RAJASTHAN STATE MINES & MINERALS LIMITED, Jaipur V. ASSISTANT COMMISSIONER OF INCOME TAX, Jaipur

ITA 47/JPR/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4836 (ITAT-JAIPUR)
• Duration Of Justice: 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 12-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROLI AGARWAL
• Keywords: Depreciation; Diversion of income; Question of law; Valuation report; Capital receipt; Commercial expediency; Revised return; Revenue expenditure; Capital expenditure
• Section: 92E; 37(1); 37; 90; 139

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKWY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA. NO. 47/JP/2018 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2014-15 M/S RAJASTHAN STATE MINES & MINERALS LTD., C-89-90, LAL KOTHI, JANPATH, JAIPUR CUKE VS. ACIT CIRCLE-6, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAACR7857H VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA. NO. 183 /JP/2018 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2014-15 DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-6, JAIPUR CUKE VS. M/S RAJASTHAN STATE MINES & MINERALS LTD., C-89-90, LAL KOTHI, JANPATH, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAACR7857H VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI P. C. PARWAL (CA) JKTLO DH VKSJ LS @ REVENUE BY : SMT. ROLI AGARWAL (CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 26/07/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 24/10/2018 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. ITA NO. 47 & 183/JP/2018 RAJASTHAN STATE MINES AND MINERALS LTD.,VS. ACIT, J AIPUR 2 THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE AGAINST THE ORDER OF LD. CIT(A), JAIPUR DATED 30.11 .2017 FOR ASSESSMENT YEAR 2014-15 WHEREIN RESPECTIVE GROUNDS OF APPEAL A RE AS UNDER:- ITA. NO. 183/JP/2018 (I) WHETHER ON THE FACTS IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW THE LD. CIT(A) WAS JUSTIFIED IN DIRECTING TO DELETE ADDITION OF RS. 20,00,000/- MADE BY THE AO BY DISALLOWING OF CO NTRIBUTION TO STATE RENEWAL FUND DESPITE THE FACT THAT IT WAS APPLICATI ON OF INCOME AND NOT EXPENDITURE INCURRED FOR BUSINESS EXPEDIENCY. (II) WHETHER ON THE FACTS IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW THE LD. CIT(A) WAS JUSTIFIED IN ALLOWING DEDUCTION OF RS. 3,01,47,000/- IN RESPECT OF PROVISION FOR MINES CLOSURE EXPENSES. (III) WHETHER ON THE FACTS IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS JUSTIFIED IN HOLDING THAT RECEIP TS OF RS. 2,92,48,044/- FROM SALE OF CARBON EMISSION CERTIFICATIONS ARE CAP ITAL IN NATURE. ITA. NO. 47/JP/2018 (1) THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW I N CONFIRMING THE DISALLOWANCE OF RS. 1,22,76,496/- OUT OF RURAL DEVE LOPMENT EXPENSES. (2) THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ACTION OF AO IN DISALLOWING THE CLAIM OF AMORTIZATI ON OF MINING LAND OF RS. 3,97,32,278/- AND LEASEHOLD LAND OF RS. 8,18,24 8/- AGGREGATING TO RS. 4,05,50,526/- BY TREATING IT AS CAPITAL EXPENDI TURE. (2.1) THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ABOVE DISALLOWANCE ON THE BASIS OF FINDINGS OF HON BLE ITAT IN ASSESSEES OWN CASE FOR AY 2007-08 BUT AT THE SAME TIME NOT ALLOWING ITA NO. 47 & 183/JP/2018 RAJASTHAN STATE MINES AND MINERALS LTD.,VS. ACIT, J AIPUR 3 THE BENEFIT OF TREATING SUCH EXPENDITURE AS CAPITAL EXPENDITURE AS DIRECTED BY HONBLE ITAT. (3) THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING THE ACTION OF AO IN NOT ALLOWING THE LEAVE ENCASHMENT E XPENDITURE OF RS. 29,39,32,282/- CLAIMED BY THE ASSESSEE DURING T HE COURSE OF ASSESSMENT PROCEEDINGS. (4) THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN HOLDING THAT THE ISSUE OF CHARGEABILITY OF INTEREST UNDER SECTION 23 4A IS MANDATORY AND CONSEQUENTIAL, BY NOT DECIDING THE GROUND THAT THE RETURN FILED ON OR BEFORE THE DATE PRESCRIBED U/S 139(1) AND THUS SAM E IS NOT LEVIABLE. 