M/s M.Hanumantha Roa , Bellary V. Assistant Commissioner of Income Tax Circle-1, Bellary

ITA 3298/BANG/2018

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 1935 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 11-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUZAFFAR HUSSAIN
• Assessee Lawyers: LAXMINIWAS SHAR MA
• Keywords: Business expenditure; Diversion of income; Set aside
• Section: 143(3); 115JB; 37(1); 43; 13; 22; 37

Judgement Text

ITA NO.3298&3299/BANG/2018 M/S. M. HANUMANTHA RAO, BANGALORE IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI B.R. BASKARAN, ACCOUNTANT MEMBER ITA NO.3298 & 3299/BANG/2018 ASSESSMENT YEAR: 2013-14 & 2014-15 M/S. M. HANUMANTHA RAO 37, GROUND FLOOR, NEAR PARK MAIN ROAD, PATEL NAGAR, BELLARY, KARNATAKA 583 101 PAN NO : AANFM1777H VS. ACIT CIRCLE-1 BELLARY APPELLANT RESPONDENT APPELLANT BY : SHRI LAXMINIWAS SHARMA, A.R. RESPONDENT BY : SHRI MUZAFFAR HUSSAIN, D.R. DATE OF HEARING : 06.01.2021 DATE OF PRONOUNCEMENT : 25.02.2021 O R D E R PER B.R. BASKARAN, ACCOUNTANT MEMBER: BOTH THE APPEALS OF THE ASSESSEE ARE DIRECTED AGAI NST THE ORDERS PASSED BY LD CIT(A), KALABURAGI AND THEY RELATE TO THE ASSESSMENT YEARS 2013-14 AND 2014-15. SINCE COMMON IS URGED I N THESE TWO APPEALS, THEY WERE HEARD TOGETHER AND ARE BEING DIS POSED OF BY THIS COMMON ORDER, FOR THE SAKE OF CONVENIENCE. 2. THE SOLITARY ISSUE URGED IN BOTH THE APPEALS IS WHETHER THE LD CIT(A) WAS JUSTIFIED IN CONFIRMING THE ADDITION OF AMOUNT REPRESENTING 15% OF SALE PROCEEDS DEDUCTED BY THE M ONITORY COMMITTEE FROM E-AUCTION SALE OF MINERAL STOCK BELO NGING TO THE ITA NO.3298&3299/BANG/2018 M/S. M. HANUMANTHA RAO, BANGALORE PAGE 2 OF 24 ASSESSEE AND WHICH WAS CONTRIBUTED TO SPECIAL PURPO SE VEHICLE, AS PER THE DIRECTION GIVEN BY HONBLE SUPREME COURT. 3. THE FACTS RELATING TO THE CASE/ISSUE ARE DIS CUSSED IN BRIEF. THE ASSESSEE IS A PARTNERSHIP FIRM AND IS ENGAGED IN TH E BUSINESS OF EXTRACTION OF IRON ORE BY TAKING LEASE OF LANDS FRO M GOVERNMENT. 3.1 BEFORE PROCEEDING TO THE SPECIFIC ISSUE URGE D BEFORE US, IT IS NECESSARY TO DISCUSS ABOUT THE BACK GROUND THAT LED TO SCRUTINY OF MINING OPERATIONS CARRIED OUT BY VARIOUS LESSEES OF MINES. THESE DETAILS HAVE BEEN CULLED OUT FROM THE ORDER DATED 1 8-04-2013 PASSED BY HONBLE SUPREME COURT IN THE SAME OF SAMAJ PARIV ARTANA SAMUDAYA & ORS VS. STATE OF KARNATAKA (WRIT PETITIO N (CIVIL) NO.562 OF 2009). THE DECISION RENDERED BY HONBLE SUPREME COURT IN THIS CASE HAS RESULTED IN MAKING CERTAIN ADDITIONS BY TH E ASSESSING OFFICER. HENCE, IT IS IMPERATIVE TO UNDERSTAND AND APPRAISE THE DECISION RENDERED BY HONBLE SUPREME COURT. 3.2 OVER EXPLOITATION OR RAMPANT MINING IN THE ST ATE OF KARNATAKA, PARTICULARLY IN THE DISTRICT OF BELLARY, WAS ENGAGI NG THE ATTENTION OF THE STATE GOVERNMENT FROM TIME TO TIME. NOT SATISF IED WITH THE INVESTIGATION CARRIED IN THE STATE OF KARNATAKA, A NGO NAMED M/S SAMAJ PARIVARTANA SAMUDAYA HAD INSTITUTED A WRIT PE TITION BEFORE HONBLE SUPREME COURT UNDER ARTICLE 32 OF THE CONST ITUTION COMPLAINING OF LITTLE OR NO COERCIVE ACTION ON THE PART OF THE STATE; SEEKING HONBLE SUPREME COURTS INTERVENTION IN THE MATTER AND SPECIFICALLY PRAYING FOR CERTAIN RELIEFS. THE WRIT PETITION WAS ENTERTAINED AND A COMMITTEE CALLED CENTRAL EMPOWER ED COMMITTEE (CEC) WAS FORMED AND IT WAS ASKED TO SUBMIT A REPOR T ON THE ALLEGATIONS OF ILLEGAL MINING IN THE BELLARY REGION OF THE STATE OF KARNATAKA. THE INITIAL REPORTS SUBMITTED BY CEC IN DICATED LARGE ITA NO.3298&3299/BANG/2018 M/S. M. HANUMANTHA RAO, BANGALORE PAGE 3 OF 24 SCALE ILLEGAL MINING AT THE COST AND TO THE DETRIME NT OF THE ENVIRONMENT. HENCE, VIDE ITS ORDER DATED 29-7-2011 , THE HONBLE SUPREME COURT IMPOSED COMPLETE BAN ON MINING IN THE DISTRICT OF BELLARY. 3.3 THE DETAILS OF VARIOUS ORDERS PASSED BY HONBL E SUPREME COURT IN THIS REGARD ARE GIVEN BELOW:- HONBLE SUPREME COURT BY ORDER DATED 29/07/2011 PASSED IN GOI VS. OBULAPURAM MINING CO. PVT.LTD., REPORTED IN (2011) 12 SCC 491 , SUSPENDED ALL MINING AND TRANSPORTATION ACTIVITIE S IN AREAS ADMEASURING APPROXIMATELY 10,868 HA, PERT AINING TO DISTRICT OF BELLARY. SUBSEQUENTLY, BY ORDER DATED 26/08/2011 PASSED IN SAMAJPARIVARTANASAMUDAYA VS STATE OF KARNATAKA , REPORTED IN (2013) 8 SCC 209 , HONBLE APEX COURT EXTENDED BAN TO TUMKUR AND CHITRADURGA MINES, BASED UPON A REPORT FILED BY CENTRAL EMPOWERED COMMITTEE (HEREINAFTER REFERRED TO AS CEC ). HONBLE APEX COURT DIRECTED LD.AMICUS CURIAE TO SUBMIT QUANTITY WHICH COULD BE RELEASED FROM EXISTING STOC K OF 25,000,000 TON OF IRON ORE, SUBJECT TO RECLAMATION AND REHABILITATION PLANS BEING SUBMITTED. THIS WAS PURS UANCE TO PLEA RAISED BY ASSOCIATION OF STEEL INDUSTRY AND OT HER AFFECTED PARTIES. ON 23/09/2011 HONBLE APEX COURT WAS APPRAISED BY CEC REPORT DATED 01/09/2011, REGARDING MODALITIES OF SA LE OF EXISTING STOCK OF IRON ORE THROUGH E-AUCTION, SALE PROCEEDS TO BE DEPOSITED IN NATIONALISED BANK. IT WAS SUBMITTED IN THE REPORT THAT, WHERE THERE IS NO ILLEGAL MINING, 80% OF SALE PROCEEDS TO BE RELEASED AND 20% TO BE RETAINED. A MONITORING COMMITTEE (MC) WAS TO BE CONSTITUTED TO SUPERVISE A ND CONTROL E-AUCTION, SIZE OF LOT, TRANSPORTATION ETC. IT WAS SUBMITTED ITA NO.3298&3299/BANG/2018 M/S. M. HANUMANTHA RAO, BANGALORE PAGE 4 OF 24 THEREIN THAT, MC WOULD UTILISE SALE PROCEEDS FOR PA YMENT OF ROYALTY, TAXES ETC. SUBSEQUENTLY, A PLEA BY KARNATAKA IRON AND STEEL MANUFACTURERS ASSOCIATION WAS RAISED REGARDING SHOR TAGE OF SUPPLY OF MINERALS DUE TO SUSPENSION OF MINING ACTI VITY, BEFORE HONBLE APEX COURT . THE ASSOCIATION ALSO SOUGHT FOR A DIRECTION TO REOPEN CATEGORY A MINES. THEREAFTER, BY ORDER DATED 03/09/2012 HONBLE APEX COURT IN CASE OF SAMAJPARIVARTANASAMUDAYA VS STATE OF KARNATAKA , REPORTED IN (2013) 8 SCC 219 APPROVED REPORT DATED 29/08/2012 FILED BY CEC. HONBLE APEX COURT ORDERED FOR REOPENING OF CATEGORY A MINES, AND VACATED ORDER DATED 29/07/2011 PASSED IN CASE OF GOI VS. OBULAPURAM MINING CO. PVT.LTD., (SUPRA) AND ORDER DATED 26/08/2011 IN CASE OF SAMAJPARIVARTANASAMUDAYA VS STATE OF KARNATAKA (SUP RA). THEREAFTER, BY ORDER DATED 28/09/2012, CEC FILED DE TAILED REPORT DATED 03/02/2012, CATEGORISING MINES INTO A , B AND C, DEPENDING ON VARIOUS TYPES OF VIOLATIONS BY MINING LESSEE. 