DCIT CIRCLE-1, V. M/s CENTRAL COAL FIELDS, Ranchi

ITA 188/RAN/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 9580 (ITAT-RANCHI)
• Duration Of Justice: 2 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax (Transfer Pricing) Appeal
• Pronouncement Date: 05-04-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2002-2003
• Appeal Filed On: 15-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K SUTARIYA CITA JSRT
• Assessee Lawyers: M K CHOUDHURY
• Keywords: Business expenditure; Wholly owned subsidiary; Revenue expenditure; Set aside
• Section: 143(3); 142(1); 145

Judgement Text

1 ITA NO. 188 &235 /RAN/ 201 6 IN THE INCOME TAX APPELLATE TRIBUNAL, RANCHI BENCH, RANCHI BEFORE SHRI N.S.SAINI , ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE , JUDICIAL MEMBER ITA NO.188/RAN/2016 A.Y. : 2002 - 2003 DY. CIT, RANGE - 1, RANCHI V S M/S CENTRAL COALFIELDS LIMITED, DARBHANGA HO USE, RANCHI, JHARKHAND P AN NO. : AAACC 7476 R (APPELLANT ) . RESPONDENT AND ITA NO.235/RAN/2016 A.Y. : 2002 - 2003 M/S CENTRAL COALFIELDS LIMITED, DARBHANGA HOUSE, RANCHI, JHARKHAND V S AD.CIT, RANGE - 1, RANCHI P AN NO. : AAACC 7476 R (APPELLANT ) . RES PONDENT REVENUE BY :SHRI D.K.SUTARIYA, CIT(A) JSRT ASSESSEE BY : SHRI M.K . CHOUDHURY & DEVESH PODDAR , ADV. DATE OF HEARING : 2 5 . 05 .201 8 DATE OF PRONOUNCEMENT : 28.05 .201 8 O R D E R PER PAVAN KUMAR G ADALE, JM : TH ESE ARE THE APPEALS FILED BY THE REVENUE AND ASSESSEE AGAINST THE ORDER OF CIT ( A ) , RANCHI , DATED 14.03.2016 , FOR THE ASSESSMENT YEAR 20 02 - 20 03 . 2 ITA NO. 188 &235 /RAN/ 201 6 2. SINCE BOTH THE APPEALS ARE INTERCONNECTED AND ARISING OUT OF THE SAME IMPUGNED ORDER , THEREFORE , FOR THE SAKE OF CONVENIENCE WE CONSIDER THE FACTS NARRATED IN REVENUE S APPEAL I.E. ITA NO. 188 /RAN/2016, WHEREIN THE REVENUE HAS RAISED THE FOLLOWING GROUNDS : - 1. THAT THE LD. CIT(A) HAS ERRED ON FACT AND IN LAW IN ALLOWING THE INSTALLATION EXPENDITURE , TREATING THE SAME AS REVENUE EXPENDITURE. 2. THAT THE LD. CIT(A) HAS ERRED ON FACT AND IN LAW IN ALLOWING HE EXPENDITURE INCURRED ON SOCIAL OVERHEADS AS REVENUE EXPENDITURE. 3 . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PUBLIC SECTOR UNDERTAKI NG BEING A WHOLLY OWNED SUBSIDIARY OF COAL INDIA LIMITED ENGAGED IN MINING/EXTRACTION AND SALE OF COAL AND FILED THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2002 - 03 ON 27.12.2007 AND THE RETURN OF INCOME WAS DULY PROCESSED U/S.143(1) OF THE ACT AND THE C ASE WAS SELECTED FOR SCRUTINY UNDER CASS. SUBSEQUENTLY, NOTICE U/S.143(2) & 142(1) OF THE ACT WERE ISSUED TO THE ASSESSEE. IN COMPLIANCE, THE AR OF THE ASSESSEE APPEARED FROM TIME TO TIME AND CASE WAS DISCUSSED . THEREAFTER THE AO COMPLETED THE ASS ESSMENT AND MADE VARIOUS ADDITIONS AND PASSED ORDER U/S.143(3) OF THE ACT, DATED 31.03.2005 . THEREAFTER THE CIT, RANCHI U/S.263 OF THE ACT FOUND THAT THE ASSESSMENT ORDER PASSED BY THE AO IS PREJUDICIAL TO THE INTEREST OF REVENUE AND VIDE ORDER DATED 05.10.2006 DI RECTED THE AO TO