2. IN GROUND NO. 1 OF THE REVENUES APPEAL, IT HAS CHALLENGED THE DELETION OF ADDITION OF RS. 20,00,000/- MADE BY THE AO BY DISALLOWING CONTRIBUTION TO STATE RENEWAL FUND. 3. AT THE TIME OF HEARING, BOTH THE PARTIES FAIRLY SUBMITTED THAT THE ISSUE IS COVERED BY THE DECISION OF THE CO-ORDINATE BENCH IN ASSESSEES OWN CASE FOR AY 2011-12 IN ITA NO. 298/JP/2015 DATE D 30.05.2017 WHEREIN IT WAS HELD AS UNDER:- 78. GROUND NO. 1 IS AGAINST DELETING THE ADDITION OF RS. 20 LAKHS IN RESPECT OF CONTRIBUTION MADE BY ASSESSEE TOWARDS ST ATE RENEWAL FUND. AT THE OUTSET, THE LD. COUNSEL SUBMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF THE HONB LE RAJASTHAN HIGH COURT RENDERED IN THE CASE OF CIT VS. JODHPUR CO-OP ERATIVE MARKETING SOCIETY (2005) 275 ITR 372(RAJ.) ITA NO. 47 & 183/JP/2018 RAJASTHAN STATE MINES AND MINERALS LTD.,VS. ACIT, J AIPUR 4 78.2 WE HAVE HEARD THE RIVAL CONTENTIONS, WE FIND THAT THE LD. CIT(A) HAS DECIDED THE ISSUE IN PARA 2.1 AND 2.2 BY FOLLOW ING THE JUDGMENTS OF THE HONBLE HIGH COURT AS UNDER:- 2.1. IN THIS YEAR, THE ASSESSEE HAS CLAIMED EXPEND ITURE OF RS. 20,00,000/- IN RESPECT OF CONTRIBUTION TO STATE REN EWAL FUND. THIS ISSUE ALSO AROSE IN THE CASE OF APPELLANT IN AY 201 0-11 AND EARLIER YEARS. THE MAIN POINTS OF THE ASSESSMENT ORDER, ON THIS ISSUE, HAVE BEEN NARRATED IN THE APPEAL ORDER OF CIT(A)-II, JAI PUR (APPEAL NO. 325/12-13, DATED 05.12.2013) FOR A.Y. 2010-11. THE MAIN POINTS OF THE SUBMISSIONS OF THE APPELLANT, ON THIS ISSUE, HAVE B EEN NARRATED THE ABOVE APPEAL ORDER. THEREFORE, THE ASSESSMENT ORDE R AND THE SUBMISSIONS OF THE APPELLANT ARE NOT BEING AGAIN NA RRATED IN THIS ORDER FOR THE SAKE OF BREVITY. IN AY 2010-11, THE CIT(A)- II, JAIPUR, HAS HELD AS UNDER- ASSESSING OFFICER DISALLOWED CONTRIBUTION MADE TO STATE RENEWAL FUND BY TREATING THE SAME AS DIVERSION OF INCOME. HOWEV ER, APPELLANT SUBMITTED THAT THIS ISSUE IS COVERED IN ITS FAVOUR BY THE ORDER OF ITAT. IT IS SEEN THAT SIMILAR ADDITION WAS MADE IN AY 200 6-07 IN THE CASE OF THE APPELLANT, BUT IT WAS DECIDED BY HONBLE ITAT B ENCH A JAIPUR IN ITA NO. 783/JP/2009 & 740/JP/2009 IN AY 2006-07 THR OUGH ORDER DATED 31.03.2010 IN FAVOUR OF THE APPELLANT, WHERE IN PAR A 15 HONBLE TRIBUNAL RELIED UPON ITS DECISION DATED 22.05.2009 IN CASE OF RAJASTHAN STATE SEEDS CORPORATION LTD, WHEREIN RELYING UPON H ONBLE RAJASTHAN HIGH COURT DECISIONS IN THE CASE OF CIT VS. RAJASTH AN SPINNING AND WEAVING MILLS LTD. 274 ITR 465 AND CIT VS. SHRI RAJ ASTHAN SYNTEX LTD. 221 CTR 410 HELD THAT THE CONTRIBUTION MADE BY THE ASSESSEE TO A PUBLIC WELFARE FUND WHICH IS CONNECTED OR RELATED W ITH HIS BUSINESS IS ITA NO. 47 & 183/JP/2018 RAJASTHAN STATE MINES AND MINERALS LTD.,VS. ACIT, J AIPUR 5 AN ALLOWABLE DEDUCTION U/S 37 AS IT WAS PROVIDED FO R THE BENEFIT OF THE EMPLOYEES. HONBLE TRIBUNAL DISTINGUISHED THE DECIS ION OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. JODHPUR CO-OPERATIVE MARKETING SOCIETY 275 ITR 372 (RAJ) STATING THAT IN THAT CASE THE AMOUNT WAS SET APART FOR THE SHAREHOLDERS OF THE SO CIETY WHEREAS IN THE PRESENT CASE AMOUNT WAS PROVIDED FOR THE BENEFIT OF THE EMPLOYEES AND THE CONTRIBUTION MADE TO STATE RENEWAL FUND WAS FOU ND ALLOWABLE U/S 37(1). RESPECTFULLY FOLLOWING THE DECISION OF ITAT IN APPELLANTS OWN CASE, ADDITION MADE BY THE AO IS DELETED. 