ACIT, Sambalpur V. M/s Mahanadi Coalfields Ltd, Sambalpur

ITA 397/CTK/2013

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 4318 (ITAT-CUTTACK)
• Duration Of Justice: 4 year(s) 8 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 07-03-2018
• Assessment Year: 2010-2011
• Appeal Filed On: 08-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PIYUSH KOLHE
• Assessee Lawyers: S S PODDARN KEDIA
• Keywords: Depreciation; Business expenditure; Opportunity of being heard; Additional depreciation; Wholly owned subsidiary; Corroborative evidences; Competent authority; Revenue expenditure; Capital expenditure
• Section: 14A; 32

Judgement Text

1 MAHANADI COALFIELD LTYD., IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO. 421 /CTK/201 3 : ASSESSMENT YEAR : 20 10 - 2011 ITA NO. 301 /CTK/201 4 : ASSESSMENT YEAR : 20 11 - 2012 ITA NO. 278 /CTK/201 5: ASSESSMENT YEAR : 20 12 - 2013 ITA NO. 447 /CTK/201 5: ASSESSMENT YEAR : 20 13 - 2014 ITA NO. 264 /CTK/201 7: ASSESSMENT YEAR : 20 14 - 2015 MAHANADI COALFIELDS LTD., JAGRITI VIHAR, BURLA, SAMBALPUR VS. DCIT, CIRCLE - 2(1), SAMBALPUR . PAN/GIR NO. AABCM 5188 P (APPELLANT ) .. ( RESPONDENT ) ITA NO. 397 /CTK/201 3: ASSESSMENT YEAR : 20 10 - 2011 ITA NO. 330 /CTK/201 4: ASSESSMENT YEAR : 20 11 - 2012 ITA NO. 292 /CTK/201 5: ASSESSMENT YEAR : 20 12 - 2013 ITA NO. 428 /CTK/201 5: ASSESSMENT YEAR : 20 13 - 2014 ITA NO. 268 /CTK/201 7: ASSESSMENT YEAR : 20 14 - 2015 DCIT, CIRCLE - 2(1), SAMBALPUR. VS. MAHANADI COALFIELDS LTD., JAGRITI VIHAR, BURLA, SAMBALPUR PAN/GIR NO. AABCM 5188 P (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI S.S.PODDAR /N.KEDIA , AR REVENUE BY : SHRI PIYUSH KOLHE, CIT DR DATE OF HEARING : 07 /03/ 2018 DATE OF PRONOUNCEMENT : / 0 3 / 201 8 O R D E R PER PAVAN KUMAR GADALE, JM THESE ARE APPEALS FILED BY THE ASSESSEE AND REVENUE AGAINST SEPARATE ORDERS OF THE CIT(A) - CUTTACK, FOR THE ASSESSMENT YEAR S 201 0 - 2 MAHANADI COALFIELD LTYD., 2011 TO 2014 - 2015, RESPECTIVELY. SINCE FACTS AND SOME OF THE ISSUES INVOLVED ARE COMMON, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE BRIEF FACTS OF THE CASE ARE TH AT THE ASSESSE E IS A GOVERNMENT OF INDIA ENTERPRISE ENGAGED IN THE BUSINESS OF EXTRACTION AND SALE OF COAL FROM ITS COALFIELDS LOCATED AT TALCHER & IB VALLEY AND OTHERS IN THE STATE OF ODISHA . THE ASSESSING OFFICER COMPLETED THE ASSESSMENTS U/S.143(3) OF THE ACT FOR THE ASSESSMENT YEARS UNDER CONSIDERATION , MAKING ADDITIONS/DISALLOWANCE. ON APPEAL, THE CIT(A) PARTLY ALLOWED THE APPEALS OF THE ASSESSEE. HENCE, BOTH THE ASSESSEE AND THE REVENUE ARE IN APPEAL BEFORE US. 3 . NOW TAKE UP THE ASS ESSEES APPEAL. 4 . THE FIRST COMMON ISSUE AGITATED BY THE ASSESSEE IS THAT THE CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN MAKING ADDITION ON ACCOUN T OF VALUATION OF CLOSING STOCK OF RS.9108.67 FOR THE ASSESSMENT YEAR 2010 - 11, RS. 7060.22 LAKHS FOR THE ASSESSMENT YEAR 2011 - 12, RS.8340.60 LAKHS FOR THE ASSESSMENT YEAR 2012 - 13 AND RS.4714.00 LAKHS FOR THE ASSESSMENT YEAR 2013 - 14. 5. WE DISCUSS THE FACTS FOR THE ASSESSMENT YEAR 2010 - 2011 AND THE DECISION WILL APPLY MUTATIS - MUTANDIS TO OTHER ASSESSMENT YEARS. 6 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER ON PERUSAL OF ANNUAL REPORT FOUND THAT THE ASSESSEE HAS DECLARED IN ITS PRINTED 3 MAHANADI COALFIELD LTYD., ACCOUNTS IN NOTES ON ACCOUNT THAT THE STOCK OF COAL VALUED BY THE ASSESSEE AS ON 31.3.2010 LYING AT DIFFERENT COLLIERIES WAS RS.34659.68 LAKHS , WHICH IS CALCULATED ON THE BASIS OF LOWER OF COST OR NET REASLISABLE VALUE MINES WISE, AND IF IT IS VALUED C OMPANY AS A WHOLE , IT WILL BE RS .43768.35 LAKHS , HENCE THERE IS AN UNDERSTATEMENT IN VALUATION OF CLOSING STOCK TO THE EXTENT OF RS.9108.67 LAKHS. 7. THE COAL MINING SECTOR HAD BEEN UNDER NATIONALISATION SINCE THE EARLY 1970S AND THE COAL BEING AN ESSENTIAL COMMODITY AND WASTING ASSET WAS DECLARED A CONTROLLED COMM ODITY AND ITS PRICE ACCORDING TO GRADES WAS DETERMINED AND ANNOUNCED BY THE CENTRAL GOVERNMENT UNDER THE COLLIERY CONTROL ORDER, 1945. SINCE THE PRICE OF COAL WAS FIXED B Y THE CENTRAL GOVERNMENT (ADMINISTERED PRICE), THERE WAS NO POSSIBILITY OF ANY VARIA TION OF SUCH PRICE UNLESS ANNOUNCED BY THE CENTRAL GOVERNMENT. ACCORDINGLY, SINCE ITS INCEPTION, THE ASSESSEE HAD BEEN VALUING ITS STOCK IN TRADE OF COAL UNDER THE NET REALISABLE VALUE (METHOD BASED ON THE PRICE OF COAL NOTIFIED BY THE CENTRAL GOVERNMENT FROM TIME TO TIME TILL FINANCIAL YEAR 1995 - 96. MEANWHILE, WITH THE LIBERALISATION OF INDIAN ECONOMY, THE CENTRAL GOVERNMENT THROUGH ITS NOTIFICATION DEREGULATED THE PRICING OF VARIOUS GRADE OF COAL TO BE FOLLOWED BY ALL ITS SUBSIDIARIES IN THE YEAR 1995. THEREAFTER, THE BOARD OF DIRECTORS OF COAL INDIA LIMITED (CIL), THE HOLDING COMPANY IN ITS 165 TH MEETING DECIDED TO ADOPT THE COST OR MARKET PRICE WHICHEVER IS LOWER METHOD FOR VALUING STOCK OF COAL AND CONVEYED ITS DECISION TO ALL ITS SUBSIDIARIES VIDE LE TTER DATED 9.6.1997 BEFORE FINALISATION OF THE ACCOUNTS FOR THE FINANCIAL YEAR 1996 - 97. THE REASONS FOR SUCH 4 MAHANADI COALFIELD LTYD., CHANGE WAS ALSO PUT UP AS A BOARD NOTE OF CIL REASONING FOR THE CHANGE. IN COMPLIANCE TO THE SAID DIRECTIONS OF CIL, MCL FINANCE DEPARTMENT ISSUE D A CIRCULAR DATED 26.7.1997 TO ALL ITS AREA MANAGER FOR VALUATION OF CLOSING STOCK . IT WAS FURTHER EXPLAINED THAT MCL HAD UNDERGROUND AS WELL AS OPEN CAST MINES AND THE QUALITY/GRADE OF COAL, THE COST OF PRODUCTION AND THE SALE PRICE DIFFERS VERY WIDELY, HENCE, A CIRCULAR WAS ISSUED BY CIL VIDE LETTER DATED 15.5.2000 FOR IMPLEMENTATION OR DER ON UNIFORMITY IN ACCOUNTING BY ALL THE SUBSIDIARIES ON THE BASIS OF THE VIEW FORMED BY A COMMITTEE FOR THE PURPOSE THAT SINCE COAL IS A PROCESS OF EXTRACTION FROM A SINGLE MINE AND COAL STOCK OF EACH UNIT IS TO BE VALUED. HENCE, ALL THE SUBSIDIARIES ARE VALUING ITS STOCK AT COST OR MARKET PRICE, WHICHEVER IS LOWER MINES WISE SINCE FINANCIAL YEAR 1996 - 97. FROM THE VALUATION OF CLOSING STOCK FORMING PART OF THE CIRCULAR ISSUED BY MCL FINANCE DEPARTMENT VIDE LETTER DATED 27.6.1997, IT IS OBSERVED THAT T HE MARKET PRICE OF DIFFERENT GRADE OF COAL DIFFERS FROM RS.262.20 PER TON TO RS.766.60 PER TON WHEREAS THE COST PRICE OR NRB WHICHEVER IS LOWER VARIED BETWEEN RS.94.73 PER TON TO RS.2439.51 PER TON. FURTHER, IT IS OBSERVED THAT FOR THE FINANCIAL YEAR 2011 - 12 IN THE CASE OF NANDIRA COLLIERY, THE COST OF PRODUCTION OF COAL WAS RS.2759. PER TON WHEREAS THE NET REASLISABLE VALUE WAS RS.1140 PER TON AND IN THE CASE OF TALCHER COLLIERY, IT WAS RS.4480.68 PER TON AND RS.2800 PER TON RESPECTIVELY AND, ACCORDINGLY, THE STOCK WAS VALUED AT COST OR NRB WHICHEVER IS LOWER. THIS METHOD OF VALUATION IS CONSISTENTLY FOLLOWED BY ALL THE SUBSIDIARIES OF CIL. ACCORDINGLY, FOLLOWING THE DIRECTION OF CIL AND AS THE GRADE, QUALITY, COST 5 MAHANADI COALFIELD LTYD., DIFFERED, MCL VALUING ITS STOCK MINE - WIS E AS AN INDEPENDENT COST CENTRES AND PROFIT - MAKING CENTRE CONSISTENTLY SINCE 1996 - 97. 8 . T HE ASSESSING OFFICER RELIED ON THE PROVISIONS OF SECTION 145A OF THE ACT AND FOUND THAT THE ASSESSEE CANNOT ADOPT THE METHOD OF INDEPENDENT VALUATION OF CLOSING STOCK . THE ASSESSING OFFICER FURTHER EMPHASISED THAT THE CORRECT METHOD OF VALUATION OF C LOSING STOCK OF RAW COAL HAS TO BE COST OF PRODUCTION OR MARKET PRICE WHICHEVER IS LOWER FOR THE AGGREGATE OF COAL STOCK AS ON CLOSING DATE OF THE ACCOUNTING YEAR AND NOT B Y MAKING UNIT WISE VALUATION OF RAW COAL STOCK AT DIFFERENT LOCATIONS OF THE COMPANY AND, THEREFORE, MADE ADDITION OF RS.9108.67 LAKHS. 9 . BEFORE THE CIT(A), THE ASSESSEE SUBSTANTIATED HIS CLAIM MA DE BEFORE THE ASSESSING OFFICER . WHEREAS TH E CIT(A) DEALT ON THE ISSUE IN DETAIL AT PAGES 5 - 8 OF THE ORDER AND THE SUBMISSIONS OF THE ASSESSEE IN RESPECT OF VALUATION AS PER THE ACCOUNTING POLICY ADOPTED BY THE COAL INDIA LIMITED. THE CIT(A) ALSO LISTED OUT THE BASIS OF VALUATION BUT FINALLY CONCLUDED THAT THE ASSESSEE IS A PERSON DEFINED AND TAXABLE UNDER THE PROVISIONS OF INCOME TAX ACT. THE CIT(A) ALSO UPHELD THE FINDINGS OF THE ASSESSING OFFICER AND CONFIRMED THAT THE VALUATION OF COAL IS TO BE DONE FOR THE COMPANY RATHER THAN VALUING IT UNIT - WISE. 1 0 . BEF ORE US, LD A.R. REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES . LD A.R. ALSO FILED WRITTEN SUBMISSIONS REFERRING TO SECTION 145A AND JUDICIAL DECISIONS. LD A.R. SUBMITTED THAT T HE ASSESSEE COMPANY WAS INCORPORATED ON 30 APRIL, 1 992 AS A 1 OO% SUBSIDIARY OF 6 MAHANADI COALFIELD LTYD., COAL INDIA LIMITED (CLL) BY TAKING OVER THE SAMBALPUR DIVISION OF SOUTH EASTERN COAL FIELDS LIMITED. THE COAL MINING SECTOR HAD BEEN UNDER NATIONALISATION SINCE THE EARLY 70S AND THE COAL BEING AN ESSENTIAL COMMODITY AND A WASTING ASSET, WAS DECLARED A CONTROLLED COMMODITY AND ITS PRICE (ACCORDING TO GRADES) WAS DETERMINED AND ANNOUNCED BY THE CENTRAL GOVT UNDER THE COLLIERY CONTROL ORDER, 1945. SINCE THE PRICE OF COAL WAS FIXED BY THE CENTRAL GOVT (ADMINISTERED PRICE) THERE WAS NO POSSIBI LITY OF ANY VARIATION OF SUCH PRICE UNLESS ANNOUNCED BY THE CENTRAL GOVT. ACCORDINGLY SINCE ITS INCEPTION THE ASSESSEE HAD BEEN VALUING ITS STOCK IN TRADE OF COAL UNDER THE 'NET REALISABLE VALUE' METHOD BASED ON THE PRICE OF COAL NOTIFIED BY THE CENTRAL GO VT OF INDIA FROM TIME TO TIME TILL FINANCIAL YEAR 1995 - 96. MEANWHILE WITH THE LIBERALISATION OF THE INDIAN ECONOMY, THE CENTRAL GOVT. THROUGH ITS NOTIFICATION PUBLISHED IN THE GAZZETE OF INDIA, EX TRAORDINARY, DATED 22ND MARCH, 1 995 DEREGULATED THE PRICING OF VARIOUS GRADES OF COAL TO BE FOLLOWED BY ALL OF ITS SUBSIDIARIES . THEREAFTER, THE BOARD OF DIRECTOR S OF COAL INDIA LIMITED DECIDED TO ADOPT THE 'COST OR MARKET PRICE WHICHEVER IS LOWER' METHOD FOR VALUING STOCK OF COAL AND CONVEYED ITS DECISION TO ALL ITS SUBSIDIARIES THROUGH LETTER DATED 09.06.1997 BEFORE FINALIS ATION OF THE ACCOUNTS FOR THE SAID FINANCIAL YEAR 1996 - 97. SUBSEQUENTLY, THERE ARE DIRECTION S OF MCL FINANCE DEPT BY CIRCULAR LETTER NO. 732 DATED 27.06.1997 FOR VALUATION OF CLOSING STOCK OF COAL TO ALL ITS AREA MANAGER . THE ASSESSEE COMPANY HAS UNDERGROUND AS WELL AS OPENCAST MINES AND THE QUALITY AND GRADE OF COAL, THE COST OF PRODUCTION AND THE SALE PRICE DIFFERS VERY WIDELY. HENCE, ALL THE 7 MAHANADI COALFIELD LTYD., SUBSIDIARIES ARE VALUING ITS STOCK AT COST OR M ARKET PRICE WHICHEVER IS LOWER MINES WISE. FROM THE VALUATION OF CLOSING STOCK FOR TH E FY 2006 - 07, IT CAN BE SEEN THAT THE COST AT HINGULA OCP IS ONLY RS. 80.37 PER TON WHEREAS THE N RV OF ORIENT MINE NO. 4 IS RS. 200/ - PER TON WHICH MEANS THAT THE COST OF PRODUCTION AT ORIENT MINE NO. 4 IS MORE THAN THE NRV. THE ACCOUNTING POLICY OF THE ASSESSEE DURING THE FY 1996 - 97 IN RESPE CT OF VALUATION OF COAL REFERRED AT PARA 7 .4 OF A UDITED ACCOUNTS AND THE EFFECT OF CHANGE AT PARA 4.2 (II) IS A FURNISHED . FURTHER, CIRCULAR WAS ISSUED BY THE HOLDING COMPANY I.E. COAL INDIA LIMITED T O ALL ITS SUBSIDIARIES FOR IMPLEMENTATION OF UNIFORM ACCOUNTING VIDE LETTER DATED 15.05.2000 AS DECIDED BY A COMMITTEE CONSTITUTE D FOR THE SPECIFIC PURPOSE OF VALUATION AND 'COAL STOCK OF EACH UNIT IS TO BE VALUED'. THIS METHOD OF VALUATION OF COAL, MINES WISE, IS FOLLOWED CONSISTENTLY. FURTHER, LD A.R. ALSO EXPLAINED THAT THE ASSESSEE IS HAVING VARIOUS UNITS O F PRODUCTION, COST CENTRE, SALES AND ACCOUNTING AND THE UNITS ARE COMMONLY KNO WN AS AREAS. THE COAL IS PRODUCED AT DIFFERENT MINES AN D SUCH MINES ARE OPERATING UNDER THE ADMINISTRATIVE CONTROL OF A PARTICULAR AREA, THEREFORE, ACCOUNTS ARE BEING MAINTAINED FOR EACH AREA IN RESPECT OF PRODUCTION AND SALES. THE VALUATION OF CLOSING STOCK IN RESPECT OF EACH AREA IS DERIVED SEPARATELY AND NE T REALISABLE VALUE IS ALSO ASCERTAINED AREA WISE. LD A.R. SUBMITTED THAT THE VALUATION OF CLOSING STOCK IS DONE AT COST OR NRV WHICHEVER IS LOWER AND FOLLOWED CONSISTENTLY . HENCE, THE METHOD OF VALUATION ADOPTED BY THE ASSESSEE IS THE MOST SCIENTIFIC M ETHOD AND GIVES A MORE ACCURATE PICTURE OF VALUATION OF CLOSING STOCK AS COMPARED TO THE METHOD ADOPTED 8 MAHANADI COALFIELD LTYD., BY THE ASSESSING OFFICER. LD A.R. SUBMITTED THAT THE METHOD OF VALUATION OF CLOSING STOCK IS FOLLOWED BY ALL THE SUBSIDIARIES OF COAL OF INDI A LIMITED IN ACCORDANCE WITH UNIFORM ACCOUNTING POLICY OF COAL INDIA LIMITED. THE ASSESSEE BEING A PUBLIC SECTOR UNDERTAKING AND ACCOUNTS AR E AUDITED BY STATUTORY AUDITOR AND THE COMPTROLLER AND AUDITOR GENERAL OF INDIA AND THE METHOD OF VALUATION OF CLOSING STOCK I S BEING ACCEPTED BY THE AUDITORS AS WELL AS THE REVENUE IN ALL THE EARLIER YEARS AND FILED WRITTEN SUBMISSIONS, SUPPORTING EVIDENCE TO SUBSTANTIATE THAT THE ASSESSEE IS FOLLOWING A UNIFORM ACCOUNTING POLICY BY COAL INDIA LIMITED AND PRAYED FOR DELETION. M OREOVER, THE ASSESSING OFFICER HAS NOT MADE ANY ADDITION DURING THE ASSESSMENT YEAR 2014 - 15 AND ASSESSMENT YEAR 2015 - 16 AS THE BOOK VALUE WAS MORE THAN THE GLOBAL VALUE TAKEN PLAYING HOT AND COLD SIMULTANEOUSLY. 1 1 . CONTRA, LD D.R.RELIED ON THE ORDERS OF LOWER AUTHORITIES. 