3.4 THE REPORTS ALSO INDICATED LARGE SCALE ENCROACHMENT INTO FOREST AREAS BY LEASEHOLDERS AND ONGOING MINING OPERATIONS IN S UCH AREAS WITHOUT REQUISITE STATUTORY APPROVAL AND CLEA RANCES. HENCE A JOINT TEAM WAS CONSTITUTED BY HONBLE SUPREME COURT BY ORDER DATED 6.5.2011 TO DETERMINE THE BOUNDARIES OF INITI ALLY 117 MINING LEASES, WHICH NUMBER WAS SUBSEQUENTLY EXTENDED TO 1 66 BY INCLUSION OF THE MINES IN TUMKUR AND CHITRADURGA DI STRICTS. THE CEC SUBMITTED ITS FINAL REPORT DATED 3.2.2012, WHIC H MADE TWO SIGNIFICANT RECOMMENDATIONS:- (A) CATEGORISATION OF MINES INTO THREE CATEGORIES, I.E., A, B AND C ON THE BASIS OF EXTENT OF ENCROACHMENT IN R ESPECT OF ITA NO.3298&3299/BANG/2018 M/S. M. HANUMANTHA RAO, BANGALORE PAGE 5 OF 24 MINING PITS AND OVER BURDEN DUMPS DETERMINED IN TERMS OF PERCENTAGE QUA THE TOTAL LEASE AREA. (B) CONDITIONS SUBJECT TO WHICH REOPENING OF THE MINES AND RESUMPTION OF MINING OPERATIONS WERE TO BE CONSIDER ED BY THE COURT. A SET OF MODIFIED RECOMMENDATIONS ALONG WITH A SET OF DETAILED GUIDELINES FOR PREPARATION AND IMPLEMENTATION OF RE CLAMATION AND REHABILITATION PLANS (R & R) WERE ALSO SUBMITTED TO THE HONBLE SUPREME COURT BY CEC ON 13.3.2012. 3.5 THE CEC CATEGORISED THE MINES INTO A, B A ND C ON THE FOLLOWING BASIS:- (A) THE CATEGORY A COMPRISES OF (A) WORKING LEA SES WHEREIN NO ILLEGALITY/MARGINAL ILLEGALITY HAVE BEEN FOUND A ND (B) NON-WORKING LEASES WHEREIN NO/MARGINAL ILLEGALITIES HAVE BEEN F OUND. (B) THE CATEGORY B COMPRISES OF (A) MINING LEASES WHEREIN ILLEGAL MINING BY WAY OF (I) MINING PITS OUTSIDE THE SANCTIONED LEASE AREAS HAVE BEEN FOUND TO BE UPTO 10% OF THE LEASE AREAS AND/OR (II) OVER BURDEN/WASTE DUMPS OUTSIDE THE SANCTIONED LEASE AREAS HAVE BEEN FOUND TO BE UPTO 15% OF THE LEASE AREAS AND (B) LEASES FALLING ON INTERSTATE BOUNDARY BETWEEN KARNATAKA AND ANDHRA PRADESH AND FOR WHICH SURVEY SKETCHES HAVE NOT BEEN FINALISED. (C) THE CATEGORY C COMPRISES OF LEASES WHEREIN (I) THE ILLEGAL MINING BY WAY OF (A) MINING PITS OUTSIDE THE SANCTIONED LEASE AREA HAVE BEEN FOUND TO BE MORE THAN 10% OF THE LEASE AREA AND/OR (B) OVER BURDEN/WASTE DUMPS OUTSIDE THE SANCTIONED LEASE AREAS HAVE BEEN FOUND TO BE MORE THAN 15% OF THE LEASE AREAS AND/OR (II) THE LEASES FOUND TO BE INVOLVED IN FLAGRANT VIOLATION O F THE FOREST ITA NO.3298&3299/BANG/2018 M/S. M. HANUMANTHA RAO, BANGALORE PAGE 6 OF 24 (CONSERVATION) ACT AND/OR FOUND TO BE INVOLVED IN I LLEGAL MINING IN OTHER LEASE AREAS. 3.6 THE HONBLE SUPREME COURT ALSO APPROVED SAL E OF IRON-ORE THROUGH E-AUCTION AND IT WAS FURTHER HELD THAT THE E-AUCTION SHALL BE CONDUCTED BY THE MONITORING COMMITTEE (MC) CONSTITU TED BY HONBLE SUPREME COURT. HOWEVER, THE QUANTITY TO BE PUT UP FOR E-AUCTION, ITS GRADE, LOT SIZES, ITS BASE/FLOOR PRICE AND THE PERIOD OF DELIVERY WILL BE DECIDED/PROVIDED BY THE RESPECTIVE LEASE HO LDERS. IT WAS ALSO HELD THAT THE MONITORING COMMITTEE MAY PERMIT THE LEASE HOLDERS TO PUT UP FOR E-AUCTION THE QUANTITIES OF I RON ORE PLANNED TO BE PRODUCED IN SUBSEQUENT MONTHS. 3.7 THE CATEGORISATION OF MINES INTO A, B AN D C HAD FOLLOWING FINANCIAL IMPACT:- (A) FROM SALE PROCEEDS REALISED BY MC ON SALE O F IRON-ORE BELONGING TO CATEGORY A MINING LEASES, 10% SHALL BE RETAINED BY THE MC. BALANCE 90% SHALL BE PAID TO THE CONCERNED LES SEES. THE ABOVE SAID 10% SHALL BE TRANSFERRED TO SPECIAL PURPOSE VE HICLE (SPV). (B) FROM THE SALE PROCEEDS REALISED BY MC ON SAL E OF IRON-ORE BELONGING TO CATEGORY B MINING LEASES, FOLLOWING AM OUNTS SHALL BE DEDUCTED RETAINED BY MC:- (A) 15% OF SALE PROCEEDS TO BE TRANSFERRED TO SPV . (B) COMPENSATION FOR ILLEGAL MINING AND ILLEGAL DU MPING COMPUTED (I) @ RS.5.00 CRORES PER HA OF THE AREA FOUND BY TH E JOINT TEAM TO BE UNDER ILLEGAL MINING PIT; AND (II) @ RS.1.00 CRORE PER HA OF AREA FOR ILLEGAL MIN ING BY WAY OF OVER BURDEN DUMP(S), ROAD, OFFICE ETC OUTSIDE THE SANCTIONED LESE AREA. ITA NO.3298&3299/BANG/2018 M/S. M. HANUMANTHA RAO, BANGALORE PAGE 7 OF 24 (C) THE ESTIMATED COST OF RECLAMATION AND REHABILITATION PLANS (R & R PLANS). FOR THIS PURPO SE, A GUARANTEE MONEY FOR IMPLEMENTATION OF R & R PLANS SHALL BE COLLECTED. CATEGORY B LESSEES HAVE TO DEPOSIT A GUARANTEE MONE Y FOR IMPLEMENTATION OF R & R PLANS IN THE RESPECTIVE SAN CTIONED LEASE AREAS. ON FULL IMPLEMENTATION OF THE R & R PLANS T O THE COMPLETE SATISFACTION OF THE CEC AND SUBJECT TO THE APPROVAL BY HONBLE SUPREME COURT, THE GUARANTEE MONEY WOULD BE REFUNDA BLE TO THE LEASE HOLDER. IT WAS ALSO STATED THAT THE LESSEES SHALL BE LIABLE TO PAY ADDITIONAL AMOUNT, IF THE R & R PLAN EXPENDITURE EX CEEDED THE ESTIMATES. (C) IN RESPECT OF MINING LEASES FALLING UNDER CAT EGORY C:- (A) SUCH LEASES ARE CANCELLED/DETERMINED ON ACCOUN T OF THE LEASES HAVING BEEN FOUND TO BE INVOLVED IN SUBSTANTIAL ILLEGAL MINING OUTSIDE THE SANCTIONED L EASE AREAS (B) THE ENTIRE SALE PROCEEDS OF THE EXISTING STOCK OF THE IRON ORE OF THESE LEASES SHOULD BE RETAINED BY THE MC AND (C) THE IMPLEMENTATION OF THE R & R PLAN SHOULD BE AT THE COST OF THE LESSEE. 