2.2 FOLLOWING THE ABOVE ORDER OF THE CIT(A)-II, JAI PUR AND THE ORDER OF ITAT, JAIPUR IN THE CASE OF THE ASSESSEE, THE DI SALLOWANCE MADE BY THE AO IS DIRECTED TO BE DELETED. THIS GROUND IS A LLOWED. 78.3 SINCE THE LD. CIT(A) RIGHTLY FOLLOWED THE JUDG MENT OF THE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. JODHPUR CO-OPERATIVE MARKETING SOCIETY(2005) 275 ITR 372 (RAJ.). WE DO NOT SEE ANY REASON TO INTERFERE INTO THE ORDER OF THE LD. CIT(A), SAME IS HEREBY AFFIRMED. THIS GROUND IS DISMISSED. 4. FURTHER, THE LD. AR ALSO SUBMITTED THAT THE ISSU E IS NOW COVERED BY THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN CASE OF PRINCIPAL CIT VS. RAJASTHAN STATE SEED CORPORATION LTD . IN D.B. APPEAL NO. 4/2016 DATED 29.04.2016 WHEREIN IT WAS H ELD AS UNDER:- 9. IN SOFAR AS THE EXPENDITURE INCURRED ON STATE RENEW AL FUND IS CONCERNED, SAID EXPENDITURE ALSO GOES TO SHOW TH AT THE RENEWAL FUND WAS SET UP BY THE STATE GOVERNMENT AND WAS CREATED WITH THE OBJECT OF PROVIDING A SAFETY NET F OR THE WORKERS LIKELY TO BE EFFECTED BY RESTRICTING IN THE STATE P UBLIC ENTERPRISE ITA NO. 47 & 183/JP/2018 RAJASTHAN STATE MINES AND MINERALS LTD.,VS. ACIT, J AIPUR 6 AND THAT A FINDING OF FACT HAS BEEN RECORDED THAT T HE CONTRIBUTION MADE TO THE STATE RENEWAL FUND IS SOLELY FOR THE PU RPOSES OF THE WELFARE AND BENEFIT OF THE EMPLOYEES. IN OUR VIEW, IT IS FOR THE ASSESSEE TO DECIDE WHETHER ANY EXPENDITURE SHOULD B E INCURRED IN THE COURSE OF BUSINESS AND EXPENDITURE OF THIS NATU RE BEING FOR BUSINESS EXPEDIENCY IS CERTAINLY ALLOWABLE DEDUCTIO N UNDER SECTION 37(1) OF THE ACT. IN OUR VIEW ANY NORMAL EX PENDITURE FOR THE WELFARE AND BENEFIT OF EMPLOYEES IS ALLOWABLE E XPENDITURE UNDER SECTION 37(1), THE TRIBUNAL HAS COME TO A FIN DING OF FACT THAT IT WAS A LEGAL OBLIGATION OF THE RESPONDENT-AS SESSEE TOWARDS CONTRIBUTION OF THE SAID AMOUNT TO THE STATE RENEWA L FUND AND THERE BEING A LEGAL OBLIGATION AS WELL IN OUR VIEW THE TRIBUNAL HAS COME TO A CORRECT CONCLUSION. 5. UNDISPUTEDLY, THERE ARE NO CHANGES IN THE FACTS AND CIRCUMSTANCES OF CASE. FOLLOWING THE DECISION OF T HE CO-ORDINATE BENCH IN ASSESSEES OWN CASE AND DECISION OF THE HONBLE RAJASTHAN HIGH COURT IN CASE OF PR. CIT VS. RAJASTHAN STATE SEED C ORPORATION LTD, WE UPHELD THE ORDER OF THE LD. CIT(A). HENCE, THE GROU ND SO TAKEN BY THE REVENUE IS DISMISSED. 6. IN GROUND NO. 2, THE REVENUE HAS CHALLENGED ALLO WANCE OF DEDUCTION OF RS. 3,01,47, 000/- IN RESPECT OF PROVI SION FOR MINES CLOSURE EXPENSES. 7. AT THE TIME OF HEARING, BOTH THE PARTIES FAIRLY SUBMITTED THAT THE ISSUE IS COVERED BY THE DECISION OF CO-ORDINATE BEN CH IN ASSESSEES OWN CASE FOR AY 2011-12 IN ITA NO. 256 AND 298/JP/2015 DATED 30.05.2017 WHEREIN IT WAS HELD AS UNDER:- ITA NO. 47 & 183/JP/2018 RAJASTHAN STATE MINES AND MINERALS LTD.,VS. ACIT, J AIPUR 7 70. GROUND NO. 4 IS CONFIRMING THE ACTION OF THE A O DISALLOWED THE CLAIM OF DEDUCTION OF RS. 4,69,61,000/- IN RESP ECT OF MINE CLOSURE EXPENSES MADE IN COURSE OF ASSESSMENT PROCE EDINGS. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUB MISSION AS MADE IN THE WRITTEN SUBMISSIONS. THE LD. COUNSEL F OR THE ASSESSEE SUBMITTED THAT AS PER THIS GUIDELINES THE ASSESSEE WAS FASTENED A LIABILITY OF RS. 4,69,61,000/- SUCH LIAB ILITY WHICH IS AN ASCERTAINED LIABILITY IS ALLOWABLE UNDER THE MERCAN TILE SYSTEM OF ACCOUNTING FOLLOWED BY THE ASSESSEE. FOR ALLOWABILI TY OF CLAIM OF EXPENDITURE, THERE IS NO REQUIREMENT THAT IT SHOULD BE DEBITED IN THE BOOKS OF ACCOUNTS FOR THIS PROPOSITION THE LD. COUNSEL FOR THE ASSESSSEE RELIED UPON THE JUDGMENT OF THE HONBLE S UPREME COURT RENDERED IN THE CASE OF SATLUJ COTTON MILLS V S CIT 116 ITR 1. HE SUBMITTED THAT THE TRIBUNAL IN ASSESSEES OW N CASE PERTAINING TO THE AY 2010-11 HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. 70.2 WE HAVE HEARD THE RIVAL CONTENTION, PERUSED TH E MATERIAL AVAILABLE ON RECORD. THE LD. CIT(A) HAS REJECTED T HE CLAIM BY FOLLOWING THE DECISION OF HIS PREDECESSOR PERTAININ G TO THE AY 2010-11. THE CO-ORDINATE BENCH IN ASSESSEES OWN C ASE HAS HELD AS UNDER:- 30.5 FURTHER THE JUDGMENT IN THE MATTER OF BHARAT EARTH MOVERS LTD VS. CIT, 112 TAXMAN 61 (SC) AND CALCUTTA COMPAN Y LTD, 37 ITR ARE APPLICABLE. BESIDE, IN THE SAID JU DGMENT IT WAS CATEGORICALLY HELD THAT THE MINES CLOSURE LIABI LITY IS A ASCERTAINED LIABILITY. AS PER MATCHING PRINCIPLE AS WELL AS THE MERCANTILE SYSTEM OF ACCOUNTING, THE LIABILITY IS ITA NO. 47 & 183/JP/2018 RAJASTHAN STATE MINES AND MINERALS LTD.,VS. ACIT, J AIPUR 8 ALLOWABLE IN PRINCIPLE UNDER SECTION 37 OF THE ACT. IN VIEW OF THE ABOVE, THE GROUND OF THE ASSESSEE IS ALLOWED AND THE AO IS DIRECTED TO GIVE THE BENEFIT OF DEDUCTION OF RS. 2,94,04,000/- TOWARDS MINES CLOSURE EXPENSES IN THE A.Y. 2010-11. THE FACTS ARE IDENTICAL IN THIS YEAR, AS WELL TAKIN G A CONSISTENT VIEW, THE AO IS DIRECTED TO GIVEN BENEFIT OF DEDUCT ION OF RS. 4,69,61,000/- IN RESPECT OF MINE CLOSURE EXPENSES. THIS GROUND OF THE ASSESSEES APPEAL IS ALLOWED. 8. THE LD AR FURTHER SUBMITTED THAT THE MATTER IS N OW COVERED IN ASSESSEES OWN CASE BY THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN CASE OF PR. CIT VS. RAJASTHAN STATE MINES & MINERALS LTD ., IN DB APPEAL NO. 151/2016 DATED 13.10.2017 FOR A Y 2010-11 WHEREIN THE RELEVANT FINDINGS ARE AS UNDER:- 5. REGARDING ISSUE NO. 5, COUNSEL FOR THE APPELLA NT HAS RELIED UPON THE OBSERVATIONS MADE BY THE AO WHICH READS AS UNDE R:- 3.10 PROVISION FOR MINES CLOSURE F.Y 2009-10:- DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE CLAI MED AS UNDER: IN COMPLIANCE TO GUIDELINES DATED 27.08.2009, AS A MENDED FROM TIME TO TIME, BY MINISTRY OF COAL, GOVERNMENT OF IN DIA, FOR PREPARATION OF FINAL MINE CLOSURE, COMPANY HAS PROV IDED SUM OF RS. 2,49,04,000/- TOWARDS PROPORTIONATE MINES CLOSU RE EXPENSES FOR THE FINANCIAL YEAR 2009-10 IN THE BOOKS OF ACCO UNTS PREPARED FOR FINANCIAL YEAR 2009-10 IN THE BOOKS OF ACCOUNTS PREPARED FOR FINANCIAL YEAR 2011-12 AS PRIOR PERIOD EXPENSES OF RS. ITA NO. 47 & 183/JP/2018 RAJASTHAN STATE MINES AND MINERALS LTD.,VS. ACIT, J AIPUR 9 2,49,04,000/- WHILE MAKING COMPUTATION OF TOTAL INC OME FOR THE ASSESSMENT YEAR 2012-13. AS THE ASSESSMENT PROCEEDI NGS FOR THE YEAR ARE UNDER PROGRESS, IT IS REQUESTED TO ALLOW T HE CLAIM OF THE ASSESSEE WHILE PASSING THE ASSESSMENT ORDER U/S 143 (3). COPY OF INCOME TAX RETURN ACKNOWLEDGEMENT, COMPUTATION OF T OTAL INCOME AND NOTES TO THE COMPUTATION ARE ENCLOSED FO R THE READY REFERENCE. I HAVE GONE THROUGH