BENCH B , KOLKATA IN THE CASE OF M/S. PREOTORIA ENCLAVE LTD., KOLKATA V. DCI T, CIRCLE-5, KOLKATA, IT IS HELD THAT NO ADDITION TO THE BOOK PR OFIT CAN BE MADE ON ACCOUNT CALCULATED EXPENDITURE AS PER THE P ROVISIONS OF SUB-SEC. (2) & (3) OF SECTION 14A OF RS.92,78,48 1/- EXTRA EXPENDITURE INCURRED TO EARN EXEMPT INCOME WHILE CO MPUTING INCOME U/S. 115JB OF THE ACT. THIS GROUND OF APPEAL IS ALLOWED. THIS GROUND OF APPEAL IS ALLOWED HOLDING T HAT THE EXCESS DISALLOWANCE CALCULATED BY THE ASSESSING OFF ICER AND PARTLY UPHELD IN APPEAL AT AN AMOUNT OF RS.92,78,48 1/- CANNOT BE ADDED WHILE COMPUTING INCOME U/S. 115JB. THIS GROUND APPEAL 1(D) IS ACCORDINGLY ALLOWED. 37. THEREFORE, IT IS HELD THAT DISALLOWANCE CALCULA TED AS PER RULE 8D AMOUNTING TO RS.92,78,481/- WILL BE ADDED B ACK IN THE NORMAL COMPUTATION OF INCOME. THEREFORE, THE GR OUNDS OF APPEAL 1(A),1(B),1(C) AND ADDITIONAL GROUND OF APPE AL ARE DISMISSED RELATING TO COMPUTATION AS PER NORMAL PRO FIT AS PER PART D OF CHAPTER IV OF THE INCOME TAX ACT, 1961 AN D GROUND OF APPEAL 1(D) IS ALLOWED. ITA NOS. 1758 & 1804/KOL/13 M/S. INTEGRATED COAL MINING LTD 6 9. THE ASSESEE BEFORE US BY THIS APPEAL CHALLENGING THE FINDING OF THE CIT- A IN CONFIRMING THE ADDITION MADE BY THE AO ON ACCO UNT OF DISALLOWANCE U/S 14A R/W RULE 8D OF THE RULES. THE LD.AR SUBMITS THA T THE LOANS AVAILED LAST YEAR WERE PAID IN THE YEAR UNDER CONSIDERATION AND REFERRED TO PAGE NO-3 OF PAPER BOOK AND FURTHER, TO SHOW THAT THERE WAS NO U NSECURED LOANS AS IT SHOWN TO HAVE STATED AS NIL IN PAGE NO-1 OF PAPER B OOK. FURTHER, ARGUED THAT THE INTEREST PAID ON LOAN RELATING TO FOR THE A.Y 2 008-09 AND REFERRED TO PAGE NO-2 OF THE PAPER BOOK. THE LD.AR RELIED ON THE ORD ER OF C BENCH OF KOLKATA TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2008-09. T HE LD. DR RELIED ON THE ORDERS OF AUTHORITIES BELOW. 10. HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIA L EVIDENCE AVAILABLE ON RECORD. WE FIND THAT THE CO-ORDINATE BENCH SUPRA DEALT THE ISSUE IN ASSESSEES OWN CASE FOR A.Y 2008-09 WHEREIN IT HELD THAT THE AO DID NOT RECORD SATISFACTION REGARDING THE CORRECTNESS OF T HE CLAIM OF THE ASSESSEE AND WITHOUT THERE BEING SATISFACTION, THE AO IS NOT ENTITLED TO COMPUTE THE DISALLOWANCE TO BE MADE UNDER U/S 14A R/W RULE 8D O F THE RULES AND FURTHER OBSERVED THAT IN ORDER TO ATTRACT SEC14A AND RULE 8 D THERETO THE AO MUST EXAMINE THE ACCOUNTS OF THE ASSESSEE TO ARRIVE AT S ATISFACTION WITH COGENT REASONS. FURTHER, WE FIND THAT IN PARAS-3.1 AND 3. 2 OF ORDER SUPRA THAT THE COMPUTATION UNDER RULE 8D IS APPLICABLE UNDER NORMA L PROVISIONS OF THE ACT AND NOT FOR BOOK PROFIT U/S 115JB OF THE ACT, BUT, HOWEVER, WE FIND THAT THE CIT-A ALSO HELD THAT NO ADDITION CAN BE MADE ON ACC OUNT OF CALCULATED EXPENDITURE AS PER THE PROVISIONS OF SUB -SEC. (2) & (3) OF SECTION 14A TO THE EXTENT OF RS.92,78,481/- AS E XTRA EXPENDITURE INCURRED TO EARN EXEMPT INCOME WHILE CO MPUTING INCOME U/S. 115JB OF THE ACT AND HELD THAT THE SAID DISALLOWANCE MADE UNDER BOOK PROFIT IS TO BE ADDED UNDER THE NOR MAL COMPUTATION OF INCOME. THE RELEVANT PORTION OF THE CO-ORDINATE BENCH ORDER SUPRA IS REPRODUCED HEREIN BELOW FOR THE SAKE OF CLARITY: ITA NOS. 1758 & 1804/KOL/13 M/S. INTEGRATED COAL MINING LTD 7 2.6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERU SED THE MATERIALS AVAILABLE ON RECORD INCLUDING THE VARIOUS CASE LAWS RELIED UPON BY BOTH THE SIDES. WE FIND FROM THE FACTS OF THE INSTANT CASE THAT THE LEARNED AO HAS NOT EXAMINED THE ACCOUNTS OF THE ASSESSEE AND THERE IS NO SATISFACTION RECORDED BY THE LEARNED AO ABOUT THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE AND WITHOUT THE SAME , HE INVOKED RULE 8D OF IT RULES. WHILE REJECTING THE CLAIM OF ASSESSEE WITH REGARD TO EXPE NDITURE IN RELATION TO EXEMPT INCOME, THE LEARNED AO HAS TO INDICATE COGEN T REASONS FOR THE SAME. WE FIND THAT THE LEARNED AO HAD STRAIGHT AWA Y EMBARKED UPON COMPUTING DISALLOWANCE UNDER RULE 8D(2) OF THE RULE S. WE FIND THAT THE CASE LAWS RELIED UPON BY THE LEARNED AR ON THE DECI SION OF THE JURISDICTIONAL HIGH COURT ARE DIRECTLY ON THIS POIN T AND IN FAVOUR OF THE ASSESSEE. CIT VS ASHISH JHUNJHUNWALA IN G.A.NO. 2990 OF 2013 IN ITAT NO. 157 OF 2013 DATED 8.1.2014 RENDERED BY CALCUTTA HIGH COURT ' WHILE REJECTING THE CLAIM OF THE ASSESSEE WITH RE GARD TO EXPENDITURE OR NO EXPENDITURE, AS THE CASE MAY BE, IN RELATION TO EXEMPTED INCOME, THE AO HAS TO INDICATE COGENT REASONS FOR T HE SAME. FROM THE FACTS OF THE PRESENT CASE, IT IS NOTICED THAT THE AO HAS NOT CONSIDERED THE CLAIM OF THE ASSESSEE AND STRAIGHT AWAY EMBARKED UPON COM PUTING DISALLOWANCE UNDER RULE 8D OF THE RULES ON PRESUMING THE AVERAGE VALUE OF INVESTMENT AT % OF THE TOTAL VALUE. IN VIEW OF THE ABOVE AND RESPECTFULLY FOLLOWING THE COORDINATE BENCH DECISION IN THE CASE OF J.K. I NVESTORS (BOMBAY) LTD., SUPRA, WE UPHOLD THE ORDER OF CIT (A)'. CIT VS R.E.I. AGRO LTD IN GA 3022 OF 2013 IN ITAT 16 1 OF 2013 DATED 23.12.2013 RENDERED BY CALCUTTA HIGH COURT THE ASSESSING OFFICER ALSO DISALLOWED THE EXPENDIT URE UNDER SECTION 14A OF THE INCOME TAX ACT, 1961 WITHOUT FIRST RECORDING TH AT HE WAS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM AS REGARDS THE CL AIM THAT NO EXPENDITURE WAS MADE BY THE ASSESSEE. CHALLENGING THE ORDER OF THE TRIBUNAL, THE PRESENT APPEAL HAS BEEN FILED. WE HAVE HEARD MR.BHOWMIK AND ARE OF THE OPINION THA T NO POINT OF LAW HAS BEEN RAISED. THEREFORE, THIS APPEAL IS DISMISSED. THE AFORESAID