1 2 . WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. THE DISPUTED ISSUE WITH RESPECT TO VALUATION OF CLOSING STOCK AS ENVISAGED BY LD A. R. THAT THE ASSESSEE IS FOLLOWING UNIFORM ACCOUNTING POLICY ADOPTED BY COAL INDIA LIMITED AND ITS SUBSIDIARIES. WE HAVE PERUSED THE PROVISIONS OF APPLICABILITY OF ACCOUNTING STANDARD AND AS PER ACCOUNTING STANDARD - 2, VALUATION OF INVENTORIES, THE PRIME OBJ ECTIVE IS THAT A PRIMARY ISSUE IN ACCOUNTING FOR INVENTORIES IS THE DETERMINATION OF THE VALUE AT WHICH INVENTORIES ARE CARRIED IN THE FINANCIAL STATEMENTS UNTIL THE RELATED 9 MAHANADI COALFIELD LTYD., REVENUES ARE RECOGNISED. THE ACCOUNTING S TANDARD - 2 HAS BEEN REVISED IN 2016, WHE REAS THE ASSESSMENT YEAR INVOLVED IN THE PRESENT CASE IS 2010 - 2011. THOUGH IN THE REVISED AS - 2, IT WAS MENTIONED THAT PRODUCERS INVENTORIES OF LIVESTOCK, AGRICULTURAL AND FOREST PRODUCTS, AND MINERAL OILS, ORES AND GASES TO THE EXTENT THAT THEY ARE ME ASURED AT NET REALISABLE VALUE IN ACCORDANCE WITH WELL - ESTABLISHED PRACTICES IN THOSE INDUSTRIES BUT THE ASSESSEE COMPANY HOLDS THE MINES AND MADE THE VALUATION INDEPENDENTLY FOR EACH MINE AND ALSO ESTABLISHED THE COST CENTRES FOR REVENUE PURPOSES. THE COST CENTRES PROVIDE THE PROFIT OR LOSS INCURRED BY EACH MINE IN ITS OPERATION. THE AS - 2 MENTIONS THAT IN THE CASE OF ORE, THE VALUATION IS MEASURED AT NET REALISABLE VALUE IN ACCORDANCE WITH THE WELL - ESTABLISH ED PRACTICES IN THOSE CENTRES. THERE IS NO DISPUTE WITH RESPECT TO THE COST OF VALUE OF CLOSING STOCK BUT ON THE OVERALL ASPECT WHERE THE VALUATION HAS TO BE MADE BY THE COMPANY BY ITSELF OR ACCRETION OF VALUATION OF STOCK AT MINES INDEPENDENTLY. LD A.R. DEMONSTRATED THE FACTS BEFORE US BY REFERRING TO THE ANNUAL REPORT AND NOTES ON ACCOUNT. ON PERUSAL OF SCHEDULE - P TO THE NOTES ON ACCOUNT FOR THE SAID FINANCIAL YEAR, THE AUDITORS HAVE EXPRESSED THE METHOD OF VALUATION OF CLOSING STOCK AT PARA 6.2.2. AS STOCK OF COAL IS VALUED SEPARATELY FOR EACH MINE AT COST OR NET REALISABLE VALUE, WHICHEVER IS LOWER AS PER UNIFORM ACCOUNTING POLICY OF CIL AND FURTHER, IT WAS MENTIONED THAT IF THE VALUATION OF COAL IS DONE FOR THE COMPANY, RATHER THAN VALUING IT UNIT - WISE, VALUATION MADE BY THE ASSESSEE IS RS.43768.35 LAKHS AGAINST RS.34659.68 LAKHS . THE AUDITORS AL SO AT PARA 11.15 OF THE 10 MAHANADI COALFIELD LTYD., NOTES ON ACCOUNT SCHEDULE - P DISCLOSED THAT IF VALUATION OF COAL IS DONE FOR THE GROUP AS A WH OLE, RATHER THAN VALUING IT MINES - W ISE, THE VALUE OF COAL STOCK WOULD HAVE BEEN RS .43768.35 LAKHS. ON PERUSAL OF SHARE CAPITAL, IT REVEALS THAT THE TOTAL SHARE CAPITAL OF THE ASSESSEE I S HELD BY THE HOLDING COMPANY - C OAL INDIA LIMITED. 1 3 . LD A.R. ALSO EXPLAINED THAT THE ACCOUNTING POLICY OF COAL INDIA LIMITED IS ADOPTED BY ALL THE SUBSIDIARIES AND THE ASSESSEE IS 100% SUBSIDIARY. AS SUCH THE ACCOUNTING POLICY IS ADOPTED AND ACCEPTED BY THE STATUTORY AUDITOR S AND THE COMPTROLLER AND AUDITOR G ENERAL OF INDIA AND INCOME TAX DEPARTMENT. WE FOUND THAT AS PER THE AS - 2 , THE METHOD OF VALUATION AND INVENTORIES ARE MANDATORY AND THE VALUATION HAS TO BE IN ACCORDANCE WITH THE GUIDELINES OF ICAI. ON PERUSAL OF THE ANNUAL REPORT AT PAGE 98, WE FOUND T HAT THE ASSESSEE HAS VALUED THE STOCK SEPARATELY FOR EACH MINE AT COST OR NET REALISABLE VALUE AND THE AGGREGATE VALUE AS ON 31.3.2010 IN RESPECT OF COST HAS BEEN WORKED OUT TO RS. 34659.68 LAKH. THE AUDITORS ALSO EXPLAINED THAT THE VALUATION OF COAL IS MA DE BY THE ASSESSEE COMPANY MINE - WISE AND VALUAT ION OF CLOSING STOCK OF COAL IF TAKEN GROUP AS A WHOLE WOULD HAVE BEEN RS.43768..35 LAKHS. 1 4 . THE MAIN DISPUTE ARISES WITH RESPECT TO THE DIFFERENCE BETWEEN RS.43768,35 LAKHS RS.346659.68 LAKHS = RS.9108.07 LAKHS, WHICH THE ASSESSING OFFICER CONSIDERED BEING UNDERVALUATION OF CLOSING STOCK. LD A.R.S CONTENTION IS THAT ALL THE SUBSIDIARIES OF COAL INDIA LIMITED HAVE B EEN FOLLOWING THIS UNIFORM ACCOUNTING POLICY AND THERE IS NO DISPUTE. 11 MAHANADI COALFIELD LTYD., ONLY IN ASSESSEES CASE, LD A.R. EXPRESSED THAT THE REVENUE HAVING ACCEPTED IN THE EARLIER YEARS MADE ADDITION IN RESPECT OF DIFFERENCE. WE, ON PERUSAL OF THE ASSESSMENT ORDER FOUND TH AT THE ASSESSING OFFICER HAS RELIED ON THE PRINTED BALANCE SHEET AND HAVING SUPPORTED W ITH THE PROVISIONS OF SECTION 1 4 5A OF THE ACT AND HAS NOT ACCEPTED THE VALUE OF CLOSING STOCK WHEREAS THE PROVISIONS OF SECTION 145A PRESCRIBES THE METHOD OF ACCOUNTIN G POLICY REGULARLY EMPLOYED BY THE ASSESSEE. IN THE PRESENT CASE, THE ASSESSEE IS A 100% SUBSIDIARY OF COAL INDIA LIMITED AND AS PER THE DIRECTION S OF THE H OLDING COMPANY , UNIFORM ACCOUNTING POLICY HAS BEEN ADOPTED REGULARLY AND THIS REGULAR METHOD OF ACC OUNTING COMPLY WITH THE PROVISION S OF VALUATION OF STOCK AND ACCOUNTING PRINCIPLES. THESE FACTS ARE NOT DISPUTED. THE METHOD OF VALUATION OF CLOSING STOCK SHALL BE IN CONSONANCE WITH THE ACCOUNTING STANDARD OF ICA I AND THE PROVISIONS OF SECTION 145A OF THE ACT. IN THE PRESENT CASE, THE COAL INDIA LIMITED, WHICH IS A GOVERNMENT OF INDIA ENTERPRISE HOLDING 100% SHARES OF THE ASS ESSEE COMPANY AND SIMILAR SHAREHOLDING IN OTHER SUBSIDIARIES, WHICH THE LD A.R. EXPLAINED THAT THEY ARE ADOPTING THIS METHOD. TH E AUDIT REPORT OF THE ASSESSEE REFERRED AT PAGE 94 PRESCRIBES THE METHOD OF VALUATION AND INVENTORIES OF STOCK AND SPARE PARTS AD ALSO THE JUSTIFICATION OF LOSS OF STOCK + AND - 5%. 1 5 . WE FOUND THAT THE HOLDING COMPANY, COAL INDIA LIMITED IS ALSO FOLLOWING SAME METHOD OF VALUATION FOR HIS INVENTORIES AS DISCUSSED IN THEIR A NNUAL REPORT AND SIMILAR METHOD OF ACCRETION/DEC C RETION OF STOCK IS DEALT IN THE PROFIT AND LOSS ACCOUNT , WHICH I S ALSO NOT DISPUTED AND 12 MAHANADI COALFIELD LTYD., AVAILABLE IN THE PUBLIC DOMAIN. LD A.R. ALSO EMPHASISED THAT SIMILAR ADDITIONS WERE MADE BY THE ASSESSEE UPTO ASSESSMENT YEAR 2013 - 14 AND FOR SUBSEQUENT ASSESSMENT YEARS, THERE IS NO ADDITION IN THE ASSESSMENT AS THE BOOK VALUE MINE - WISE WAS MORE THAN VALUATION AS A GROUP. IT IS FURTHER OBSERVED THAT THE QUALITY/GRADE OF COAL, COST OF PRODUCTION AND SALE PRICE HAS WIDE DIFFERENCE BETWEEN MINES TO MINES, HENCE, IT IS NOT PRACTICAL N OR JUSTIFIED TO VALUE STOCK FOR ALL MINES AS A GROUP. FURTHER, VALUATION OF CLOSING STOCK DOES NOT GIVE ANY PROFIT FOR BOOK PURPOSE NOR FOR INCOME TAX PURPOSES AS THE SAME VALUATION IS CONSIDERED AS VALUATION OF OPENING STOCK IN SUBSEQUENT YEAR. MOREOVER, AS THERE IS A WIDE DIFFERENCE BETWEEN THE QUALITY/GRADE OF COAL, COST OF PRODUCTION MINES - WISE, SALE PRICE MINES - WISE; HENCE TAKING THE GLOBAL VIEW FOR VALUATION OF CLOSING STOCK CAN NEVER BE JUSTIFIED RATHER THE VALUATION OF COAL MINES - WISE GIVES THE REA L COST OF PRODUCTION FOR THE PURPOSE OF VALUATION OF STOCK IN PLACE OF VALUATION FOR MCL AS A WHOLE . WE CONSIDERING THE OVERALL CIRCUMSTANCES AND UNIFORM ACCOUNTING POLICY ISSUED BY COAL INDIA LIMITED AND THE SUBMISSION OF LD A.R. ALONGWITH DOCUMENTARY EVI DENCE AND THE UNDISPUTED FACT THAT THE ASSESSEE COMPANY IS A 100% SUBSIDIARY OF COAL INDIA LIMITED AND SIMILAR ACCOUNTING POLICY IS ADOPTED BY THE OTHER SUBSIDIARIES, ARE OF TH E OPINION THAT THE METHOD OF VALUATION HAS TO BE TEST CHECKED BY THE ASSESSI NG OFFICER SO THAT THIS UNIFORM ACCOUNTING POLICY APPLICABLE TO THE ASSESSEE AS A SUBSIDIARY COMPANY. THE POLICY OF VALUATION OF M INES INDEPENDENTLY AND HAS BEEN ACCEPTED BY THE PARENT COMPANY I.E. COAL INDIA LIMITED AND INDEPENDENTLY REFLECTS IN FINANCIAL 13 MAHANADI COALFIELD LTYD., STATEMENTS. THE CHANGE IN VALUATION POLICY IS FOR REALISATION OF VALUES AND THE ASSESSEE BEING GOVERNMENT ENTERPRISES , THE ACCOUNTS ARE AUDITED BY THE STATUTORY AUDITORS AND COMPTROLLER AND AUDITOR GENERAL OF INDIA . WE ARE OF THE SUBSTANT IVE VIEW THAT THE LOWER AUTHORITIES HAVE TO VERIFY THE UNIFORM ACCOUNTING POLICY ADOPTED BY OTHER SUBSIDIARIES, WHICH ARE IN THE SIMILAR LINE OF BUSINESS AS PER COAL INDIA LTD LETTER DATED 31.3.2010 (SUPRA). ACCORDINGLY, WE REMIT THIS DISPUTED ISSUE TO THE FILE OF THE ASSESSING OFFICER WHO SHALL VERIFY AND CALL FOR THE INFORMATION IN RESPECT OF OTHER SUBSIDIARIES WHO ARE FOLLOWING THIS METHOD OF ACCOUNTING AND IF SO, SAME BE CONSIDERED ON MERITS AND THE ASSESSEE SHALL CO - OPERATE IN SUBMITTING THE INFORM ATION AND THIS GROUND OF APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. CONSEQUENTLY, THIS GROUND TAKEN BY THE ASSESSEE FOR OTHER ASSESSMENT YEARS I.E. 2011 - 12 TO 2013 - 14 ARE ALLOWED FOR STATISTICAL PURPOSES. 1 6 . THE SECOND COMMON ISSUE RELATES TO CONFIRMATION OF ADDITION OF RS.31475.28 LAKHS FOR THE ASSESSMENT YEAR 2010 - 2011, RS.25778.15 LAKHS FOR THE ASSESSMENT YEAR 2011 - 12, RS.32242.12 LAKHS FOR THE ASSESSMENT YEAR 2012 - 13, RS.24010.50 LAKHS FOR THE ASSESSMENT YEAR 2013 - 14 AND RS.15912.00 LAKHS F OR THE ASSESSMENT YEAR 2014 - 15 DUE TO CHANGE IN VALUATION OF CLOSING STOCK AND OVERBURDEN REMOVAL ADJUSTMENT DEBIT/CREDIT. 1 7 . THE ASSESSING OFFICER FO UND FROM THE AUDIT REPORT THAT DUE TO THE CHANGE IN METHOD OF VALUATION OF CLOSING STOCK AS PER UNIFORM POLICY OF 14 MAHANADI COALFIELD LTYD., COAL INDIA LIMITED, THE HOLDING COMPANY , THE PROFIT FOR THE YEAR HAS BE EN DECREASED BY RS.314.75 LAKHS . IN THE ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS FILED EXPLANATION S IN RESPECT OF EFFECT OF CHANGE IN VALUATION OF CLOSING STOCK OF COAL. THIS EXPLANATION HAS BEEN REFERRED AT PAGE 58 OF THE ASSESSMENT ORDER AND THE ASSESSEE HAS RELIED ON THE JUDICIAL DECISION S THAT THE METHOD OF VALUATION NECESSITATED IN THE CURRENT FINANCIAL YEAR AND THE METHOD OF VALUATION OF CLOSING STOCK , WHEREAS THE A SSESSING OFFICER HAS DEALT ON THE PROVISIONS OF SECTION 145(2) OF THE ACT AND OBSERVED THAT THE CHANGE IN THE METHOD OF VALUATION IS NOT BY THE STATUTE AND IN THE EARLIER YEARS ALSO, THE AS SESSEE HAS ADOPTED THE SAME BY CHANGING THE VALUATION OF CLOSING ST OCK. 1 8 . THE CIT(A) HAVING DEALT ON THE SUBMISSIONS OF THE ASSESSEE AND JUDICIAL D ECISIONS CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. 1 9 . BEFORE US, LD A.R. EMPHASISED THAT THE CHANGE IN METHOD OF VALUATION IS BASED ON THE FINAL RECOMMENDATION OF UNIFORM ACCOUNTING COMMITTEE, 2009 - 10 OF COAL INDIA LIMITED VIDE LETTER NO.CIL /CGM(F)/31025/969 DATED 31.3.2010 ISSUED TO ALL SUBSIDIARIES. THEREFORE, THE METH OD OF CALCULATION OF COST PER TON FOLLOWED IN THE EARLIER YEARS HAS BEEN CHANGED AND A N IMPROVED METHOD OF VALUATION HAS BEEN FOLLOWED DURING THE YEAR UNDER CONSIDERATION. LD A.R. REFERRED TO THE OBJECTIVES OF STOCK VALUATION OF INVENTORIES AND METHOD OF VALUATION OF INVENTORIES AND JUDICIAL DECISIONS TO SUBSTANTIATE THAT THE ACTION OF THE 15 MAHANADI COALFIELD LTYD., ASSESSING OFFICER IN MAKING THE ADDITION IN RESPECT OF DECREASE IN PROFIT CANNOT BE ACCEPTED. 20 . LD D.R. RELIED ON THE ORDERS OF LOWER AUTHORITIES. 2 1 . WE HAVE HEARD TH E RIVAL SUBMISSIONS, PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. THIS DISPUTE IS INTERCONNECTED WITH THE METHOD OF VALUATION OF CLOSING STOC K. VALUATION OF CLOSING STOCK HAS BEEN CHANGED DUE TO UNIFORM ACCOUNTING POLICY OF COAL INDIA LIMITED. W E FOUND THAT A REFERENCE MADE BY THE ASSESSING OFFICER ON THE AUDITED ACCOUNT S THAT R EDUCTION IN VALUE OF STOCK IS DUE TO OVERALL ADJUSTMENT IS AS PER THE UNIFORM ACCOUNTING POLICY ADOPTED BY THE COAL INDIA LIMITED. LD A.R. DEMONST RATED BEFORE US WITH A COPY OF LETTER OF UNIFORM ACCOUNTING COMMITTEE RECOMMENDATION AND SUPPORTED WITH PAPER BOOK . ACCORDINGLY, WE CONSIDER IT APPRO PRIATE TO RESTRICT OUR VIEW ON THE METHOD OF VALUATION OF CLOSING STOCK MINE - WISE AND THE VALUATION OF CLOSING STOCK OF COAL ARE INTERCONNECTED AND SINCE WE HAVE DISCUSSED ON THE APPLICABILITY OF THE PROVISIONS, FACTS AND REASONS FOR VALUATION OF STOCK CENTRE ON T HE FIRST DISPUTED ISSU E. THEREFORE, WE REMIT TH IS DISPUTED ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR APPROPRIATE ADJUDICATION AFRESH AND THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. HENCE, THIS ISSUE FOR THE ASSESSMENT YEARS 2010 - 11 TO 2014 - 1 5 IS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION. 16 MAHANADI COALFIELD LTYD., 2 2 . GROUND NO.3(3) FOR THE ASSESSMENT YEAR 2010 - 11 AND GROUND NO.3(5) FOR THE ASSESSMENT YEAR 2011 - 12 RELATES TO INTEREST PAID TO FOREIGN INSTITUTION THROUGH CIL. 2 3 . THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS DISCLOSED RS.382.21 LAKHS IN ITS BALANCE SHEET AS UNSECURED LOAN FROM THE HOLDING COMPANY , COAL INDIA LIMITED AS UNDER: I) LOANS FROM IBRD & JBIC : RS. 258,71 LAKH S II) ON DEFERRED PAYMENT : RS. 13.64 LAKHS III) OTHER INTEREST : RS. 109.86 LAKHS TOTAL : RS.282.21 L A KHS. 2 4 . THE ASSESSING OFFICER NOTED THAT A COPY OF LETTER DATED 26.3.1998 FROM THE MINISTRY OF FINANCE, DEPARTMENT OF ECONOMIC AFFAIRS, GOVT OF INDIA WAS FILED BY THE ASSESSEE. ON PERUSAL OF THE SAME, THE ASSESSING OFFICER OBSERVED THAT THE WORLD BANK HAS SANCTIONED LOAN TO CIL AND NOT TO MCL. AS SUCH THE INTEREST LIABILITY ON DUES OF THE HOLDING COMPANY CANNOT PARTAKE THE CHARACTER OF ANY INTEREST PAID OR PAYABLE BY THE ASSESSEE COMPANY TO WORLD BANK AND THE ASSESSEE HAS NOT PROVIDED THE DETAILS OF DEDUCTION OF TDS. THEREFORE, THE ASSE SSING OFFICER HAS MADE ADDITION WHEREAS THE CIT(A) RELIED ON THE AMENDMENT TO SECTION 40(A)(IA) BY THE F INANCE AT 2012 W.E.F. 2013 - 14 AND IS OF THE OPINION THAT THE PRESENT ASSESSMENT YEAR DOES NOT GET THE BENEFIT OF THE PROVISIONS AND CONFIRMED THE ADDITION. 