THE CLAIM MADE BY THE ASSESSEE IN RESPECT OF TOWARDS PROPORTIONATE MINES CLOSURE EXPENSES FOR THE FINANCIAL YEAR 2009-10 AMOUNTING TO RS. 2,49,04,000/-. AS THE ASSESSEE ITSELF MENTIONED IN HIS REPLY THAT THE EXPENDITURE HAS NOT BEEN DEBITED IN THE BOOKS OF ACCOUNTS FOR THE ASSESSMENT YEAR UNDER CONSIDERATION THEREFORE NO QUESTION OF ITS ALLOWABI LITY ARISES. EVEN OTHERWISE, LEGALLY ALSO THE CLAIM OF THE ASSESSEE I S NOT VALID IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN TH E CASE OF GOETZE (INDIA) LTD. VS. CIT 284 ITR 323, THAT CLAIM OF DEDUCTION NOT MADE IN THE RETURN CANNOT BE ENTERTAINED BY AO OTHERWISE THAN BY FILING REVISED RETURN. 6.1 REGARDING ISSUE NO. 5, IT IS NOT REFLECTED IN THE BOOKS OF ACCOUNTS WITHOUT TAKING CLOSURE OF A MINING IS A ST ATUTORY LIABILITY AND THE SAME IS FOR THE SUBSEQUENT YEAR REFLECTED, THEREFORE, IN VIEW OF THE DECISION RENDERED BY THE TRIBUNAL, WE A RE OF THE OPINION THAT THE TRIBUNAL HAS NOT COMMITTED ANY ERR OR. 9. UNDISPUTEDLY, THERE ARE NO CHANGES IN THE FACTS AND CIRCUMSTANCES OF CASE. FOLLOWING THE DECISION OF T HE CO-ORDINATE BENCH IN ASSESSEES OWN CASE AND DECISION OF THE HONBLE RAJASTHAN HIGH ITA NO. 47 & 183/JP/2018 RAJASTHAN STATE MINES AND MINERALS LTD.,VS. ACIT, J AIPUR 10 COURT IN CASE OF PR. CIT VS. RAJASTHAN STATE SEED C ORPORATION LTD, WE HEREBY AFFIRM THE ORDER OF LD. CIT(A). HENCE, THE G ROUND SO TAKEN BY THE REVENUE IS DISMISSED. 10. IN GROUND NO. 3, THE REVENUE HAS CHALLENGED THE DECISION OF LD. CIT(A) WHEREIN RECEIPT OF RS. 2,92,48,044/- FROM SA LE OF CARBON EMISSION CERTIFICATIONS WERE HELD AS CAPITAL IN NAT URE. 11. IN THIS REGARD, BOTH THE PARTIES FAIRLY SUBMITT ED THAT ISSUE IS COVERED BY THE DECISION OF CO-ORDINATE BENCH IN ASS ESSEE OWN CASE FOR A.Y 2007-08 IN ITA NO. 253/JP/2015 AND 295/JP/2015 DATED 30/05/2017 WHEREIN IT WAS HELD AS UNDER:- 12.3 SINCE, THE LD. CIT(A) HAS FOLLOWED THE JUDGME NT OF THE HONBLE ANDHRA PRADESH HIGH COURT RENDERED IN THE C ASE OF MY HOME POWER LTD. 365 ITR 82 (SUPRA) WHERE THE HONBL E COURT, UNDER THE IDENTICAL FACTS CONFIRMED THE VIEW OF THE TRIBUNAL IN HOLDING THAT CARBON CREDIT IS NOT AN OFFSHOOT OF BU SINESS BUT AN OFFSHOOT OF ENVIRONMENTAL CONCERNS. NO ASSET IS GE NERATED IN COST OF BUSINESS BUT IT IS GENERATED DUE TO ENVIRON MENTAL CONCERNS. THEREFORE, ON SALE OF EXCESS CARBON CRED ITS CORRECTLY HELD BY THE TRIBUNAL AS A CAPITAL RECEIPT. IN VIEW OF THE JUDGMENT OF HONBLE ANDHRA PRADESH HIGH COURT, WE DO NOT SEE ANY REASON TO DISTURB THE FINDING OF LD. CIT(A), SAME IS HEREB Y AFFIRMED. THE REVENUE HAS NOT BROUGHT TO OUR NOTICE ANY CONTRARY BINDING PRECEDENT. HENCE, THIS GROUND OF REVENUES APPEAL IS DISMISSED. 12. UNDISPUTEDLY, THERE ARE NO CHANGE IN THE FACTS AND CIRCUMSTANCES OF CASE. FOLLOWING THE DECISION OF THE CO-ORDINATE BENCH IN ASSESSEES ITA NO. 47 & 183/JP/2018 RAJASTHAN STATE MINES AND MINERALS LTD.,VS. ACIT, J AIPUR 11 OWN CASE, WE HEREBY AFFIRM THE ORDER OF THE LD CIT( A). HENCE, THE GROUND SO TAKEN BY THE REVENUE IS DISMISSED. 13. NOW, WE REFER TO THE ASSESSEES APPEAL IN ITA N O. 47/JP/18. IN GROUND NO. 1 OF THE ASSESSEES APPEAL, IT HAS CHALL ENGED THE CONFIRMATION BY THE LD CIT(A) OF DISALLOWANCE OF RS . 1,22,76,496/- OUT OF RURAL DEVELOPMENT EXPENSES. 