4. NOW WE SHALL TURN TO THE FACTS RELATING TO T HE ISSUE URGED BEFORE US. THE MINES OWNED BY THE ASSESSEE HEREIN HAVE BE EN CATEGORISED AS B CATEGORY MINES. HENCE 15% OF SALE PROCEEDS HAS BEEN DEDUCTED BY MONITORING COMMITTEE DURING THE YEARS U NDER CONSIDERATION AS DETAILED BELOW:- ASSESSMENT YEAR 2013-14 : RS.3,58,87,698/- ASSESSMENT YEAR 2014-15 : RS.1,48,60,184/- ITA NO.3298&3299/BANG/2018 M/S. M. HANUMANTHA RAO, BANGALORE PAGE 8 OF 24 THE ASSESSEE HAD REDUCED THE ABOVE SAID AMOUNTS FRO M THE GROSS SALE PROCEEDS AND ACCORDINGLY DECLARED ONLY NET SAL E PROCEEDS AS ITS INCOME IN BOTH THE YEARS. HOWEVER, THE AO WAS OF T HE VIEW THAT THE AMOUNT RETAINED BY MC AS PER THE PROPOSAL APPROVED BY HONBLE SUPREME COURT IS IN THE NATURE OF APPROPRIATION OF PROFIT AND PENAL/COMPENSATORY PAYMENT TOWARDS DAMAGES CAUSED TO ENVIRONMENT AND FOREST BY CONTRAVENTION OF LAWS. A CCORDINGLY, THE AO TOOK THE VIEW THAT THE SAID PAYMENT CANNOT BE SA ID TO BE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS WITHIN THE MEANING OF PROVISIONS OF SEC.37 OF THE ACT. HENCE THE AO PROPOSED TO DISALLOW THE ABOVE SAID CLAIM OF THE ASSESSEE IN BOTH THE YEARS. HOWEVER, THE ASSESSEE CONTENDED THAT THE ABOVE SAID AMOUNTS HAVE NOT BEEN RECEIVED BY IT AND HENCE THE SAME SHOULD N OT BE CONSIDERED IN ITS HANDS. 4.1 THE AO, HOWEVER, DID NOT ACCEPT THE CONTENT IONS OF THE ASSESSEE. THE AO HELD THAT (A) ENTIRE SALE PROCEEDS AS PER E-AUCTION BIT SHEE TS/INVOICES HAS TO BE ASSESSED TO TAX AS TRADING RECEIPTS. HEN CE IT CONSTITUTES INCOME IN THE HANDS OF THE ASSESSEE. (B) THE AMOUNT RETAINED BY CEC/MC, AS PER DIRECTIO NS OF THE SUPREME COURT ON BEHALF OF THE ASSESSEE, WHICH IS G IVEN TO THE SPECIAL PURPOSE VEHICLE (SPV) IS ON ACCOUNT OF DAMA GES AND LOSS CAUSED TO THE FOREST AND ENVIRONMENT BY CONTRA VENTION OF LAWS. THE SAID AMOUNT CANNOT BE ALLOWED AS DEDUCTIO N OUT OF SALE PROCEEDS EVEN AFTER ACCRUAL OF SUCH LIABILITY WHICH IS BEING COMPENSATION AND PENAL IN NATURE FOR CONTRAVENTION OF LAWS. THE AMOUNT SO RETAINED FOR ADJUSTING PENALTY AND OT HER LIABILITIES IS NOTHING BUT APPROPRIATION OF THE PRO FIT OF THE ASSESSEE. ITA NO.3298&3299/BANG/2018 M/S. M. HANUMANTHA RAO, BANGALORE PAGE 9 OF 24 (C) SPV ESTABLISHED FOR SOCIAL ECONOMIC DEVELOPME NT OF THE MINING AREA IS NOTHING BUT RELATING TO CORPORATE SO CIAL RESPONSIBILITY ONLY. HENCE IT IS NOT ALLOWABLE U/S 37(1), AS IT WAS NOT INCURRED BY THE ASSESSEE WHOLLY AND EXCLUSI VELY FOR THE PURPOSE OF BUSINESS. IT WAS RETAINED TO MEET THE P ENAL AND OTHER LIABILITIES FOR CONTRAVENTION OF LAW AND THER EFORE, THE SAID AMOUNT CANNOT BE ALLOWED AS DEDUCTION IN VIEW OF TH E SPECIFIC EXPLANATION TO SECTION 37(1) OF THE ACT. (D) THE AO PLACED HIS RELIANCE ON THE FOLLOWING C ASE LAWS:- (I) CIT VS. KCP LIMITED (245 ITR 421)(SC) (II) G. PADMANABHACHETTIAR& SONS (182 ITR 1,5)(MA D) (III) REFORM FLOUR MILLS P LTD VS. CIT (132 ITR 18 4, 196)(CAL.) (IV) CIT VS. A. KRISHNASWAMY MUDALIAR& OTHERS (53 ITR 122)(SC) ACCORDINGLY, THE AO ASSESSED THE ABOVE SAID AMOUNTS IN RESPECTIVE YEARS AS INCOME OF THE ASSESSEE. THE LD CIT(A) ALS O CONFIRMED THE SAME. 4.2 BEFORE US, THE LD A.R PLACED HIS RELIANCE ON THE DECISION RENDERED BY THE CO-ORDINATE BENCH IN THE CASE OF M/ S VEERABHADRAPPA SANGAPPA & CO VS. ACIT (ITA NO.1054/ BANG/2019 DATED 08-12-2020 AND ALSO THE DECISION RENDERED BY ANOTHER CO- ORDINATE BENCH IN THE CASE OF M/S RAMGAD MINERALS & MINING LTD VS. ACIT (ITA NO. 1270 & 1271/BANG/2019 DATED 04-11-202 0. THE LD A.R SUBMITTED THAT, IN THE ABOVE SAID CASES, IT HAS BEEN HELD BY THE TRIBUNAL THAT THE AMOUNT OF 10%/15% AS THE CASE MAY BE RETAINED BY THE MONITORY COMMITTEE IS ASSESSABLE AS TRADING RECEIPTS, BUT ALLOWABLE AS BUSINESS EXPENDITURE, NET EFFECT OF WH ICH IS NIL ADDITION. ITA NO.3298&3299/BANG/2018 M/S. M. HANUMANTHA RAO, BANGALORE PAGE 10 OF 24 ACCORDINGLY HE SUBMITTED THAT THE ADDITION MADE BY THE AO IN BOTH THE YEARS IS LIABLE TO BE DELETED. 4.3 THE LD D.R, HOWEVER, PLACED HIS RELIANCE ON T HE ORDERS PASSED BY LD CIT(A). HIS FURTHER SUBMISSIONS ARE DISCUSSE D INFRA. 4.4 WE HEARD THE PARTIES ON THIS ISSUE AND PER USED THE RECORD. WE NOTICE THAT IDENTICAL ISSUE HAS BEEN EXAMINED BY THE CO-ORDINATE BENCHES IN THE CASES RELIED UPON BY THE ASSESSEE. FOR THE SAKE OF CONVENIENCE, WE EXTRACT BELOW THE RELEVANT OBSERVAT IONS MADE BY THE CO-ORDINATE BENCH IN THE CASE OF M/S VEERABHADRAPPA SANGAPPA & CO (SUPRA):- 7.10.4. WITH THIS BACKGROUND, WE ONCE AGAIN REFER TO AND RELY ON OBSERVATIONS BY HONBLE SUPREME COURT IN CASE OF CIT VS SITALDAS TIRATHDAS (SUPRA). HONBLE SUPREME COURT LAYING DOWN FOLLOWING PRINCIPAL REFERRED TO VARIOUS RULINGS THAT ILLUSTRATED ASPECT S OF DIVERSION OF INCOME BY OVERRIDING TITLE. THESE ARE THE CASES WHICH HAVE CONSIDERED THE PROB LEM FROM VARIOUS ANGLES. SOME OF THEM APPEAR TO HAVE APPLIED THE PRINCIPLE CORRECTLY AND SOME, NOT. BUT WE DO NOT PR OPOSE TO EXAMINE THE CORRECTNESS OF THE DECISIONS IN THE LIG HT OF THE FACTS IN THEM. IN OUR OPINION, THE TRUE TEST IS WHETHER T HE AMOUNT SOUGHT TO BE DEDUCTED, IN TRUTH, NEVER REACHED THE ASSESSEE AS ITS INCOME. OBLIGATIONS, NO DOUBT, THERE ARE IN EVE RY CASE, BUT IT IS THE NATURE OF THE OBLIGATION WHICH IS THE DECISI VE FACT. THERE IS A DIFFERENCE BETWEEN AN AMOUNT WHICH A PERSON IS OBLIGED TO PAY OUT OF HIS INCOME AND AN AMOUNT WHICH BY THE NA TURE OF THE OBLIGATION CANNOT BE SAID TO BE A PART OF THE I NCOME OF THE ASSESSEE. WHEREBY THE OBLIGATION INCOME IS DIVERTED BEFORE IT REACHES THE ASSESSEE, IT IS DEDUCTIBLE BUT WHERE TH E INCOME IS REQUIRED TO BE APPLIED TO DISCHARGE AN OBLIGATION A FTER SUCH INCOME REACHES THE ASSESSEE THE SAME CONSEQUENCE IN LAW DOES NOT FOLLOW. IT IS THE FIRST KIND OF PAYMENT WH ICH CAN TRULY BE EXCUSED AND NOT THE SECOND. THE SECOND PAYMENT I S MERELY AN OBLIGATION TO PAY ANOTHER PORTION OF ONES OWN I NCOME WHICH ITA NO.3298&3299/BANG/2018 M/S. M. HANUMANTHA RAO, BANGALORE PAGE 11 OF 24 HAS BEEN RECEIVED AND ESSENCE APPLIED. THE FIRST IS A CASE IN WHICH THE INCOME NEVER REACHES THE