MAKE FRESH ASSESSMENT. ACCORDINGLY, THE AO PASSED THE FRESH ASSESSMENT ORDER DATED 27.12.2007 WHEREIN ADDITIONS ON ACCOUNT OF INSTALLAT ION EXPENSES, SLURRY AT GIDI WA S H ERY, ARREAR SALARY, TRANSFER OF FREE 3 ITA NO. 188 &235 /RAN/ 201 6 ISSUE OF COAL, SOCIAL OVERHEAD WER E MADE AND PASSED ORDER U/S.143(3)/263 OF THE ACT. 4 . AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE HAS FILED AN APPEAL WITH THE CIT(A). IN THE APPELLATE PROCEEDINGS THE ASSESSEE ARGUED THE GROUNDS AND REITERATED THE SUBMISSIONS MADE BEFORE THE AO. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE AND THE FINDINGS OF AO AND PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 5 . AGGRIEVED BY THE ORDER OF CIT(A), THE REVENUE HAS FILED AN APPEAL BEFORE THE TRIBUNAL. 6 . LD. D R BEFORE US SUBMITTED THAT THE CIT(A ) HAS ERRED IN ALLOWING THE INSTALLATION EXPENDITURE TREATING THE SAME AS REVENUE EXPENDITURE. LD.DR FURTHER SUBMITTED THAT THE AO WAS CORRECT IN MAKING THE DISALLOWANCES. 7 . CONTRA, LD. A R RELIED ON THE ORDER OF CIT(A) AND SUPPORTED HIS ARGUMENTS WITH RES PECT TO THE GROUNDS AND ALSO COVERED DECISIONS IN RESPECT OF ASESSEES OWN CASE. 8 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. PRIMA FACIE, ON THE FIRST DISPUTED ISSUE ON THE INSTALLATION EXPENDITURE, WE FOUND THAT THE AO HA S MADE THE A DDITION BASED ON THE INFORMATION AND THE CIT(A) DELETED THE SAME. THE OBSERVATION OF THE CIT(A) IS AS UNDER : - 9.3 I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND HAVE ALSO PERUSED THE ASSESSMENT ORDER. WHILE DISALLOWING THE SAID ADDI TION IT WOULD BE WORTHWHILE TO QUOTE A PORTION OF THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF DHAKESHAWARI COTTON MILLS LTD. V CIT 26 ITR 775 ( SC) WHEREIN THE HONBLE SUPREME COURT HAS RULED THAT ALTHOUGH ITO IS NOT FETTERED BY TECHNICAL RUL ES 4 ITA NO. 188 &235 /RAN/ 201 6 OF EVIDENCE AND PLEADINGS, AND THAT HE IS ENTITLED TO ACT ON MATERIAL WHICH MAY NOT BE ACCEPTED AS EVIDENCE IN A COURT OF LAW, BUT THERE THE AGREEMENT ENDS; BECAUSE IT IS EQUALLY CLEAR THAT IN MAKING THE ASSESSMENT UNDER SECTION 23(3) HE IS NOT ENTITLED TO MAKE A PURE SUESS AND MAKE AN ASSESSMENT WITHOUT REFERENCE TO ANY EVIDENCE OR ANY MATERIAL AT ALL AND THERE MUST BE SOMETHINS MORE THAN BARE SUSPICION TO SUPPORT THE ASSESSMENT UNDER SECTION 23(3). THE ADDITION MADE BY THE LD. ASSESSING OFFICER IS PU RE GUESS AS IS EVIDENT FROM THE FOLLOWING COMPANY MAY HAVE BOOKED THESE EXPENSES ON REVENUE ACCOUNT UNDER THE HEAD REPAIRS OF P&M. AN ADDITION MADE ON PURE GUESS CANNOT BE SUSTAINED. GROUND OF APPEAL IS ALLOWED. LD.DR COULD NOT POINT OUT ANY MISTAKE I N THE ORDER OF CIT(A) AND COULD NOT CONTROVERT THE FINDINGS OF THE CIT(A). ACCORDINGLY, WE ARE OF THE OPINION THAT THE CIT(A) HAS PASSED A REASONED ORDER IN WHICH OUR INTERFERENCE IS NOT CALLED FOR AND ACCORDINGLY WE UPHELD THE FINDINGS OF CIT(A) AND DISM ISS THE GROUND OF APPEAL OF REVENUE. 