14. IN THIS REGARD, BRIEFLY STATED, THE FACTS OF TH E CASE ARE THAT THE ASSESSEE HAS INCURRED AN EXPENDITURE OF RS.1,22,76, 496/- UNDER THE HEAD RURAL DEVELOPMENT EXPENSES DEBITED TO THE PR OFIT AND LOSS ACCOUNT. THE AO OBSERVED THAT THE EXPENSES ARE IN T HE NATURE OF APPLICATION OF INCOME/ DONATIONS. THERE WAS NO DEFI NITE BUSINESS LIABILITY OF THE ASSESSEE. THE ASSESSEE WANTS TO CL AIM THESE EXPENSES ON THE BASIS OF SOCIAL CAUSE OR GENERAL PUBLIC GOOD. T HE EXPENDITURE INCURRED IS NOT WITH THE MOTIVE TO BRING PROFIT OR MONETARY ADVANTAGE TO THE COMPANY. ACCORDINGLY, HE DISALLOWED THE CLAIM O F RURAL DEVELOPMENT EXPENSES OF RS.1,22,76,496/-. THE LD. CIT(A) AFTER RELYING ON THE DECISION OF TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2007-08 IN ITA NO.253/JP/15 HAS CONFIRMED THE SAID DISALLOWANCE. 15. DURING THE COURSE OF HEARING, THE LD. AR SUBMIT TED THAT THE AO HAS ACCEPTED THE NATURE OF EXPENSES INCURRED UNDER THIS HEAD AND THE FACT THAT THE SAME HAS ACTUALLY BEEN INCURRED. HOWE VER, HE IS OF THE VIEW THAT THE MOTIVE OF INCURRING THESE EXPENSES IS NOT SOLELY FOR PROMOTING THE BUSINESS BUT ALSO THE SOCIAL CAUSE. I T IS SUBMITTED THAT EXPENDITURE ON RURAL DEVELOPMENT RELATES TO VARIOUS EXPENSES LIKE EXPENSES ON TUBEWELL, PAYMENT MADE TO GOVT. UPPER P RIMARY SCHOOL FOR VARIOUS EDUCATIONAL FACILITIES, PAYMENT TO DISTRICT COLLECTOR FOR DESSERT ITA NO. 47 & 183/JP/2018 RAJASTHAN STATE MINES AND MINERALS LTD.,VS. ACIT, J AIPUR 12 FESTIVAL, CONSTRUCTION OF ROAD, CONSTRUCTION OF PUB LIC REST SHELTER AT BUS STAND, CONTRIBUTION TO GRAM PANCHAYAT, PAYMENT MADE FOR MAINTENANCE OF PARK, SUPPLY OF DRINKING WATER, ETC. IN THE DIFF ERENT MINING AREA WHERE THE ASSESSEE IS FUNCTIONING AND ITS EMPLOYEES ARE ALSO BENEFITTED BY IT. THE DETAILS OF THESE EXPENSES ARE AT. FROM T HE SAME IT CAN BE NOTED THAT THE EXPENDITURE ON REPAIR OF ROAD AT THE MINING SITE OF ASSESSEE IS RS. 35,21,000/-. IN AY 2007-08, THE LD. CIT(A) HAS ALLOWED THE EXPENDITURE ON REPAIR OF ROAD AT DIFFERENT MINI NG SITE FOR THE SMOOTH TRANSPORTATION OF VEHICLES AND FOR STREET LIGHTNING AMOUNTING TO RS.1,76,01,218/- AS INCURRED FOR THE PURPOSE OF ASS ESSEES BUSINESS AS IT FACILITATES SMOOTH TRANSPORTATION OF MINERALS. COPY OF THE RELEVANT EXTRACT OF CIT(A)ORDER IS ENCLOSED. HENCE, EXPENDIT URE OF RS.35,21,000/- IS OTHERWISE ALLOWABLE TO THE ASSESS EE. 16. IT WAS FURTHER SUBMITTED THAT SO FAR AS REMAIN ING EXPENSES ARE CONCERNED, THE SAME ARE ON ACCOUNT OF PROVIDING DRI NKING WATER FACILITY, CONTRIBUTION TO GOVERNMENT PRIMARY SCHOOLS, MAINTEN ANCE OF PARK, ETC. THESE EXPENSES HELP THE ASSESSEE IN SMOOTH FUNCTION ING OF ITS BUSINESS AS THE MINING ACTIVITY INVOLVES ACQUISITION OF LAND OF THE VILLAGERS IN THE MINING AREA WHICH RESULTS IN NEGATIVE FEELINGS, AGI TATIONS AND UNREST BY THE LOCAL VILLAGERS. THESE EXPENSES HELP IN THE IMA GE BUILDING AND SMOOTH RUNNING OF THE ACTIVITIES OF THE COMPANY. TH ESE EXPENSES ARE INCURRED SOLELY FOR THE PURPOSE OF THE BUSINESS OF THE ASSESSEE BUT IF SUCH EXPENDITURE ALSO RESULTS IN THE BENEFIT TO THI RD PARTY, THE SAME CANNOT BE DISALLOWED. THEREFORE, SUCH EXPENSES ARE ALLOWABLE U/S 37(1) OF THE INCOME TAX ACT. 17. IN SUPPORT OF HIS CONTENTIONS, THE LD AR PLACED RELIANCE ON THE FOLLOWING DECISIONS: ITA NO. 47 & 183/JP/2018 RAJASTHAN STATE MINES AND MINERALS LTD.,VS. ACIT, J AIPUR 13 ACIT VS. JINDAL POWER LTD. (2016) 138 DTR 313 (RAIP UR) (TRIB) SASOON J. DAVID & CO. (P) LTD. VS. CIT 118 ITR 261 (SC) CIT VS. DELHI SAFE DEPOSIT CO. LTD (1982) 133 ITR 7 56 (SC) SRI VENKATASATYANARAYANA RICE MILL CONTRACTOR VS.CI T 223ITR 101 (SC) ACIT VS. RAJASTHAN