17 MAHANADI COALFIELD LTYD., 2 5 . WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. BEFORE US, LD A.R. EXPL AINED THE REASONS OF INTEREST LIABILITY AND ALSO THE TRANSACTION FROM WORLD BANK TO THE CIL AND THE ASSESSEE REFLECTING THE LOAN PAYABLE TO THE HOLDING COMPANY AND EMPHASISED THAT THE TDS WAS NOT REQUIRED TO DEDUCT THE INTEREST ON LOAN IN TERMS OF LETTER D ATED 26.3.1998 AND REFERRED AT PAPER BOOK AT PAGES 13 TO 14. HENCE, NO TDS IS REQUIRED TO BE MADE FOR PAYMENTS TO WORLD BANK AND ALSO THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT ARE NOT APPLICABLE. LD A.R. EXPLAINED THAT T HE TOTAL INTEREST LIABILITY OF RS.382.21 LAKHS CONSISTS OF INTEREST PAYABLE TO CIL OF LOANS FROM IBRD AND JBIC OF RS.258.71 LAKHS AND DEFERRED PAYMENT TO M/S. LIEBHERR FRANCE S.S. FRANCE OF RS.13.64 LAKHS AND OTHER INTEREST ON CESS COLLECTED FROM CUSTOMERS OF RS.109.86 LAKHS. THE ASSESSING OFFICER HAS DISALLOWED THIS CLAIM WHEREAS THE INTEREST PAYMENT TO WORLD BANK, NO TDS HAS TO BE DEDUCTED AND SIMILARLY INTEREST INCOME ON DEF ER R ED PAYMENT TO M/S. LIEBHERR FRANCE S.A FRANCE, AS DISCLOSED IN THE BALANCE SH EET, INTEREST IS NOT TAXABLE AS PER DOUBLE TAXATION AVOIDANCE AGREEMENT (DTAA) BETWEEN FRANCE AND INDIA. IN RESPECT OF OTHER INTEREST ON CESS COLLECTED FROM CUSTOMERS OF RS.109.86 LAKHS, AS PER DIRECTIVE OF HONBLE SUPREME COURT JUDGMENT DATED 31.7.2001, THE MONEY IS REFUNDABLE TO THE CUSTOMER ALONGWITH INTEREST AND THE ASSESSEE COULD NOT IDENTIFY THE CUSTOMERS/PARTIES TO WHOM THE REFUND IS TO BE MADE AN D, THEREFORE, NO TDS WAS MADE AND THIS FACT WAS ALSO REFLECTED IN THE AUDITED BALANCE SHEET AS PER THE SUBMISSION OF THE LD A.R. 18 MAHANADI COALFIELD LTYD., 2 6 . WE FIND FORCE IN THE SUBMISSION OF LD A.R. THAT IN RESPECT OF CLAIM OF WORLD BANK AND M/S. LIEBHERR FRANCE S.A. FRANCE THAT NO TDS ON INTEREST LIABILITY AROSE DUE TO AGREEMENT WITH WORLD BANK AND DOUBLE TAXATION AVOIDANCE AGREEMENT WITH FRANCE. IN RESPECT OF OTHER INTEREST ON CESS COLLECTED FROM CUSTOMERS OF RS.109.86 LAKHS, AS PER THE SUPREME COURT JUDGMENT DATED 31.7.2001 THE MONEY IS REFUNDABLE TO THE CUSTOMERS ALONGWITH INTEREST. BUT THE ASSESSEE HAS EXPRESSED THAT TH E COMPANY HAS NOT IDENTIFIED THE CUSTOMERS TO WHOM THE REFUND IS TO BE MADE AND THIS F ACT WAS DIS C LOSED IN SCHEDULE - P OF THE AUDIT REPORT AT PAGE 99. WE PERUSE D THE AUDIT REPORT AT PAGE 10.0 (A ) AT PAGE 99 - 100 WHERE THESE FACTS WERE EXPLAINED THAT THE ASSESSEE COMPANY HAS NOT IDENTIFIED THE CUSTOMERS TO WHOM THE REFUND IS TO BE MADE AND, THEREFORE, THE FINALISATION OF LIABILITY TO REFUND THE SAME IS YET TO BE DONE. WE ARE OF THE OPINION THAT THIS VITAL FACT NEEDS TO BE VERIFIED AND E XAMINED AS EXPLAINED BY LD A.R. THAT FROM ASSESSMENT YEAR 2012 - 13 THIS INTEREST CLAIM WAS ALLOWED. ACCORDINGLY, IN THE INTEREST OF JUSTICE, WE REMIT THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER WHO SHALL VERIFY THE DIFFERENT PAYMENTS OF INTEREST MADE TO WORLD BANK AS COVERED BY THE LETTER OF GOVT. OF IND IA VIDE LETTER DATED 26.3.1998 AND DIRECT THE ASSESSING OFFICER TO VERIFY THE PAYMENT OF INTEREST IN THE HANDS OF THE RECIPIENTS ARE OFFERED TO TAX AND DECIDE ON MERIT S AND ALLOW THIS GROUND OF APPEAL F OR STATISTICAL PURPOSES. GROUND NO.3(3) FOR ASSESSMENT YEAR 2010 - 11 AND GROUND NO.3(5) FOR ASSESSMENT YEAR 2011 - 12 IS ALLOWED FOR STATISTICAL PURPOSES. 19 MAHANADI COALFIELD LTYD., 27. THE ISSUE COMMON TO GROUND NO.3.4 FOR THE ASSESSMENT YEAR 2010 - 11 AND GROUND NO.3(2) FOR ASSESSMENT YEAR 2011 - 12 RELATES TO ADDITION MADE TOWARDS CHARGES PAID FOR LEASE HOLD LAND . GROUND NO.3(2) FOR THE ASSESSMENT YEAR 2012 - 13, GROUND NO.3(1) FOR ASSESSMENT YEAR 2013 - 14 AND GROUND NO.3(1) FOR ASSESSMENT YEAR 2014 - 15 RELATES TO DEPRECIATION ON LEASE HOLD LAND. THESE GROUNDS ARE INTER - CONNECTED . 28. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE COMPANY HAS CLAIMED RS.2514.44 LAKHS U/S.37(1) OF THE ACT TOWARDS CHARGE AGAINST LEASEHOLD LAND FOR LEASE PERIOD EXHAUSTED. FURTHER, THE ASSESSEE ALSO CLAIMED ALTERNATE CLAM OF DEPRECIATION U/S.32(1)(II) I.E. DEPRECIATION ON INTANGIBLE ASSETS . THE ASSESSING OFFICER DID NOT ACCEPT THE ALTERNATE CLAIM OF THE ASSESSEE AND MADE THE ADDITION. 29. ON APPEAL, THE CIT(A) FOLLOWING THE DECISION DATED 12.9.2011 OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.226,227/CTK/2009, 456,457 & 458/CTK/2010 AND NO.50,51,52 & 53/CTK/2011 AND ALSO REFERRING VARIOUS JUDICIAL DECISIONS ON THIS ISSUE, HAS CONFIRMED THE ADDITION. 30 . BOTHE PARTIES CONCEDED THAT THE ABOVE ISSUES ARE COVERED BY THE DECISION OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2008 - 09 IN ITA NO.73/CTK/2012 ORDER DATED 3.1.2018. THE FINDINGS PORTIONS ARE AS UNDER: 45. LD D.R. OBJECTED TO THE ADMISSION OF ADDITIONAL GROUNDS ON THE GROUND THAT THE GROUNDS HAVE TO BE DISMISSED AS THE LEASE HOLD RIGHTS ARE NOT ELIGIBLE FOR DEPRECIATION U/S.32(1)(II) OF THE ACT CONSIDERING IT AS INTANGIBLE ASSET. HE REFERRED TO THE DECISION O F HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. TECHNO SHARES 20 MAHANADI COALFIELD LTYD., STOCKS LTD., 225 CTR 337 (BOM), WHEREIN, IT HAS BEEN HELD THAT THE DEPRECIATION UNDER SECTION 32 IS RESTRICTED TO THE TANGIBLE/INTANGIBLE ASSETS WHICH ARE SPECIFICALLY ENUMERATED THEREIN AND DEPRECIATION IS NOT ALLOWABLE ON ALL TANGIBLE/INTANGIBLE ASSETS. HE ALSO REFERRED TO THE DECISION OF ITAT MUMBAI BENCHES IN THE CASE OF DABUR INDIA LTD. VS ACIT, 159 TTJ 563 (MUMBAI), WHEREIN ALSO, IT WAS HELD THAT THE TENANCY RIGHTS CANNOT BE CONSTRU ED AS INTANGIBLE ASSETS FALLING WITHIN MEANING EXPLANATION TO SECTION 32(1) AND, THEREFORE, THERE IS NO QUESTION OF ALLOWING DEPRECIATION ON SAID RIGHTS. 46. WE FIND THAT THE ASSESSEE HAS RAISED THESE ADDITIONAL GROUNDS AS PER THE DIRECTION OF HONBLE HI GH COURT OF ORISSA, CUTTACK IN W.P (C) NO.24 OF 2013 AND MISC. CASE NO.5716 OF 2013 ORDER DATED 20.3.2013. IN VIEW OF ABOVE, WE ADMIT THESE ADDITIONAL GROUNDS FOR OUR CONSIDERATION. 47. ON MERITS ALSO, WE FIND FORCE IN THE SUBMISSION OF LD D.R. THAT THE DEPRECIATION IS NOT ALLOWABLE U/S.32(1)(III) OF THE ACT IN RESPECT OF INTANGIBLE ASSETS, WHICH IS SUPPORTED BY JUDICIAL PRONOUNCEMENTS CITED ABOVE. IN VIEW OF ABOVE, WE DISMISS THESE GROUNDS FILED BY THE ASSESSEE. 31 . IN VIEW OF ABOVE, WE HOLD THAT THE LEASE HOLD RIGHTS ARE NOT ELIGIBLE FOR DEPRECIATION U/S.32(1)(II) OF THE ACT CONSIDERING IT AS INTANGIBLE RIGHTS AND, ACCORDINGLY, DISMISS THE GR OUND OF APPEAL OF THE ASSESSEE. 32. GROUND NO.3(5) RELATES TO CONFIRMATION OF DISALLOWANCE OF PROSPECTING & BORING EXPENSES OF RS. 1138.73 SEPARATELY CLAIMED FIN COMPUTATION OF INCOME, AND GROUND NO.3.8 RELATES TO CONFIRMATION OF DISALLOWANCE OF RS.278.39 LAKHS CHARGED TO P&L APPEARING IN SCHEDULE - 12. 33. AT THE TIME OF HEARING, BOTH THE PARTIES AGREED THAT THE ISSUE IS COVERED AGAINST THE ASSESSEE BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2004 - 05 TO 2007 - 08, RESPECTIVELY. 21 MAHANADI COALFIELD LTYD., 34 . AFTER HEARING BOTH THE PARTIES, WE FIND THAT THIS ISSUE HAS BEEN DEALT WITH BY THIS BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2004 - 05 TO 2007 - 08 IN ITA NO.22 7 /CTK/2009 AND OTHERS ORDER DATED 12.9.2011 AS UNDER: WE FIND THAT TH E LEARNED CIT(A) HAS CONSIDERED THE ISSUE AND HELD THAT THE EXPENDITURE BOOKED UNDER THE HEAD PROSPECTING AND BORING AND APPEARING IN THE FIXED ASSET SCHEDULE AND WORK - IN - PROGRESS SHOULD ALSO BE CONSIDERED ON THE SAME BASIS AS DIRECTED WHILE ADJUDICATING D EVELOPMENT EXPENSES. WE HAVE ALREADY ADJUDICATED THE ISSUE ON DEVELOPMENT EXPENSES AND UPHELD THE ORDER OF THE CIT(A) FOR THE REASONS AS DISCUSSED IN PARAGRAPHS 21 AND 22 OF THIS ORDER. THEREFORE, WE UPHOLD THE IMPUGNED ORDER OF THE LD CIT(A) ON THE IS SUE OF DISALLOWANCE OF PROSPECTING & BORING EXPENSES (P&B) AND DISMISS THE GROUND RAISED BY THE ASSESSEE IN THIS REGARD. 35 . SINCE THERE IS NO CHANGE OF FACTS IN THE YEAR UNDER CONSIDERATION, FOLLOWING THE PRECEDENT, WE CONFIRM THE ORDER OF THE CIT(A) AND DISMISS GROUND NO . 3.5 AND GROUND NO.3.8 OF APPEAL OF THE ASSESSEE. 36. GROUND NO.3.6 RELATES TO PAYMENT OF VRS AND GROUND NO.3.7 RELATES TO CLAIM OF EXPENDITURE ON ASSETS NOT BELONGING TO COMPANY WERE NOT PRESSED BY LD A.R. OF THE ASSESSEE AND, THEREFORE, SAME ARE DISMISSED AS NOT PRESSED. 37. GROUND NO.3.9 OF APPEAL RELATES TO WRITE OFF/WRITTEN BACK OF RS.17.38 LAKHS. 38. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS CLAIMED RS.17.38 LAKHS TOWARDS WRITE OFF/WRITE BACK OF DIFFERENT ITEMS IN SCHEDULE - 16(B) OF THE P&L ACCOUNT . SINCE THE ASSESSEE 22 MAHANADI COALFIELD LTYD., FAILED TO SUBSTANTIATE THE BASIS OF WRITE OFF, THE ASSESSING OFFICER ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 39. BEFORE THE CIT(A), IT WAS SUBMITTED BY THE ASSESSE E THAT THE EXPENDITURE IN QUESTION IS A LEGITIMATE EXPENDITURE AS THE FIRST ITEM RELATES TO SURVEY OF FOUR MACHINES WHICH ARE NO MORE USABLE AND THE SECOND ITEM PERTAINS TO COST OF STOLEN ASSETS. ALL THESE EXPEND ITURES WERE DULY APPROVED BY THE BOARD OF DIRECTORS FOR WRITE OFF. 40. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE CIT(A) DIRECTED THE ASSESSING OFFICER TO CALCULATE THE WRITE OFF/WRITE BACK CONSIDERING THE FACTS THAT WHEN THE DISCARDED ASSET IS SOLD AND WHEN THE ASSET IS DESTROYED AS PER THE PROVISIONS OF THE ACT. 41. HAVING HEARD BOTH THE SIDES, WE DO NOT FIND ANY ERROR IN THE ORDER OF THE CIT(A) AS HE HAS SIMPLY DIRECTED THE ASSESSING OFFICER TO CALCULATE THE WRITE OFF/WRITE BACK ON THE BASIS OF GUIDELINES GIVEN IN THE IMPUGNED ORDER. HENCE, THIS GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 42. GROUND NO.3.10 RELATES TO DEVELOPMENT EXPENDITURE OF 2238.70 LAKHS . 43. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS FAILED TO PRODUCE THE DETAILS IN CONFORMITY WITH THE DIRECTION OF THE ITAT ON SIMILAR ISSUES FOR EARLIER YEARS SUCH AS BIFURCATION OF CAPITAL EXPENDITURE AND REVENUE EXPENDITURE/AMOUNT SPENT ON DEVELOPIN G MINES AND COMMERCIALLY OPERATING MINES INCLUDED UNDER THE HEAD DEVELOPMENT 23 MAHANADI COALFIELD LTYD., EXPENDITURE. THEREFORE, THE ASSESSING OFFICER DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AS 100% REVENUE EXPENDITURE AND HENCE, REJECTED THE CLAIM OF THE ASSESSEE. 44. ON AP PEAL, REFERRING TO THE DECISIONS OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 1999 - 2000 TO 2002 - 03 AND ALSO FOR THE ASSESSMENT YEAR 2004 - 05 TO 2007 - 08 , THE CIT(A) HAS DIRECTED THE ASSESSING OFFICER TO FOLLOW THE DIRECTION OF THE TRIBUNAL REGARDING SEGREGATION OF EXPENSES UNDER THE HEAD DEVELOPMENT EXPENDITURE. 45. BEFORE US, LD A.R. SUBMITTED THAT AS PER ACCOUNTING POLICY CONSISTENTLY FOLLOWED BY THE ASSESSEE, THE DEVELOPMENT EXPENDITURE IS CONSIDERED UNDER THE HEAD FIXED ASSETS/CAPITA L WORK IN PROGRESS. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS CLAIMED ENTIRE AMOUNT INCURRED TOWARDS DEVELOPMENT EXPENDITURE AS REVENUE EXPENDITURE . IT WAS SUBMITTED BY LD A.R. THAT SIMILAR CLAIM OF THE ASSESSEE HAS BEEN ALLOWED BY THE REVENUE FOR THE ASSESSMENT YEARS 2012 - 13 ONWARDS. 47. IN THE PRESENT YEAR UNDER CONSIDERATION, THE CIT(A) HAS DIRECTED THE ASSESSING OFFICER TO FOLLOW THE DIRECTION OF THE TRIBUNAL REFERRED T O SUPRA REGARDING SEGREGATION OF EXPENSES UNDER THE HEAD DEVELOPMENT EXPENDITURE . HENCE, WE SEE NO ERROR IN THE ORDER OF THE CIT(A), WHICH IS HEREBY CONFIRMED AND GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 48. THE COMMON GROUND NO.4 OF APPEAL FOR TH E ASSESSMENT YEAR 201 0 - 11 AND 2011 - 12 , THE GRIEVANCE OF THE ASSESSEE IS THAT THE CIT(A) ERRED IN ALLOWING SHORT C REDIT OF TDS BY RS.926.53 LAKHS AND RS.49.01 LAKHS. 24 MAHANADI COALFIELD LTYD., 49. THE ASSESSING OFFICER HAS NOT ALLOWED THE FULL CREDIT OF TDS AS CLAIMED BY THE ASSESSEE U/S.143(3) OF THE ACT. THE ASSESSING OFFICER HAS ALLOWED CREDIT OF RS.8311.51 LAKHS AS AGAINST TOTAL CLAIM OF RS.9238.04 LAKHS. 50. THE CIT(A) HAS DIRECTED THE ASSESSING OFFICER TO ALLOW CREDIT OF TOTAL TDS AS CLAIMED ON THE BASIS OF TDS CERTIFICATES AFT ER VERIFYING THE SAME WITH NSDL FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSEES CASE FOR THE ASSESSMENT YEAR 2008 - 09 IN ITA NO.136/CTK/2012. HENCE, THE ASSESSEE SHOULD NOT HAVE ANY GRIEVANCE AS TO THE ALLOWANCE OF SHORT DEDUCTION OF TDS SINCE THE CIT (A) HAS DIRECTED TO ALLOW CREDIT OF TDS ON VERIFICATION. HENCE, THIS GROUND OF APPE AL OF THE ASSESSEE IS DISMISSED FOR THE ASSESSMENT YEAR 2010 - 11 AND 2011 - 12. 51. GROUND NO.3(1) RELATES TO REDUCTION IN VALUE OF STORES DUE TO OBSOLESCENCE AND SHORTAGE OF STORES FOR THE ASSESSMENT YEAR 2011 - 12. 52. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS PROVIDED AN AMOUNT OF RS.21.72 LAKHS TOWARDS OBSOLESCENCE OF STORES, WHICH, AS PER THE ASSESSEE, WAS ARRIVED AT AFTER TECHNIC AL APPRAISAL OF STORES ARTICLES WHICH MAINLY PERTAINS TO SPARES STORE OF THOSE MACHINERIES AND HEMM WHICH HAS ALREADY BEEN SCRAPPED. THE ASSESSING OFFICER DISALLOWED ON THE GROUND THAT THE ASSESSEE COULD NOT FURNISH THE DETAILS AS WELL AS EVIDENCE THEREOF , WHICH WAS CONFIRMED IN APPEAL BY THE CIT(A) 25 MAHANADI COALFIELD LTYD., 53 . BOTH THE PARTIES AGREED THAT IDENTICAL ISSUE HAS BEEN DECIDED BY THE CUTTACK BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2003 - 04 TO 2007 - 08 IN ITA NOS.226 & 277/CTK/2009 AND ITA N OS.456, 457 & 458/CTK/2010. THE DECISION IS ALSO FOLLOWED IN THE ASSESSMENT YEAR 2008 - 09 IN ITA NO.73/CTK/2012 ORDER DATED 3.1.2018 THE RELEVANT PORTION IS REPRODUCED AS UNDER: WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE AUTHORITIES BELOW HAVE DISALLOWED THE CLAIM OF THE ASSESSEE MAINLY ON THE GROUND THAT NO DETAILS THEREOF COULD BE FURNISHED BY THE ASSESSEE. THE LD A.R OF THE ASSESSEE VEHEMENTLY CONTENDED THAT THE DETAILS THEREOF WEE PRODUCED BEFORE THE LD CIT(A) INCLUDING THE AREA - WISE DETAILS OF AMOUNT CHARGED AGAINST NON - MOVING STORES AND SPARES. HE ALSO SUBMITTED A COPY OF SUCH DETAILS WHICH IS FOUND PLACED AT PAGE 165 OF THE PAPER BOOK. IF THAT IS SO, IN OUR CONSIDERED VIEW, WITHOUT EXAMINING SUCH DETAILS FURNISHED BEFORE HIM THE CIT(A) IS NOT JUSTIFIED IN UPHOLDING THE DISALLOWANCE AS MADE BY THE AO. THEREFORE , FOR THE ENDS OF JUSTICE, WE SET ASIDE THE IMPUGNED ORDER OF THE LD CIT(A) AND RESTORE THIS ISSUE TO THE FILE OF THE AO FOR CONSIDERATION AFRESH IN THE LIGHT OF DETAILS FURNISHED BY THE ASSESSEE WHEN CLAIM AS MANDATORY PERCENTAGE TO ACTUAL IDENTIFICATION HAS TO BE CONSIDERED TO BE ESTABLISHED BY THE ASSESSEE AND PASS NECESSARY CONSEQUENTIAL ORDER IN ACCORDANCE WITH LAW GIVING DUE AND PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 54. FACTS BEING IDENTICAL FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, FOLLOWING THE DECISION OF THE TRIBUNAL AS ABOVE, WE SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THE FILE TO THE ASSESSING OFFICER FOR C ONSIDERATION AFRESH IN THE LIGHT OF DETAILS FURNISHED BY THE ASSESSEE AFTER AFFORDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. HENCE, THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 26 MAHANADI COALFIELD LTYD., 55. IN GROUND NO.3(1) FOR THE ASSESSMENT YEAR 2012 - 13, THE GRIEVANCE OF THE ASSESSEE IS THAT THE CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.21.47 CRORES MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DIFFERENCE BETWEEN INTEREST INCOME AS PER ACCOUNTS AND AS PER 26AS. 56. THE ASSESSING OFFICER FOUND THAT THE ASSESS EE HAD SHOWN RS.1196.28 CRORES AS RECEIPTS FROM INTEREST INCOME WHEREAS AS PER 26AS STATEMENT, THE RECEIPTS COME TO RS.1217.75 CRORES. THE ASSESSEE EXPLAINED THAT THE INFORMATION SUBMITTED BY BANKS RELATING TO INTEREST WAS NOT FULLY CORRECT AS THEY SOMETI MES FURNISH DATA AS PER MATURITY OF FDRS WHEREAS THE ASSESSEE WAS ACCOUNTING FOR THE INCOME ON ACCRUAL BASIS. THE ASSESSING OFFICER DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE AND FOR WANT OF EVIDENCE, ADDED THE DIFFERENCE AMOUNT OF RS.21.47 CRORES TO THE TOTAL INCOME OF THE ASSESSEE. 57. ON APPEAL, THE CIT(A), THE ASSESSEE SUBMITTED THAT IT HAD SHOWN INCOME OF RS.1197.52 CRORES WHEREAS THE ASSESSING OFFICER HAS MISTAKENLY TAKEN IT AS RS.1196.28 CRORES. HOWEVER, THE CIT(A) OBSERVED THAT THE INTEREST INCOME REFLECTED IN 26AS CANNOT BE IGNORED. ACCORDINGLY, HE DIRECTED THE ASSESSING OFFICER TO ADD THE DIFFERENCE OF RS.20.23 CRORES AS AGAINST RS.2147 CRORES. 58. BEFORE US, IT WAS EXPLAINED BY LD A.R. THAT THE ASSESSEE IS A PSU AND FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING AND ACCORDINGLY ALL THE INCOME AND EXPENDITURE ARE BEING ACCOUNTED FOR ON ACCRUAL BASIS. THE 27 MAHANADI COALFIELD LTYD., ASSESSEE IS A N ORGANIZED AND LARGE ENTITY. THE PSU MAINTAINS PROPER BOOKS OF ACCOUNT AND SUITABLE EVIDENCE FOR ALL INCOME ACCRUED AND EXPENSES INCURRED. SUITABLE EVIDENCE DEPENDS ON VARIOUS FACTORS LIKE NATURE OF INCOME/PAYMENT, NATURE OF CLAIMANT, NATURE OF PAYER/PAYEE, PLACE OF RECEIPT/PAYMENT, AMOUNT OF RECEIPTS/PAYMENT ETC. IN SUCH AN ORGANIZATION THERE IS SUITABLE INTERNAL CHECK AND CONTROL. BUSINESS IS CARRIED IN A PROFESSIONAL MANNER. MOREOVER, THE ACCOUNTS OF THE ASSESSEE ARE SUBJECTED TO AUDIT BY THE STATUTORY AUDITOR, CAG AND OTHER GOVT, AGENCIES AND NONE OF THEM HAS RAISED ANY POINT IN THIS R ESPECT. LD A.R. SUBMITTED THAT THE ASSESSEE HAS SHOWN A N INTEREST INCOME OF 1197.52 CRORES AND NOT RS. 1196.28 CRORES AS MENTIONED BY THE LD. AO. THE AMOUNT OF GROSS INTEREST REFLECTED IN FORM 26AS AS ON 13.01.2015 IS RS. 1181.54 CRORES U/S. 194A AND RS . 0.65 CRORE U/S. 193, TOTALING TO RS. 1182.19 CRORES WHICH IS MUCH LOWER THAN THE AMOUNT OF INTEREST INCOME SHOWN BY THE ASSESSEE. THIS CLEARLY ESTABLISH THAT FORM NO. 26AS IS NOT AT ALL A RELIABLE DOCUMENT FOR ARRIVING AT THE INCOME OF THE ASSESSEE. MOREOVER, THE ASSESSEE IS CORRECTLY ACCOUNTING ITS INCOME AND EXPENDITURE ON ACCRUAL BASIS IRRESPECTIVE OF AMOUNT REFLECTED IN 26AS. LD A.R. REFERRED TO COPY OF FORM 26AS FOR FY 2011 - 12 ALONG WITH ITS SUMMARY CONTAINED AT PAGE NO. 2 - 28 OF P/B. LD A.R. ALSO REFERRED TO A SET OF VOUCHER CONTAINED AT PAGE NO. 83 - 91 OF P/B , WHICH CONTAINS THE VOUCHER RELATING TO CREATION OF FDR, BOOKING OF INTEREST, BOOKING OF TDS AND MATURITY OF FDR ON THE BASIS OF STATEMENT/BANK ADVICE GIVEN BY BANK . THIS WILL CLEARLY EXPLAIN THE METHOD OF ACCOUNTING FOLLOWED BY THE 28 MAHANADI COALFIELD LTYD., ASSESSEE IN RESPECT OF FDRS AND INTEREST THEREON. IT IS PERTINENT T O MENTION HERE THAT IN THE IMMEDIATELY PRECEDING AND SUCCEEDING FINANCIAL YEARS ALSO I.E. FY 2010 - 11 AND 2012 - 13 THE AM OUNT OF INCOME SHOWN BY THE ASSESSEE IS ALWAYS HIGHER THAN THE AMOUNT APPEARING IN FORM 26AS. TO SUPPORT THIS, LD A.R. REFERRED TO COPY OF FORM 26AS AL ONG WITH ITS SUMMARY CONTAINED AT PAGE NO. 29 - 82 OF P/B FOR THE FY 2010 - 11 & 2012 - 13 RESPECTIVELY . HENCE , LD A.R. PRAYED FOR DELETION OF THE ADDITION. 59. LD D.R. SUPPORTED THE ORDERS OF LOWER AUTHORITIES. 60. AFTER HEARING THE SUBMISSIONS OF BOTH THE SIDES, WE FIND THAT T HE AMOUNT OF GROSS INTEREST REFLECTED IN FORM 26AS AS ON 13.01.2015 IS RS. 1181.54 CRORES U/S. 194A AND RS. 0.65 CRORE U/S. 193, TOTALING TO RS. 1182.19 CRORES WHICH IS MUCH LOWER THAN THE AMOUNT OF INTEREST INCOME SHOWN BY THE ASSESSEE. FROM THE ABOVE, IT IS CLEARLY ESTABLISH ED THAT THERE IS DIFFERENCE IN THE 26AS AND INCOME SHOWN BY THE ASSESSEE. MOREOVER, THE ASSESSEE IS CORRECTLY ACCOUNTING ITS INCOME AND EXPENDITURE ON ACCRUAL BASIS IRRESPECTIVE OF AMOUNT REFLECTED IN 26AS. IN VIEW OF ABOVE, WE REMIT THE MATTER TO THE FI LE OF THE ASSESSING OFFICER TO VERIFY THE AMOUNT SHOWN BY THE ASSESSEE AND REFLECTED IN 26AS STATEMENT. IF THE CONTENTION OF THE ASSESSEE IS FOUND TO BE CORRECT, THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE CLAIM OF THE ASSESSEE. THIS GROUND OF ASSESSEE FOR ASSESSMENT YEAR 2012 - 13 IS ALLOWED FOR STATISTICAL PURPOSES. 61. GROUND NO.3(6) OF APPEAL FOR THE ASSESSMENT YEAR 2011 - 12 RELATES TO ADDITION OF RS.552.46 LAKHS TOWARDS SITE EXPENDITURE. 29 MAHANADI COALFIELD LTYD., 63. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS CLAIMED RS.552.46 LAKHS TOWARDS SITE MAINTENANCE THROUGH JOURNAL ENTRY MADE ON 31.3.2011. SINCE THE ASSESSEE COULD NOT EXPLAIN THE BASIS OF MAKING SUCH PROVISION ON THE LAST DATE OF ACCOUNTING PERIOD AND FURNISH PARTY WISE ACTUAL PAYMENT, THE ASSESSING OFFICER DISALLOWED THE SAME. 64. ON APPEAL, THE CIT(A) UPHELD THE ACTION OF THE ASSESSING OFFICER ON THE GROUND THAT THE ASSESSEE HAS NOT BEEN ABLE TO CORRELATE THE DOCUMENTS AND THE BASIS OF JOURNAL ENTRY MADE. 65. BEFORE US, LD A.R. EXPLAINED THAT THE ASSESSEE HAS DETAILS AND SAME CAN BE PRODUCED AND PRAYED FOR AN OPP ORTUNITY TO EXPLAIN WITH EVIDENCE. WE, A FTER CONSIDERING THE RIVAL SUBMISSIONS, FIND THAT THE ASSESSEE HAS CLAIMED RS.552.46 LAKHS TOWARDS SITE MAINTENANCE EXPENSES THROUGH A JOURNAL ENTRY. THE BASIS OF THE ENTRY MADE BY THE ASSESSEE HAS NOT BEEN EXPLAIN ED BUT AS THE LD A.R. EXPLAINED AND PRAYED FOR AN OPPORTUNITY TO SUBSTANTIATE ITS CLAIM, WE CONSIDER IT APPROPRIATE TO REMIT THE ISSUE TO THE FILE OF THE ASSESSING OFFICER TO PASS THE ISSUE AFRESH. G ROUND NO.3(6) OF THE ASSESSEE FOR ASSESSMENT YEAR 2011 - 12 IS ALLOWED FOR STATISTICAL PURPOSES. 66. GROUND NO.3(7) OF APPEAL FOR THE ASSESSMENT YEAR 2011 - 12 RELATES TO ADDITION OF RS.305.32 LAKHS MADE DUE TO CHANGE IN ACCOUNTING METHOD FOR REPAIR JOB. 30 MAHANADI COALFIELD LTYD., 67. THE ASSESSING OFFICER FOUND THAT DUE TO CHANGE IN THE ACCOUNTING METHOD OF MAINTENANCE OF EXPENDITURE ON REPAIR JOB REGULARLY FOLLOWED AT THE CENTRAL WORKSHOP BOOK PROFIT OF THE ASSESSEE HAS BEEN REDUCED BY RS.305.32 LAKHS. SINCE THE ASSESSEE COULD NOT SUBSTANTIATE THE DEVIATION IN RESPECT OF REPAIR JOB, THE ASSESSING OFFICER ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 68. ON APPEAL, THE CIT(A) OBSERVED THAT THERE IS NO CLARITY REGARDING CHANGE IN ACCOUNTING METHOD AND NOT CLEAR WHETHER REPAIRS EXPENSES WERE CHARGED TO P&L ACCOUNT AND HENCE, UPHELD T HE ADDITION. 69. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSEE HAD CHANGED THE ACCOUNTING METHOD TOWARDS EXPENDITURE ON REPAIR JOB. THE LD A.R.S CON TENTION THAT THE EXPENSES INCURRED ON REPAIRS JOBS AT THE CENTRAL WORKSHOP UNDER FINISHED GOOD AND WORK - IN - PROGRESS AND DUE TO SUCH CHANGE, THE PROFIT FOR THE YEAR HAS BEEN REDUCED BY RS.305.32 LAKHS AND SUCH EXPENDITURE INCURRED IS REVENUE EXPENDITURE . WE FIND FORCE IN THE SUBMISSION OF LD A.R. THAT DUE TO CHANGE IN ACCOUNTING METHOD, THE PROFIT HAS BEEN REDUCED AND THE EXPENDITURE IS ONLY FOR REPAIR JOBS BUT SAME COULD NOT BE SUBSTANTIATED AND, ACCORDINGLY, WE RESTORE THE ISSUE TO THE FILE OF THE ASSES SING OFFICER AND THE ASSESSING OFFICER SHALL EXAMINE THE CASE AND PASS THE ORDER ON MERITS. THIS GROUND 31 MAHANADI COALFIELD LTYD., OF APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2011 - 12 IS ALLOWED FOR STATISTICAL PURPOSES. 70. COMMON GROUND NO.3.4 OF APPEAL FOR THE ASSESSMENT YEAR 2013 - 14 AND GROUND NO.3(5) OF APPEAL FOR ASSESSMENT YEAR 2014 - 15 IS AS IS UNDER: CSR EXPENSES 71. LD A.R. DID NOT PRESS THIS GROUND FOR BOTH THE ASSESSMENT YEARS AND THEREFORE, SAME IS DISMISSED AS NOT PRESSED. 71. GROUND NO.6 OF APPEAL FOR THE ASSESSMENT YEAR 2011 - 12 REGARDING INCORRECT INTEREST ALLOWANCE U/S.244 IS NOT PRESSED BY LD A.R. AND HENCE, SAME IS DISMISSED AS NOT PRESSED. 72. GROUND NO.5 OF APPEAL FOR THE ASSESSMENT YEAR 2011 - 12 IS THAT THE CIT(A) ERRED IN NOT ALLOWING THE CORRECT DEPRECIATION AFTER CONSIDERING THE SALE OF ASSETS AS PER BLOCK ASSETS CONCEPT AND DEPRECIATION THEREON. 73. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORD OF THE CASE. THE ASSESSEE COMPANY HAS SHOWN THE G AIN ON SALE OF ASSETS AS PROFIT FOR ACCOUNTING PURPOSE. AS PER SECTION 32 OF THE ACT THE GAIN ON SALE OF ASSETS IS NOT TAXABLE IF THE REMAINING ASSETS ARE MORE THAN THAT AND, THE DEPRECIATION SHOULD BE ALLOWED THEREON. THEREFORE, WE REMIT THIS ISSUE TO T HE FILE OF THE ASSESSING OFFICER ALLOW THE CORRECT DEPRECIATION BY REDUCING THE VALUE OF BLOCK OF ASSETS BY SALE VALUE. THIS GROUND OF APPEAL OF THE ASSESSEE FOR A.Y. 2011 - 12 IS ALLOWED FOR STATISTICAL PURPOSES. 32 MAHANADI COALFIELD LTYD., 74. GROUND NO3(5) OF APPEAL IS AGAINST ADD ITION U/S.14A FOR ASSESSMENT YEAR 2014 - 15 IS NOT PRESSED DUE TO SMALLNESS OF AMOUNT AND HENCE, SAME IS DISMISSED AS NOT PRESSED. 75. GROUND NO.3(4) OF APPEAL FOR ASSESSMENT YEAR 2014 - 15 IS DIRECTED AGAINST CONFIRMATION OF ADDITION OF RS.5.01 CRORES MADE ON OTHER EXPENSES . 76. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS CLAIMED RS.6.19 CRORES AS OTHER EXPENSE. IN RESPONSE TO ASSESSING OFFICER/S REQUISITION, THE ASSESSEE SUBMITTED THE DETAILS OF RS.6.19 CRORES. ON PERUSAL OF THE SAME, THE AS SESSING OFFICER FOUND THAT RS.4.41 CRORES WAS INCURRED TOWARDS OTHER WELFARE EXPENSES AND RS.0.60 CRORES WAS INCURRED TOWARDS MISCELLANEOUS - OTHER RESETTLEMENT. SINCE THE ASSESSEE FAILED TO JUSTIFY THE EXPENSES, THE ASSESSING OFFICER ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 77. THE CIT(A) UPHELD THE ADDITION IN THE ABSENCE OF REQUIRED DETAILS AND EXPLANATIONS. 78. BEFORE US, LD A.R SUBMITTED THAT THE EXPENDITURE IN QUESTION PERTAINS TO EMPLOYEE WELFARE EXPENDITURE APPEARING AS OTHER EXPENSES UNDER NOTE 25 OF WELFARE EXPENSES ANNEXED TO PROFIT AND LOSS ACCOUNT. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE FURNISHED THE DE TAILS OF EXPENDITURE BUT SAME WERE NOT CONSIDERED. LD A.R. SUBMITTED THAT SIMILAR ADDITION MADE IN THE ASSESSMENT YEAR 2007 - 08 HAS BEEN DELETED BY THE CIT(A). 33 MAHANADI COALFIELD LTYD., 79. WE HEARD THE RIVAL SUBMISSIONS, WE FIND THAT THE EXPENDITURE IS APPEARING UNDER NOTE 25 O F WELFARE EXPENSES . LD A.R. SUBMITTED THAT THE ASSESSEE HAS SUFFICIENT MATERIALS TO JUSTIFY THE EXPENDITURE. ACCORDINGLY, WE CONSIDER IT APPROPRIATE TO REMIT THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR VERIFICATION AND ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE FOR STATISTICAL PURPOSES. 81. OTHERS GROUNDS RAISED BY THE ASSESSEE IN ALL THE ASSESSMENT YEARS ARE GENERAL IN NATURE, HENCE REQUIRE NO SEPARATE ADJUDICATION. 