9 . ON THE SECOND DISPUTED ISSUE IN RESPECT OF EXPENDITU RE INCURRED ON SOCIAL OVERHEADS AS REVENUE EXPENDITURE, THE CIT(A) OBSERVED THAT NO DEFECT IN THE MAINTENANCE OF BOOKS OF ACCOUNTS HAVE BEEN POINTED OUT AND THE CIT (A) RELYING ON THE JUDICIAL DECISION HAS ALLOWED THIS GROUND OF ASSESSEE. THE OBSERVATIONS OF THE CIT(A) IN THIS REGARD IS AS UNDER : - 10.5 I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND HAVE ALSO PERUSED THE ASSESSMENT ORDER. THE LD. ASSESSING OFF ICER HAS BEGUN PARA - 5 OF THE ORDER AS FOLLOWS AS STATED IN THE ORDER. APPARENTLY, THE LD. ASSESSING OFFICER IS REFERRING TO THE 263 ORDER OF THE COMMISSIONER OF INCOME TAX, RANCHI WHEREIN THE LD. COMMISSIONER OF INCOME TAX, RANCHI HAD HELD THE ORDER U/S. 143(3) OF THE INCOME TAX ACT, 1961 TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE ON SEVERAL COUNTS, ONE OF THEM BEING THE LOWER VALUATION OF THE CLOSING STOCK. I HAVE PERUSED THE 263 ORDER. THE COMMISSIONER OF INCOME TAX, RANCHI IN HIS 263 OR DER HAD STATED THAT THE CLOSING STOCK CONSISTED OF E GRADE COAL WHILE THE APPELLANT HAD VALUED IT AS G GRADE COAL LEADING TO LOWER INCOME. HE, HOWEVER, HAD STATED THAT THE SAME WAS ACCEPTED BY THE ASSESSING OFFICER WITHOUT VERIFICATION MEANING THAT IT WAS EXPECTED 5 ITA NO. 188 &235 /RAN/ 201 6 OF THE LD. ASSESSING OFFICER TO CONDUCT VERIFICATION TO ASSESS THE CORRECTNESS OF ACCOUNTS. [10. 6] BE THAT AS IT MAY, VIDE ORDER U/S.263 THE ORDER U/S.143(3) WAS SET ASIDE. IN THE ORDER PURSUANT TO THE 263 ORDER THE LD. ASSESSING OFFICER OUG HT TO HAVE GIVEN HIS OWN FINDINGS. HE HAS STATED THAT THE APPELLANT HAD APPLIED THE VALUE OF G GRADE COAL TO E GRADE COAL. WHY DOES THE LD. ASSESSING OFFICER THINK THAT THE COAL SHOULD HAVE BEEN VALUED AS E GRADE IS NOT GIVEN IN THE ORDER. I HAVE GON E THROUGH THE LETTER OF THE APPELLANT FILED BEFORE THE LD. ASSESSING OFFICER DATED 23.10.2007. THE APPELLANT HAD STATED THAT THE GIDI WASHERY WAS CONVERTED FROM A COCKING COAL WASHERY INTO A NON - COKING COAL WASHERY ON 14.05.1998. THE EXISTING STOCK WAS GEN ERATED BEFORE THIS DATE. THE STOCK WAS AN OLD ONE AND THE VALUE WAS TAKEN CONSIDERING THE DETERIORATION IN ITS QUALITY AND ALSO AFTER THE SALE OF E GRADE COAL FROM THIS STOCK. THEY HAD APPLIED THE RATE OF RS. 348.08 PER TON TO THE QUANTITY OF 177293 TONS TO THE BALANCE STOCK. I HAVE ALSO GONE THROUGH PAGE - 83 OF THE ANNUAL REPORT OF THE APPELLANT COMPANY WHICH PROVIDES DETAILS OF THE CLOSING STOCK. THE DATA SHOWS THAT THE APPELLANT COMPANY MAINTAINS EXHAUSTIVE DETAILS OF COAL STOCK OF VARIOUS GRADES. COMPA RISON OF THE TABLE OF VARIOUS YEARS WOULD HAVE EASILY GIVEN THE VARIOUS GRADE OF COAL AND THE SALE OUT OF IT. THE AUDITORS IN THEIR REPORT VIDE POINT - 4.3 (PAGE - 95) HAVE MENTIONED ABOUT THE VALUATION OF STOCK. THE MANAGEMENT IN ITS RESPONSE HAVE STATED THAT IT HAS A WELL - DEFINED PROCEDURE FOR VALUATION OF STOCK WHICH IS CONSISTENTLY FOLLOWED. THE AUDITORS TOO HAVE CONFIRMED THIS UNDER SCHEDULE P ACCOUNTING POLICY POINT NO.6 INVENTORIES. 