ASSESSEE, WHO, E VEN IF HE WERE TO COLLECT IT, DOES SO, NOT AS PART OF HIS INC OME BUT FOR AND ON BEHALF OF THE PERSON TO WHOM IT WAS PAYABLE. EMPHASIS SUPPLIED 7.10.5. APPLYING, THIN LINE OF DIFFERENCE INTERPRETED BY HONBLE SUPREME COURT TO PRESENT FACTS, WE ARE OF THE OPINION THAT, CONTRIBUTION TO SPV ACCOUNT, CANNOT BE CONSIDERED TO BE DIVERSION OF INCOME. THIS IS BECAU SE, WE HAVE ALREADY HELD WHILE DECIDING GROUND 2.1 AND 2.2 HEREINABOVE, THAT ENTIRE SALE PROCEEDS ACCRUED TO ASSESSEE, AND IT IS ONLY DUE TO DIRECTION OF HONBLE SUPREME COURT THAT SUCH AMOUNT WAS CONTRIBUTED TO SPV ACCOUNT, FOR WHICH ASSESSEE WAS TO AUTHORISE CEC/MC IN RELEVANT PARAGRAPH 11(III) REFER TO AND RELIED BY LD.CIT DR. 7.10.8. WE NOTE THAT CO-ORDINATE HYDRABAD BENCH OF TRIBUNAL IN NMDC (SUPRA) WAS THE CASE OF CATEGORY A WHEREIN IT WAS ALLOWED AS EXPENDITURE BY OBSERVING AS UNDER: 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE-C OMPANY, A PUBLIC SECTOR UNDERTAKING, ENGAGED IN THE BUSINESS OF 'MINING OF IRON ORE DIAMONDS; AND GENERATION AND SALE OF WIND POWER', FILED ITS RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YE ARS 2013-14 AND 2014-15 BOTH UNDER THE NORMAL PROVISIONS AS WEL L AS U/S 115JB OF THE ACT FOR THE RELEVANT AYS. DURING THE A SSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT, THE A.O. OBSERVE D THAT THE ASSESSEE-COMPANY IS CARRYING OUT MINING ACTIVITY IN INDIA AND PARTICULARLY IN KARNATAKA AND THAT THE HON'BLE SUPR EME COURT OF INDIA TOOK NOTE OF THE LARGE SCALE ILLEGAL MININ G ACTIVITY CARRIED ON BY VARIOUS COMPANIES IN KARNATAKA AT THE COST OR DETRIMENT ITA NO.3298&3299/BANG/2018 M/S. M. HANUMANTHA RAO, BANGALORE PAGE 12 OF 24 OF ENVIRONMENT AND DELIVERED THEIR JUDGMENT ON 18.0 4.2013 LEVYING APPROPRIATE CHARGES ON THE LEASEHOLDERS. A. O. ALSO OBSERVED THAT THE HON'BLE SUPREME COURT, BASED ON T HE EXTENT OF ILLEGAL MINING, CLASSIFIED THE MINING LEASES INT O THREE CATEGORIES VIZ., CATEGORY 'A', 'B' AND 'C' AND THAT THE ASSESSEE IS FALLING IN CATEGORY-B IN RESPECT OF DONIMALI COM PLEX AND THAT IN THEIR ORDER, THE APEX COURT OBSERVED THAT BEFORE CONSIDERATION OF ANY RESUMPTION OF MINING OPERATIONS BY CATEGORY- B LEASEHOLDERS, EACH OF THE LEASE HOLDER MUST PAY COM PENSATION FOR THE AREAS UNDER ILLEGAL MINING PITS OUTSIDE THE SANCTIONED AREA AT THE RATE OF RS. 5 CRS PER HECTARE AND FOR I LLEGAL OVERBURDEN FOR AT THE RATE OF RS. 1 CR PER HECTARE. FURTHER, A.O. OBSERVED THAT THE SAID DIRECTION OF THE APEX COURT WAS SUBJECT TO THE FINAL DETERMINATION OF THE NOTIONAL LOSS CAU SED BY THE ILLEGAL MINING AND ILLEGAL USE OF THE LAND; AND THA T THE HON'BLE SUPREME COURT HAD DIRECTED THAT EACH OF THE LEASEHO LDER SHOULD PAY A SUM EQUIVALENT TO 15% OF THE SALE PROCEEDS OF ITS IRON ORE SOLD THROUGH THE MONITORING COMMITTEE. IN ACCORDANC E WITH THE SAID DIRECTION, THE ASSESSEE MADE PAYMENT OF RS. 33 7.13 CRS TOWARDS CONTRIBUTION FOR THE SPECIAL PURPOSE VEHICL E AND THE SUM OF RS. 68.66 CRS TOWARDS PENALTY / COMPENSATION FOR ENCROACHMENT OF THE MINING AREA BEYOND THE SANCTION ED / LEASED AREA. THE A.O. OBSERVED THAT THE TOTAL OF TH E ABOVE PAYMENT OF RS. 405.79 CRS WAS PUNITIVE IN NATURE AN D ACCORDINGLY SOUGHT TO DISALLOW THE SAME BY ISSUANCE OF A SHOW- CAUSE NOTICE. 4. THE A.O. HOWEVER DID NOT ACCEPT THE ASSESSEE'S E XPLANATION AND HELD THAT THE ASSESSEE, BEING A CATEGORY-B LEAS EHOLDER, HAS BEEN DIRECTED TO MAKE THE PAYMENT FOR INFRINGEMENT OF MMDR ACT AND OTHER ALLIED LAWS. THEREFORE, HE OBSERVED THAT THE PAYMENT OF RS. 405.79 CRS IS PUNITIVE IN NATURE AND BROUGHT IT TO TAX. . 10. THUS, FROM THE TABLE REPRODUCED ABOVE, IT IS SE EN THAT THE ASSESSEE HAS BEEN CLASSIFIED AS CATEGORY-'A' WHEREA S THE ASSESSING OFFICER HAS CONSIDERED THE ASSESSEE AS CA TEGORY-'B' COMPANY. THE HON'BLE SUPREME COURT HAS CLEARLY INDI CATED THAT CATEGORY-A COMPRISES OF (I) 'WORKING LEASES' WHEREI N NO ILLEGALITY / MARGINAL ILLEGALITY HAVE BEEN FOUND AND (II) 'NON -WORKING LEASES' WHEREIN NO MARGINAL / ILLEGALITIES HAVE BEE N FOUND, WHEREAS CATEGORY-B COMPRISES OF (I) MINING LEASES W HEREIN ILLEGAL MINING IS 10% TO 15% OF THE SANCTIONED LEAS E AREAS. HOWEVER, CEC HAD RECOMMENDED THAT BOTH 'A' AND 'B' CATEGORIES MAY BE ALLOWED TO RESUME THE MINING ACTI VITY SUBJECT TO THE PAYMENT OF PENALTY / COMPENSATION DECIDED BY THE COURT. THUS, ACCORDING TO THE ASSESSEE, THE SAID EXPENDITU RE IS NOTHING ITA NO.3298&3299/BANG/2018 M/S. M. HANUMANTHA RAO, BANGALORE PAGE 13 OF 24 BUT A PAYMENT WHICH WAS REQUIRED TO BE MADE WITHOUT WHICH THE ASSESSEE COULD NOT HAVE CARRIED ON THE MINING A CTIVITIES AND THEREFORE, IT IS A 'BUSINESS EXPENDITURE'. SINCE TH E CEC HAD CATEGORISED THE ASSESSEE AS A CATEGORY-A COMPANY AN D THE HON'BLE SUPREME COURT HAS ACCEPTED THE SAID CATEGOR IZATION, THERE WOULD HAVE BEEN MARGINAL ILLEGALITIES COMMITT ED BY THE ASSESSEE AND THE COMPENSATION / PENALTY AS DIRECTED BY THE HON'BLE SUPREME COURT IS ONLY TO COMPENSATE THE GOV ERNMENT FOR THE LOSS OF REVENUE FROM SUCH MINING OR MARGINA L ILLEGALITIES AND NOT AS A PENALTY. THOUGH THE NOMENCLATURE GIVEN IS 'PENALTY' IT IS NOT FOR INFRACTION OR VIOLATION OF ANY LAW TO HOLD IT TO BE PUNITIVE IN NATURE, AS PRESUMED BY THE ASSESS ING OFFICER. LEARNED COUNSEL FOR THE ASSESSEE PLACED RELIANCE ON VARIOUS CASE LAW, PARTICULARLY THE DECISION OF THE COORDINA TE BENCH OF THE ITAT, KOLKATA IN THE CASE OF ESSEL MINING & INDUSTRIES LTD VS. ADDL . CIT (ITA NO. 352/KOL/2011 AND OTHERS, DATED 20.05.2016); ACIT VS. FREEGADE& CO. LTD (ITA NO .934/KOL/2009, DATED 05.08.2011) AND ALSO THE DECIS ION OF THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF SHYAMSEL LTD VS. DCIT (72 TAXMANN.COM 105) (CAL.). ON GOING THROUGH THE SAID DECISIONS, WE FIND THAT THE HON'BLE CALCUTTA HIGH C OURT HAS CONSIDERED THE CASE OF