TWO DECISIONS OF THE JURISDICTIONAL H IGH COURT ARE BINDING ON THIS TRIBUNAL AND HENCE THE CASE LAWS ADDRESSED BY THE LEARNED CITA IN HIS ORDER ARE NOT CONSIDERED IN THIS ORDER. WE ALSO FI ND THAT ONE OF THE DECISIONS RELIED UPON BY THE LEARNED CITA IS THAT O F JURISDICTIONAL HIGH COURT IN THE CASE OF DHANUKA & SONS (SUPRA)). WE F IND THAT THE FACTS IN THE CASE OF DHANUKA & SONS ARE TOTALLY DIFFERENT FR OM THE FACTS OF THE INSTANT CASE AND MOREOVER, WHEN THERE ARE TWO CONFL ICTING DECISIONS OF THE SAME COURT OR DIFFERENT COURTS ON THE SAME ISSUE, T HEN THE DECISION FAVOURABLE TO THE ASSESSEE HAS TO BE FOLLOWED. REL IANCE IN THIS REGARD IS ITA NOS. 1758 & 1804/KOL/13 M/S. INTEGRATED COAL MINING LTD 8 PLACED ON THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF VEGETABLE PRODUCTS REPORTED IN 88 ITR 172 (SC). HENCE WE HOLD THAT THE ACTION OF THE LEARNED AO IN DIRECTLY EMBARKING ON RULE 8D(2) OF THE RULES IS NOT APPRECIATED AND HENC E NO DISALLOWANCE U/S 14A OF THE ACT COULD BE MADE IN THE FACTS OF THE IN STANT CASE. 2.6.1. WE ALSO FIND THAT THE ASSESSEE HAS GOT SUFF ICIENT OWN FUNDS TO MAKE THESE INVESTMENTS AND THE LEARNED AO HAD NOT BROUGH T ANY NEXUS BETWEEN THE BORROWED FUNDS VIS A VIS THE INVESTMENTS MADE B Y THE ASSESSEE. WITHOUT DOING THE SAME, HE CANNOT DIRECTLY PRESUME THAT THE INVESTMENTS WERE MADE OUT OF BORROWED FUNDS. IF THE ACTION OF THE LEARNED AO AND LEARNED CITA ARE TO BE UPHELD, THEN NO ASSESSEE COU LD MAKE ANY INVESTMENTS WHEN THERE IS A INTEREST BEARING LOAN T O BE REPAID. THE FACT OF MAKING THE INVESTMENTS HAS TO BE VIEWED FROM THE PO INT OF COMMERCIAL EXPEDIENCY AND FROM THE POINT OF VIEW OF BUSINESSMA N AND NOT FROM THE VIEW POINT OF THE REVENUE. IT IS WELL SETTLED THAT BUSINESSMAN KNOWS HIS INTEREST BEST. WE PLACE RELIANCE ON THE DECISION O F HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS RELIANCE UTILITIES & PO WER LTD ( 313 ITR 340 ) (BOM) IN SUPPORT OF OUR VIEW THAT IF THE OWN FUNDS ARE AV AILABLE WITH THE ASSESEE AND IF THE SAME ARE MORE THAN THE INVESTMENTS MADE BY THE ASSESSEE, THEN IT HAS TO BE PRESUMED THAT THE I NVESTMENTS WERE MADE OUT OF OWN FUNDS AND NOT OUT OF BORROWED FUNDS. H ENCE WE HOLD THAT NO DISALLOWANCE U/S 14A OF THE ACT COULD BE MADE IN TH ESE CIRCUMSTANCES. 2.6.2. WE ALSO FIND THAT THE INVESTMENTS MADE IN S UBSIDIARIES BY THE ASSESSEE ARE ONLY STRATEGIC INVESTMENTS AND WERE MA DE WITH A PRIMARY OBJECT TO ACQUIRE CONTROLLING INTEREST IN GROUP CON CERNS AND NOT FOR EARNING ANY INCOME OUT OF THAT INVESTMENT. RELIANCE IN THI S REGARD IS PLACED ON THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF DCIT VS SELVEL ADVERTISING P LTD REPORTED IN (2015) 58 TAXMANN .COM 196 (KOLKATA TRIB.). WE HOLD THAT EVEN ON THIS COUNT, NO DISALLOWANC E U/S 14A OF THE ACT COULD BE MADE BY THE LEARNED AO. 2.6.3. WE ALSO FIND THAT THE INVESTMENTS THAT DID NOT YIELD ANY DIVIDEND INCOME NEEDS TO BE EXCLUDED FROM THE COMPUTATION OF DISALLOWANCE , IF ANY, U/S 14A OF THE ACT READ WITH RULE 8D OF THE RULES A S THE BASIC INTENTION BEHIND INTRODUCTION OF SECTION 14A ITSELF IS ONLY T O DISALLOW THE EXPENDITURE INCURRED FOR EARNING AN INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME. WHEN THERE IS NO INCOME WHICH IS CLAIMED A S EXEMPT, THEN THERE IS NO SCOPE FOR PROVISIONS OF SECTION 14A TO OPERAT E. IN THE INSTANT CASE, THE ASSESSEE DERIVED DIVIDEND INCOME WHICH IS EXEMP T ONLY FROM CESC LTD AND FROM UTI MUTUAL FUND (WHICH WAS PURCHASED AND S OLD DURING THE YEAR ITSELF). HENCE EVEN ASSUMING IF DISALLOWANCE IS T O BE MADE U/S 14A READ WITH RULE 8D, THE INVESTMENTS WHICH DID NOT YIELD A NY DIVIDEND INCOME DURING THE YEAR HAS TO BE EXCLUDED. WE AGREE WITH THE ARGUMENTS OF THE LEARNED AR IN THIS REGARD. RELIANCE IN THIS REGARD IS PLACED ON THE FOLLOWING DECISIONS:- ALLIANCE INFRASTRUCTURE PROJECTS PVT LTD VS DCIT IN ITA NO. 220 & 1043 (BNG.)/2013 FOR ASST YEARS 2009-10 & 2010-11 DATED 12.9.2014 (BANGALORE TRIBUNAL) CIT VS CORRTECH ENERGY PVT LTD REPORTED IN 352 ITR 97 (GUJ) CIT VS SHIVAM MOTORS IN ITA NO. 88 OF 2014 DATED 5.5. 2014 RENDERED BY ALLAHABAD HIGH COURT ITA NOS. 1758 & 1804/KOL/13 M/S. INTEGRATED COAL MINING LTD 9 CIT VS LAKHANI MARKETING IN ITA NO. 970 OF 2008 REN DERED BY PUNJAB & HARYANA HIGH COURT CIT VS DELITE ENTERPRISES IN ITA NO. 110 OF 2009 RE NDERED BY BOMBAY HIGH COURT THE DECISION OF SPECIAL BENCH OF TRIBUNAL IN THE CA SE OF CHEMINVEST LTD VS CIT REPORTED IN 121 ITD 318 HAD HELD THAT DISALLOWANCE U/S 14A COULD BE MADE EVEN IN AN YEAR IN WHICH NO EXEMPT INCOME W AS EARNED OR RECEIVED BY THE ASSESSEE. BUT THIS DECISION HAS BE EN OVERRULED BY BANGALORE TRIBUNAL , GUJARAT HIGH COURT AND ALLAHAB AD HIGH COURT AS STATED SUPRA. MOREOVER WE ALSO FIND THAT THE SPECIAL BE NCH DECISION IN CHEMINVEST LTD VS CIT HAS BEEN OVERRULED BY THE RECENT DECISION OF THE DELHI HIGH COURT IN CHEMINVEST LTD CASE ITSELF AND HENCE IT IS NO LONGER GOOD LAW. HENCE WE HOLD IN FAVOUR OF THE ASSESSEE T HE ALTERNATIVE ARGUMENT OF THE LEARNED AR THAT ONLY INVESTMENTS YI ELDING DIVIDEND INCOME DURING THE YEAR SHOULD BE CONSIDERED FOR DIS ALLOWANCE U/S 14A OF THE ACT. RESPECTFULLY FOLLOWING THE AFORESAID JUDICIAL PRECED ENTS, WE HAVE NO HESITATION IN DIRECTING THE LEARNED AO TO DELETE TH E ADDITION MADE U/S 14A OF THE ACT. ACCORDINGLY, THE GROUND NOS. 1 (A) TO (C ) RAISED BY THE ASSESSEE ARE ALLOWED. 