10.7 VALUATION OF STOCK IS DONE AS PER AS - 2. THE SAID STANDARD STA TES : - DEFINITIONS 3. THE FOLLOWING TERMS ARE USED IN THIS STANDARD WITH THE MEANINGS SPECIFIED: 3.1 INVENTORIES ARE ASSETS: ( A ) HELD FOR SALE IN THE ORDINARY COURSE OF BUSINESS; ( B ) IN THE PROCESS OF PRODUCTION FOR SUCH SALE; OR (C) IN THE FORM OF MATERIALS OR SUPPLIES TO BE CONSUMED IN THE PRODUCTION PROCESS OR IN THE RENDERING OF SERVICES. 3.2 NET REALISABLE VALUE IS THE ESTIMATED SELLING PRICE IN THE ORDINARY COURSE OF BUSINESS LESS THE ESTIMATED COSTS OF COMPLETION AND THE ESTIMATED COSTS NECESSARY TO MAKE THE SALE. 4. INVENTORIES ENCOMPASS GOODS PURCHASED AND HELD FOR RESALE, FOR EXAMPLE, MERCHANDISE PURCHASED BY A RETAILER AND HELD FOR RESALE, COMPUTER SOFTWARE HELD FOR RESALE, OR LAND AND OTHER 6 ITA NO. 188 &235 /RAN/ 201 6 PROPERTY HELD FOR RESALE. INVENTORIES ALSO ENCOMPASS FINISH ED GOODS PRODUCED, OR WORK IN PROGRESS BEING PRODUCED, BY THE ENTERPRISE AND INCLUDE MATERIALS, MAINTENANCE SUPPLIES, CONSUMABLES AND LOOSE TOOLS AWAITING USE IN THE PRODUCTION PROCESS. INVENTORIES DO NOT INCLUDE MACHINERY SPARES WHICH CAN BE USED ONLY IN CONNECTION WITH AN ITEM OF FIXED ASSET AND WHOSE USE IS EXPECTED TO BE IRREGULAR; SUCH MACHINERY SPARES ARE ACCOUNTED FOR IN ACCORDANCE WITH ACCOUNTING STANDARD (AS) 10, ACCOUNTING FOR FIXED ASSETS. MEASUREMENT OF INVENTORIES 5. INVENTORIES SHOULD BE VAL UED AT THE LOWER OF COST AND NET REALISABLE VALUE. 10.7 IN THE CASE OF SANJEEV WOOLLEN MILLS V CIT 279 ITR 434 (SC) THE HONBLE SUPREME COURT HAS HELD THAT: - T O ATTRACT SECTION 145 IT IS NECESSARY THAT ( C ) THE ASSESSEE HAS COMPUTED THE INCOME IN ACCORDANC E WITH THE METHOD OF ACCOUNTING REGULARLY EMPLOYED BY THE ASSESSEE; AND ( D ) PROVIDED WHERE THE ACCOUNTS ARE CORRECT AND COMPLETE TO THE SATISFACTION OF THE ASSESSING OFFICER, BUT ( E ) THE METHOD EMPLOYED IS SUCH THAT IN THE OPINION OF THE ASSESSING OFFICER THE INCO ME CANNOT BE DEDUCED THEREFROM, THEN THE ASSESSING OFFICER MAY ADOPT A DIFFERENT METHOD OF COMPUTATION OF THE INCOME AS HE MAY DETERMINE. [PARA 9] THE ASSESSEE MAY EMPLOY WHICHEVER BASIS OF VALUATION OF STOCK IN HAND, BUT IT MUST ADHERE TO THAT CONSISTENTL Y YEAR AFTER YEAR. CASUAL DEPARTURE OF VALUATION OF TRADING STOCK IN HAND AT COST OR MARKET VALUE IS NOT PERMISSIBLE. THE METHOD ADOPTED FOR MAINTAINING THE ACCOUNTS SHOULD BE DEFINITE METHOD OF VALUATION WHICH IS FOLLOWED BY AN ASSESSEE FROM YEAR TO YEAR. THE CHOICE OF METHOD OF ACCOUNTING REGULARLY EMPLOYED BY THE ASSESSEE LIES WITH THE ASSESSEE BUT THE ASSESSEE WOULD BE REQUIRED TO SHOW THAT HE HAS FOLLOWED THE CHOSEN METHOD REGULARLY. THE DEPARTMENT IS BOUND BY THE ASSESSEES CHOICE OF METHOD REGULARLY EMPLOYED UNLESS BY THAT METHOD THE TRUE INCOME, PROFIT OF ACCOUNTS CANNOT BE ARRIVED AT. THE ASSESSEES REGULAR METHOD WOULD NOT BE REJECTED AS IMPROPER MERELY BECAUSE IT GIVES HIM THE BENEFIT IN CERTAIN YEARS OR THAT AS PER THE ASSESSING OFFICER THE OTHER METHOD WOULD HAVE BEEN MORE PREFERABLE. THE METHOD OF ACCOUNTING CANNOT BE SUBSTITUTED BY THE ASSESSING