AN ASSESSEE WHO FAILED TO IN STALL POLLUTION CONTROL DEVICE WITHIN FACTORY PREMISE WITHIN PRESCR IBED TIME AND THAT THE ASSESSEE HAD TO PAY RS. 12.50 LAKH FOR COMPENSATING DAMAGE TO ENVIRONMENT AND THE SAME WAS RECOVERED BY STATE POLLUTION CONTROL BOARD ON THE P RINCIPLE OF 'POLLUTER PAYS' AND THE A.O. HAD TREATED IT AS PENA LTY AND DID NOT ALLOW THE SAME AS BUSINESS EXPENDITURE. THE HON'BLE HIGH COURT HAD TAKEN NOTE OF THE FACT THAT THE ASSESSEE'S BUSI NESS WAS NOT ILLEGAL AND THAT COMPENSATION WAS PAID BECAUSE OF I TS FAILURE TO INSTALL POLLUTION CONTROL DEVICE WITHIN PRESCRIBED TIME AND THEREFORE, SUCH PAYMENT WAS UNDOUBTEDLY FOR THE PUR POSE OF BUSINESS AND IN CONSEQUENCE OF BUSINESS CARRIED ON BY THE ASSESSEE AND WAS THUS COVERED BY SECTION 37 OF THE ACT. FOR COMING TO THIS CONCLUSION, HON'BLE HIGH COURT HAS A LSO CONSIDERED THE JUDGMENT OF THE HON'BLE NATIONAL GRE EN TRIBUNAL IN THE CASE OF STATE POLLUTION CONTROL BOARD VS. SWASTIK ISPAT (P .) LTD WHEREIN AT PARA 38 OF THE JUDGMENT THE TRIBUNAL HELD AS UNDER:- 'BEING PUNITIVE IS THE ESSENCE OF 'PENALTY'. IT IS IN CLEAR CONTRADISTINCTION TO 'REMEDIAL' AND / OR 'COMPENSAT ORY'. 'PENALTY' ESSENTIALLY HAS TO BE FOR RESULT OF A DEF AULT AND IMPOSED BY WAY OF PUNISHMENT. ON THE CONTRARY, 'COMPENSATORY' MAY BE RESULTING FROM A DEFAULT FOR THE ADVANTAGE ALREADY TAKEN BY THAT PERSON AND IS INTEN DED TO REMEDY OR COMPENSATE THE CONSEQUENCES OF THE WRO NG DONE. FOR INSTANCE, IF A UNIT HAS BEEN GRANTED COND ITIONAL ITA NO.3298&3299/BANG/2018 M/S. M. HANUMANTHA RAO, BANGALORE PAGE 14 OF 24 CONSENT AND IS IN DEFAULT OF COMPLIANCE, CAUSES POL LUTION BY POLLUTING A RIVER OR DISCHARGING SLUDGE, TRADE A FFLUENT OR TRADE WASTE INTO THE RIVER OR ON OPEN LAND CAUSI NG POLLUTION, WHICH A BOARD HAS TO REMOVE ESSENTIALLY TO CONTROL AND PREVENT THE POLLUTION, THEN THE AMOUNT SPENT BY THE BOARD, IS THUS, SPENT BY ENCASHING THE BANK GUARANTEE OR IS ADJUSTED THREAD AND THIS EXERCISE W OULD FALL IN THE REALM OF COMPENSATORY RESTORATION AND N OT A PENAL CONSEQUENCE. IN GATHERING THE MEANING OF THE WORD 'PENALTY' IN REFERENCE TO A LAW, THE CONTEXT IN WHI CH IT IS USED IS SIGNIFICANT.' 11. APPLYING THIS RATIO TO THE FACTS OF THE CASE BE FORE US, WE FIND FROM PARA 43 OF THE HON'BLE SUPREME COURT'S ORDER R EPRODUCED ABOVE THAT THE CONDITION OF PAYMENT FOR RESUMING TH E MINING ACTIVITY BY CATEGORIES 'A' & 'B' COMPANIES IS TO NO T TO PUNISH THE COMPANIES FOR ANY VIOLATION OF LAW BUT IS TO ENSURE SCIENTIFIC AND PLANNED EXPLOITATION OF MINERAL RESOURCES IN INDIA. FURTHER THE HON'BLE SUPREME COURT HAD DIRECTED AS UNDER:- '(X) OUT OF THE 20% OF SALE PROCEEDS RETAINED BY TH E MONITORING COMMITTEE IN RESPECT OF THE CLEARED MINI NG LEASES FALLING IN 'CATEGORY- A', 10% OF THE SALE PR OCEEDS MAY BE TRANSFERRED TO THE SPV WHILE THE BALANCE 10% OF THE SALE PROCEEDS MAY BE REIMBURSED TO THE RESPECTI VE LESSEES. IN RESPECT OF THE MINING LEASES FALLING IN 'CATEGORY-B', AFTER DEDUCTING THE PENALTY / COMPENS ATION, THE ESTIMATED COST OF THE IMPLEMENTATION OF THE R & R PLAN, AND 10% OF THE SALE PROCEEDS TO BE RETAINED FOR BEI NG TRANSFERRED TO THE SPV, THE BALANCE AMOUNT, IF ANY MAY BE REIMBURSED TO THE RESPECTIVE LESSEES;' THE FACT THAT THE COMPENSATION IS PROPORTIONATE TO AREA OF ILLEGAL MINING OUTSIDE THE LEASED AREA AND THAT THE ASSESSE E HAS PAID THE PROPORTIONATE COMPENSATION FOR MINING IN THE AR EAS OUTSIDE THE SANCTIONED AREA ALLOTTED TO IT AND THAT 10% OF SUM IS TO BE TRANSFERRED TO SPV AND THE BALANCE 10% IS TO BE REI MBURSED TO THE RESPECTIVE LESSEES, ACCORDING TO US, PROVES THA T IT IS A PAYMENT MADE AS 'COMPENSATION' FOR EXTRA MINING, WI THOUT WHICH THE ASSESSEE COULD NOT HAVE RESUMED ITS ACTIV ITIES. THEREFORE, WE ARE INCLINED TO ACCEPT THE CONTENTION OF THE ASSESSEE THAT IT IS COMPENSATORY IN NATURE AND IS A 'BUSINESS EXPENDITURE' AND IS ALLOWABLE U/S 37(1) OF THE ACT. THUS, GROUNDS NO.2 AND 3 RAISED BY THE ASSESSEE ARE ALLOW ED. 7.10.9. WE ALSO NOTICE THAT THE CO-ORDINATE BANGALORE BENCH OF TRIBUNAL HAS ALSO CONSIDERED IDENTICAL ISSUE ITA NO.3298&3299/BANG/2018 M/S. M. HANUMANTHA RAO, BANGALORE PAGE 15 OF 24 IN THE CASE OF RAMGAD MINERALS & MINING LTD (ITA NO.1270 & 1271/B/2019 DATED 04-11-2020) BEING CATEGORY B, AN IDENTICAL ADDITION MADE BY LD.AO W AS HELD TO BE ALLOWABLE AS EXPENDITURE WITH FOLLOWING OBSERVATIONS:- 7.8.9. IN PRESENT APPEALS, ONLY ISSUE RAISED FOR OUR CONSIDERATION IS IN RESPECT OF 15% CONTRIBUTION MAD E TO SPV FOR ASSESSMENT YEAR 2013-14 AND 2014-15; AND ISSUE IN R ESPECT OF R&R EXPENSES INCURRED DURING ASSESSMENT YEAR 2013 14. FIRST OF ALL, WE SUMMARISE OBJECTIONS OF LD.AO AS IN RESP ECT OF SPV EXPENSES AS UNDER:- (A) THIS IS ONE OF THE OBJECTIONS OF THE AO THAT TH E SPV EXPENSES IS NOT ALLOWABLE BECAUSE IT IS NOT COMPENS ATION BUT IT IS PENAL IN NATURE FOR CONTRAVENTION OF LAW AS OBSERVED BY HIM IN PARA 4.3 OF THE ASSESSMENT ORDER FOR AY:2013-14. (B) SECOND OBJECTION OF THE LD.AO IS CONTAINED IN P ARA 4.9 OF THE ASSESSMENT ORDER FOR AY:2013-14 AND AS PER T HE SAME, THIS IS THE OBJECTION OF LD.AO THAT THE SAID SPV IS NOTHING BUT CSR EXPENSES ONLY AND THEREFORE NOT ALLOWABLE. (C) THIRD OBJECTION OF LD.AO IS ALSO CONTAINED IN P ARA 4.9 OF THE ASSESSMENT ORDER FOR AY:2013-14 AND AS PER T HE SAME, THIS IS THE OBJECTION OF THE LD.AO THAT THE S AID SPV IS NOT ALLOWABLE U/S 37 (1) AS IT WAS NOT INCURRED BY THE ASSESSEE WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. (D) IN PARA 4.8 OF THE ASSESSMENT ORDER FOR AY:2013 -14, LD.AO IS STATING THIS THAT SPV RATE IS 10% IN CATEG ORY A MINES BUT 15% IN CATEGORY B MINES AND THIS EXTRA 5% IN CATEGORY B MINES IS FOR VARIOUS VIOLATIONS AND IL LEGAL MINING AND EVEN AFTER THIS OBSERVATION, HE FINALLY HELD IN THE SAME PARA THAT WHOLE SPV EXPENSES OF 15% IS NOT ALLOWABLE. 