81 . IN THE RESULT, APPEALS OF THE ASSESSEE PARTLY ALLOWED FOR STATISTICAL PURPOSES. NOW WE TAKE UP THE APPEALS OF THE REVEN UE FOR ASSESSMENT YEARS 2010 - 11 TO 2014 - 15 IN ITA N OS. 3 97/CTK/2013,NO.330/CTK/2 014, I TA NO.292/CTK/2015, ITA NO.428/CTK/2015 & ITA NO.268/CTK/2017 . 81. GROUND NO.2(A) FOR THE ASSESSMENT YEAR 2010 - 2011 AND GROUND NO.6 OF APPEAL FOR THE ASSESSMENT YEAR 2011 - 2012 IS THAT THE CIT(A) ERRED IN DELETING THE ADDITION MADE TOWARDS VRS. 82. AFTER HEARING BOTH THE SIDES, WE FIND TH A T THE ASSESSING OFFICER HAS DISALLOWED RS.55.54 LAKHS IN THE ASSESSMENT YEAR 2010 - 2011 AND RS.106.18 LAKHS IN THE ASSESSMENT YEAR 2011 - 2012 ON THE GROUND THAT THE DID NOT EXPLAIN THE BASIS OF SUCH COMPUTATION OF PROVISIONS TOWARDS VRS. BUT THE CIT(A) DELETED THE ADDITION OBSERV ING THAT THE CLAIM OF THE 34 MAHANADI COALFIELD LTYD., ASSESSEE IS IN CONFORMITY WITH SECTION 35DAA WHICH RELATES TO AMORTIZATION OF EXPENDITURE INCURRED UNDER VRS. LD D.R. COULD NOT CONTROVERT THE ABOVE FINDINGS OF THE CIT(A). HENCE, WE SEE NO REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) FOR BOTH THE ASSESSMENT YEARS AND HENCE, SAME IS DISMISSED. 83. THE NEXT ISSUE RAISED BY THE REVENUE IS AGAINST DELETION OF RS.1431.90 LAKHS AND RS.3759.58 LAKHS TOWARDS COMMUNITY DEVELOPMENT EXPENSES FOR THE ASSESSMENT YEARS 2010 - 11 AND 2011 - 12, RESPECTIVELY. 84. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. THE ASSESSING OFFICER DID NOT ALLOW THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE FAILED TO PRODUCE ANY DOCU MENTARY EVIDENCE TO PROVE THAT IN VILLAGES SURROUNDING MINING SITES AT TALCHER/IB VALLEY AND OTHER PLACES AND EVEN AT HEADQUARTERS AT BURLA, THE VARIOUS COMMUNITY DEVELOPMENT EXPENDITURE RELATING TO CREATION OF ASSETS HAVE BEEN MADE IN COMPLIANCE TO ANY DI RECTION ISSUED BY GOVT. OF INDIA/DISTRICT ADMINISTRATION OR ANY OTHER COMPETENT AUTHORITY. THE LD CIT(A) FOLLOWING THE DECISION OF THIS BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2005 - 06 TO 2007 - 08 IN ITA NOS.50,51,52 & 53/CTK/2 011 HAS DELETED THE ADDITION. LD D.R. COULD NOT SHOW ANY ERROR IN THE ORDER OF THE CIT(A). HENCE, THIS GROUND OF APPEAL FOR THE ASSESSMENT YEAR 2010 - 11 AND 2011 - 12 IS DISMISSED. 35 MAHANADI COALFIELD LTYD., 85. THE NEXT ISSUE IS AGAINST DELETION OF RS.86.34 LAKHS TOWARDS COMPENSATION OF LAND FOR THE ASSESSMENT YEAR 2010 - 2011. 86. HAVING HEARD THE RIVAL SUBMISSIONS, WE FIND THAT THE ASSESSEE HAS DEBITED COMPENSATION FOR LAND OF RS.86.34 LAKHS UNDER THE HEAD SOCIAL FACILITIES EXPENSES '. THE ASSESSING OFFICER DISALLOWED TH E AMOUNT PAID TOWARDS COMPENSATION PAID TO LAND OWNERS STATING THAT THE AMOUNT PAID RELATABLE TO ACQUISITION OF THEIR LAND. THE CIT(A) DELETED THE ADDITION OBSERVING THAT THE AMOUNT WAS INCURRED IN COMPLIANCE TO ORISSA RESETTLEMENT & REHABILITATION POLICY , 2006 AND THE SAME HAS BEEN PAID FOR ONE - TIME PAYMENT IN LIEU OF EMPLOYMENT AND TRAINING FOR SELF - EMPLOYMENT . THIS AMOUNT IS REFLECTED IN THE BALANCE SHEET OF THE ASSESSEE FOR THE YEAR ENDING 31.3.2011. SINCE THE AMOUNT HAS BEEN PAID FOR THE PURPOSE OF BUSINESS OPERATION , THE CIT(A) HAS RIGHTLY DELETED THE ADDITION. WE ALSO OBSERVE THAT IN THE SUBSEQUENT YEARS, SIMILAR CLAIM OF THE ASSESSEE HAS BEEN ALLOWED BY THE REVENUE. HENCE, WE FIND NO ERROR IN HIS ORDER, WHICH IS HEREBY CONFIRMED AND THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 86. THE NEXT ISSUE IS AGAINST DELETION OF RS.352.48 LAKHS AND RS.829.61 LAKHS TOWARDS ENVIRONMENT/ECOLOGY/IMPROVEMENT EXPENSES FOR THE ASSESSMENT YEAR 2010 - 11 AND 2011 - 12. 36 MAHANADI COALFIELD LTYD., 87. THE ASSESSING OFFICER HAS DISALL OWED RS.352.48 LAKHS AS AGAINST CLAIM OF THE ASSESSEE OF R S.467.64 LAKHS TOWARDS ENVIRONMENT/ECOLOGY/IMPROVEMENT FOR THE ASSESSMENT YEAR 2010 - 2011 FOR THE REASONS THAT THE ASSESSEE DID NOT FILE THE DETAILS OF SUCH EXPENDITURE . SIMILARLY, FOR THE SAME REAS ON, THE ASSESSING OFFICER DISALLOWED RS. 829.61 LAKHS FOR THE ASSESSMENT YEAR 2011 - 12. THE CIT(A) DELETED THE ADDITION OBSERVING THAT THE ASSESSEE HAS FILED ALL THE RELEVANT DETAILS BEFORE THE ASSESSING OFFICER AND ALL SUCH PAYMENTS ARE DULY AUDITED BY ST ATUTORY AUDITORS AND CAG. EVEN OTHERWISE, IT WAS STATED THAT SIMILAR CLAIM OF THE ASSESSEE HAS BEEN ALLOWED IN THE PRECEDING ASSESSMENT YEARS. 88. WE FIND THAT THE EXPENDITURE INCURRED ARE IN RESPECT OF TREE PLANTATION, OTHER ENVIRONMENTAL EXPENSES, ENVIRONMENTAL MONITORING COST OF AIR, WATER AND NOISE AND DUST MITIGATING EQUIPMENT, ETC, WHICH IS NECESSITATED IN THE AREAS WHERE COAL MINES ARE SITUAT ED AS PER THE GUIDELINES OF CORPORATE SOCIAL RESPONSIBILITY. HENCE, W E FIND NO ERROR IN THE ORDER OF THE CIT(A) AS THE EXPENDITURES ARE AUDITED BY THE AUDITORS AND REFLECTED IN THE BALANCE SHEET OF THE ASSESSEE. AE ALSO FIND THAT SIMILAR CLAIM OF THE ASSE SSEE HAS BEEN ALLOWED IN THE SUBSEQUENT ASSESSMENT YEARS. THIS GROUND OF THE REVENUE FOR THE ASSESSMENT YEARS 2010 - 11 AND 2011 - 12 IS DISMISSED. 37 MAHANADI COALFIELD LTYD., 89. THE NEXT ISSUE RAISED BY THE REVENUE IS AGAINST DELETION OF RS.400.03 LAKHS AND RS.461.91 LAKHS TOWARDS SO CIAL FACILITIES EXPENSES FOR THE ASSESSMENT YEARS 2010 - 11 AND 2011 - 12, RESPECTIVELY. 90. THE ASSESSING OFFICER HAS DISALLOWED RS.400.03 LAKHS AS AGAINST CLAIM OF THE ASSESSEE OF RS.451.95 LAKHS ON THE GROUND THAT SUPPORTING DETAILS WERE NOT FURNISHED BY THE ASSESSEE IN RESPECT OF EXPENDITURE INCURRED TOWARDS SOCIAL FACILITIES , WHICH WAS DELETED IN FIRST APPEAL. 91. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE CIT(A) HAS DELETED THE ADDITION MADE BY THE ASSESSING OFFICER THAT IN ORDER SHEE T, IT HAS BEEN MENTIONED THAT THE REQUIRED DETAILS HAVE BEEN FURNISHED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER. HENCE, IT CANNOT BE SAID THAT THE DETAILS AS CALLED FOR HAVE NOT BEEN FURNISHED. WE ALSO FIND THAT THE IN SUBSEQUENT YEARS IDENTICAL CLAI M OF THE ASSESSEE HAS BEEN ALLOWED BY THE REVENUE. HENCE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A), WHICH IS HEREBY CONFIRMED AND GROUND OF APPEAL OF THE REVENUE IS DISMISSED FOR THE ASSESSMENT YEAR 2010 - 11 AND 2011 - 12. 92. THE NEXT ISSUE RELATES TO LOSS ON SALE OF DISCARDED ASSETS OF RS.33.11 LAKHS FOR THE ASSESSMENT YEAR 2010 - 2011. 93. AFTER HEARING THE RIVAL SUBMISSIONS AND PERUSING THE ORDERS OF LOWER AUTHORITIES, WE FIND THAT THE ASSESSING OFFICER DISALLOWED RS.33.11 LAKHS CLAIMED BY THE ASSESSEE ON THE GROUND THAT THE ACCOUNTING TREATMENT FOR TRANSFER OF FIXED ASSETS SHOWING LOSS BY THE ASSESSEE CANNOT BE 38 MAHANADI COALFIELD LTYD., CONSIDERED AS CORRECT SO AS TO ALLOW DEDUCTION IN COMPUTATION OF PROFIT & GAINS FROM BUSINESS. THE CIT(A) ON PERUSAL OF ANNUAL REPORTS & ACCOUNT OF THE ASSESSEE FOR THE FINANCIAL YEAR 2009 - 2010, OBSERVED THAT THE ASSESSEE HAS SHOWN PROFIT ON SALE OF ASSETS OF RS.1589.25 LAKHS UNDER THE HEAD OTHER INCOME AS PER SCHEDULE - 4 TO P&L ACCOUNT AND CLAIMED AS LOSS ON SALE/DISCAR DED ASSETS OF RS.33.11 LAKHS. THEREFORE, THE CIT(A) DELETED THE ADDITION. BEFORE US, LD D.R. COULD NOT POINT OUT ANY SPECIFIC MISTAKE IN THE ORDER OF THE CIT(A), WHICH IS HEREBY CONFIRMED AND GROUND OF APPEAL OF REVENUE FOR ASSESSMENT YEAR 2010 - 11 IS DISM ISSED. 94. THE NEXT ISSUE INVOLVED IN THE APPEALS OF THE REVENUE IS AGAINST DELETION OF RS.278.39 LAKHS AND RS.4162.50 LAKHS TOWARDS PROSPECTING AND BORING EXPENSES FOR THE ASSESSMENT YEAR 2010 - 11 AND 2012 - 13, RESPECTIVELY. 95. WE FIND THAT IDENTICAL ISSUE HAS ALREADY BEEN DECIDED BY THE C O - ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2004 - 05 TO 2007 - 08 IN ITA NOS. 05,51 & 52/CTK/2011 ORDER DATED 12.9.2011, WHEREIN, THE TRIBUNAL HAS UPHELD THE ACTION OF THE CIT(A) IN D ELETING THE ADDITION. IN THE YEAR UNDER CONSIDERATION ALSO, THE CIT(A) FOLLOWING THE DECISION OF THE TRIBUNAL HAS DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. HENCE, WE FIND NO ERROR IN HIS ORDER, WHICH IS HEREBY CONFIRMED AND GROUND OF APPEAL OF THE REVENUE IS DISMISSED FOR THE ASSESSMENT YEAR 2010 - 11 AND 2012 - 13. 39 MAHANADI COALFIELD LTYD., 96. THE NEXT ISSUE IS RELATING TO DELETION OF RS.33 7.89 LAKHS, RS.1255.42 LAKHS, RS.1913.00 LAKHS, RS.2656.00 LAKHS AND RS.2288 LAKHS FOR THE ASSESSMENT YEARS 2010 - 11, 2011 - 12, 2012 - 13, 2013 - 14 AND 2014 - 15, RESPECTIVELY TOWARDS CMPDIL EXPENSES. 97. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICE R HAS DISALLOWED THE CLAIM OF THE ASSESSEE TOWARDS CMPDIL EXPENSES FOR WANT OF NECESSARY DETAILS. BEFORE THE CIT(A), THE ASSESSEE CONTENDED THAT THE ASSESSING OFFICER HAS NEVER ASKED FOR ANY DETAILS BUT DISALLOWED THE EXPENDITURE WITHOUT UNDERTAKING THE S UBJECT. IT WAS SUBMITTED THAT THE CMPDIL (CENTRAL MINES PLANNING & DESIGN INSTITUTE) IS ANOTHER SUBSIDIARY COMPANY OF COAL INDIA LIMITED HAVING ITS HEAD - QUARTER AT RANCHI WITH REGIONAL INSTITUTE IN DIFFERENT LOCATIONS IN INDIA. THEY ARE PROVIDING VARIOU S SERVICES AS PER MEMORANDUM OF UNDERTAKING ENTERED WITH MCL. THE CIT(A) SEGREGATED THE SERVICES BY CMPDIL IN THE IMPUGNED ORDER AND DELETED THE ADDITION MADE BY THE ASSESSING OFFICER STATING THAT THE ASSESSEE HAS FURNISHED THE REQUIRED DETAILS AS CALLED FOR, WHICH IS EVIDENT FROM ORDER SHEET ENTRY. HENCE, THE REVENUE IS IN APPEAL BEFORE US FOR ALL THE ASSESSMENT YEARS UNDER CONSIDERATION. 98. AFTER HEARING THE RIVAL SUBMISSIONS AND PERUSING THE ORDERS OF LOWER AUTHORITIES, WE FIND THAT THE EXPENDITURE IS INCURRED TOWARDS SERVICES RENDERED BY CMPDIL AS PER MOU BETWEEN THE ASSESSEE AND CMPDIL. WE ALSO FIND THAT SIMILAR ADDITION WAS MADE IN THE CASE OF NORTHERN COALFIELDS 40 MAHANADI COALFIELD LTYD., LIMITED AND THE JABALPUR BENCH OF THIS TRIBUNAL VIDE ORDER DATED 5.5.2015 IN ITA NO.18 /JAB/2014 AND ITA NO.55/JAB/2014 FOR THE ASSESSMENT YEAR 2010 - 11 HAS DELETED THE ADDITION BY OBSERVING AS UNDER: 4 6 . WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE L EGAL POSITION. 4 7. WE HAVE NOTED THAT THESE EXPENSES HAVE BEEN TREATED AS CAPITAL EXPENSES BY THE ASSESSING OFFICER ONLY ON THE GROUND OF THE 'ENDURING BENEFIT IN NATURE' WHICH BY IMPLICATION SUGGESTS THAT IT'S A PREPARATORY WORK FOR MINE DEVELOPMENT BUT THEN WHAT SUCH AN APPROACH OVERLOOKS IS THAT ALL THE MINES ARE REVENUE MINES AND THE EXTRACTION OF COAL, ON COMMERCIAL BASIS, HAS ALREADY STARTED IN THESE CASES. THEREFORE, ASSESSING OFFICER'S OBSERVATION TO THE EFFECT THAT 'EXTRACTION OF COAL IS A LO NG PROCESS AND THE NATURE OF WORK DONE HAVE AN ENDURING BENEFIT TO THE ASSESSEE' COULD HAVE BEEN RELEVANT WHEN COAL EXTRACTION PROCESS HAD NOT STARTED BUT THAT IS NOT THE CASE HERE. WE HAVE NOTED THAT THE CMPDIL (I.E. CENTRAL MINE PLANNING & DESIGN INSTITU TE), A SUBSIDIARY OF THE COAL INDIA LIMITED, IS ADMITTEDLY PROVIDING TECHNICAL SUPPORT AND SERVICES TO THE ASSESSEE IT THE MINING OPERATIONS. IT CONDUCTS MINE SURVEY IN THE EXISTING MINES IN ORDER TO ENSURE THAT THE MINING IS CARRIED OUT IN THE RIGHT DIREC TION AND IN THE OPTIMAL MANNER. WE HAVE ALSO NOTED THAT IT IS BEYOND AND DISPUTE AND CONTROVERSY THAT NONE OF THE MINES OF THE ASSESSEE IS A DEVELOPMENT MINE, AND, AS SUCH)' THE EXPENSES OF THIS NATURE CANNOT SAID TO BE RELATING TO PREPARATORY W ORK OR OF CAPITAL NATURE FOR THAT REASON. WHEN MINING ITSELF IS AN ONGOING ACTIVITY AND THE MINES ARE IN THE NATURE OF REVENUE MINES, IT IS ILLOGICAL TO PROCEED ON THE BASIS THAT THE EXPENDITURE I CONNECTION WITH SUCH AN ONGOING MINING PROCESS CAN BE TREAT ED AS CAPITAL IN NATURE AS IN THE NATURE OF A PREPARATORY ACTIVITY. ALL THE ELEVEN MINES OF THE ASSESSEE ARE REVENUE MINES, AND, THEREFORE, ANY EXPENDITURE INCURRED BY THE ASSESSEE ON ITS MINES CAN ONLY BE IN RESPECT OF THE REVENUE MINES ONLY. THE OBSE RVATIONS MADE BY THE CIT(A) TO THE EFFECT THAT THERE IS NOTHING TO SHOW THAT THESE EXPENSES ARE INCURRED IN RESPECT OF REVENUE MINES, IS, THEREFORE, WHOLLY UNWARRANTED AND IT ONLY SHOWS HIS NOT APPLYING THE MIND TO THE FACTS OF THE CASE. WHILE THE AO DISAL LOWED THE EXPENSES THAT IT IS CAPITAL EXPENDITURE IN NATURE, THE CIT(A) UPHELD IT ON THE GROUND THAT THERE IS NO MATERIAL TO COME TO THE CONCLUSION THAT THIS EXPENDITURE PERTAINS TO REVENUE MINES. THE BASIS ON WHICH THE CIT(A) UPHELD THE D ISALLOWANCE IS CLEARLY WRONG. WE HAVE ALSO NOTED THAT IN THE EARLIER ASSESSMENT YEARS, THIS ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE AND MATTER RESTS THERE. WE HAVE 41 MAHANADI COALFIELD LTYD., ALSO NOTED THAT THIS ISSUE HAS BEEN DECIDED, IN ASSESSEE'S OWN CASE FOR THE ASSES SMENT YEAR 2008 - 09, IN FAVOUR OF THE ASSESSEE BY A COORDINATE BENCH OF THIS TRIBUNAL. SUCH DEVIATIONS FROM ACCEPTED PAST HISTORY OF THE CASE, AS CANVASSED BEFORE US BY THE REVENUE AUTHORITIES, ARE MADE ONLY IN EXCEPTIONAL SITUATION AND NO SUCH CASE HAS BEE N SUCCESSFULLY MADE OUT BEFORE US. IN VIEW OF THESE DISCUSSIONS, AS ALSO BEARING IN MIND ENTIRETY OF THE CASE, WE DEEM IT FIT AND PROPER TO DIRECT THE AO TO DELETE THIS DISALLOWANCE OF RS.1973.98 LAKHS AS WELL. THE ASSESSEE GETS THE RELIEF ACCORDINGLY. 99. RESPECTFULLY FOLLOWING THE JUDICIAL PRECEDENCE AND DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL, WE UPHOLD THE FINDINGS OF THE CIT(A) IN DELETING THE ADDITION MADE FOR ALL THE ASSESSMENT YEARS UNDER CONSIDERATION. THUS, THIS GROUND OF APPEAL IS DISMISSED. 