OFFICER MERELY BECAUSE IT IS UNSATISFACTORY. WHAT IS MATERIAL FOR THE PURPOSE OF SECTION 145 IS THE METHOD TO BE SUCH THAT THE REAL INCOME, PROFIT AND GAIN CAN BE PROPERLY DEDUCED THEREFROM. IF THE METHOD ADOPTED DOES NOT AFFORD TRUE 7 ITA NO. 188 &235 /RAN/ 201 6 PICTURE OF PROFIT, IT WOULD BE REJECTED BUT THEN SUCH REJECTION SHOULD BE BASED ON COGENT EVIDENCE AND WOULD BE DONE WITH CAUTION. THE POWER CAN BE EXERCISED BY THE ASSESSIN G AUTHORITY TO CHOOSE THE BASIS AND MANNER OF COMPUTATION OF INCOME BUT HE MUST EXERCISE HIS DISCRETION AND JUDGMENT JUDICIALLY AND REASONABLY. 10.8 THE LD. ASSESSING OFFICER HAS NOT ESTABLISHED WHETHER THE SYSTEM OF ACCOUNTING FOLLOWED BY THE APPELLANT WAS NOT AS PER AS - 2 OR WAS NOT CONSISTENTLY FOLLOWED. NO EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE LD. ASSESSING OFFICER TO SHOW THAT THE STOCK WAS THAT OF E GRADE COAL AND NOT G GRADE COAL. THE LD. ASSESSING OFFICER HAS PRESUMED THAT ALL THE STOCK A T GIDI WASHERY WAS E GRADE COAL WITHOUT CONSIDERING THE EVIDENCE BROUGHT ON RECORD BY THE APPELLANT. GROUND OF APPEAL IS ALLOWED. LD. DR COULD NOT BRING ANY NEW MATERIAL FACT TO CONTROVERT THE FINDINGS OF THE CIT(A) , ACCORDINGLY, WE DO NOT FIND ANY GO OD REASON TO INTERFERE WITH THE ABOVE FINDINGS OF CIT(A) AND WE UPHELD THE SAME AND DISMISS THE GROUND OF REVENUE. 10. THUS, APPEAL OF THE REVENUE IS DISMISSED. 1 1 . NOW, WE SHALL TAKE UP APPEAL OF THE ASSESSEE I.E. ITA NO.235/RAN/2016 . 1 2 . WE FIND THAT THE RE IS A DELAY OF 30 DAYS IN FILING THE PRESENT APPEAL BY THE ASSESSEE. LD. AR HAS FILED AN APPLICATION FOR CONDONATION OF DELAY. LD. DR HAS NO SERIOUS OBJECTION IN CONDONING THE DELAY. ACCORDINGLY, WE ALLOW THE APPLICATION OF THE ASSESSEE AND CONDONE THE D ELAY OF 30 DAYS IN FILING THE PRESENT APPEAL AND THE APPEAL IS HEARD FINALLY. 1 3 . T HE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - 1. FOR THAT LD.CIT(APPEALS) HAS ERRED IN NOT APPRECIATING THAT THE EXPENSES INCURRED UNDER THE HEAD DONATION WERE IN THE NATUR E OF SPORTS PROMOTION EXPENSES AND COMMUNITY DEVELOPMENT EXPENSES AND AS SUCH WERE ALLOWABLE AS BUSINESS EXPENDITURE. THE EXPENSES CONFIRMED IS UNJUSTIFIED AND UNCALLED FOR. 8 ITA NO. 188 &235 /RAN/ 201 6 2. FOR THAT IN RESPECT OF THE EXPENSE UNDER THE HEAD 'ARREAR OF SALARY' LD. CIT( A) FAILED TO TAKE INTO CONSIDERATION THE FACT THAT CONSEQUENT TO THE BOARD'S DECISION, COMMUNICATED VIDE LETTER DATED 31.07.2002, A PROVISION WAS QUANTIFIED AND INCORPORATED IN RESPECT OF ARREAR SALARY PAYABLE TO EXECUTIVES BELOW BOARD LEVEL AND NOT IN RES PECT OF WAGES OF WORKMEN WHICH WAS GOVERNED BY NATIONAL WAGE AGREEMENT. 2.1 FOR THAT LD. CIT(APPEALS) FAILED TO APPRECIATE THAT THE APPELLANT WAS DUTY BOUND TO MAKE PAYMENT TO ITS EXECUTIVE EMPLOYEES, ONCE A DECISION WAS TAKEN BY THE BOARD OF THE PARENT H OLDING COMPANY. THE SAME WAS A ASCERTAINED LIABILITY. 