3. THE NEXT GROUND TO BE DECIDED IN THIS APPEAL IS THAT WHETHER THE DISALLOWANCE U/S 14A OF THE ACT COULD BE MADE TO TH E BOOK PROFITS COMPUTED U/S 115JB OF THE ACT. THE ASSESSEE HAS RA ISED THE FOLLOWING GROUND BEFORE US :- 1(D) THAT THE FINDING RECORDED BY THE LEARNED CIT( APPEALS) IN THE APPELLATE ORDER WHILE CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN MAKING THE IMPUGNED FURTHER DISALLOWANCE OF EXPENDI TURE AMOUNTING TO INR 44,91,468 U/S.14A OF THE READ WITH RULE 8D OF T HE INCOME-TAX RULES, 1962 IS BASED MERELY ON CONJECTURE, SURMISE AND PRE SUMPTIONS. 3.1. THE LEARNED AR ARGUED THAT RULE 8D IS MEANT ON LY FOR COMPUTATION OF INCOME UNDER NORMAL PROVISIONS OF THE ACT AND NOT F OR BOOK PROFIT U/S 115JB OF THE ACT. THE LEARNED DR ARGUED THAT THE DI SALLOWANCE U/S 14A OF THE ACT WOULD AUTOMATICALLY FALL IN CLAUSE (F) OF E XPLANATION TO SECTION 115JB OF THE ACT AND HENCE NEEDS TO BE ADDED BACK F OR COMPUTATION OF BOOK PROFITS U/S 115JB OF THE ACT. 3.2. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND LOT OF FORCE IN THE ARGUMENT OF THE LEARNED AR THAT COMPUTATION OF DIS ALLOWANCE UNDER RULE 8D CAN BE USED ONLY FOR COMPUTATION OF INCOME UNDER NORMAL PROVISIONS OF THE ACT AND NOT FOR BOOK PROFITS U/S 115JB OF THE A CT. UNLESS AN ITEM IS DEBITED IN THE PROFIT AND LOSS ACCOUNT, THE SAME CA NNOT BE THE SUBJECT MATTER OF ADDITION TO BOOK PROFITS UNDER CLAUSE (F) OF EXPLANATION TO SECTION 115JB OF THE ACT. THE DISALLOWANCE MADE U/S 14A OF THE ACT READ WITH RULE 8D IS ONLY ARTIFICIAL DISALLOWANCE AND OBVIOUSLY TH E SAME IS NOT DEBITED IN THE PROFIT AND LOSS ACCOUNT AND THE SAME CANNOT BE IMPORTED INTO CLAUSE (F) OF EXPLANATION TO SECTION 115JB OF THE ACT. 11. IN THE PRESENT CASE, THE CIT-A HELD THAT THE CO MPUTATION OF DISALLOWANCE U/SEC 14A R/W RULE 8D OF THE RULES UND ER BOOK PROFIT IS NOT ITA NOS. 1758 & 1804/KOL/13 M/S. INTEGRATED COAL MINING LTD 10 PERMISSIBLE AND THE DISALLOWANCE AS MADE BY THE AO WILL BE ADDED TO THE INCOME COMPUTED UNDER THE NORMAL PROVISIONS OF THE ACT. IT IS EVIDENT FROM PAGE NO-3 OF PAPER BOOK THAT THE LOANS AVAILED LAST YEAR WERE PAID IN THE YEAR UNDER CONSIDERATION AND FURTHER, THERE WAS NO UNSECURED LOANS AS IT CLEAR FROM PAGE NO-1 OF PAPER BOOK GOES TO SHOW AS NIL. REGARDING THE INTEREST PAID ON LOAN WAS RELATING TO THE A.Y 2008- 09 AS IT WAS ESTABLISHED THROUGH PAGE NO-2 OF THE PAPER BOOK. WE FIND THAT T HE ASSESSEE HAS GOT SUFFICIENT OWN FUNDS TO MAKE THE INVESTMENTS AND TH E AO HAD NOT BROUGHT ANY NEXUS BETWEEN THE BORROWED FUNDS VIS A VIS THE INVESTMENTS MADE BY THE ASSESSEE. THE ASSESSEE CLAIMED IN ITS RETURN OF INCOME THAT IT EARNED EXEMPT INCOME AGGREGATING TO RS.55,89,232 A ND OFFERED AN AGGREGATE SUM OF RS.94,312/- AS DISALLOWABLE U/S . 14A. THE AO HAS TO INDICATE COGENT REASONS FOR REJECTION OF THE CLAIM OF ASSESSEE WITH REGARD TO EXPENDITURE IN RELATION TO EXEMPT INCOME. WE FIND FROM THE FACTS OF THE INSTANT CASE THAT THE AO HAS NOT EXAMINED THE A CCOUNTS OF THE ASSESSEE AND THERE IS NO SATISFACTION RECORDED BY THE AO ABO UT THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE AND WITHOUT THE SAME, THE AO INVOKED RULE 8D OF IT RULES. IN VIEW OF THE SAME, THE FINDING OF THE CIT -A THE DISALLOWANCE AS MADE BY THE AO WILL BE ADDED TO THE INCOME COMPUTED UNDER THE NORMAL PROVISIONS OF THE ACT IS NOT JUSTIFIED AND THE ADDI TION MADE THEREON IS DELETED AND THE GROUND NOS-1(A) TO 1(D) RAISED BY THE ASSE SSEE ARE ALLOWED. 12. THE BRIEF FACTS OF THE ISSUE IN GROUND NOS. 2 (A) TO 2(C) ARE THAT ASSESSEE DEBITED A SUM OF RS. 8,14,000/- IN ITS PROFIT AND L OSS ACCOUNT TOWARDS PROVISION FOR LEAVE ENCASHMENT BASED ON ACTUARIAL V ALUATION. THE AO ALLOWED TO AN EXTENT OF RS.2,31,000/- AS IT SHOWN TO HAVE P AID TOWARDS LEAVE ENCASHMENT AND DISALLOWED RS.5,83,000/-. ON FIRST APPEAL, THE CIT-A CONFIRMED THE ACTION OF THE LEARNED AO. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US BY AFOREMENTIONED GROUNDS 2(A) TO 2(C). ITA NOS. 1758 & 1804/KOL/13 M/S. INTEGRATED COAL MINING LTD 11 13. THE LD. AR SUBMITS THAT THE REVENUE HAD PREFER RED SPECIAL LEAVE PETITION (SLP) BEFORE THE HONBLE SUPREME COURT AGA INST THE JUDGEMENT OF HONBLE HIGH COURT OF CALCUTTA. HE, FURTHER SUBMIT S THAT THE ISSUE IN HAND MAY BE REMANDED TO AO IN VIEW OF THE ORDER DT: 8.5. 2009 BY THE HONBLE APEX COURT IN SLP IN CC 12060 / 2008. THE LD. DR CO NCEDES THAT THE ORDER OF THE HONBLE SUPREME COURT IS BINDING ON THE RESPOND ENT REVENUE AND ACCORDINGLY, SOUGHT TO REMAND THE ISSUE TO THE AO. 14. HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIA L AVAILABLE ON RECORD. WE FIND THAT THE CO-ORDINATE BENCH SUPRA REMANDED THE ISSUE TO THE AO IN ASSESSEES OWN CASE FOR AY.2008-09, THE RELEVANT OF PORTION OF DISCUSSION IS REPRODUCED HEREIN BELOW: 4.2. THE LEARNED AR RELIED ON THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF EXIDE INDUSTRIES LTD VS UNION OF INDIA REPORTED IN 292 ITR 470 (CAL) WHEREIN THE PROVISIONS OF SECTION 43B (F) OF THE A CT HAS BEEN STRUCT DOWN AS ARBITRARY. HOWEVER HE FAIRLY C ONCEDED THAT THE HONBLE APEX COURT THOUGH HAD STAYED THE OPERATION OF THE JUDGEMENT OF CALCUTTA HIGH COURT INITIALLY BUT LATER, IT HAD DIR ECTED THE ASSESSES TO COMPLY WITH THE PROVISIONS OF SECTION 43B(F) OF THE ACT AND PAY TAXES THEREON BUT PARALLELY CLAIM DEDUCTION FOR LEAVE ENC ASHMENT ON PROVISION BASIS, AS AN INTERIM MEASURE TILL THE DISPOSAL OF T HE CIVIL APPEAL BY THE APEX COURT. IN RESPONSE TO THIS, THE LEARNED DR VEHEMEN TLY SUPPORTED THE ORDER OF THE LOWER AUTHORITIES. 4.