100. THE NEXT ISSUE RAISED BY THE REVENUE IS AGAINST DELETION OF RS.1487.46 LAKHS TOWARDS COST OF EXPLORATION AND DEVELOPMENT EXPENDITURE. 101. WE HAVE HEARD THE RIVAL SUBMISSION, PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. THE ASSESSEE HAS CLAIMED SEPARATELY IN TH E COMPUTATION OF INCOME OF RS.1487.46 LAKHS TOWARDS THE COST OF EXPLORATION AND OTHER DEVELOPMENT EXPENDITURE. THE ASSESSING OFFICER DISALLOWED RS.1487.46 LAKHS. BEFORE THE CIT(A), IT WAS SUBMITTED BY THE ASSESSEE THAT THE ABOVE EXPENDITURE INCURRED IN RESPECT OF BLOCKS IN ONE FIVE YEAR PLAN PERIOD IS KEPT INTO CAPITAL WORK - IN - PROGRESS TILL THE END OF SUBSEQUENT TWO - FIVE YEAR PLAN PERIODS FOR FORMATION OF PROJECTS BEYOND WHICH IT IS WRITTEN - OFF BY WAY OF AMORTISATION OVER A PERIOD OF 20 YEARS OR WORKING LIFE OF THE MINES WHICHEVER IS LESS AND THESE FACTS HAVE 42 MAHANADI COALFIELD LTYD., BEEN CLEARLY DISCLOSED IN ACCOUNTING POLICY(SCHEDULE - O). THE CIT(A) REFERS TO SECTION 35E(1) OF THE ACT AND RELYING ON THE JUDICIAL DECISIONS OBSERVED THAT IN THE CASE OF WINNING OF MINERALS, EXPLOR ATION IS AN ESSENTIAL PRE - ACTIVITY. EXPENSES INCURRED TOWARDS EXPLORATORY AND PROSPECTING ACTIVITIES ARE NORMALLY OF CAPITAL EXPENDITURE BUT AMORTIZATION THEREOF OVER A PERIOD OF TEN YEARS HAS SPE CIALLY BEEN PROVIDED FOR AND SAME WILL BE ALLOWED IN EQUAL INSTALMENTS OVER A PERIOD OF 10 YEARS AGAINST THE PROFIT ARISING FROM THE COMMERCIAL EXPLOITATION OF ANY MINE. HENCE, THE CIT(A) DIRECTED TO WORK OUT THE AMORTISATION OF QUALIFYING EXPENDITURE AS PER SECTION 35E(1) OF THE ACT. THIS FINDING OF FACT WAS NO T CONTROVERTED BY LD D.R. DURING THE COURSE OF HEARING. HENCE, WE DISMISS THIS GROUND OF APPEAL OF THE REVENUE AND UPHOLD THE FINDINGS OF THE CIT(A). 102. THE NEXT RAISED BY THE REVENUE IS AGAINST DELETION OF ADDITION ON ACCOUNT OF OVERBURDEN REMOVAL EXPENDITURE OF RS.50383.53 LAKHS, RS.9875.22 LAKHS, RS.159043.50 LAKHS, RS.129209.00 LAKHS AND RS.126929.70 LAKHS FOR THE ASSESSMENT YEARS 2010 - 11, 2011 - 12, 2012 - 13, 2013 - 14 AND RS.2014 - 15, RESPECTIVELY. 103. THE ASSESSING OFFICER HAS DISALLOWED THE EXPEN DITURE INCURRED BY THE ASSESSEE TOWARDS OVERBURDEN REMOVAL EXPENDITURE OF RS.50383.53 LAKHS, RS.9875.22 LAKHS, RS.159043.50 LAKHS, RS.129209.00 LAKHS AND 43 MAHANADI COALFIELD LTYD., RS.126929.70 LAKHS FOR THE ASSESSMENT YEARS 2010 - 11, 2011 - 12, 2012 - 13, 2013 - 14 AND RS.2014 - 15, RESPECT IVELY. 104. BEFORE THE CIT(A), THE ASSESSEE RELIED ON VARIOUS JUDICIAL DECISIONS INCLUDING THE DECISION OF THIS BENCH IN THE CASE OF ACIT VS. PATNAIK MINERALS PVT LTD., AND OTHERS FOR A.Y. 2009 - 10, WHEREIN, IT HAS BEEN CATEGORICALLY HELD THAT THE EXPENDIT URE INCURRED ON REMOVAL OF OVERBURDEN IN COAL IN MINING IS A REVENUE EXPENDITURE, THE CIT(A) FOLLOWING THE DECISION OF ITAT, JABALPUR IN THE CASE OF NORTHERN COALFIELDS LTD VS ACIT IN ITA NO.42 & 43 OF 2002 AND ALSO THE DECISION OF THIS BENCH OF THE TRIBU NAL IN THE CASE OF PATNAIK MINERALS PVT LTD. (SUPRA) HAS DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. 105. WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. THE DISPUTE ARISE IN THIS GROUND OF APPEAL IS WHETHER THE EXPENDITURE INCURRED ON REMOVAL OF OVERBURDEN IN COAL IS ALLOWABLE EXPENDITURE OR NOT. WE FIND THAT SIMILAR ISSUE AROSE IN THE CASE OF NORTHERN COALFIELD LTD, WHEREIN, ON SIMILAR FACTS , THE JABALPUR BENCH OF THE TRIBUNAL AFTER A THOROUGH AND DETAILED DISCUSSION ON THE ISSUE, HAS DELETED THE ADDITION . THE RELEVANT PORTION IS REPRODUCED HEREUNDER: 40. WE ARE UNABLE TO FIND ANY LEGALLY SUSTAINABLE MERITS IN THIS OBJECTION EITHER. THE CRITERION ON THE BASIS WHICH CALL IS TAKEN AS TO BE WHETHER A MINE CAN BE TREATED AS A DEVELOPMENT MINE OR AS A REVENUE MINE IS, AS WE HAVE NOTED IN PARAGRAPH 22 EARLIER IN THIS ORDER, IS UNIFORM ALL ALONG NOT ONLY IN THIS CASE OF THIS ASSESSEE BUT 44 MAHANADI COALFIELD LTYD., IN THE CASE OF OTHER SIMILARLY PLACED ASSESSEES, AND THE REVENUE AUTHORITIES HAVE ACCEPTED THAT CRITERION ALL ALONG. IT IS A PURELY A FACTUAL MATTER WHICH PERMEATES THROUGH DIFFERENT ASSESSMENT YEARS, AND FOR THE DETAILED REASONS DISCUSSED EARLIER, THERE IS NO GOOD REASON TO DISTURB THIS CRITERION. IN AN Y CASE, THE AUTHORITIES BELOW HAVE NEITHER SUGGESTED ANY ALTERNATIVE CRITERION, WHICH WILL BE APPROPRIATE ON THE FACTS OF THIS CASE, NOR HAVE THEY HAVE DEMONSTRATED THAT THE FACTS IMPLICIT IN THEIR STAND ACTUALLY EXIST. AS A MATTER OF FACT, THE APPREHENSIO NS OF THE ASSESSING OFFICER SEEM TO BE PURELY HYPOTHETICAL AND IN THE REALM OF CONJECTURES AND SURMISES INASMUCH AS NOT ONE INSTANCE IS SHOWN IN WHICH THE OVERBURDEN REMOVAL EXPENSES, BOOKED IN THE ACCOUNTS AS REVENUE EXPENDITURE, ACTUALLY PERTAIN TO REMOV AL OF OVERBURDEN ONLY AT THE SURFACE LEVEL AND SHOULD BE, THEREFORE, TREATED AS CAPITAL EXPENDITURE. SIMILARLY, WHILE - DECLINING THE DEDUCTION OF OVERBURDEN REMOVAL AS CAPITAL EXPENDITURE, THE ASSESSING OFFICER, AS ALSO THE CIT(AJ, HAS NOT TREATED ANY PART OF THIS EXPENDITURE, WHICH ESSENTIALLY INCLUDES THE EXPENDITURE INCURRED ON REMOVING OVERBURDEN IN THE PROCESS OF COAL MINING AND PRODUCTION, AS REVENUE EXPENDITURE. IT SEEMS TO BE MORE OR LESS AN UNDISPUTED POSITION, GIVEN THE NATURE OF OVERBURDEN REMOVA L EXPENSES AS WE HAVE DISCUSSED EARLIER, THAT A PART OF THE OVERBURDEN REMOVAL EXPENSES IS ADMITTEDLY REVENUE EXPENDITURE, BUT IF WE HAVE TO UPHOLD THE STAND OF THE AUTHORITIES BELOW, ENTIRE OVERBURDEN REMOVAL EXPENSES IS REQUIRED TO BE TREATED AS CAPITAL EXPENDITURE ELIGIBLE ONLY FOR AMORTIZATION UNDER SECTION 35D. IN ANY CASE, THERE IS NOTHING ON RECORD TO ESTABLISH, OR EVEN SUGGEST, THAT EXPENSES INCURRED ON REMOVAL OF OVERBURDEN AT THE SURFACE LEVEL, WHICH WERE CAPITAL EXPENDITURE IN NATURE, HAVE BEEN C LAIMED AS REVENUE DEDUCTION ON THE STRENGTH OF COAL MINING IN ANOTHER PIECE OF LAND WITHIN THAT COAL MINE. 41. IN VIEW OF THESE DISCUSSIONS, AS ALSO BEARING IN MIND ENTIRETY OF THE CASE, WE CONSIDER IT FIT AND PROPER TO DIRECT THE ASSESSING OFFICER TO DELETE THE DISALLOWANCE OF RS 2,05,616.72 LAKHS. THE ASSESSEE GETS THE RELIEF ACCORDINGLY. THIS FINDINGS OF THE TRIBUNAL HAS BEEN UPHELD BY THE HONBLE M.P.HIGH COURT IN ITA NO.71/JAB/2014 ORDER DATED 24.4.2015.FOLLOWING THE ABOVE DECISION, THE JABALPUR BENCH OF THIS TRIBUNAL IN THE CASE OF NORTHER COALFIELD LTD FOR THE ASSESSMENT YEAR 2011 - 12 HAS DELETED TH E SIMILAR ADDITION. WE ALSO FIND THAT SIMILAR ADDITION MADE IN THE CASE OF WESTERN COALFIELDS LTD., FOR THE ASSESSMENT YEAR 1978 - 79 TO 1984 - 85 BY THE 45 MAHANADI COALFIELD LTYD., ASSESSING OFFICER WAS DELETED BY THE CIT(A) AND ON FURTHER APPEAL, THE NAGPUR BENCH OF THIS TRIBUNAL HAS UPHELD THE FINDINGS OF THE CIT(A). BEFORE US, LD D.R. COULD NOT PLACE ANY CONTRARY JUDGMENT OF THE HIGHER FORUM TO CONTROVERT THE ABOVE DECISIONS OF THE TRIBUNAL AND ALSO HIGH COURT. THE CIT(A) HAS FOLLOWED THE DECISION OF THE TRIBUNAL WHILE DELETING THE ADDITION MADE BY THE ASSESSING OFFICER. HENCE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A), WHICH IS HEREBY CONFIRMED AND THIS GROUND OF APPEAL OF REVENUE IS DISMISSED FOR THE ASSESSMENT YEARS 2010 - 11 TO 2014 - 15. 106. THE NEXT IS SUE RELATES TO DELETION OF RS.3371.57 LAKHS AND RS.6481.34 LAKHS TOWARDS ADMISSIBILITY OF ADDITIONAL DEPRECIATION FOR THE ASSESSMENT YEARS 2010 - 11 AND 2011 - 12, RESPECTIVELY. 107. THE ASSESSING OFFICER HAS DISALLOWED THE CLAIM OF ADDITIONAL DEPRECIATION ON THE GROUND THAT THE ASSESSEE IS NOT ENGAGED IN THE BUSINESS OF MANUFACTURING OR PRODUCTION OF ANY ARTICLE OR THING. ON APPEAL, THE CIT(A) DELETED THE ADDITION MADE BY THE ASSESSING OFFICER BY FOLLOWING THE VARIOUS JUDICIAL DECISIONS INCLUDING THE HONBL E SUPREME COURT IN THE CASE OF CIT S. SESA GOA LTD., 271 ITR 331 (SC). 108. HAVING HEARD THE RIVAL SUBMISSION AND PERUSING THE MATERIALS AVAILABLE ON RECORD, WE FIND THAT THE ASSESSEE COMPANY IS PRODUCING COAL AND THE COAL BECAME EXCISABLE VIDE NOTIFICATIO N NO.1/2011 - CENTRAL EXCISE OF MINISTRY OF FINANCE, DEPARTMENT OF REVENUE W.E.F 1.3.2011. THE 46 MAHANADI COALFIELD LTYD., HONBLE SUPREME COURT IN THE CASE OF SESA GOA LTD (SUPRA) HAS HELD AS UNDER: EXTRACTION AND PROCESSING OF ORE AMOUNTS TO 'PRODUCTION' WITHIN THE MEANING OF S. 32A(2)(B)(III) SINCE ORE IS 'A THING' WHICH IS THE RESULT OF HUMAN ACTIVITY OR EFFORT SOME OTHER PROVISIONS OF THE ACT, PARTICULARLY S. 33(1)(B)(B) R/W ITEM NO. 3 OF FIFTH SCHEDULE AND S. 35E ALSO SHOW THAT MINING OF ORE IS TREATED AS 'PRODUCTION' LANGUAGE OF THESE SECTIONS IS SIMILAR TO THE LANGUAGE OF S. 32A(2) THERE IS NO REASON TO ASSUME THAT THE WORD 'PRODUCTION' WAS USED IN A DIFFERENT SENSE IN S. 32A CONSEQUENTLY, ASSESSEE WAS ENTITLED TO INVESTMENT ALLOWANCE IN RESPECT OF MACHINERY USED IN MINING AC TIVITY . HENCE, SINCE THE COAL IS COMING UNDER THE PURVIEW OF MINING ORE AND IS TREATED AS PRODUCTION, FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF SESA GOA (SUPRA), WE HOLD THAT THE CIT(A) IS FULLY JUSTIFIED IN DELETING THE ADDITION FOR THE ASSESSMENT YEARS 2010 - 11 AND 2011 - 12. WE ALSO OBSERVE THAT IN THE SUBSEQUENT ASSESSMENT YEARS, THE REVENUE HAS NOT ACCEPTED THE CONTENTION OF THE ASSESSEE ON THIS I SSUE. THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED FOR BOTH THE ASSESSMENT YEARS UNDER CONSIDERATION. 109. THE NE X T ISSUE RELATES TO DELETION OF RS.5128.76 LAKHS AND RS.2321.01 LAKHS TOWARDS EMPLOYEES REMUNERATION AND BENEFITS FOR THE ASSESSMENT YE ARS 2010 - 11 AND 2011 - 12, RESPECTIVELY. 110. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. FOR THE ASSESSMENT YEAR 2010 - 11, THE ASSESSING OFFICER HAS DISALLOWED RS.3555.00 LAKHS TOWARDS PERF ORMANCE BASED PAY PERTAINING TO YEARS 2007 - 08 AND 2008 - 09 ON THE 47 MAHANADI COALFIELD LTYD., GROUND THAT THE LIABILITY WAS ASCERTAINED AND HAD CRYSTALISED DURING FINANCIAL YEAR 2009 - 10 AND RS.1573.76 LAKHS TOWARDS SUPERANNUATION BENEFITS PERTAINING TO YEARS 2006 - 07, 2007 - 08 AND 2008 - 09 ON THE GROUND THAT THE ASSESSEE HAS NOT PRODUCED SUCH SCHEME. SIMILARLY, FOR THE ASSESSMENT YEAR 2011 - 12, THE ASSESSING OFFICER FOUND THAT THE PROVISION MADE BY THE ASSESSEE TOWARDS INCREMENTAL LIABILITY FOR VARIOUS EMPLOYEES BENEFIT SCHEMES AND REMUN ERATION ON THE BASIS OF ACTUARIAL VALUATION, WHICH IS NOT CONTINGENT IN NATURE AND, THEREFORE, DISALLOWED RS.2321 . 00 LAKHS. 111. ON APPEAL BEFORE THE CIT(A) , IT WAS SUBMITTED THAT THE LIABILITY TOWARDS PERFORMANCE RELATED PAY AND SUPERANNUATION BENEFIT S HAS ACCRUED AND CRYSTALLISED DURING THE YEAR UNDER CONSIDERATION, WHICH IS EVIDENT FROM THE OFFICE MEMORANDUM DATED 2/7.5.2009 ISSUED BY COAL INDIA LIMITED, THE HOLDING COMPANY OF THE ASSESSEE. BASED ON THE SAID OFFICE MEMORANDUM AND ALSO RELYING ON JUD ICIAL DECISIONS, THE CIT(A) DELETED THE ADDITION. IT WAS INFORMED DURING THE COURSE OF HEARING THAT NO SUCH ADDITION HAS BEEN MADE IN THE SUBSEQUENT ASSESSMENT YEARS AGAINST THE CLAIM OF THE ASSESSEE. THEREFORE, WE SEE NO REASON TO INTERFERE WITH THE ORD ER OF THE CIT(A) AND DISMISS THIS GROUND OF APPEAL OF THE REVENUE FOR THE ASSESSMENT YEAR 2010 - 11 AND 2011 - 12, RESPECTIVELY. 112. THE NEXT ISSUE RELATES TO DELETION OF RS.1694.10 LAKHS MADE ON ACCOUNT OF PROVISION S . 48 MAHANADI COALFIELD LTYD., 113. THE ASSESSING OFFICER FOUND THAT IN THE COMPUTATION OF RETURN OF INCOME, THE ASSESSEE HAS ADDED PROVISION OF RS.401.33 LAKHS TO THE RETURNED FIGURE. THE ASSESSEE COULD NOT EXPLAIN HOW GROSS PROVISION DEBITED FOR RS.1696.10 LAKHS COULD BE CONSIDERED AS ACC RUED LIABILITY WHICH HAS ARISEN AND CRYSTALISED DURING THE FINANCIAL YEAR 2009 - 10 AND WHY UNASCERTAINED LIABILITY SHOULD NOT BE A MERE PROVISION OF CONTINGENT IN NATURE. IN THE APPELLATE PROCEEDINGS BEFORE THE CIT(A), THE ASSESSEE FURNISHED THE DETAILS OF PROVISION S AND THE TOTAL BEING RS.688.82 LAKHS, WHEREAS THE ASSESSING OFFICER MENTIONED TOTAL OF RS.1696.10, WHICH IS APPARENT MISTAKE ON RECORD. IT WAS FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAS ADDED THE POSITIVE ITEMS ONLY AND LEFT THE NEGATI VE TOTAL OF RS.1294.77 LAKHS, THE DETAILS OF WHICH, ARE MENTIONED IN THE IMPUGNED ORDER. IT WAS ALSO SUBMITTED THAT THE ASSESSEE HAS ITSELF ADDED THE PROVISION OF R S.401.33 LAKHS IN THE COMPUTATION OF INCOME FROM SUCH ADDITION, THE AMOUNT TOWARDS OBSOLESC ENCE OF STORE (RS. - 2.09 LAKH) AND SHORTAGE OF STORES (RS.5.08 LAKH) HAS BEEN CLAIMED SEPARATELY. HENCE, THE NET ADDITION SHOULD HAVE BEEN RS.398.34 LAKHS (RS.401.33 LAKHS (RS.5.08 LAKHS RS.2.09 LAKHS). HENCE, THIS HAS RESULTED INTO DOUBLE EFFECT I.E. OF RS.5.98 LAKHS, WHICH SHOULD BE ALLOWED. 49 MAHANADI COALFIELD LTYD., THE CIT(A) CONSIDERED THE SUBMISSIONS OF THE ASSESSEE AND ALSO RELIED ON THE ANNUAL REPORTS & ACCOUNT S OF THE ASSESSEE FOR THE FINANCIAL YEAR 2009 - 10 AND FOUND THAT AS PER SCHEDULE - 16(A) TO THE P&L ACCOUNT , THE PROVISION IS RS.401.33 LAKHS. THE ASSESSING OFFICER HAS TAKEN POSITIVE ITEMS BUT LEFT BEHIND THE NEGATIVE ITEMS AND, ACCORDINGLY, DELETED THE ADD ITION OF RS.1289.78 LAKHS. REGARDING THE SUBMISSION OF THE ASSESSEE THAT NET ADDITION IN THE COMPUTATION OF TAXABLE INCOME SHOULD HAVE BEEN RS.398.34 LAKHS, THE CIT(A) DIRECTED THE ASSESSING OFFICER TO EXAMINE IT FROM THE RECORD AND TAKE REMEDIAL MEASURES AS PER THE PROVISIONS OF THE ACT. HAVING HEARD THE RIVAL SUBMISSIONS, WE SEE NO REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) ON THIS ISSUE , WHICH IS HEREBY CONFIRMED AND GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 114. THE NEXT ISSUE RELATES TO DELETION OF CONTRIBUTION TO REHABILITATION FUND OF RS.5889.12 LAKHS AND RS.6125.28 LAKHS FOR THE ASSESSMENT YEARS 2010 - 11 AND 2011 - 12, RESPECTIVELY. 