7.8.10. LD.AO OBSERVED THAT, THESE SPV WERE DEDUCTED PURSUANT TO DIRECTIONS OF HONBLE SUPREME COURT (SU PRA) BY ORDER DATED 18/04/2013, WHEREIN, IT WAS DIRECTED THAT, SU M SO PAID TOWARDS SPV CHARGES SHOULD BE EXHAUSTIVELY AND EXCL USIVELY USED TO UNDERTAKE SOCIO ECONOMIC AND INFRASTRUCTURE DEVELOPMENT, AFFORESTATION, SOIL AND BIODIVERSITY C ONSERVATION AND FOR ENSURING INCLUSIVE GROWTH OF THE AREA SURRO UNDING MINING LEASES. ITA NO.3298&3299/BANG/2018 M/S. M. HANUMANTHA RAO, BANGALORE PAGE 16 OF 24 7.8.11. LD.AO FURTHER OBSERVED THAT THESE PAYMENTS ARE NOTHING BUT APPROPRIATION OF PROFITS EARNED BY ASSE SSEE THAT CANNOT BE SAID TO HAVE INCURRED FOR PURPOSE OF BUSI NESS OR EARNING PROFITS. ACCORDINGLY, ENTIRE AMOUNT ADJUSTE D TOWARDS SPV WAS DISALLOWED BY LD.AO. LD.AO WAS OF OPINION T HAT ENTIRE SALE PROCEEDS AS PER E AUCTION BID SHEETS/INVOICES WERE TO BE ASSESSED AS TRADING RECEIPTS. THE AMOUNT RETAINED B Y CEC/MONITORING COMMITTEE AS PER DIRECTIONS OF HONB LE SUPREME COURT, ON BEHALF OF ASSESSEE FOR SPV PURPOSES, WAS ON ACCOUNT OF DAMAGES AND LOSS CAUSED TO ENVIRONMENT DUE TO CONTRAVENTION OF LAW, AND THEREFORE, CANNOT BE ALLO WED AS DEDUCTION OUT OF SALE PROCEEDS, EVEN AFTER ACCRUAL OF SUCH LIABILITY. LD.AO WAS OF OPINION THAT, EVEN IN CATEG ORY A MINES, THERE WAS MARGINAL ILLEGALITY FOUND BY CEC, BECAUSE OF WHICH 10% OF CONTRIBUTION WAS ATTRIBUTED OUT OF SALE PROC EEDS TO THE SPV. 7.8.12. ON CAREFUL READING OF DECISION OF HONBLE SUPREME C OURT DATED 18/04/2013, IT IS CLEAR THAT 15% CONTRIBUTION TO SPV ACCOUNT WAS GUARANTEE PAYMENT FOR IMPLEMENTING OF R & R PLAN, WHICH WOULD BE DEDUCTED FROM SALE PROCEEDS. THIS WA S ONE OF THE CONDITIONS FOR RESUMING MINING OPERATIONS UNDER CATEGORY B. WE REFER TO AND RELY ON OBSERVATIONS BY HONBLE SUP REME COURT IN CASE OF CIT VS SITALDASTIRATHDASREPORTED IN(1961 ) 41 ITR 367.HONBLE SUPREME COURT LAYING DOWN FOLLOWING PRI NCIPAL REFERRED TO VARIOUS RULINGS THAT ILLUSTRATED ASPECT S OF DIVERSION OF INCOME BY OVERRIDING TITLE. THESE ARE THE CASES WHICH HAVE CONSIDERED THE PROB LEM FROM VARIOUS ANGLES. SOME OF THEM APPEAR TO HAVE APPLIED THE PRINCIPLE CORRECTLY AND SOME, NOT. BUT WE DO NOT PR OPOSE TO EXAMINE THE CORRECTNESS OF THE DECISIONS IN THE LIG HT OF THE FACTS IN THEM. IN OUR OPINION, THE TRUE TEST IS WHETHER T HE AMOUNT SOUGHT TO BE DEDUCTED, IN TRUTH, NEVER REACHED THE ASSESSEE AS ITS INCOME. OBLIGATIONS, NO DOUBT, THERE ARE IN EVE RY CASE, BUT IT IS THE NATURE OF THE OBLIGATION WHICH IS THE DECISI VE FACT. THERE IS A DIFFERENCE BETWEEN AN AMOUNT WHICH A PERSON IS OBLIGED TO PAY OUT OF HIS INCOME AND AN AMOUNT WHICH BY THE NA TURE OF THE OBLIGATION CANNOT BE SAID TO BE A PART OF THE I NCOME OF THE ASSESSEE. WHEREBY THE OBLIGATION INCOME IS DIVERTED BEFORE IT REACHES THE ASSESSEE, IT IS DEDUCTIBLE BUT WHERE TH E INCOME IS REQUIRED TO BE APPLIED TO DISCHARGE AN OBLIGATION A FTER SUCH INCOME REACHES THE ASSESSEE THE SAME CONSEQUENCE IN LAW DOES NOT FOLLOW. IT IS THE FIRST KIND OF PAYMENT WH ICH CAN TRULY BE EXCUSED AND NOT THE SECOND. THE SECOND PAYMENT I S MERELY AN OBLIGATION TO PAY ANOTHER PORTION OF ONES OWN I NCOME WHICH HAS BEEN RECEIVED AND ESSENCE APPLIED. THE FIRST IS A CASE IN WHICH THE INCOME NEVER REACHES THE ASSESSEE, WHO, E VEN IF HE ITA NO.3298&3299/BANG/2018 M/S. M. HANUMANTHA RAO, BANGALORE PAGE 17 OF 24 WERE TO COLLECT IT, DOES SO, NOT AS PART OF HIS INC OME BUT FOR AND ON BEHALF OF THE PERSON TO WHOM IT WAS PAYABLE. EMPHASIS SUPPLIED 7.8.13. IN THE PRESENT CASE, WE NOTE THAT 15% OF SALE PROCE EDS WAS PAYABLE TO SPV ACCOUNT AFTER IT ACCRUED TO ASSE SSEE AND THE FACT THAT, ASSESSEE WAS OBLIGED TO PART WITH SUCH P ORTION OF INCOME, BY VIRTUE OF DIRECTIONS OF HONBLE SUPREME COURT, AS A PRECONDITION TO RESUME MINING OPERATIONS UNDER CATE GORY B. AT THIS JUNCTURE, WE ALSO EMPHASISE THAT, BUT FOR THE INTERVENTION BY HONBLE SUPREME COURT, ASSESSEE WOULD NOT HAVE C ONTRIBUTED 15% TO SPV ACCOUNT FOR IMPLEMENTATION OF RECLAMATIO N AND REHABILITATION SCHEME ON ITS OWN, AS THERE WAS NO S TATUTORY REQUIREMENT TO DO SO UNDER RELEVANT STATUTES THAT R EGULATE MINING ACTIVITIES. 7.8.14. HONBLE SUPREME COURT HAS BEEN VERY CLEAR REGARDING THE TYPES OF PAYMENTS THAT NEEDS TO BE RECOVERED FR OM LESSEES UNDER CATEGORY B, FROM THE SALE PROCEEDS AS WELL AS OTHERWISE. ALL THE PAYMENTS FORM PART OF R&R PLAN FOR RECOUPIN G AND REHABILITATING THE ENVIRONMENT. CERTAIN PAYMENTS AR E ONETIME PAYMENT AND SOME OTHERS ARE RECURRING DEPENDING UPO N THE SALE OF IRON ORE SOLD IN THE NAME OF EACH LICENSEE OR DE PENDING ON THE NEED FOR REHABILITATION. 7.8.15. IN OUR VIEW, CONTRIBUTING 15% TO SPV ACCOUNT ON ACC OUNT OF CATEGORY B, WOULD BE APPLICATION OF INCOME, AN D THEREFORE, SHOULD BE CONSIDERED AS EXPENDITURE INCURRED FOR CA RRYING OUT ITS BUSINESS ACTIVITY. THIS WE HOLD SO, FOR THE REA SON THAT, CONTRIBUTIONS DETERMINED BY HONBLE SUPREME COURT A RE IN THE NATURE OF GUARANTEE PAYMENT NECESSARY FOR RESUMING MINING ACTIVITY. WE ALSO NOTE THAT, ALLEGED SUM IN THESE G ROUNDS ARE FOR IMPLEMENTATION OF R&R PLANS IN RESPECTIVE SANCTIONE D LEASE AREAS HELD BY ASSESSEE, WHERE ILLEGAL MINING ACTIVI TIES OR WHICH WERE USED FOR ILLEGAL OVERBURDEN DUMPS, ROADS, OFFI CES ETC., BEYOND SANCTIONED LEASE AREA WERE CARRIED OUT. HERE , WE ALSO NOTE THAT, HONBLE SUPREME COURT DIRECTED CEC TO RE FUND ANY LEFTOVER GUARANTEE MONEY, AFTER COMPLETION OF IMPLE MENTATION OF R& R PLAN, SUBJECT TO SATISFACTION OF CEC AND APPRO VAL BY HONBLE SUPREME COURT. FOR THIS PECULIAR REASON, AM OUNT SO CONTRIBUTED TOWARDS SPV BEING 15% OF SALE PROCEEDS, UNDER CATEGORY B, CANNOT BE TREATED AS PENAL IN NATURE. W E, THEREFORE, REJECT OBSERVATIONS OF AUTHORITIES BELOW THAT, SUCH SUM HAVING CONTRIBUTED BY ASSESSEE FALL WITHIN AMBIT OF EXPLAN ATION 1 TO SECTION 37 (1) OF THE ACT. 4.5 THE LD D.R, HOWEVER, CONTENDED THAT THE DEC ISION RENDERED IN THE CASE OF NMDC LTD (SUPRA) CANNOT BE RELIED UPON BY THE ASSESSEE. HE SUBMITTED THAT NMDC LTD IS A PUBLIC SECTOR UNDER TAKING AND ITA NO.3298&3299/BANG/2018 M/S. M. HANUMANTHA RAO, BANGALORE PAGE 18 OF 24 FURTHER, THERE IS NO ALLEGATION OF ILLEGALITIES. H E ALSO SUBMITTED THAT THE HYDERABAD BENCH OF TRIBUNAL HAS TAKEN THE VIEW THAT THESE PAYMENTS ARE NOT PUNITIVE IN NATURE, BUT COMPENSATI ON FOR SCIENTIFIC EXPLOITATION OF MINERALS. HOWEVER, THE LD D.R CON TENDED THAT THESE AMOUNTS HAVE BEEN COLLECTED FROM THE ASSESSEES, SIN CE THEY HAVE CAUSED DAMAGE TO THE ENVIRONMENT AND HENCE IT IS PE NAL IN NATURE. 