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND WE FIN D CASE LAWS QUOTED BY THE LEARNED AR. WE FIND THAT IT IS RELEVANT TO GE T INTO THE OPERATIVE PORTION OF THE DECISION OF THE CALCUTTA HIGH COURT IN THE CASE OF EXIDE INDUSTRIES LTD VS UNION OF INDIA REPORTED IN 292 IT R 470 . IT WAS HELD AS BELOW:- 11. IN THIS REGARD THE OBSERVATION OF THE APEX CO URT IN THE CASE OF BHARAT EARTH MOVERS (SUPRA) IS QUOTED BELOW: THE LAW IS SETTLED: IF A BUSINESS LIABILITY HAS DEF INITELY ARISEN IN THE ACCOUNTING YEAR, THE DEDUCTION SHOULD BE ALLOWED AL THOUGH THE LIABILITY MAY HAVE TO BE QUANTIFIED AND DISCHARGED AT A FUTURE DA TE. WHAT SHOULD BE CERTAIN IS THE INCURRING OF THE LIABILITY. IT SHOUL D ALSO BE CAPABLE OF BEING ESTIMATED WITH REASONABLE CERTAINTY THOUGH THE ACTU AL QUANTIFICATION MAY NOT BE POSSIBLE. IF THESE REQUIREMENTS ARE SATISFIE D THE LIABILITY IS NOT A CONTINGENT ONE. THE LIABILITY IS IN PRAESENTI THOUG H IT WILL BE DISCHARGED AT A FUTURE DATE. IT DOES NOT MAKE ANY DIFFERENCE IF THE FUTURE DATE ON WHICH THE LIABILITY SHALL HAVE TO BE DISCHARGED IS NOT CERTAI N.... ITA NOS. 1758 & 1804/KOL/13 M/S. INTEGRATED COAL MINING LTD 12 APPLYING THE ABOVESAID SETTLED PRINCIPLES TO THE FA CTS OF THE CASE AT HAND WE ARE SATISFIED THAT THE PROVISION MADE BY THE APP ELLANT COMPANY FOR MEETING THE LIABILITY INCURRED BY IT UNDER THE LEAV E ENCASHMENT SCHEME PROPORTIONATE WITH THE ENTITLEMENT EARNED BY EMPLOY EES OF THE COMPANY, INCLUSIVE OF THE OFFICERS AND THE STAFF, SUBJECT TO THE CEILING ON ACCUMULATION AS APPLICABLE ON THE RELEVANT DATE, IS ENTITLED TO DEDUCTION OUT OF THE GROSS RECEIPTS FOR THE ACCOUNTING YEAR DURING WHICH THE P ROVISION IS MADE FOR THE LIABILITY. THE LIABILITY IS NOT A CONTINGENT LIABIL ITY. THE HIGH COURT WAS NOT RIGHT IN TAKING THE VIEW TO THE CONTRARY. 13. THE APPEAL SUCCEEDS AND IS ALLOWED. SECTION 43 B(F) IS STRUCK DOWN BEING ARBITRARY, UNCONSCIONABLE AND DE HORS THE APE X COURT DECISION IN THE CASE OF BHARAT EARTH MOVERS (SUPRA) . IT IS OBSERVED THAT THE REVENUE HAD PREFERRED SPEC IAL LEAVE PETITION (SLP) BEFORE THE HONBLE SUPREME COURT AGAINST THE JUDGEM ENT OF HONBLE CALCUTTA HIGH COURT. THE HONBLE APEX COURT IN SLP PROCEEDINGS IN CC 12060 / 2008 DATED 8.9.2008 HAD HELD AS UNDER:- THE PETITION WAS CALLED ON FOR HEARING TODAY. UPON HEARING COUNSEL THE COURT MADE THE FOLLOWING O RDER. ISSUE NOTICE. IN THE MEANTIME, THERE SHALL BE STAY OF THE IMPUGNE D JUDGEMENT, UNTIL FURTHER ORDERS. LATER THE HONBLE SUPREME COURT IN CC 22889 / 2008 DATED 8.5.2009 HAD HELD AS UNDER:- THE PETITION WAS CALLED ON FOR HEARING TODAY. UPON HEARING COUNSEL THE COURT MADE THE FOLLOWING O RDER DELAY CONDONED. LEAVE GRANTED. PENDING HEARING AND FINAL DISPOSAL OF THE CIVIL APP EAL, DEPARTMENT IS RESTRAINED FROM RECOVERING PENALTY AND INTEREST WHI CH HAS ACCRUED TILL DATE. IT IS MADE CLEAR THAT AS FAR AS THE OUTSTANDING INT EREST DEMAND AS OF DATE IS CONCERNED, IT WOULD BE OPEN TO THE DEPARTMENT TO RE COVER THAT AMOUNT IN CASE CIVIL APPEAL OF THE DEPARTMENT IS ALLOWED. WE FURTHER MAKE IT CLEAR THAT THE ASSESSEE WOULD, D URING THE PENDENCY OF THIS CIVIL APPEAL , PAY TAX AS IF SECTION 43B(F) IS ON THE STATUTE BOOK BUT AT THE SAME TIME IT WOULD BE ENTITLED TO MAKE A CLAIM IN ITS RETURNS. IN THE AFORESAID CIRCUMSTANCES, WE DEEM IT FIT AND APPROPRIATE , IN THE INTEREST OF JUSTICE AND FAIR PLAY, TO SET ASIDE THI S ISSUE TO THE FILE OF THE LEARNED AO TO PASS ORDERS BASED ON THE OUTCOME OF T HE MAIN APPEAL ON MERITS BY THE HONBLE SUPREME COURT AS STATED SUPRA . ACCORDINGLY, THE GROUND NO. 2(A) RAISED BY THE ASSESSEE IS ALLOWED FOR S TATISTICAL PURPOSES. ITA NOS. 1758 & 1804/KOL/13 M/S. INTEGRATED COAL MINING LTD 13 15. IN VIEW OF THE ABOVE, WE REMIT THE ISSUE TO THE FILE OF THE AO TO DECIDE THE SAME TAKING INTO CONSIDERATION THE OUTCOME OF T HE MAIN CASE IN SLP (CIVIL) 22889/2008 OF THE HONBLE SUPREME COURT. TH EREFORE, THE GROUNDS RAISED IN 2(A) TO 2(C) BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSE. 16. THE BRIEF FACTS OF THE ISSUE IN GROUND NOS-3( A) TO 3(D) ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MINING AND E XTRACTION OF COAL. THE MINES OF THE ASSESSEE ARE LOCATED WITHIN THE STATE OF WEST BENGAL. THE GOVERNMENT OF WEST BENGAL LEVIES AND COLLECTS TWO C ESS NAMELY RURAL EMPLOYMENT CESS (RE CESS) AND PRIMARY EDUCATION C ESS (PE CESS) FROM ENTERPRISES ENGAGED IN THE MINING AND EXTRACTION OF COAL WITHIN THE STATE OF WEST BENGAL. THE ASSESSEE IS BOUND TO PAY RURAL E MPLOYMENT CESS AND PRIMARY EDUCATION CESS ON PRODUCTION OF COAL OF EAC H YEAR PAYABLE IN THE SUCCEEDING YEAR. THE SAID CESS IS COLLECTED BY TH E ASSESSEE IN THE SALE BILLS RAISED BY THE ASSESSEE ON THE CUSTOMERS AND ASSESSE E TREATED THE SAME AS ADVANCE FROM CUSTOMERS IN THE LIABILITY SIDE OF THE BALANCE SHEET. WHEN THE SAID CESS IS PAID IN THE SUBSEQUENT YEAR, THE CONCE RNED LIABILITY ACCOUNT IS DEBITED BY THE ASSESSEE AND THE ENTIRE TRANSACTIONS ARE NOT ROUTED THROUGH THE PROFIT AND LOSS ACCOUNT OF THE ASSESSEE. THE AS SESSEE HAS BEEN CONSISTENTLY FOLLOWING THIS PRACTICE OVER THE YEARS COMMENCING FROM ASST YEAR 2003-04 ONWARDS. A DETAILED NOTE IN THIS REGARD WA S ALSO MENTIONED IN THE NOTES TO TAX AUDIT REPORT STATING THE REASONS FOR N OT STATUTORILY ACCRUING THIS RECEIPT IN THE ASST YEAR UNDER APPEAL. THE AO HOWE VER OBSERVED THAT THESE RECEIPTS IN THE FORM OF CESS COLLECTED OUT OF SALE INVOICES ARE NOTHING BUT TRADING RECEIPTS AND HENCE IF THE SAME ARE NOT PAID WITHIN THE DUE DATE OF FILING THE RETURN OF INCOME, THEN THE SAME ARE LIAB LE FOR DISALLOWANCE U/S 43B OF THE ACT. THE AO CONSIDERED