SPINNING & WEAVING MILLS LTD. 27 4ITR465 (RAJ.) CIT VS. RAJASTHAN SPINNING & WEAVING MILLS LTD. 272 ITR 487 (RAJ.) CIT VS. RUPSA RICE MILL 104 ITR 249 (ORISSA) (HC) M/S RANBAXY LABORATORIES LTD. VS. DCIT 2009-TIOL-32 -ITAT-DEL INDIA UNITED MILLS LTD. VS. CIT 98 ITR 426 (BOM.) ( HC) HINDUSTAN PETROLEUM CORPORATION LTD. VS. DCIT 96 IT D 186 (MUM) ACIT VS. RANBAXY LABORATORIES LTD. 7 ITR (TRIB.) 16 1 (DEL.) 18. IT WAS FURTHER SUBMITTED THAT THE AO HAS OBSER VED THE CASES RELIED ABOVE ARE NOT APPLICABLE IN THE PRESENT CASE AS IN THESE CASES EXPENSES RELATED TO THE DIRECT BUSINESS EXPEDIENCY OF THE AS SESSEE. HOWEVER, HE HAS FAILED TO POINT OUT THAT HOW THE VARIOUS EXPEND ITURE INCURRED BY THE ASSESSEE IN THE AREA WHERE IT IS OPERATING ITS MINE S IS NOT RELATED TO THE BUSINESS EXPEDIENCY OF THE ASSESSEE. AS AGAINST THI S, THE CASES RELIED BY HIM ARE THOSE WHERE THERE WAS NO BUSINESS EXPEDIENC Y INVOLVED AND THEREFORE THEY WERE DISALLOWED. THE NATURE OF EXPEN SES INCURRED BY THE ASSESSEE IS NOT OF THE NATURE REFERRED IN THE CASES RELIED BY THE AO. IN THESE FACTS THE EXPENDITURE INCURRED UNDER THE HEAD RURAL DEVELOPMENT EXPENSES IS ALLOWABLE U/S 37(1). 19. IT WAS FURTHER SUBMITTED THAT IN AY 2007-08, TH E LD. CIT(A) HELD THAT THESE EXPENDITURE ARE ON CORPORATE SOCIAL RESP ONSIBILITY WHICH ARE NOT INCURRED WHOLLY & EXCLUSIVELY FOR THE PURPOSE O F BUSINESS. THE TRIBUNAL IN ITA NO.253/JP/15 FOR AY 2007-08 DT. 03. 05.2017 AT PARA 8.3 ITA NO. 47 & 183/JP/2018 RAJASTHAN STATE MINES AND MINERALS LTD.,VS. ACIT, J AIPUR 14 OF THE ORDER CONFIRMED THE FINDINGS OF LD. CIT(A) B Y HOLDING THAT ASSESSE HAS NOT REBUTTED THE FINDING GIVEN BY LD. C IT(A) THAT THE AMOUNT WAS NOT EXPENDED WHOLLY & EXCLUSIVELY FOR TH E PURPOSE OF BUSINESS AND THEREFORE, IN THE ABSENCE OF MATERIAL PROVING THAT THE EXPENSES INCURRED IS FOR THE PURPOSE OF BUSINESS OF ASSESSEE, SAME CANNOT BE ALLOWED. HOWEVER, THE VARIOUS DECISIONS R EFERRED SUPRA WAS NOT DISCUSSED. IT MAY BE NOTED THAT SIMILAR EXPENDI TURE OF RS.50 LACS BY WAY OF CONTRIBUTION MADE FOR COMPUTERISATION OF MIN ING DEPARTMENT HAS BEEN ALLOWED BY HONBLE RAJASTHAN HIGH COURT IN DBI TA NO.146/2016 DT. 13.12.2017 IN AY 2010-11. IN VIEW OF ABOVE, THE CLAIM OF ASSESSEE BE INDEPENDENTLY EXAMINED IN LIGHT OF THE DECISIONS REFERRED SUPRA AND THE EXPENDITURE CLAIMED BY THE ASSESSEE BE DIRECTED TO BE ALLOWED. 20. THE LD DR IS HEARD WHO HAS RELIED ON THE FINDIN GS OF THE LOWER AUTHORITIES. 21. WE HAVE HEARD THE RIVAL CONTENTIONS AND PURUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. CIT(A) HAS SUSTAINED T HE DISALLOWANCE OF RURAL DEVELOPMENT EXPENSES FOLLOWING THE DECISION O F CO-ORDINATE BENCH FOR AY 2007-08 DATED 30.05.2017 WHEREIN THE CO-ORDI NATE BENCH HAS CONFIRMED THE DISALLOWANCE HOLDING THAT LD. CIT(A) HAS GIVEN A FINDING ON FACT THAT THE AMOUNT WAS NOT EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. IT WAS FURTHER HELD BY THE CO-ORDINATE BENCH THAT THIS FINDING ON FACT IS NOT REBUTTED BY THE AS SESSEE AND IN THE ABSENCE OF MATERIAL PROVING THE EXPENSES INCURRED F OR THE PURPOSE OF THE ASSESSEE, THE SAME CANNOT BE ALLOWED U/S 37 OF THE ACT. IN THE INSTANT CASE, FIRSTLY, IT HAS BEEN CONTENDED THAT E XPENDITURE HAS BEEN INCURRED ON REPAIR OF ROADS AT THE MINING SITE AMOU NTING TO RS. ITA NO. 47 & 183/JP/2018 RAJASTHAN STATE MINES AND MINERALS LTD.,VS. ACIT, J AIPUR 15 35,21,000/- AND THE SAME HAS, IN FACT, BEEN ALLOWED BY