4.6 THE HYDERABAD BENCH OF TRIBUNAL HAS ALSO NO TICED THAT NMDC LTD FALLS UNDER CATEGORY A. THERE IS NO DISPUTE ABOUT THE SAME. HOWEVER, THE CEC HAS RECOMMENDED THAT M/S NMDC LTD SHALL BE LIABLE TO DEPOSIT PENALTY/COMPENSATION AS PAYABLE F OR THE MINING LEASES FALLING IN CATEGORY B. THE SAID RECOMMEND ATION WAS ACCEPTED BY HONBLE SUPREME COURT AND HENCE NMDC LT D HAS PAID COMPENSATION @ 5.00 CRORES & 1.00 CRORES AND ALSO D EDUCTION FROM SALE PROCEEDS WAS MADE @ 15%. IN ANY CASE, THE QU ESTION IS HERE IS ABOUT THE NATURE OF SUCH PAYMENTS. 4.7 WE NOTICE THAT, IN THE CASE OF NMDC LTD (SU PRA), HYDERABAD BENCH OF TRIBUNAL HAS RELIED UPON THE DECISION REND ERED BY HONBLE KOLKATTA HIGH COURT IN THE CASE OF SHYAM SEL LTD (S UPRA) AND ALSO THE DECISION RENDERED IN THE CASE OF STATE POLLUTIO N CONTROL BOARD VS. SWASTIK ISPAT (P) LTD (SUPRA). IN BOTH THE CASES, THE PAYMENT MADE BY AN ASSESSEE TO THE POLLUTION CONTROL BOARD IN OR DER TO TAKE REMEDIAL ACTION IN RESPECT OF THE POLLUTION CAUSED BY THE ASSESSEE WOULD BE COMPENSATORY IN NATURE. 4.8 WE HAVE EARLIER NOTICED THAT THE CEC, VIDE I TS REPORT DATED 3-2- 2012 AND 13-3-2012 HAD MADE CERTAIN RECOMMENDATIONS TO THE HONBLE SUPREME COURT. THE HONBLE SUPREME COURT HA S INCORPORATED THOSE RECOMMENDATIONS IN PARAGRAPH 7 ( PAGE 164 TO 171 OF ITS ORDER REPORTED IN (2013)(8 SCC 154). TH E CEC HAD MADE ITA NO.3298&3299/BANG/2018 M/S. M. HANUMANTHA RAO, BANGALORE PAGE 19 OF 24 FOLLOWING RECOMMENDATION WITH REGARD TO SETTING UP OF SPECIAL PURPOSE VEHICLE, TRANSFER OF FUNDS COLLECTED FROM A LL LEASE HOLDERS UNDER VARIOUS HEADS, THE PURPOSE OF UTILISATION OF SAID FUNDS ETC. (IX) A SPECIAL PURPOSE VEHICLE (SPV) UNDER THE CHA IRMANSHIP OF CHIEF SECRETARY, GOVERNMENT KARNATAKA AND WITH THE SENIOR OFFICERS OF THE CONCERNED DEPARTMENTS OF THE STATE GOVERNMENT AS MEMBERS MAY BE DIRECTED TO BE SET UP FOR THE PUR POSE OF TAKING VARIOUS AMELIORATIVE AND MITIGATIVE MEASURES IN DISTRICTS BELLARY, CHITRADURGA AND TUMKUR. THE ADDITIONAL RES OURCES MOBILIZED BY (A) ALLOTMENT/ ASSIGNMENT OF THE CANCE LLED MINING LEASES AS WELL AS THE MINING LEASES BELONGING TO M/ S. MML, (B) THE AMOUNT OF THE PENALTY/ COMPENSATION RECEIVED/ R ECEIVABLE FROM THE DEFAULTING LESSEE, (C) THE AMOUNT RECEIVED / RECEIVABLE BY THE MONITORING COMMITTEE FROM THE MINING LEASES FALLING IN CATEGORY- A AND CATEGORY-B, (D) AMOUNT RECEIVED / RECEIVABLE FROM THE SALE PROCEEDS OF THE CONFISCATED MATERIAL ETC., MAY BE DIRECTED TO BE TRANSFERRED TO THE SPV AND USED EXCLUSIVELY FOR THE SOCIO- ECONOMIC DEVELOPMENT OF THE AREA/LOCAL POPULATION, INFRASTRUCTURE DEVELOPMENT, CONSERVATION AND PROTECTION OF FOREST, DEVELOPING COMMON FACILITIE S FOR TRANSPORTATION OF IRON ORE (SUCH AS MAINTENANCE AND WIDENING OF EXISTING ROAD, CONSTRUCTION OF ALTERNAT E ROAD, CONVEYOR BELT, RAILWAY SIDING AND IMPROVING COMMUNICATION SYSTEM, ETC.). A DETAILED SCHEME IN THIS REGARD MAY BE DIRECTED TO BE PREPARED AND IMPLEMENT ED AFTER OBTAINING PERMISSION OF THIS HONBLE COURT; THE HONBLE SUPREME COURT @ 176 OF ITS ORDER HAS MA DE FOLLOWING OBSERVATIONS WITH REGARD TO SPV:- BY ORDER DATED 28-09-2012, THIS COURT HAD CONSTITU TED A SPECIAL PURPOSE VEHICLE (FOR SHORT SPV) ON THE SU GGESTION OF THE LEARNED AMICUS CURIAE. THE PURPOSE OF CONSTITUTION OF THE SPV, ITA NO.3298&3299/BANG/2018 M/S. M. HANUMANTHA RAO, BANGALORE PAGE 20 OF 24 IT MAY BE NOTICED, IS FOR TAKING OF AMELIORATIVE AN D MITIGATIVE MEASURES AS PER THE COMPREHENSIVE ENVIRONMENT PLAN S FOR MINING IMPACT ZONE (CPEMIZ) AROUND MINING LEASES IN BELLARY, CHITRADURGA AND TUMKUR. BY ORDER DATED 28-09-2012, THE MONITORING COMMITTEE WAS TO MAKE AVAILABLE THE PAYM ENTS RECEIVED BY IT UNDER DIFFERENT HEADS OF RECEIVABLES TO THE SPV 4.9 THE HON'BLE SUPREME COURT HAS OBSERVED AS UND ER IN RESPECT OF RECLAMATION AND REHABILITATION PLANS (R & R PL ANS) AT PAGE 168:- 8. AS PREVIOUSLY NOTICED, THE CEC IN ITS REPORT DA TED 13.3.2012 HAD SET OUT IN DETAIL THE OBJECTIVES OF THE RECLAMA TION AND REHABILITATION (R&R) PLANS AND THE GUIDELINES FOR P REPARATION OF DETAILED R & R PLANS IN RESPECT OF EACH MINING LEAS E. THE ORIGINS OF THE IDEA (R & R PLANS) ARE TO BE FOUND IN AN EAR LIER REPORT OF THE CEC DATED 28.7.2011. AS THE SUGGESTIONS OF THE CEC WITH REGARD TO PREPARATIONS OF R & R PLANS FOR EACH MINE IS CRUCIAL TO SCIENTIFIC AND PLANNED EXPLOITATION OF THE MINERAL RESOURCES IN QUESTION IT WILL BE NECESSARY FOR US TO NOTICE THE SAID OBJECTIVES AND THE DETAILED GUIDELINES WHICH ARE SET OUT BELOW . IN THIS CONNECTION IT WOULD BE WORTHWHILE TO TAKE NOTE OF T HE FACT THAT THE GUIDELINES IN QUESTION HAVE BEEN PREPARED AFTER DETAILED CONSULTATION WITH DIFFERENT STAKEHOLDERS INCLUDING THE FEDERATION OF INDIAN MINERAL INDUSTRIES (FIMI) WHIC H CLAIMS TO BE THE REPRESENTATIVE BODY OF THE MAJORITY OF THE MINI NG LESSEES OF THE PRESENT CASE. II. BROAD OBJECTIVES/PARAMETERS OF R&R PLANS 8. THE BROAD OBJECTIVES/PARAMETERS OF THE R&R PLANS WOULD BE: I) TO CARRY OUT TIME BOUND RECLAMATION AND REHABILI TATION OF THE AREAS