THE AMOUNTS OF RS.1 7,58,44,394/- WHICH WAS PAID DURING THE PERIOD 01-10-2008 TO 31-03-2009 AND RS.15,84,65,895/- PAID DURING 01-04-2009 TO 26-09-2009 FOR THE YEAR U NDER CONSIDERATION. THE AO DID NOT CONSIDER RS.17,26,15,364/- FOR ALLOWANCE AS IT WAS PAID DURING THE PERIOD OF 01-04-2008 TO 30-09-2008 RELEVANT TO AY.2 008-09. THE AO ITA NOS. 1758 & 1804/KOL/13 M/S. INTEGRATED COAL MINING LTD 14 ACCORDINGLY DISALLOWED RS. 31,53,02,826/- TOWARDS R E CESS AND RS. 7,88,25,718/- TOWARDS PE CESS. 17. ON FIRST APPEAL, THE CIT-A DIRECTED THE AO TO S UBSTITUTE THE ACTUAL FIGURES UP TO A.Y 2008-09 AND A.Y 2009-10 AND DISAL LOWANCE MAY BE CALCULATED ON THE BASIS FOR THE FIGURES TAKEN IN TH E A.Y2008-09 BY TAKING INTO CONSIDERATION THE TOTAL COLLECTION UPTO 31-03-2009 AND PAYMENT UPTO DATE OF FILING OF RETURN OF INCOME I.E 26-09-2009. 18. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE U S BY AFOREMENTIONED GROUNDS. 19. THE LD. AR ARGUED THAT THE CESS WAS COLLECTED F ROM CUSTOMERS IN THE YEAR UNDER CONSIDERATION AND THE SAME WAS PAID TO G OVERNMENT NEXT YEAR AS PER THE WEST BENGAL RURAL EMPLOYMENT AND PRODUCT ION ACT, 1976 AND THE WEST BENGAL PRIMARY EDUCATION ACT, 1973. LD.AR SUB MITTED THAT THE SAID AMOUNTS ARE NOT COMING INTO PROFIT AND LOSS ACCOUNT AND TOOK US TO THE RELEVANT PAGES AT 62 OF PAPER BOOK. FURTHER, SUBMIT TED THAT THIS PRACTICE OF PAYMENT WAS BEING FOLLOWED FROM A.Y 2003-04 ONWARDS . THE LD.AR DREW OUR ATTENTION TO THE FINDING OF THE COORDINATE BENCH TO PARA-5.3 AT PAGE NO-64 OF PAPER BOOK. THE LD. DR CONCEDED THAT THE ISSUE IS C OVERED BY IN ASSESSEES OWN CASE IN A.Y 2008-09. 20. HEARD SUBMISSIONS AND PERUSED THE MATERIAL AVAI LABLE ON RECORD. AS RIGHTLY POINTED BY THE LD.AR AND AS CONCEDED BY THE LD. DR, THE CO-ORDINATE BENCH OF KOLKATA TRIBUNAL IN ASSESSEES OWN CASE HE LD THAT THAT THE CESS COLLECTED FROM CUSTOMERS IN THE SALE INVOICES SHALL NOT BE CHARGEABLE TO TAX IN THE YEAR OF COLLECTION. THE RELEVANT PORTION OF WHI CH IS REPRODUCED HEREIN BELOW: 5.3. WE FIND THAT THE LEARNED CITA ALSO HAD REPROD UCED THE RELEVANT PROVISIONS OF THE WEST BENGAL RURAL EMPLOYMENT AND PRODUCTION ACT, 1976 AND THE WEST BENGAL PRIMARY EDUCATION ACT, 1973 WHI CH STATES THAT THE CESS WOULD BE COLLECTED BY THE PERSON ENGAGED IN TH E PRODUCTION OF COAL FROM THE CUSTOMERS AND THE SAME WOULD BECOME PAYABL E IN THE SUCCEEDING YEAR ONLY. HENCE THE CONCEPT OF ACCRUAL OF LIABILI TY TO PAY THE CESS HAD NOT ITA NOS. 1758 & 1804/KOL/13 M/S. INTEGRATED COAL MINING LTD 15 AROSE DURING THE ASST YEAR UNDER APPEAL. IN OTHER WORDS, THE CESS DOES NOT BECOME PAYABLE IN THE ASST YEAR UNDER APPEAL. NOW LET US GO INTO THE PROVISIONS OF SECTION 43B OF THE ACT WHICH IS REPRO DUCED HEREIN BELOW:- [ CERTAIN DEDUCTIONS TO BE ONLY ON ACTUAL PAYMENT] 43B NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PR OVISION OF THIS ACT, A DEDUCTION OTHER- WISE ALLOWABLE UNDER THIS ACT I N RESPECT OF- [(A)] ANY SUM PAYABLE BY THE ASSESSEE BY WAY OF TAX , DUTY, CESS OR FEE, BY WHATEVER NAME CALLED, UNDER ANY LAW FOR THE TIME BEING IN FORCE, OR] (B) TO [(F) *** *** *** *** *** *** *** *** SHALL BE ALLOWED (IRRESPECTIVE OF THE PREVIOUS YEA R IN WHICH THE LIABILITY TO PAY SUCH SUM WAS INCURRED BY THE ASSES SEE ACCORDING TO THE METHOD OF ACCOUNTING REGULARLY EMPLOYED BY HIM) ONL Y IN COMPUTING THE INCOME REFERRED TO IN SECTION 28 OF THAT PREVIOUS Y EAR IN WHICH SUCH SUM IS ACTUALLY PAID BY HIM: [PROVIDED THAT NOTHING CONTAINED IN THIS SECTION SHALL APPLY IN RELATION TO ANY SUM, WHICH IS ACTUALLY PAID BY THE ASSESSEE ON OR BEFORE THE DUE DATE APPLICABLE IN HIS CASE FOR FURNISHING THE RETURN O F INCOME UNDER SUB- SECTION (1) OF SECTION 139 IN RESPECT OF THE PREVIO US YEAR IN WHICH THE LIABILITY TO PAY SUCH SUM WAS INCURRED AS AFORESAID AND THE EVIDENCE OF SUCH PAYMENT IS FURNISHED BY THE ASSESSEE ALONG WIT H SUCH RETURN. [EXPLANATION 2.- FOR THE PURPOSES OF CLAUSE (A), A S IN FORCE AT ALL MATERIAL TIMES,' ANY SUM PAYABLE' MEANS A SUM FOR WHICH THE ASSESSEE INCURRED LIABILITY IN THE PREVIOUS YEAR EVEN THOUGH SUCH SUM MIGHT NOT HAVE BEEN PAYABLE WITHIN THAT YEAR UNDER THE RELEVANT LAW.] FROM THE AFORESAID PROVISIONS, IT COULD BE SEEN THA T WHAT IS CONTEMPLATED IN SECTION 43B(A) READ WITH EXPLANATION 2 IS TAX, D UTY OR CESS SHOULD BECOME PAYABLE UNDER THE RELEVANT ACT. THE EXPRESS ION PAYABLE UNDER THE RELEVANT ACT IN THE CONTEXT OF THE IMPUGNED ISSUE MEANS THE CESS PAYABLE BY THE ASSESSEE UNDER THE PROVISIONS OF THE WEST B ENGAL RURAL EMPLOYMENT AND PRODUCTION ACT, 1976 AND THE WEST BE NGAL PRIMARY EDUCATION ACT, 1973. HENCE IN THESE FACTS AND CIRCU MSTANCES, THE VERSION OF THE LEARNED CITA THAT THE OTHER ACTS SHALL NOT O VERRIDE THE PROVISIONS OF INCOME TAX ACT IS NOT AT ALL RELEVANT. WE HOLD T HAT THE CESS COLLECTED FROM CUSTOMERS OUT OF SALE PRICE IN THE FACTS AND C IRCUMSTANCES OF THE INSTANT CASE CANNOT BE CONSTRUED AS TRADING RECEIPT S CHARGEABLE TO TAX AS THE SAME ARE COLLECTED IN ADVANCE FOR PAYMENT TO TH E EXCHEQUER IN THE SUCCEEDING YEAR UNDER THE RELEVANT ACT. HENCE WE CANNOT IMPORT A DIFFERENT MEANING OF ACCRUAL OF LIABILITY FOR PAYME NT OF CESS INTO THIS RELEVANT ACT WHEN MORE SO THE PROVISIONS OF SECTION 43B OF THE ACT ITSELF SPECIFICALLY STATES THAT AMOUNTS PAYABLE UNDER THE RELEVANT LAW SHALL BE ITA NOS. 1758 & 1804/KOL/13 M/S. INTEGRATED COAL MINING LTD 16 ALLOWED AS DEDUCTION ONLY ON PAYMENT BASIS. HENCE IN THESE FACTS AND CIRCUMSTANCES, THE DECISION OF THE HONBLE APEX COU RT IN THE CASE OF CHOWRINGHEE SALES BUREAU PVT LTD VS CIT REPORTED IN 87 ITR 542(SC) IS NOT APPLICABLE TO THE FACTS OF THE ASSESSEE. 