115. IDENTICAL ISSUE HAD COME UP FOR ADJUDICATION IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2005 - 06 T O 2007 - 08 IN ITA NOS.51,52 & 53/CTK/2011, WHEREIN, THE TRIBUNAL HAS CONFIRMED THE DELETION OF DISALLOWANCE BY THE CIT(A) IN THE APPEALS FILED BY THE REVENUE. THE RELATION PORTION OF FINDINGS OF THE TRIBUNAL IS AS UNDER: 50 MAHANADI COALFIELD LTYD., 13. THE LEARNED AR OF THE ASSESSES REITERATED THE SUBMISSIONS AS WERE MADE BEFORE THE LEARNED C I T(A) AND SUBMITTED THAT THE ASSESSEE COMPANY HAS CONTRIBUTED THE AFORESAID AMOUNT UNDER THE HEAD ' CONTRIBUTION TO REHABILITATION FUND UNDER THE DIRECTION OF GOVT, OF INDIA, MI NISTRY OF COAL CONVEYED TO CIL AS ADDITIONAL LEVY FROM ALL THE SUBSIDIARIES EXCEPT ECL AND BCCL SINCE THESE TWO COMPANIES ARE ALREADY SICK AND ADDITIONAL BURDEN OF LEVY MAY CAUSE DISHARMONY. ON RECEIPT OF THE SAID LETTER BY CIL, THE BOARD OF DIRECTORS OF CIL DECIDED AND INSTRUCTED ALL ITS SUBSIDIARIES TO PAY @ ?6 PER TON OF DISPATCH OF COAL TO CIL. THESE FACTS COULD NOT BE NEGATED BY THE REVENUE BEFORE US. WHENEVER THE ASSESSEE IS ABLE TO ESTABLISH THAT THE ASSESSEE COMPANY HAS INCURRED THE EXPENDITURE ON THE DIRECTIONS/ INSTRUCTIONS OF THE CENTRAL/STATE GOVERNMENT AND OTHER GOVT, ORGANISATION WHICH ARE HAVING DIRECT CONTROL OVER THE BUSINESS OF THE ASSESSEE COMPANY THEN THE SAME ARE ALLOWABLE AS DEDUCTIONS AS BUSINESS EXPENDITURE U/S.37(L) OF THE INCOME - TAX ACT,1961. THIS WAS SO HELD BY THE ITAT, CUTTA C K BENCH IN ASSESSEE'S OWN CASE FOR THE ASSESSMENT YEARS 1999 - 2000 TO 2002 - 03. SINCE THE ASSESSEE HAS PAID THE AMOUNT IN QUESTION UNDER THE DIRECTION DF THE MINISTRY OF COAL, GOVERNMENT OF INDIA , THE LD IT(A) IS JUSTIFIED IN DELETING THE DISALLOWANCES RELYING ON THE ABOVE ORDER OF THE ITAT, CUTTACK BENCH HOLDING THE SAME AS BUSINESS EXPENDITURE ALLOWABLE U/S.3791). WE, THEREFORE, UPHOLD THE IMPUGNED ORDER OF THE LD CIT(A) ON THIS ISSUE AND DISMISS THE GROUND RAISED BY THE REVE NUE. FOLLOWING THE JUDICIAL PRECEDENT, WE DISMISS THIS GROUND OF APPEAL OF THE REVENUE FOR THE ASSESSMENT YEARS 2010 - 11 AND 2011 - 12, RESPECTIVELY. 116. THE NEXT ISSUE RELATES TO DELETION OF PRIOR PERIOD EXPENSES OF RS.312.65 LAKHS AND RS.2821.46 LAKHS FOR THE ASSESSMENT YEARS 2010 - 11 AND 2011 - 12, RESPECTIVELY. 117. WE FIND THAT A SIMILAR ISSUE AROSE FOR CONSIDERATION BEFORE THE ITAT, NAGPUR IN THE CASE OF WESTERN COALFIELDS LTD IN ITA NOS.164/NAG.1986 FOR THE ASSESSMENT YEAR 1979 - 80, WHEREIN, THE TRIB UNAL UPHELD THE FINDINGS OF THE CIT(A) OBSERVING THAT IN SUCH LINE OF BUSINESS, IT IS NOT POSSIBLE TO HAVE THE FULL ITEMS OF EXPENSES INCURRED AT ONCE GIVEN TIME. AS AND WHEN THE DEBIT NOTES ARE RAISED THE SAME WILL HAVE TO BE DEBITED TO THE ACCOUNTS. I N THE PRESENT CASE, THE CIT(A) OBSERVED THAT THE EXPENDITURE IS AN OUTCOME OF CRYSTALISATION OF LIABILITY 51 MAHANADI COALFIELD LTYD., RATHER THAN A RESULT OF ANY ERROR OR OMISSION. THE CIT(A) REFERRED TO CBDT NOTIFICATION NO.S.O.69 DATED 25.1.1996 ( 218 ITR (ST) 1, WHEREIN, THE CBD T HAS CLARIFIED THAT THE TERM PRIOR PERIOD ITEMS MEANS MATERIAL CHARGES OR CREDITS WHICH ARISE IN THE PREVIOUS YEAR AS A RESULT OF ERRORS OR OMISSIONS IN THE PREPARATION OF FINANCIAL STATEMENTS OF ONE OR MORE PREVIOUS YEARS AND ALSO FURTHER CLARIFICATION THAT THE CHARGE OR CREDIT ARISING ON THE OUTCOME OF A CONTIGENCY, WHICH AT THE TIME OF OCCURRENCE COULD NOT BE ESTIMATED ACCURATELY SHALL NOT CONSTITUTE THE CORRECTION OF AN ERROR BUT A CHANGE IN THE ESTIMATE AND SUCH AN ITEM SHALL NOT BE TREATED AS A PRI OR PERIOD ITEM. THIS FINDING OF FACT OF THE CIT(A) WAS NOT CONTROVERTED BY LD D.R. DURING THE COURSE OF HEARING. HENCE, RESPECTFULLY FOLLOWING THE DECISION OF THE ITAT NAGPUR BENCH IN THE CASE OF WESTERN COALFIELD LTD. (SUPRA), WE DISMISS THIS GROUND OF APPEAL OF THE REVENUE FOR THE ASSESSMENT YEAR 2010 - 11 AND 2011 - 12, RESPECTIVELY. 118. THE NEXT ISSUE RELATES TO DELETION OF RS. 520.40 LAKHS TOWARDS TRAINING EXPENSES FOR THE ASSESSMENT YEAR 2010 - 11. 119. THE ASSESSING OFFICER OBSERVED THAT ALTHOUGH IN THE BOOKS OF ACCOUNT, A SUM OF RS.630.50 LAKHS TOWARDS TRAINING EXPENSES INCLUDES A SUM OF RS.520.40 LAKHS LEVIED BY THE COAL INDIA LIMITED @ 50 PAISE PER TON OF COAL DISPATCHED, IN REALITY SUCH LEVY AT FIXED RATE IS NOT DIRECTLY RELATED TO ANY TRAINING EXPENSES INCURRED. THEREFORE, HE MADE THE ADDITION. 52 MAHANADI COALFIELD LTYD., 120. THE CIT(A) DELETED THE ADDITION BY OBSERVING AS UNDER: I HAVE GONE THROUGH THE RELATED DOCUMENTS IN RESPECT OF TRAINING EXPENSES INCURRED BY THE APPELLANT COMPANY UNDER THE BROAD HEAD SOCIAL FACILITIES EXPENSES. THE EXPENDITURE IN QUESTION IS LEVIED BY COAL INDIA LTD., THE HOLDING COMPANY ON COAL PRODUCED ON ACCOUNT OF PAYMENT TO THE INDIAN IN STATUTE OF COAL MANAGEMENT, RANCHI. THIS ACT HAS BEEN DISCLOSED AT PARA NO.14.2 TO NOTES ON ACCOUNTS (SCHEDULE - F) OF THE ANNUAL REPORT & ACCOUNTS OF THE APPELLANT COMPANY. SIMILAR EXPENDITURE I.E. APEX OFFICE EXPEND ITURE WAS DISALLOWED BY THE AO IN THE EARLIER YEARS I.E. AY 2005 - 06, 2006 - 07 & 2007 - 08. ON APPEAL, THE ABOVE DISALLOWANCE WAS DELETED BY THE CIT(A). ON SECOND APPEAL BY THE DEPARTMENT, THE ITAT, CUTTACK HAS DISMISSED THE APPEAL ON THE ABOVE POINT IN ITA NO.051, 052 & 053/CTK/2011. IN VIEW OF THE ABOVE, THE DISALLOWANCE OF RS.520.40 LAKH MADE BY THE AO IS DELETED. 121. NO CONTRARY DECISION WAS PLACED ON RECORD BY THE LD D.R. IT WAS ALSO SUBMITTED BEFORE US THAT IN THE SUBSEQUENT YEARS, THE REVENUE HA S NOT MADE ANY SUCH DISALLOWANCE. HENCE, WE DISMISS THIS GROUND OF APPEAL OF THE REVENUE AND UPHOLD THE FINDINGS OF THE CIT(A). 122. THE NEXT ISSUE RAISED BY THE REVENUE IS AGAINST DELETION OF RS.2000.00 LAKHS TOWARDS RENOVATION OF RAILWAY SIDING. 123. THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAS INCURRED RS.2000.00 LAKHS TOWARDS REPAIR OF RAILWAY TRACKS AND CLAIMED THE SAME AS DEDUCTION. THE ASSESSING OFFICER DISALLOWED THE SAME ON THE GROUND OF NON - CURRENT REPAIR EXPENDITURE HAVING LONG TERM BENEF ITS FOR THE COMPANY. 53 MAHANADI COALFIELD LTYD., 124. BEFORE THE CIT(A), THE ASSESSEE SUBMITTED A BREAK - UP OF THE EXPENDITURE ON REPAIR OF RAIL TRACKS AND SUBMITTED THAT THE ASSESSEE HAS DEPOSITED TOTAL ADVANCE OF RS.3335.94 LAKHS WITH RAILWAYS AGAINST WHICH A DEDUCTION OF RS.700.1 3 LAKHS IS MADE BY RAILWAYS TOWARDS GENERAL CHARGES AND DEPARTMENTAL CHARGES UPFRONT. IT WAS SUBMITTED THAT OUT OF FUND AVAILABLE FOR EXECUTION OF WORK, RS.2223.39 LAKH WAS INCURRED TILL JUNE, 2011, TO SUBSTANTIATE THAT THE TOTAL EXPENDITURE TILL JUNE, 20 11 WAS RS.2923.52 LAKHS (RS.700.13 LAKHS + RS.2223.39 LAKHS). THE ASSESSEE RELIED ON THE DECISION OF HONBLE CAL C UTTA HIGH COURT IN THE CASE OF CULTURAL ENTERPRISES CORP VS CIT, 196 ITR 488 (CAL) AND P&H HIGH COURT IN THE CASE OF CIT VS. VISHAL PAPER IND , 351 TIR 478 (P&H). THE CIT(A) BY FOLLOWING THE ABOVE SAID DECISIONS RELIED BY LD A.R. OF THE ASSESSEE DELETED THE ADDITION. 125. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD AND ALSO PE RUSED THE DECISIONS RELIED UPON BY LD CIT(A) IN THE IMPUGNED ORDER. IN THE CASE OF CULTURAL ENTERPRISES COR (SUPRA), IT HAS BEEN HELD THAT EVEN WHERE A SUM OF MONEY IS SPENT FOR REPAIRS IN A PARTICULAR YEAR BECAUSE OF THE FACT THAT REGULAR REPAIRS ARE AL LOWED TO FALL IN ARREARS AND REPAIRS ON AN EXTENSIVE SCALE HAVE TO BE UNDERTAKEN TO REMEDY THE EFFECT OF SEVERAL YEARS NEGLIGENCE, THE EXPENSES FOR SUCH ARREARS ARE ALLOWABLE. SIMILARLY, IN THE CASE OF VISHAL PAPER INDUSTRIES (SUPRA), IT HAS BEEN HELD TH AT THE INCREASE OF LIFE BY REPAIR AND MAINTENANCE OF THE EXISTING ASSETS BEYOND THEIR 54 MAHANADI COALFIELD LTYD., ORIGINAL ESTIMATED ECONOMIC LIFE COULD NOT BE A GROUND TO RETURN A FINDING THAT IT WAS NOT A CASE OF REPAIRS. WE FIND THAT LD D.R. COULD NOT POINT OUT ANY SPECIFIC ERROR IN THE ORDER OF THE CIT(A) OR PLACE ANY POSITIVE MATERIAL ON RECORD THAT THE AMOUNT SPENT ON REPAIR OF RAILWAY TRACKS ARE NOT ALLOWABLE EXPENDITURE. IN VIEW OF ABOVE, WE UPHOLD THE FINDINGS OF THE CIT(A) AND DISMISS THIS GROUND OF APPEAL OF THE REVENUE. 126. THE NEXT ISSUE RELATES TO DELETION OF DISALLOWANCE U/S.14A OF THE ACT OF RS.189.74 LAKHS AND RS.516.59 LAKHS TOWARDS FOR THE ASSESSMENT YEAR 2012 - 13 AND 2013 - 14, RESPECTIVELY. 127. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF LOWER A UTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSEE HAD RECEIVED TAX FREE INCOME OF RS.18.32 CRORES FROM INTEREST ON 8.5% TAX FREE BONDS, INTEREST ON IRFC BONDS AND DIVIDEND FROM MUTUAL FUND. THE ASSESSING OFFICER OBSERVED THAT THE VALUE OF ASSETS WHICH YIELDED THE ABOVE INCOME WAS RS.478.53 CRORES AS ON 31.3.2012 AND THE EXPENDITURE TOWARDS FINANCE COST CLAIMED BY THE ASSESSEE WAS RS.5.38 CRORES AND HENCE, THE ASSESSING OFFICER RESORTED TO RULE 8D AND CALCULATED THE DISAL LOWANCE U/S.14A AT RS.1.897 CRORES. SIMILARLY, IN THE ASSESSMENT YEAR, THE ASSESSING OFFICER CALCULATED THE DISALLOWANCE U/S.14A OF THE ACT AT RS.5.1659 CRORES. 55 MAHANADI COALFIELD LTYD., 128. ON APPEAL, THE CIT(A) DIRECTED THE ASSESSING OFFICER TO DELETE THE ADDITION MADE U/S.14 A OF THE ACT FOR BOTH THE ASSESSMENT YEARS UNDER CONSIDERATION. 129. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. THE ASSESSING OFFICER ON PERUSAL OF AUDIT REPORT FOUND THAT THE AMOUNT OF DEDUCTION INADMISSIBLE IN TERMS OF SECTION 14A IN RESPECT OF EXPENDIT URE INCURRED IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME, WHEREAS THE VALUE OF ASSETS WHICH YIELDED INCOME AND NOT INCLUDIBLE IN THE TOTAL INCOME AND CALCULATED THE DISALLOWANCE U/S.14A OF THE ACT. ON APPEAL, THE CIT(A) DIRECTED THE ASSESSING OFFICER TO DELETE THE ADDITION. WE NOTICE THAT SUB - SECTION(1) OF SECTION 14A PROVIDES THAT FOR THE PURPOSE OF COMPUTING TOTAL INCOME UNDER CHAPTER IV OF THE ACT, NO DEDUCTION SHALL BE ALLOWED IN RESPECT OF EXPENDITURE INCURRED BY THE ASSESSEE IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE ACT. IN THE PRESENT CASE , THE ASSESSING OFFICER HAS NOT GIVEN ANY REASON FOR CALCULATING THE DISALLOWANCE. THE ASSESSEE SUBMITTED THAT THERE WERE NO BORROWINGS EXCEPT VERY OLD FOR SPECIFIC PURPOSES. THE CIT(A) IN THE ORDER HAS ALSO STATED THAT THE ASSESSING OFFICER HAS NOT VERIFIED WHETHER THE DIFFERENTIAL AMOUNT OF THE ASSET HAS COME FROM ANY BORROWING BY THE ASSESSEE OR IT IS SIMPLY THE INVESTMENT FROM THE RESERVE & SURPLUS. WE ARE OF THE SUBSTANTIVE VIEW AND DEEM IT PROPER TO RESTORE THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER TO VERIFY WHETHER THE ASSESSEE HAS 56 MAHANADI COALFIELD LTYD., BORROW ED MONEY OR SURPLUS FROM RESERVE & SURPLUS AMOUNT AND REDECIDE THE ISSUE AFRESH AS PER LAW AND AFTER GIVING OPPORTUNITY OF HEARING TO THE ASSESSEE. THIS GROUND OF APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSE FOR THE ASSESSMENT YEAR 2012 - 13 AN D 2013 - 14, RESPECTIVELY. 130. THE NEXT ISSUE RELATES TO DELETION OF DISALLOWANCE TOWARDS RECLAMATION OF LAND AND MINES CLOSURE EXPENDITURE OF RS. 5935.75 LAKHS, RS.10821.00 LAKHS, RS.6474.00 LAKHS AND RS.7012.00 LAKHS FOR THE ASSESSMENT YEARS 2011 - 12, 2012 - 13, 2013 - 14 AND 2014 - 15, RESPECTIVELY. 131. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD . THE ASSESSING OFFICER HAS DISALLOWED THE CLAIM OF THE ASSESSEE THE ABOVE PROVISION SHOULD N OT BE ALLOWED AS BUSINESS EXPENDITURE. THE CIT(A) OBSERVED THAT THE ASSESSEE HAS CREATED THE PROVISION FOR MINES CLOSURE PLAN AS PER THE GUIDELINES OF THE MINISTRY OF COAL, GOVERNMENT OF INDIA , WHICH STATES THAT THE ASSESSEE IS TO PREPARE THE PLAN AND DIV IDE THE EXPENDITURE AMONG USEFUL LIFE OF THE MINES BY CREATING PROVISION FOR SUCH IN EACH YEAR. FURTHER, THE GUIDELINES REQUIRED THE COMPANY FINANCIAL ASSURANCE BY OPENING AN ESCROW ACCOUNT WITH THE COAL CONTROLLER ORGANISATION AS EXCLUSIVE BENEFICIARY. THEREFORE, THE ASSESSEE COMPANY HAS MADE A FRESH PROVISION FOR EXPENDITURE TOWARDS MINES CLOSURE PLAN AND HAS REVERSED THE EARLIER PROVISION BOOKED UNDER THE HEAD RECLAMATION OF LAND. HENCE, IN VIEW OF THE GUIDELINES, THE ASSESSEE HAS DEPOSITED IN THE ESCR OW ACCOUNT 57 MAHANADI COALFIELD LTYD., THE PROVISION. WE FIND NO GOOD REASON COULD BE GIVEN BY LD D.R. POINTING OUT THE REQUIREMENT TO INTERFERE WITH THE ORDER OF THE CIT(A ), WHICH IS IN THE SPIRT OF GUIDELINES ISSUED BY MINISTRY OF COAL, GOVERNMENT OF INDIA. WE, THEREFORE, DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVENUE AND, ACCORDINGLY, SAME IS DISMISSED FOR THE ASSESSMENT YEARS 2011 - 12, 2012 - 13, 2013 - 14 AND 2014 - 15. 132. THE NEXT ISSUE RELATES TO DELETION OF ADDITION OF RS.2834.00 LAKHS TOWARDS CSR EXPENSES FOR TH E ASSESSMENT YEAR 2012 - 13. 133. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD . THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE HAS CLAIMED RS.28.34 CRORES AS CORPORATE SOCIAL RESPONSI BILITY EXPENSES. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS NOT ESTABLISHED THE ATTRIBUTABILITY OF EXPENDITURE TO THE BUSINESS AFFAIRS OF THE ASSESSEE. THEREFORE, HE DISALLOWED THE SAME. THE CIT(A)OBSERVED THAT THERE IS AN IMPOSITION ON THE AS SESSEE BY SECTION 135 OF THE COMPANIES ACT, 1913 READ WITH SCHEDULE VII THERETO AND COMPANIES (CORPORATE SOCIAL RESPONSIBILITY) RULES, 2014 THAT THE ASSESSEE HAS TO INCUR THE EXPENDITURE AND AS PER WHICH, THE ASSESSEE COMPANY WAS BOUND TO INCUR SUCH EXPEN DITURE. CORPORATE SOCIAL RESPONSIBILITY (CSR) IS A CONCEPT WHICH SUGGESTS THAT IT IS THE RESPONSIBILITY OF THE CORPORATIONS OPERATING WITHIN SOCIETY TO CONTRIBUTE TOWARDS ECONOMIC, SOCIAL AND ENVIRONMENTAL DEVELOPMENT THAT CREATES 58 MAHANADI COALFIELD LTYD., POSITIVE IMPACT ON SOCIETY AT LARGE. ALTHOUGH THERE IS NO FIXED DEFINITION, HOWEVER THE CONCEPT REVOLVES AROUND THAT FACT THE CORPORATIONS NEED TO FOCUS BEYOND EARNING JUST PROFITS . IT WAS ALSO SUBMITTED BEFORE US LD A.R. OF THE ASSESSEE IN THE SUBSEQUENT ASSESSMENT YEARS, NO SUCH ADDITION HAS BEEN MADE BY THE REVENUE. HENCE, WE DO NOT FIND ANY GOOD REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) AND DISMISS THIS GROUND OF APPEAL OF THE REVENUE FOR THE ASSESSMENT YEAR 2012 - 13. 134. THE NEXT ISSUE IS AGAINST DELETION OF DISALLOWANCE TOWARDS SERVICE CHARGES TO CIL OF RS.5156.00 LAKHS, RS.5395.00 LAKHS AND RS.5522.00 LAKHS FOR THE ASSESSMENT YEARS 2012 - 13, 2013 - 14 AND 2014 - 15, RESPECTIVELY. 135. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS CLAIMED RS.5156.00 LAKHS, RS .5395.00 LAKHS AND RS.5522.00 LAKHS FOR THE ASSESSMENT YEARS 2012 - 13, 2013 - 14 AND 2014 - 15, RESPECTIVELY TOWARDS SERVICES CHARGES TO COAL INDIA LIMITED. AS THE ASSESSEE COULD NOT JUSTIFY THE PAYMENT, THE ASSESSING OFFICER DISALLOWED THE SAME. BEFORE THE C IT(A), THE ASSESSEE DELINEATED THE SERVICES RENDERED BY COAL INDIA LIMITED, FOR WHICH, THE ASSESSEE WAS REQUIRED TO MAKE SUCH PAYMENT TO THE HOLDING COMPANY. THE CIT(A) FOUND THAT SIMILAR DISALLOWANCE WAS DELETED BY THE CIT(A) IN EARLIER YEARS AND THE SAM E WAS CONFIRMED BY THE ITAT. THEREFORE, THE CIT(A) DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. 59 MAHANADI COALFIELD LTYD., 136. WE A FTER HEARING THE RIVAL SUBMISSIONS, FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) WHO HAS FOLLOWED THE DECISION OF THE TRIBUNAL ORDER DATED 12.9.2011 FOR THE ASSESSMENT YEARS 2004 - 05 TO 2007 - 08 IN ASSESSEES OWN CASE, WHEREIN, IT HAS BEEN HELD AS UNDER: 41. THE AMOUNT IN QUESTION IS CLAIMED BY THE ASSESSEE - COMPANY TO HAVE BEEN PAID TO CO AT INDIA LTD., ( C IL) @ RS. 5 PER TON OF COAL PRODUCED TOWARDS RENDERING VARIOUS SERVICES LIKE PROCUREMENT, FOREIGN CONTRACT, MARKETING & CORPORATE SERVICES BASED N AGREEMENT ENTERED WITH THEM. THE ASSESSING OFFICER OBSERVED THAT THIS PAYMENT TO COAL INDIA L IMITED HAS BEEN WORKED OUT ON THE BASIS OF RS. 5 PER TON OF COAL PRODUCED AND NOT FOR ANY EXPENSES INCURRED OR SERVICES RENDERED ON ACTUAL BASIS BY THE CIL. ACCORDINGLY, HE WAS OF THE VIEW THAT THIS PAYMENT IS BASICALLY ON PRESUMPTIVE BASIS AND CANNOT BE SA ID THAT THE WHOLE AMOUNT IS SPENT FOR WHOLLY AND EXCLUSIVELY FOR BUSINESS PURPOSE. THEREAFTER, HE EXAMINED THE DEBIT MEMO AND CONCLUDED THAT THE PAYMENT IN QUESTION UNDER THE HEAD OF APEX OFFICE EXPENSES BY THE ASSESSEE TO THE HOLDING COMPANY IS TOTALLY PREDETERMINED AND PRESUMPTIVE AND WITHOUT ANY LOGICAL LINKAGE TO THE QUANTUM OF SERVICES RENDERED. THIS PAYMENT BY THE SUBSIDIARY TO THE HOLDING COMPANY WHICH IS NOT COMMENSURATE WITH THE SERVICES/BENEFITS ALSO CANNOT ESCAPE FROM THE PROVISION OF SECTION 40A(2). ON THE BASIS OF ABOVE, THE ASSESSING OFFICER DISALLOWED 10% OF SUCH EXPENDITURE. IT WAS THE STAND OF THE ASSESSEE THAT COAL INDIA LIMITED WAS FORMED BY GOVT. OF INDIA AS A PUBLIC SE C TOR UNDERTAKING WHOLE 100% SHARES ARE HELD BY THE PRESIDENT OF INDIA AND CONTROLLED THROUGH MINISTRY OF COAL. A F TER MAKING LOT OF PERMUTATION AND COMBINATIONS BY CIL, IT WAS FOUND THAT IF RS.5 PER TON OF COAL PRODUCED IS CONTRIBUTED BY ALL THE SUBSIDIARIES ARE REIMBURSEMENT OF EXPENSES, IT WILL BE SUFFICIENT TO TAKE CARE OF APEX OFFICE EXPENSES AND AC C ORD I NGLY , THE AMOUNT WAS PAID IN PURSUANCE OF AN AGREEMENT ENTERED INTO BETWEEN THE ASSESSEE AND CIL. THESE FACTS ARE NOT DISPUTED BY THE REVENUE. BUT, HOWEVER, THE LD AO HAS DISALLOWED 10% OF SUCH EXPENSES PRESUMABLY U/S.40A(2) ON ADHOC BASIS. THE AO HAS NOT JUSTIFIED SUCH DISALLOWANCE IN HIS ORDER. THE LD CIT(A) IN HIS ORDER OBSERVED THAT BOOKS OF ACCOUNT OF THE ASSESSEE COMPANY ARE AUDITED WHERE THE COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA U/S.619(4) OF THE COMPANIES ACT, 1956 ON THE ACCOUNTS ARE ALSO AVAILABLE. WE FIN THAT THE AO HAS NOT DISPUTED THE PAYMENT O APEX OFFICE EXPENSES TO CIL. IN VIEW OF THE ABOVE, WE HAVE NO HESITATION TO UPHOLD THE I MPUGNED ORDER OF THE LD CIT(A) ON THIS ISSUE THE AO HAVING DISALLOWED 10% OUT OF SUCH EXPENSES WITHOUT ANY COGENT 60 MAHANADI COALFIELD LTYD., REASONS. THEREFORE, THE GROUND RAISED BY THE REVENUE ON THIS ISSUE IS DISMISSED. WE FIND NO GOOD REASON COULD BE GIVEN BY LD D.R. POINTING OUT THE REQUIREMENT TO INTERFERE WITH THE ORDER OF THE CIT(A), WHICH IS IN CONSONANCE WITH THE ORDER OF THIS BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE. HENCE, WE DISMISS THIS GROUND OF APPEAL OF THE REVENUE FOR THE ASSESSMENT YEARS 2012 - 13, 2013 - 14 AND 2014 - 15, RESPECTIVELY. 137. THE NEXT ISSUE RELATES TO DELETION OF DISALLOWANCE TOWARDS GRANTS TO SCHOOL AND INSTITUTION OF RS.1674.00 LAKHS, RS.1868.00 LAKHS AND RS.2818.00 LAKHS FOR THE ASSESSMENT YEARS 2012 - 13, 2013 - 14 AND 2014 - 15, RESPECTIVELY. 138. THE ASSESSING OFFICER DISALLOWED GRANTS TO SCHOOL AND INSTITUTION OF RS.1674.00 LAKHS, RS.1868.00 LAKHS AND RS.2818.00 LAKHS FOR THE ASSESSMENT YEARS 2012 - 13, 2013 - 14 AND 2014 - 15, RESPECTIVELY BEING NOT SATISFIED HOW SUCH EXPENDITURE IS RELATED TO BUSINESS OF THE ASSESSEE. ON APPEAL, THE CIT(A) DELETED THE DISALLOWANCE ON THE GROUND THAT SINCE THE MINES ARE LOCATED IN REMOTE AREAS WHERE NO CIVIL FACILITIES ARE FACILITIES AND IN ORDER TO RETAIN THE EMPLOYEES AT THOSE AREAS, THE ASSESSEE WAS REQUIRED TO PROV IDE FOR SCHOOLS AND OTHER INSTITUTIONS. THEREFORE, THE EXPENDITURE IS RELATABLE TO WELFARE OF THE EMPLOYEES OF THE COMPANY. 139. BEFORE US, LD A.R. SUBMITTED THAT SIMILAR DISALLOWANCE MADE BY THE REVENUE IN THE CASE OF NORTHERN COALFIELDS LTD., WAS DEL ETED BY THE ITAT, JABALPUR VIDE ORDER DATED 21.10.2013. LD D.R. COULD NOT POINT OUT 61 MAHANADI COALFIELD LTYD., ANY SPECIFIC REASONS TO DEVIATE FROM THE FINDINGS OF THE CIT(A). HENCE, WE DISMISS THIS GROUND OF APPEAL OF REVENUE THE ASSESSMENT YEARS 2012 - 13, 2013 - 14 AND 2014 - 15, RES PECTIVELY. 140. THE NEXT ISSUE RELATES TO DELETION OF DISALLOWANCE OF RS.7347.88 LAKHS TOWARDS CENTRAL EXCISE DUTY. 141. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSEE HAD CREATED A PROVISION OF RS.7347.88 LAKHS REGARDING CENTRAL EXCISE DUTY ON COAL TO MEET THE STATUTORY LIABI LITY FOR THE IMPUGNED FINANCIAL YEAR. THE ASSESSING OFFICER DISALLOWED THE ABOVE PROVISION OF R S.7347.88 LAKHS ON THE GROUND THAT THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE OF ACTUAL PAYMENT OF CENTRAL EXCISE DUTY FOR THE MONTH OF MARCH, 2011 AND WHETHER THE PROVISION MADE TOWARDS CENTRAL EXCISE DUTY WAS FULLY PAID BEFORE THE DUE DATE OF FILING OF THE RETURN OF INCOME. ON APPEAL, BEFORE THE CIT(A), THE ASSESSEE SUBMITTED THE DETAILS OF EXCISE DUTY OF RS.7776.03 LAKHS UPTO JUNE, 2011 . THE CIT(A) OBSERVED THAT THE ASSESSEE HAS PAID THE AMOUNT MORE THAN THE PROVISION CREATED FOR THIS PURPOSE. THEREFORE, HE DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. THE ABOVE FINDINGS OF THE CIT(A) WAS NOT CONTROVERTED BY LD D.R. AND, THEREFORE, WE ARE INCLINED TO UPHOLD THE ORDER OF THE CIT(A) AND DISMISS THIS GROUND OF APPEAL OF THE REVENUE. 62 MAHANADI COALFIELD LTYD., 142. THE NEXT ISSUE RELATES TO DELETION OF DISALLOWANCE MADE ON DEVELOPMENT EXPENDITURE OF RS.2457.35 LAKHS FOR THE ASSESSMENT YEAR 2011 - 12. 143. BEFORE US, BOTH THE PARTIE S CONCEDED THAT IDENTICAL ISSUE AROSE FOR CONSIDERATION BEFORE THIS BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2003 - 04 TO 2006 - 07 ON REVENUES APPEALS AND THE TRIBUNAL HAS UPHELD THE FINDINGS OF THE CIT(A). IN THE PRESENT YEAR T HE CIT(A) HAS FOLLOWED THE DECISION OF THE TRIBUNAL FOR THE EARLIER ASSESSMENT YEARS(SUPRA). HENCE, WE DISMISS THIS GROUND OF APPEAL OF THE REVENUE. 144. THE NEXT ISSUE RELATES TO DELETION OF DISALLOWANCE OF INTEREST PAID TO CIL OF RS.314.64 LAKHS FOR TH E ASSESSMENT YEAR 2011 - 12. 145. WE HAVE DECIDED SIMILAR ISSUE IN THE ASSESSEES APPEAL IN PARAS 24 - 25 ABOVE. HENCE, THIS GROUND OF REVENUE IS DISMISSED. 146. THE NEXT RELATES TO DELETION OF DISALLOWANCE TOWARDS REPAIR EXPENSES OF PLANT AND MACHINERY OF RS.157.45 LAKHS FOR THE ASSESSMENT YEAR 2011 - 12. 147. WE H AVING HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE ORDERS OF LOWER AUTHORITIES, FIND THAT THE ASSESSING OFFICER DISALLOWED THE CLAIM OF RS.157.45 LAKHS TOWARDS REPAIRS EXPENSES OF PLANT AND MACHINE RY ON THE GROUND OF DOCUMENTARY EVIDENCE. ON APPEAL, THE CIT(A) DELETED THE ADDITION TREATING THE CLAIM OF EXPENDITURE AS REVENUE EXPENDITURE 63 MAHANADI COALFIELD LTYD., FOLLOWING THE DECISION OF HONBLE APEX COURT IN THE CASE OF SARVANA SPG. MILLS PVT LTD., 293 ITR 201(SC) AND HON BLE P&H HIGH COURT IN THE CASE OF VISHAL PAPER INDUSTRIES, 351 ITR 578(P&H). NO CONTRARY DECISION WAS PLACED ON RECORD BY THE REVENUE. HENCE, WE UPHOLD THE FINDINGS OF THE CIT(A) AND DISMISS THIS GROUND OF APPEAL OF THE REVENUE. 148. THE NEXT ISSUE REL ATES TO DELETION OF ADDITION TOWARDS PER TAX OF RS.168.54 LAKHS FOR THE ASSESSMENT YEAR 2011 - 12. 149. HAVING HEARD BOTH THE SIDES, WE FIND THAT THE AMOUNT TOWARDS PERK TAX IS NOT CLAIMED AS AN EXPENDITURE, RATHER IT IS REFLECTED IN BALANCE SHEET UNDER THE BROAD HEAD LOANS & ADVANCE. SINCE THERE WAS NO CLAIM BY THE ASSESSEE, THERE IS NO REASON TO DISALLOW THE SAME BY THE ASSESSING OFFICER. THE CIT(A) HAS RIGHTLY DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. HENCE, THIS GROUND OF REVENUE FOR THE A SSESSMENT YEAR 2011 - 12 IS DISMISSED. 150. THE NEXT WHICH REQUIRES OUR ADJUDICATION IN REVENUES APPEAL FOR THE ASSESSMENT YEAR 2014 - 15 RELATES TO DELETION OF ADDITION OF RS.4594.00 LAKHS TOWARDS DIFFERENCE IN OPENING STOCK OF COAL. 151. THE ASSESSING OFFI CER MADE AN ADDITION OF RS.4594 LAKHS BEING THE DIFFERENCE IN VALUATION OF CLOSING STOCK AS ON 31.3.2012 AND OPENING STOCK AS ON 1.4.2013 BEING NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE. 64 MAHANADI COALFIELD LTYD., 152. THE CIT(A) DELETED THE ADDITION MADE BY THE ASSES SING OFFICER BY OBSERVING AS UNDER: I HAVE CONSIDERED THE MATTER AND PERUSED THE EXPLANATION OF THE ASSESSEE. THE ASSESSEE'S EXPLANATION IS THAT THE CONCERNED DEVELOPMENT MINES IN QUESTION WAS CONVERTED TO REVENUE MINES AND, THEREFORE, THE COST OF COAL WA S TRANSFERRED TO OPENING STOCK AS ON 1.4.2013. THE ASSESSEE FURTHER EXPLAINS THAT THE STOCK OF COAL REPRESENTS THE NORMAL RAISING COST OF THE COAL WHICH WAS NOT CHARGED TO THE P&L ACCOUNT DURING THE FY 2012 - 13 AND AFTER CONVERSION OF MINES FROM DEVELOPMENT TO REVENUE, THE SAME WAS CHARGED TO P&L ACCOUNT IN THE FY 2013 - 14BY BRINGING THE OPENING STOCK UNDER P&L ACCOUNT AS THE SALE PROCEEDS OF THE SAME STOCK WAS CREDITED TO THE P&L ACCOUNT IN THE PLACE OF DEVELOPMENT EXPENSES. THE ASSESSEE PLEADS THAT THIS IS AN ESTABLISHED ACCOUNTING POLICY BEING FOLLOWED BY THE ASSESSEE WHICH WILL BE EVIDENT FROM NOTE - 33 OF SIGNIFICANT ACCOUNTING POLICIES' WHEREIN AT CLAUSE 3.4 THE ACCOUNTING POLICY RELATING TO DEVELOPMENT MINES IS GIVEN. THE CONTENTION OF THE ASSESSEE APPEA RS TO BE CORRECT. THE AO HAS PERHAPS FAILED TO UNDERSTAND THE IMPLICATIONS OF THE ENTRIES IN QUESTION WHILE MAKING THE IMPUGNED ADDITION. IN THIS VIEW OF THE MATTER, I FIND NO JUSTIFICATION IN THE IMPUGNED ADDITION AND, THEREFORE, DIRECT FOR DELETION OF RS .45.94 CRORES. 153. BEFORE US , NO SPECIFIC ERROR COULD BE POINTED OUT BY LD D.R. IN THE ORDER OF THE CIT(A). THEREFORE, WE CONFIRM THE FINDINGS OF THE CIT(A) AND DISMISS THIS GROUND OF APPEAL OF REVENUE FOR THE ASSESSMENT YEAR 2014 - 15. 154 IN THE RESULT, APPEAL S FILED BY THE REVENUE FOR THE ASSESSMENT YEARS 2010 - 11, 2011 - 12, 2013 - 14 & 2014 - 15 ARE DISMISSED AND APPEAL FOR ASSESSMENT YEAR 2012 - 13 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 20 / 03 /201 8 . SD/ - SD/ - ( N.S SAINI) ( PAVAN KUMAR GADALE) A CCOUNTANT MEMBER JUDICIALMEMBER CUTTACK; DATED 20 / 0 3 /201 8 65 MAHANADI COALFIELD LTYD., B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PRIVATE SECRETARY ITAT, CUTTACK 1. THE APPELLANT : MAHANADI COALFIELDS LTD., JAGRITI VIHAR, BURLA, SAMBALPUR 2. THE RESPONDENT. DCIT, CIRCLE - 2(1), SAMBALPUR 3. THE CIT(A) - CUTTACK 4. PR.CIT - 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//