2.2 FOR THAT LD. CIT(A) HAS ERRED IN CONFIRMING THE PROVISION FOR THE ENTIRE PERIOD FROM 01.0.1997 TO 31.08.2001 (MORE THAN 6 YEARS), ON THE ALLEGED GROUND THAT THE PROVISION WAS MADE IN EXCESS FOR TW O MONTHS. EVEN IF, TWO MONTHS WERE IN EXCESS, THE SAME WERE OF THE YEAR UNDER CONSIDERATION. AS SUCH THE ADDITION CONFIRMED IS UNJUSTIFIED, NOT CORRECT AND UNCALLED FOR. 2.3 FOR THAT EVEN IF, IT WAS NOT CREATED DURING THE YEAR UNDER CONSIDERATION, IT HAS TO BE INCORPORATED IN THE IMMEDIATELY SUBSEQUENT YEAR, IN WHICH THE DECISION OF THE BOARD WAS RECEIVED. LD. CIT(APPEALS) FAILED TO APPRECIATE THERE WERE LOSSES IN THESE YEARS, AS SUCH IT DID NOT HAVE ANY EFFECT ON THE TAXABILITY OF THE APPELLANT AND HAS NO T BENEFITED THE APPELLANT IN ANY WAY. 3. FOR THAT LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION ASSESSING OFFICER UNDER THE HEAD 'TRANSFER OF FREE ISSUE OF COAL', HOLDING, INTERALIA, THAT THE NATIONAL COAL WAGE AGREEMENT WAS VALID ONLY TILL 30.0 6.2011 AND THEREAFTER NO SUCH AGREEMENT EXISTED FOR NINE MONTHS, THUS THERE BEING NO CONTRACTUAL LIABILITY, TREATING THE SAME AS GRATUITOUS EXPENSES. 3.1 FOR THAT LD. CIT(APPEALS) ERRED IN NOT APPRECIATING ALL THE TERMS OF THE WAGE AGREEMENT AND THAT EARL IER WAGE AGREEMENT WAS CONTINUING TILL THE FINALISATION OF NEW WAGE AGREEMENT BECAUSE THERE WERE ALWAYS DELAY IN FINALISATION OF NATIONAL COAL WAGES AGREEMENT BETWEEN THE REPRESENTATIVES OR WORKMEN AND THE PARENT COMPANY. 3.2 FOR THAT LD. COMMISSIONER OF INCOME TAX FURTHER ERRED IN NOT APPRECIATING THAT THE SAME WAS ALWAYS ALLOWED IN PAST, UNDER THE SIMILAR CIRCUMSTANCES AND NO DISALLOWANCE WAS MADE. AS SUCH THE ADDITION SUSTAINED IN UNJUSTIFIED, ARBITRARY AND UNCALLED FOR. 9 ITA NO. 188 &235 /RAN/ 201 6 4. FOR THAT THE APPELLANT CRAVES LEAVE TO REFER TO FACTS OF THE CASE, AS STATED HEREINABOVE ON THE AFORESAID GROUNDS OF APPEAL. 12. BRIEF FACTS RELATING TO THE ABOVE GROUNDS NO. 1 WITH RESPECT ARE THAT THE AO STATED THAT THE DONATION IS NOT ALLOWABLE EXPENSES AND EARLIER ALSO THE SAME WAS DISALLOWED. IN APPEAL, THE CIT(A) OBSERVED THAT THE ASSESSEE COULD NOT BRING OUT ANY EVIDENCE TO SHOW AS TO HOW THE EXPENSES ON ACCOUNT OF DONATION IS WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS , AGAINST WHICH THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 13. LD. AR BEFORE US SUBMITTED THAT THE CIT(A) HAS ERRED IN CONFIRMING THE DONATION WHICH IS IN THE NATURE OF SPORTS PROMOTION EXPENSES AND COMMUNITY DEVELOPMENT EXPENSES AS SUCH WERE ALLOWABLE AS BUSINESS EXPENDITURE AND PRAYED FOR ALLOWING THIS GROUND. ON THE OTHER HAND, LD.DR RELIED ON THE ORDERS OF LOWER AUTHORITIES. 14. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE COULD NOT SUBSTANTIATES ITS CLAIM BEFORE BOTH THE AUTHORITIES BELO W. THE CIT(A) WHILE DEALING WITH THE DISPUTED ISSUE HAS OBSERVED AS UNDER : - 7.4 I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND HAVE ALSO PERUSED THE ASSESSMENT ORDER. THE ARGUMENTS ADVANCED BY THE APPELLANT, IF ACCEPTED WOULD MEAN THAT ANY EXPENS E THAT IS INCURRED FOR ANY PURPOSES (FOR CHARITABLE OR OTHERWISE) WOULD QUALIFY AS LEGITIMATE