5.3.1. WE ALSO FIND THAT ASST YEAR 2003-04 WAS THE FIRST YEAR OF OPERATION FOR THE ASSESSEE WHEREIN SIMILAR ADDITION MADE BY T HE LEARNED AO WAS DELETED BY THE LEARNED CITA AND THE REVENUE HAD NOT PREFERRED ANY APPEAL AGAINST THE SAME BEFORE THIS TRIBUNAL. SIMILARLY I N ASST YEAR 2006-07, NO DISALLOWANCE UNDER THIS HEAD WAS MADE BY THE LEARNE D AO EVENTHOUGH THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT. TH ESE ARE THE ONLY TWO SCRUTINY ASSESSMENTS DONE BY THE LEARNED AO ON THE ASSESSEE PRIOR TO THE ASSESSMENT YEARS UNDER APPEAL. HENCE WE FIND LOT OF FORCE IN THE ARGUMENTS OF THE LEARNED AR THAT THE PRINCIPLE OF C ONSISTENCY SHOULD NOT BE GIVEN A GO BY ON THE GROUND THAT PRINCIPLE OF RE S JUDICATA DOES NOT APPLY TO INCOME TAX PROCEEDINGS. RELIANCE IN THIS REGARD WAS MADE ON THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF R ADHASOAMI SATSANG VS CIT REPORTED IN 193 ITR 321 (SC), WHEREIN IT WAS HE LD THAT : AS WE ARE AWARE OF THE FACT THAT, STRICTLY SPEAKING RES JUDICATA DOES NOT APPLY TO INCOME TAX PROCEEDINGS. AGAIN, EACH ASSES SMENT YEAR BEING A UNIT, WHAT IS DECIDED IN ONE YEAR MAY NOT APPLY IN THE FOLLOWING YEAR BUT WHERE A FUNDAMENTAL ASPECT PERMEATING THROUGH THE D IFFERENT ASSESSMENT YEARS HAS BEEN FOUND AS A FACT ONE WAY OR THE OTHER AND THE PARTIES HAVE ALLOWED THAT POSITION TO BE SUSTAINED BY NOT CHALLE NGING THE ORDER, IT WOULD NOT BE AT ALL APPROPRIATE TO ALLOW THE POSITION TO BE CHANGED IN A SUBSEQUENT YEAR. WE FIND THAT THE ASSESSEE HAS BEEN CONSISTENTLY FOL LOWING THIS PRACTICE OF TREATING THE CESS COLLECTED AS A LIABILITY AND THE SAME ARE DEBITED AS AND WHEN THE SAID CESS IS PAID IN THE IMMEDIATELY SUCCE EDING ASSESSMENT YEAR AND IN CASE IF THE SAME IS NOT PAID IN THE SUCCEEDI NG YEAR, THE SAME IS DISALLOWED U/S 43B OF THE ACT. THIS PRACTICE OF TH E ASSESSEE IS EVIDENT FROM THE FOLLOWING CHART :- ITA NOS. 1758 & 1804/KOL/13 M/S. INTEGRATED COAL MINING LTD 17 5.3.2. WE HOLD THAT THE RELIANCE PLACED BY THE LEAR NED AR ON THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF CIT VS EXC EL INDUSTRIES LTD AND CIT VS MAFATLAL INDUSTRIES P LTD REPORTED IN 358 ITR 29 5 (SC) WHEREIN THEIR LORDSHIPS HAD HELD AS FOLLOWS:- ITA NOS. 1758 & 1804/KOL/13 M/S. INTEGRATED COAL MINING LTD 18 SECONDLY AS NOTED BY THE TRIBUNAL, A CONSISTENT VI EW HAS BEEN TAKEN IN FAVOUR OF THE ASSESSSEE ON THE QUESTIONS RAISED, ST ARTING WITH THE ASSESSMENT YEAR 1992-93 , THAT THE BENEFITS UNDER T HE ADVANCE LICENCES OR UNDER THE DUTY ENTITLEMENT PASS BOOK DO NOT REPRESE NT THE REAL INCOME OF THE ASSESSEE. CONSEQUENTLY, THERE IS NO REASON FOR US TO TAKE A DIFFERENT VIEW UNLESS THERE ARE VERY CONVINCING REASONS, NONE OF WHICH HAVE BEEN POINTED OUT BY THE LEARNED COUNSEL FOR THE REVENUE. IT APPEARS FROM THE RECORD THAT IN SEVERAL ASSESSME NT YEARS, THE REVENUE ACCEPTED THE ORDER OF THE TRIBUNAL IN FAVOUR OF THE ASSESSEE AND DID NOT PURSUE THE MATTER ANY FURTHER BUT IN RESPECT OF SOM E ASSESSMENT YEARS THE MATTER WAS TAKEN UP IN APPEAL BEFORE THE BOMBAY HIG H COURT BUT WITHOUT ANY SUCCESS. THAT BEING SO, THE REVENUE CANNOT BE ALLOWED TO FLIP-FLOP ON THE ISSUE AND IT OUGHT LET THE MATTER REST RATHER T HAN SPEND THE TAXPAYERS MONEY IN PURUSING LITIGATION FOR THE SAKE OF IT. 5.3.3. WE ARE ALSO REMINDED OF THE OBSERVATIONS OF HONBLE JUSTICE P.N. BHAGWATI WHILE RENDERING THE JUDGEMENT IN THE CASE OF DISTRIBUTORS (BARODA) P LTD VS UNION OF INDIA & ORS REPORTED IN 155 ITR 120 (SC) LARGER BENCH DECISION AS BELOW:- TO PERPETUATE AN ERROR IS NO HEROISM. TO RECTIFY T HE SAME IS THE COMPULSION OF JUDICIAL CONSCIENCE. IN THE FACTS OF THE INSTANT CASE, THE ASSESSEE HAD COMMENCED ITS OPERATIONS FROM ASST YEAR 2003-04 AND IN THE VERY F IRST YEAR, THIS ISSUE WAS TAKEN UP FOR DISALLOWANCE AND THE SAME WAS DELE TED BY THE LEARNED CITA AND THE REVENUE CHOSE NOT TO FILE AN APPEAL BE FORE THIS TRIBUNAL. THE NEXT SCRUTINY ASSESSMENT WAS MADE FOR ASST YEAR 200 6-07 WHEREIN NO ADDITION ON THIS ACCOUNT WAS MADE. THIS GOES TO PR OVE THAT THE REVENUE HAD ALREADY ACCEPTED TO THE CONTENTIONS OF THE ASSE SSEE ON THE IMPUGNED ISSUE AND SATISFIED THAT THE CESS COLLECTED FROM CU STOMERS HAVE BEEN DULY REMITTED IN THE SUCCEEDING YEAR IN ACCORDANCE WITH THE PROVISIONS OF THE WEST BENGAL RURAL EMPLOYMENT AND PRODUCTION ACT, 19 76 AND THE WEST BENGAL PRIMARY EDUCATION ACT, 1973 AND WAS ALSO SAT ISFIED WITH THE MANNER OF TREATMENT OF THE SAME BY THE ASSESSEE FOR TAX PU RPOSES. HAVING DONE SO, THERE IS NO GOOD REASON FOR THE REVENUE TO SHIF T ITS STAND IN THE ASSESSMENT YEAR UNDER APPEAL. TO THIS EXTENT, THE D ECISIONS OF THE HONBLE APEX COURT AND THE OBSERVATION MADE BY THE APEX COU RT (SUPRA) ARE RELEVANT TO THE FACTS OF THE INSTANT CASE. IN VIEW OF THE AFORESAID FACTS AND CIRCUMSTANCES A ND IN VIEW OF THE JUDICIAL PRECEDENTS RELIED UPON HEREINABOVE, WE HOLD THAT TH E CESS COLLECTED FROM CUSTOMERS IN THE SALE INVOICES SHALL NOT BE CHARGEA BLE TO TAX IN THE YEAR OF COLLECTION AND ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE IN THI S REGARD ARE ALLOWED. 21. IN VIEW OF THE FINDING OF THE CO-ORDINATE BENCH IN ITA 1146/KOL/2012 IN ASSESSEES OWN CASE FOR A.Y 2008-0 9, WE HOLD THAT THE CESS COLLECTED FROM CUSTOMERS UNDER SALE INVOICES S HALL NOT BE CHARGEABLE ITA NOS. 1758 & 1804/KOL/13 M/S. INTEGRATED COAL MINING LTD 19 TO TAX IN THE YEAR OF COLLECTION. THUS, THE GROUND NOS-3(A) TO 3(D) ARE ALLOWED. 22. THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED ITA NO.1758/KOL/2013 A.Y 2009-10 BY THE REVENUE 23. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLL OWING GROUNDS:- 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, LD. CIT(A) ERRED IN LAW IN DELETING THE DISALLOWANCE OF RS.92,78,481/- U/S. 14A OF THE IT ACT IN COMPUTATIO N OF BOOK PROFIT U/S.115JB. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, LD. CIT (A) ERRED IN VIOLATING THE PROVISIONS OF SECTIO N 115JB OF THE IT ACT BY DELETING THE DISALLOWANCE U/S. 14A. 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, LD.CIT(A) ERRED IN LAW IN HOLDING THAT ADDITIONAL D EPRECIATION OF RS.1,30,493/- SHOULD BE ALLOWED BY TREATING THE COA L MINING AS PRODUCTION OF COAL. 24. REGARDING THE GROUND NOS-1 & 2 OF REVENUES AP PEAL ARE IN RESPECT OF DELETING THE DISALLOWANCE OF RS.92,78 ,481/- MADE BY THE AO COMPUTING SUCH INCOME U/S. 14A R/W RULE 8 D OF THE RULES UNDER BOOK PROFIT U/S.115JB OF THE ACT. 25. SINCE WE DECIDED THE IDENTICAL ISSUE INVOLVING GROUND NOS-1(A) TO 1(D) OF ASSESSEES APPEAL IN FAVOUR OF ASSESSEE AND AGAINST THE REVENUE BY FOLLOWING THE ORDER OF C OORDINATE BENCH OF KOLKATA TRIBUNAL SUPRA IN ASSESSEES OWN CASE FOR A.Y. 2008-09 WHEREIN IT HELD THE DISALLOWANCE U/SEC 14A R/W RULE 8D COMPUTED UNDER BOOK PROFIT IS NOT PERMISSIBLE, I N VIEW OF THE SAME WE ADOPT THE SAME RATIO TO GROUND NOS. 1 & 2 RAISED ITA NOS. 1758 & 1804/KOL/13 M/S. INTEGRATED COAL MINING LTD 20 BY THE REVENUE. THEREFORE, THE GROUNDS 1 AND 2, ACC ORDINGLY, ARE DISMISSED. 26. GROUND NO-3 OF REVENUES APPEAL REGARDING ADDIT IONAL DEPRECIATION. DURING THE YEAR, THE ASSESSEE HAS CLA IMED ADDITIONAL DEPRECIATION OF RS.1,30,493 ON PUMPS & V ALVES WHICH WERE ACQUIRED ON 02.07.2008 AND 25.11.2008. THE CON TENTION OF THE ASSESSEE VIDE LETTER DATED 13.12.2011 WAS TH AT THE MINING INVOLVES PRODUCTION OF COAL AND IS AN EXCISA BLE GOODS. THE AO WAS OF THE VIEW THAT THE ASSESSEE IS NEITHER ENGAGED IN MANUFACTURING OF COAL NOR PRODUCING ANYTHING OR ART ICLE AND IS NOT ELIGIBLE FOR ANY ADDITIONAL DEPRECIATION. ACCOR DINGLY, THE AMOUNT OF ADDITIONAL DEPRECIATION OF RS.1,30,493/- WAS DISALLOWED. 27. IN FIRST APPEAL BEFORE THE CIT-A THE ASSESSEE S UBMITTED THAT IT ENTITLED TO CLAIM ADDITIONAL DEPRECIATION I .E THE SUM EQUAL TO THE 20% OF THE ACTUAL COST OF MACHINERY U /S. 32(1)(IIA) OF THE ACT THAT IN CASE OF A NEW MACHINE RY OR PLANT ACQUIRE OR INSTALLED AFTER 31 ST DAY OF MARCH 2005 AND RELIED ON THE DECISION OF HONBLE HIGH COURT OF CALCUTTA IN T HE CASE OF CIT VS. ATWA & CO. REPORTED IN 254 ITR 592(CAL), WHEREI N IT HELD MINING EXTRACTION OR MINING OF COAL TO BE REGARDED AS PRODUCTION OF AN ARTICLE OR THING. THE ASSESSEE ALS O REFERRED TO THE ORDER OF CIT-A IN ASSESSEES OWN CASE FOR THE A Y 2008-09 WHEREIN HE HELD THE MINING OR EXTRACTION OF COAL IS A PROCESS OF PRODUCTION AND ALLOWED ADDITIONAL DEPRECIATION ON T HIS ISSUE. CONSIDERING THE SAME THE CIT-A DELETED THE IMPUGNED ADDITION MADE U/S. 32(1)(IIA) OF THE ACT. ITA NOS. 1758 & 1804/KOL/13 M/S. INTEGRATED COAL MINING LTD 21 28. BEFORE US THE LD. DR CONCEDED THAT THE SAID ISS UE IN HAND IS COVERED BY THE ORDER OF CO-ORDINATE BENCH ( SUPRA) IN ASSESSEES OWN CASE FOR A.Y 2008-09. THE LD.AR SUBM ITS THAT THE FINDING OF THE TRIBUNAL IS IN FAVOUR OF THE ASS ESSEE BY RELYING ON THE DECISION OF THE HONBLE JURISDICTION AL HIGH COURT OF CALCUTTA IN THE CASE OF SUPRA IS PLACED AT PAGE 69 OF THE PAPER BOOK . 29. HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MAT ERIAL AVAILABLE ON RECORD INCLUDING THE DETAILS AVAILABLE IN THE PAPER BOOK. WE FIND THAT THE CO-ORDINATE BENCH OF THIS TR IBUNAL IN ASSESSEES OWN CASE SUPRA ALLOWED THE CLAIM OF THE ASSESSEE AND HELD THAT MINING OF COAL IS A PROCESS INVOLVING PRODUCTION OF COAL AND THE PROVISIONS OF SECTION 32(1)(IIA) OF THE ACT IS APPLICABLE TO THE PRESENT ISSUE IN THE FACTS AND CI RCUMSTANCES OF THE CASE. THE RELEVANT PORTION OF WHICH IS REPRO DUCED HEREIN BELOW FOR THE SAKE OF CLARITY. 6.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSE SSEE CLAIMED ADDITIONAL DEPRECIATION OF RS. 75,400/- ON SURVEY INSTRUMENT W HICH WAS ACQUIRED ON 8.12.2007. ACCORDING TO THE LEARNED AO , THE ASSES SEE IS ENAGED IN MINING OF COAL AND NOT IN MANUFACTURING OR PRODUCIN G ANY THING OR ARTICLE. HENCE HE FELT THAT THE ASSESSEE IS NOT ELIGIBLE FOR ADDITIONAL DEPRECIATION. ON FIRST APPEAL, THE LEARNED CITA HELD THAT COAL MI NING WOULD FALL UNDER THE PHRASE PRODUCTION OF ANY ARTICLE OR THING BY PLACIN G RELIANCE ON THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS G.S.ATWAL & CO REPORTED IN 254 ITR 592 (CAL) . AGGRIEVED, THE R EVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUND:- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E, LD.CIT(A) ERRED IN LAW IN HOLDING THAT ADDITIONAL DEPRECIATION OF R S.75,400/- SHOULD BE ALLOWED ON THE BASIS THAT COAL MINING IS PRODUCTION OF COST. 6.2. THE LEARNED AR RELIED ON THE ORDER OF THE LEA RNED CITA. IN RESPONSE TO THIS, THE LEARNED DR ARGUED THAT COAL MINING DOE S NOT BRING INTO EFFECT ANY NEW PRODUCT AS EVEN AFTER MINING, THE END PRODU CT IS ONLY COAL AND HENCE NO TRANSFORMATION HAPPENS IN THE SAID PROCESS . HE FURTHER PLACED RELIANCE ON THE DEFINITION OF MANUFACTURE IN SECT ION 2(29BA) OF THE ACT WHICH DEFINES AS FOLLOWS:- [29BA) MANUFACTURE WITH ITS GRAMMATICAL VARIATI ONS, MEANS A CHANGE IN A NON-LIVING PHYSICAL OBJECT OR ARTICLE OR THING- ITA NOS. 1758 & 1804/KOL/13 M/S. INTEGRATED COAL MINING LTD 22 (A) RESULTING IN TRANSFORMATION OF THE OBJECT OR ARTICL E OR THING INTO A NEW AND DISTINCT OBJECT OR ARTICLE OR THING HAVING A DIFFER ENT NAME, CHARACTER AND USE; OR (B) BRINGING INTO EXISTENCE OF A NEW AND DISTINCT OBJ ECT OR ARTICLE OR THING WITH A DIFFERENT CHEMICAL COMPOSITION OR INTEGRAL STRUCT URE;. 