FOUND TO BE UNDER ILLEGAL MINING BY WA Y OF ITA NO.3298&3299/BANG/2018 M/S. M. HANUMANTHA RAO, BANGALORE PAGE 21 OF 24 MINING PITS, OVER BURDEN/WASTE DUMPS ETC. OUTSIDE T HE SANCTIONED AREAS; II) TO ENSURE SCIENTIFIC AND SUSTAINABLE MINING AFT ER TAKING INTO CONSIDERATION THE MINING RESERVES ASSESSED TO BE AVAILABLE WITHIN THE LEASE AREA; III) TO ENSURE ENVIRONMENTAL FRIENDLY MINING AND RE LATED ACTIVITIES AND COMPLYING WITH THE STANDARDS STIPULA TED UNDER THE VARIOUS ENVIRONMENTAL/MINING STATUTES E.G . AIR QUALITY (SPM, RPM), NOISE/VIBRATION LEVEL, WATER QU ALITY (SURFACE AS WELL AS GROUND WATER), SCIENTIFIC OVER BURDEN/WASTE DUMPING, STABILIZATION OF SLOPES AND BENCHES, PROPER STACKING AND PRESERVATION OF TOP SO IL, SUB GRADE MINERAL AND SALEABLE MINERALS, PROPER QUALITY OF INTERNAL ROADS, ADEQUATE PROTECTIVE MEASURES SUCH A S DUST SUPPRESSION/CONTROL MEASURES FOR SCREENING AND CRUSHING PLANTS, BENEFICIATION PLANTS, PROVISION FO R RETENTION WALLS, GARLAND DRAINS, CHECK DAMS, SILTAT ION PONDS, AFFORESTATION, SAFETY ZONES, PROPER COVERING OF TRUCK, EXPLORING POSSIBILITY OF BACK FILLING OF PAR T OF OVER BURDEN/WASTE DUMPS IN THE MINING PITS, SALE/BENEFICIATION OF SUB GRADE IRON ORE, WATER HAR VESTING, ETC. IV) FOR ACHIEVING (II) AND (III) ABOVE, FIXATION OF PERMISSIBLE ANNUAL PRODUCTION; AND V) REGULAR AND EFFECTIVE MONITORING AND EVALUATION. THE HON'BLE SUPREME COURT HAS ALSO RECORDED LEASE W ISE R & R PLANS IN CONTINUATION OF THE ABOVE SAID OBSERVATIONS. 4.10 THE HON'BLE SUPREME COURT HAS ACCEPTED THE RECOMMENDATIONS OF CEC WITH THE FOLLOWING OBSERVATI ONS AT PAGE 194:- ITA NO.3298&3299/BANG/2018 M/S. M. HANUMANTHA RAO, BANGALORE PAGE 22 OF 24 52. THE CONDITIONS SUBJECT TO WHICH CATEGORY A A ND B MINES ARE TO BE REOPENED AND THE R&R PLANS THAT HAVE BEEN RECOMMENDED AS A PRECONDITION FOR REOPENING OF CATE GORY B MINES ARE ESSENTIALLY STEPS TO ENSURE SCIENTIFIC AN D PLANNED EXPLOITATION OF THE SCARCE MINERAL RESOURCES OF THE COUNTRY. THE DETAILS OF THE PRECONDITIONS AND THE R&R PLANS HAVE ALREADY BEEN NOTICED AND WOULD NOT REQUIRE A REPETIT ION. SUFFICE IT WOULD BE TO SAY THAT SUCH RECOMMENDATION S ARE WHOLESOME AND IN THE INTEREST NOT ONLY OF THE ENVIR ONMENT AND ECOLOGY BUT THE MINING INDUSTRY AS A WHOLE SO A S TO ENABLE THE INDUSTRY TO RUN IN A MORE ORGANIZED, PLAN NED AND DISCIPLINED MANNER. 53. FIMI WAS ACTIVELY ASSOCIATED IN THE FRAMING OF THE GUIDELINES AND THE PREPARATION OF THE R&R PLANS. THERE IS NOTH ING IN THE PRECONDITIONS OR IN THE DETAILS OF THE R&R PLANS SU GGESTED WHICH ARE CONTRARY TO OR IN CONFLICT OR INCONSISTENT WITH ANY OF THE STATUTORY PROVISIONS OF THE MMDR ACT, EP ACT AND FC ACT. IN SUCH A SITUATION, WHILE ACCEPTING THE PRECONDITIONS SUBJ ECT TO WHICH THE CATEGORY A AND B MINES ARE TO BE REOPENED A ND THE R&R PLANS THAT MUST BE PUT IN PLACE FOR CATEGORY B MI NES, WE ARE OF THE VIEW THAT THE SUGGESTIONS MADE BY THE CEC FO R REOPENING OF CATEGORY A AND B MINES AS WELL AS THE DETAIL S OF THE R&R PLANS SHOULD BE ACCEPTED BY US, WHICH WE ACCORDINGL Y DO. THIS WILL BRING US TO THE MOST VITAL ISSUE OF THE CASE, I.E., THE FUTURE OF THE CATEGORY C MINES. 4.11 IT CAN BE NOTICED THAT ALL THE AMOUNTS COLLE CTED FROM THE LESSEES UNDER DIFFERENT CATEGORIES ARE DIRECTED TO BE GIVEN TO THE SPV, WHICH WILL IN TURN TAKE VARIOUS TYPES OF AMELIORATIVE AND MITIGATIVE STEPS IN THE INTEREST NOT ONLY OF THE ENVIRONMENT AND ECOLOG Y BUT THE MINING INDUSTRY AS A WHOLE SO AS TO ENABLE THE INDUSTRY TO RUN IN A MORE ITA NO.3298&3299/BANG/2018 M/S. M. HANUMANTHA RAO, BANGALORE PAGE 23 OF 24 ORGANIZED, PLANNED AND DISCIPLINED MANNER. UNDER TH ESE SET OF FACTS, IT CANNOT BE SAID THAT THESE AMOUNTS ARE PENAL IN N ATURE. WE NOTICE THAT THE HYDERABAD BENCH OF TRIBUNAL IN THE CASE OF NMDC LTD (SUPRA) CAME TO THE SAME CONCLUSION BY FOLLOWING TH E DECISION RENDERED BY HON'BLE KOLKATTA HIGH COURT IN THE CASE OF SHYAMSEL LTD (SUPRA) AND STATE POLLUTION CONTROL BOARD VS. SWAST IK ISPAT (P) LTD (SUPRA), WHEREIN IDENTICAL TYPES OF PAYMENTS MADE T O REMEDY THE RIVER POLLUTION CAUSED BY THE PARTIES WERE HELD TO BE COM PENSATORY IN NATURE. HENCE THE PROVISIONS OF EXPLANATION 1 TO S EC.37 WILL NOT APPLY TO THESE PAYMENTS. HENCE, AS HELD BY HYDERA BAD BENCH OF TRIBUNAL IN THE CASE OF NMDC LTD (SUPRA), THESE EXP ENSES ARE ALLOWABLE AS DEDUCTION U/S 37(1) OF THE ACT. 4.12 ANOTHER IMPORTANT POINT WE NOTICE IS THAT THE RECOMMENDATIONS MADE BY CEC FOR MAKING THESE PAYMEN TS HAVE BEEN MADE FOR THE PURPOSE OF RESUMING THE MINING OP ERATIONS. THE HON'BLE SUPREME COURT DISCUSSES THESE POINTS AT PAG E 171 FROM PARAGRAPH 10 ONWARDS. HENCE THERE IS MERIT IN THE S UBMISSION OF THE LD A.R THAT, WITHOUT MAKING THESE PAYMENTS, THE ASS ESSEE COULD NOT HAVE RESUMED THE MINING OPERATIONS. HENCE, THESE E XPENSES ARE INCIDENTAL TO CARRYING ON THE BUSINESS AND HENCE AL LOWABLE U/S 37(1) OF THE ACT. 4.13 IN VIEW OF THE FOREGOING DISCUSSIONS AND AL SO FOLLOWING THE DECISION RENDERED BY THE CO-ORDINATE BENCHES REFERR ED ABOVE, WE HOLD THAT THE AMOUNT DEDUCTED @ 15% FROM THE SALE PROCEE DS CONSTITUTE TRADING RECEIPTS IN THE HANDS OF THE ASSESSEE, BUT AT THE SAME TIME IT IS ALLOWABLE AS DEDUCTION U/S 37(1) OF THE ACT. AC CORDINGLY, WE SET ASIDE THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE I N BOTH THE YEARS UNDER CONSIDERATION AND DIRECT THE AO TO DELETE THE IMPUGNED ADDITION IN BOTH THE YEARS. ITA NO.3298&3299/BANG/2018 M/S. M. HANUMANTHA RAO, BANGALORE PAGE 24 OF 24 5. IN THE RESULT, BOTH THE APPEALS OF THE ASS ESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH FEB, 2021. SD/- (N.V. VASUDEVAN ) VICE PRESIDENT SD/- (B.R. BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED 25 TH FEB, 2021. VG/SPS COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.