BUSINESS EXPENSES. THIS WOULD INCLUDE DONATIONS FOR HOLDING OF FOOTBALL TOURNAMENTS OF CLIENTS AND TRANSPORTERS. IN THE CASE OF DCM (SUPRA) THE FACTS WERE THAT TH E ASSESSE HAD MADE A DONATION FOR A TOURNAMENT THAT IT WAS ORGANISING UNDER ITS BRAND NAME. ACCORDINGLY, IT WAS HELD THAT THE ASSESSEE IN ORGANISING FOOTBALL AND HOCKEY TOURNAMENTS WAS AN ALLOWABLE DEDUCTION UNDER SECTION 10(2)(XV). THE HONBLE HC HAD GONE ON THE LOGIC THAT THE STAGING AND SPONSORING OF THE TOURNAMENTS AND THE REPORTS IN THE NEWSPAPERS DAY AFTER DAY ABOUT THE D.C.M. TOURNAMENTS WOULD CERTAINLY BRING THE NAME OF THE D.C.M. GROUP INTO PROMINENCE WITH THE CONSEQUENT ADVERTISING VALUE FOR THE C OMPANY. CONTINUOUS AND PERSISTENT REFERENCE TO THE LETTERS 'D.C.M.' MEANING DELHI CLOTH 10 ITA NO. 188 &235 /RAN/ 201 6 MILLS WOULD NATURALLY MAKE IT ALMOST A HOUSEHOLD EXPRESSION, AND THE SAME WOULD GET IMPRESSED IN THE MINDS OF THE READERS OF THE REPORTS IN THE NEWSPAPERS AND OTHER ADV ERTISEMENT MEDIA. FURTHER, THE HOLDING OF THE TOURNAMENTS BY THE D.C.M. GROUP PROVIDED OPPORTUNITIES TO THE EMPLOYEES OF THE MILLS TO PARTICIPATE AND ALSO TO WITNESS SUCH TOURNAMENTS, AND THUS OPERATE AS AN AMENITY PROVIDED FOR THE RECREATION OF THE EMPLOY EES. THE FURNISHING OF SUCH AMENITIES WOULD GO A LONG WAY TO HELP THE BUSINESS OF THE ASSESSEE. THEREFORE, THE EXPENDITURE INCURRED BY THE ASSESSEE IN ORGANIZING FOOTBALL AND HOCKEY TOURNAMENTS, WAS AN ALLOWABLE DEDUCTION UNDER SECTION 10(2)(XV) OF THE 192 2 ACT. FACTS OF THE PRESENT CASE ARE DIFFERENT. THE APPELLANT HAS NOT BEEN ABLE TO BRING OUT ANY EVIDENCE TO SHOW AS TO HOW WERE THESE EXPENSES WHOLLY AND EXCLUSIVELY LAID OUT FOR THE PURPOSE OF BUSINESS. GROUND OF APPEAL IS DISMISSED. LD.AR EVEN BEFOR E US COULD NOT BRING ANY NEW MATERIAL FACT TO CONTROVERT THE ABOVE FINDING OF THE CIT(A). IN THE ABSENCE OF THE SAME, WE ARE OF THE VIEW THAT THE BOTH THE AUTHORITIES BELOW HAVE PASSED A REASONED ORDER AFTER GOING THROUGH THE DETAILS AND THERE IS NO NECESS ITY TO INTERFERE BY US IN THE ABOVE FINDING OF THE CIT(A), WHICH IS UPHELD AND THIS GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 15. ON THE SECOND DISPUTED ISSUE OF DISALLOWANCE ON ACCOUNT OF ARREAR OF SALARY, THE AO DISALLOWED THE SAME ON THE GROUND THAT THE SAME WAS NOT AN ASCERTAINED AND HAD NOT CRYSTALLISED DURING THE YEAR. IN APPEAL, THE CIT(A) DISMISSED THIS GROUND OF APPEAL OF ASSESSEE, AGAINST WHICH THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 16. LD. AR BEFORE US SUBMITTED THAT THE LD. CIT(A ) HAS ERRED IN CONFIRMING THE DISALLOWANCE MADE BY THE AO ON ACCOUNT OF ARREAR OF SALARY. THIS ISSUE IS COVERED BY THE DECISION OF THIS BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2004 - 05 IN ITA NO.186/RAN/2008, DATED 03.12.2014, W HEREIN THE TRIBUNAL CONFIRMED THE ACTION OF CIT(A) IN DELETING THE ADDITION MADE 11 ITA NO. 188 &235 /RAN/ 201 6 ON ACCOUNT OF ADHOC PROVISION OF PENDING WAGE REVISION. THEREFORE, LD.AR PRAYED FOR ALLOWING THE APPEAL. CONTRA, LD.DR RELIED ON THE ORDERS OF LOWER AUTHORITIES. 17. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THIS ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THIS BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2004 - 05 VIDE ORDER DATED 03.12.2014 IN ITA NO.186/RAN/2008, WHEREIN THE TRIBUNAL HELD AS UNDER : - 3. THE FIRST ISSUE RELATES TO THE DISALLOWANCE OF CLAIM RELATING TO 'ADHOC PROVISION OF PENDING WAGE REVISION. THE ASSESSEE HAD PROVIDED A SUM OF RS. 1708.24 LAKHS ON ACCOUNT OF ADHOC PROVISION MADE T OWARDS INTERIM RELIEF PENDING FINALISATION OF NCWA - VII (NATIONAL COAL WAGE AGREEMENT - VII). THE QUANTUM OF LIABILITY WAS DETERMINED AT 10% OF BASIC PAY OF NON EXECUTIVE EMPLOYEES AND THE SAME WAS APPROVED BY THE BOARD OF DIRECTORS. ACCORDINGLY, THE ASSESSEE PROVIDED FOR THE ABOVE SAID AMOUNT AND CLAIMED THE SAME AS EXPENDITURE. THE ASSESSEE CONTENDED BEFORE THE AO THAT THE ACCOUNTING STANDARD NOTIFIED BY THE CBDT U/S 145(2) (REPORTED IN 218 ITR (ST.) 1) PROVIDES THAT THE KNOWN LIABILITIES SHOULD BE PROVIDED FOR IN THE ACCOUNTS, EVEN THOUGH THE AMOUNT COULD NOT BE ASCERTAINED WITH CERTAINTY. FURTHER, THE ASSESSEE ALSO PLACED RELIANCE ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASEOF BHARAT EARTH MOVERS VS. CIT (245 ITR 428), WHEREIN THE HON'BLE APEX COURT HAD HELD THAT THE DEFINITE LIABILITIES SHOULD BE ALLOWED AS DEDUCTION, ALTHOUGH THE LIABILITY MAY HAVE TO BE QUANTIFIED AND DISCHARGED AT A FUTURE DATE. HOWEVER, THE AO WAS NOT CONVINCED WITH THE SAID EXPLANATIONS. HE WAS OF THE VIEW THAT ONLY ASCERTAINED LIABILITIES ARE ALLOWABLE, AS DEDUCTION AND ACCORDINGLY DISALLOWED THE ADHOC PROVISION MADE BY THE ASSESSEE ON THE REASONING THAT IT HAS NOT CRYSTALLISED DURING THE INSTANT YEAR. THE LD CIT(A), HOWEVER, DELETED THIS ADDITION. 4.. THE LD CIT(A) HAS NOTICE D THAT THE BOARD OF DIRECTORS HAVE PASSED NECESSARY RESOLUTION TO PAY INTERIM RELIEF OF 10% AND HENCE THE ASSESSEE HAS PROVIDED FOR THE ADHOC PROVISION AND CLAIMED THE SAME AS DEDUCTION. THE LD CIT(A) ALSO NOTICED THAT THE RESOLUTION PASSED BY THE BOARD OF DIRECTORS NEEDS TO BE IMPLEMENTED AND FURTHER NOTICED THAT THE ASSESSEE HAS GIVEN EFFECT TO THE RESOLUTION BY DISBURSING THE RELIEF AMOUNT THE VERY NEXT MONTH. ACCORDINGLY, THE 'LD CIT(A) DELETED THE ADDITION. WE ARE IN AGREEMENT WITH THE DECISION TAKEN B Y THE LD QT(A). AS MENTIONED IN THE ACCOUNTING STANDARD ISSUED BY THE CBDT U/S 145(2) OF THE ACT AS WELL AS THE HON'BLE SUPREME COURT IN THE CASE OF BHARAT EARTH MOVERS (SUPRA), 12 ITA NO. 188 &235 /RAN/ 201 6 IT IS THE ACCOUNTING REQUIREMENT/PRUDENCE TO PROVIDE FOR ALL KNOWN LIABILITI ES AND LOSSES, EVEN THOUGH THE ACTUAL QUANTIFICATION MAY BE MADE SUBSEQUENTLY. IN THE INSTANT CASE, THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE ASSESSEE IS BOUND BY THE DECISION TAKEN IN NATIONAL COAL WAGE AGREEMENT - VII. THE ASSESSEE WAS ALSO VERY MUCH CERTAIN THAT THERE WOULD BE DEFINITE INCREASE IN THE WAGES AND FURTHER THE SAID LIABILITY IS KNOWN TO THE