6.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND WE FIN D THAT THE ONLY ISSUE IS WHETHER THE ASSESSEE ENGAGED IN COAL MINING COULD B E CONSTRUED AS PRODUCTION OF COAL AND IF SO, THE ASSESSEE IS ENTIT LED FOR ADDITIONAL DEPRECIATION. WE FIND THAT THIS ISSUE IS SQUARELY COVERED BY THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS G.S.ATWAL & CO REPORTED IN 254 ITR 592 (CAL) WHEREIN IT WAS HELD AS BELOW:- 13. FOLLOWING AN OLD AND LONG STANDING DECISION GI VEN BY CHAKRAVARTI C.J IN 1959, WHICH WAS LATER APPROVED BY THE SUPREM E COURT, THE DIVISION BENCH OPINED THAT THE WINNING OF COAL IS NO DOUBT P RODUCTION. AT PARAGRAPH 12 OF THE JUDGMENT IT SAID THAT AFTER WINNING COAL SOMETHING THAT WAS NOT THERE COMES UP, AND IT IS, THEREFORE, A PRODUCTION OF COAL. THE DIVISION BENCH FOLLOWED ITS OWN DECISION IN THE LATER CASE O F KHALSA BROS V. CIT [1996] 217 ITR 185. MR. BAJORIA ALSO RELIED ON THE INTERESTING CASE OF CIT V. SHANN FINANCE (P) LTD [1998] 231 ITR 308 WHERE T HE SUPREME COURT OPINED THAT A FINANCIER OWNING MACHINERY MIGHT STIL L BE ENTITLED TO INVESTMENT ALLOWANCE EVEN IF THE MACHINERY IS ACTU ALLY USED BY ITS LESSEE FOR THE PURPOSE OF PRODUCTION. GOING ON THE LANGUA GE OF SUB-SECTIONS (1) AND (2) OF THE SAID SECTION, THE SUPREME COURT FOUN D, ON AN ACCURATE ASSESSMENT OF THE LANGUAGE ( WE SAY THIS WITH THE G REATEST RESPECT), THAT THE LANGUAGE DOES NOT DISENTITLE THE FINANCIER FROM INVESTMENT ALLOWANCE IN THE ABOVE CIRCUMSTANCES. 14. EVEN CONSIDERING THE LATER SUPREME COURT DECIS ION GIVEN BY MR. AGARWALLA, WE ARE STILL OF THE OPINION THAT THE VIEW TAKEN BY OUR DIVISION BENCH AS TO WINNING OF COAL BEING PRODUCTI ON IS, WITH DUE RESPECT, PERFECTLY SOUND AND CONSISTENT WITH COMMON SENSE. W E HAVE ABSOLUTELY NO REASON TO DIFFER FROM THE REASONING GIVEN IN MERCA NTILE CONSTRUCTION CO.S CASE (SUPRA) AND WE RESPECTFULLY ADOPT THE SAME. 15. THE POINT THAT THE ASSESSEE IS STILL NOT AN IN DUSTRIAL UNDERTAKING EVEN THOUGH IT MIGHT BE ENGAGED IN PRO DUCTION OF COAL IS, IN OUR OPINION, ALSO BE DECIDED AGAINST THE REVENUE. UNDER THE DEFINITION OF AN INDUSTRIAL UNDERTAKING GIVEN UNDER SECTION 33B O F THE ACT. EXPLANATION, MINING ACTIVITY WOULD BRING THE ASSESSEE WITHIN TH E DEFINITION OF AN INDUSTRIAL UNDERTAKING. BUT WE NEED NOT IMPORT THE DEFINITION OF ANOTHER SECTION TO THE PRESENT ONE, ALTHOUGH ORDINARILY THE DEFINITION GIVEN IN ONE SECTION IN AN ACT CAN BE USED FOR THE PURPOSES OF A NOTHER SECTION UNLESS THE CONTEXT INDICATES OTHERWISE. 16. SO FAR AS THE ASSESSEE IS CONCERNED, AN UNDERT AKING IT CERTAINLY IS. WE HAVE FOUND NO FACTS FROM WHICH WE CAN OPINE THAT THE ASSESSEE IS NOT AN INDUSTRIAL UNDERTAKING. ORDINARI LY SPEAKING IF A MANUFACTURING ACTIVITY OR AN ARTICLE PRODUCING ACT IVITY IS CARRIED ON, AN UNDERTAKING CARRYING ON SUCH ACTIVITY IS TO BE CLAS SED AS AN INDUSTRIAL ONE. IT MIGHT BE SMALL SCALE OR LARGE SCALE, THAT DOE NO T MATTER MUCH. EVEN IF AN UNDERTAKING IS MANUFACTURING OR PRODUCING ARTICLES, BUT IS STILL NOT BE CLASSED AS AN INDUSTRIAL ONE FOR THIS, CLEAR INDICA TIONS HAVE TO BE GIVEN AS TO WHY THIS DIFFERENCE SHOULD BE MADE IN THE CASE OF THE UNDERTAKING IN ITA NOS. 1758 & 1804/KOL/13 M/S. INTEGRATED COAL MINING LTD 23 QUESTION, SO THAT IT STANDS OUT FROM THE GENERAL CA TEGORY. WE WERE NOT SHOWN ANY SUCH PARTICULAR DIFFERENCE EXCEPTING THA T THE ASSESSEE WAS ALSO SAID TO CARRY ON TRANSPORT BUSINESS. 17. IT SUFFICES IN THIS REGARD TO MENTION THAT ON THE PRINCIPLE OF SHAN FINANCE (P) LTDS CASE (SUPRA), IF THE ASSESSE E OWNS THE MACHINERY FOR WHICH INVESTMENT ALLOWANCE IS CLAIMED, AND SUCH MACHINERY IS USED FOR PRODUCTION THEN THE SECTION APPLIES, IT DOES NOT MA TTER IF THE USE FOR PRODUCTION IS MADE BY THE LESSEE OR ONLY IN ONE IND USTRIAL PART OF THE ASSESSEES BUSINESS UNDERTAKING. ACCORDINGLY, THE T RANSPORT BUSINESS OF THE ASSESSEE DOES NOT TILT THE QUESTION ONE WAY OR THE OTHER. 30. IN VIEW OF AFOREMENTIONED DISCUSSION AND RESPE CTFULLY FOLLOWING THE DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF SUPRA , WE FIND NO INFIRMITY IN THE ORDER OF THE CIT-A IN THIS REGARD. ACCORDINGLY, WE HOLD THAT MINING OF COAL INVOLVES PRODUCTION OF ANY ARTICLE O R THING AS PROVIDED IN SECTION 32(1)(IIA) OF THE ACT. THUS, THE GROUND NO. 3 RAISED BY THE REVENUE IS DISMISSED. 31. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT A NO. 1804/KOL/2013 FOR THE A.Y 2009-10 IS PARTLY ALLOWED AND THE APPEAL OF THE REVENUE IN ITA NO. 1758/KOL/2013 FOR THE A.Y 2009- 10 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH SEPTEMBER 2016. SD/- SD/- P.M. JAGTAP S.S.VISWANETHRA RAVI ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:16/09/2016 ITA NOS. 1758 & 1804/KOL/13 M/S. INTEGRATED COAL MINING LTD 24 1. THE APPELLANT/ DEPARTMENT : DCIT,CIR - 6, ROOM NO.17, 6 TH FLOOR,AAYKAR BHAWAN, P-7 CHOWRINGHEE SQUARE, KOL-69 . 2 . THE RESPONDENT/ ASSESSEE: M/S. INTEGRATED COAL MINING LTD 6 CHURCH LANE, KOL-1. 3. CIT 4. CIT(A) 5. THE DEPARTMENTAL REPRESENTATIVE 6. GUARD FILE TRUE COPY B Y ORDER ASSISTANT REGIS TRAR ** PRADIP SPS INCOME TAX APPELLATE TRIBUNAL KOLKAT A BENCHES, KOLKATA COPY OF THE ORDER FORWARDED TO: -