THE LD. CIT(A) IN AY 2007-08 HOLDING THAT EXPENDITURE INCURRED BY THE ASSESSEE ON REPAIR OF ROAD AT DIFFERENT MINING AREAS FOR SMOOTH TRANSP ORTATION OF VEHICLES AND FOR STREET LIGHTING AMOUNTING TO RS. 1,76,01,21 8/- HAS BEEN INCURRED FOR THE PURPOSES OF ASSESSEES BUSINESS AS IT FACILITATES SMOOTH TRANSPORTATION OF MINERALS. IT WAS ACCORDINGLY SUBM ITTED THAT THE SAME EXPENDITURE SHOULD BE ALLOWED. FURTHER, IT HAS BEE N CONTENDED BY THE LD AR THAT THE FACTS ARE DISTINGUISHABLE IN THE INS TANT YEAR AND THE EXPENSES HAVE BEEN INCURRED IN THE DIFFERENT MINING AREAS WHERE THE ASSESSEE IS FUNCTIONING AND ITS EMPLOYEES ARE ALSO BENEFITED BY SUCH EXPENDITURE. IT IS NOTED THAT DURING THE YEAR, THE ASSESSEE COMPANY HAS MADE PAYMENT TO GOVERNMENT UPPER PRIMARY SCHOOL FOR VARIOUS EDUCATIONAL FACILITIES WHERE CHILDREN OF ITS EMPLOY EES/WORKERS ARE ALSO STATED TO BE STUDYING. FURTHER, EXPENDITURE HAS BEE N INCURRED ON CONSTRUCTION OF PUBLIC REST SHELTER AT BUS STAND AT VICINITY OF THE MINING AREA AND WHICH IS ALSO BEEN USED BY THE WORKERS OF THE ASSESSEE. SIMILARLY, PAYMENT HAVE BEEN MADE TO GRAM PANCHAYAT FOR TUBEWELL AND SUPPLY OF DRINKING WATER IN NEARBY VILLAGES AND ITS WORKERS ARE STAYING IN THESE PLACES AND THEY ARE ALSO BENEFITTE D. IT HAS BEEN CONTENDED BY THE LD. AR THAT UNLIKE THE PREVIOUS YE AR, WHERE THE NECESSARY DETAILS COULD NOT BE PRODUCED BY THE ASSE SSEE IN SUPPORT OF ITS CLAIM, FOR THE YEAR UNDER CONSIDERATION, THE NE CESSARY DETAILS ARE AVAILABLE ON RECORD AND OUR REFERENCE WAS DRAWN TO COPY OF THE LEDGER ACCOUNT OF RURAL DEVELOPMENT EXPENSES OF VARIOUS UN ITS AVAILABLE AT ASSESSEES PAPER BOOK 4 TO 11. IT WAS SUBMITTED TH AT ALL THE EXPENSES HAVE BEEN INCURRED AT CLOSE VICINITY OF ITS DIFFERE NT MINING AREA WHERE THE ASSESSEE BUSINESS ACTIVITIES ARE BEING UNDERTAK EN AND ITS EMPLOYEES/WORKERS ARE EQUALLY BENEFITED BY THE INCU RRENCE BY SUCH ITA NO. 47 & 183/JP/2018 RAJASTHAN STATE MINES AND MINERALS LTD.,VS. ACIT, J AIPUR 16 EXPENDITURE BESIDES THE LOCAL PEOPLE/VILLAGERS RESI DING IN THOSE AREAS. IT WAS FURTHER SUBMITTED THAT THESE EXPENSES SUCH AS P AYMENT TO DISTRICT COLLECTOR FOR DESERT FESTIVAL HELP THE ASSESSEE IN ITS BUSINESS PROMOTION BESIDES THE SMOOTH FUNCTIONING OF ITS BUSINESS AS T HE MINING ACTIVITY INVOLVES ACQUISITION OF LAND OF THE VILLAGERS IN TH E MINING AREA WHICH RESULTS IN NEGATIVE FEELINGS, AGITATIONS AND UNREST BY THE LOCAL VILLAGERS AND IT WAS ACCORDINGLY SUBMITTED THAT THESE EXPENSE S ARE INCURRED SOLELY FOR THE PURPOSE OF THE BUSINESS OF THE ASSES SEE AND SHOULD BE ALLOWED. IN THIS REGARD, WE REFER TO THE DECISION OF THE HONBLE RAJASTHAN HIGH COURT IN CASE OF RAJASTHAN SPINNING & WEAVING MILLS LTD.(SUPRA), WHEREIN IT WAS HELD THAT ANY CONTRIBUT IONS MADE BY THE ASSESSEE TO THE PUBLIC WELFARE FUND WHICH IS DIRECT LY CONNECTED OR RELATED WITH THE CARRYING ON OF THE ASSESSEES BUSI NESS OR WHICH RESULTS IN BENEFIT TO THE ASSESSEES BUSINESS HAS TO BE REG ARDED AS AN ALLOWABLE DEDUCTION. IT WAS FURTHER HELD THAT SUCH A DONATION WHETHER VOLUNTARY OR AT THE INSTANCE OF THE AUTHORITIES CONCERNED, WH ERE MADE TO A RELIEF FUND OR A WELFARE FUND OR ANY OTHER FUND FOR THE BE NEFIT OF THE PUBLIC AND WITH A VIEW TO SECURE BENEFIT TO THE ASSESSEES BUSINESS CANNOT BE REGARDED AS PAYMENT OPPOSED TO PUBLIC POLICY. IN C ASE OF RUPSA RICE MILL (SUPRA), WHERE THE ASSESSEE HAS DONATED CERTAI N SUM TO THE COLLECTOR FOR CONSTRUCTION OF A PRIMARY HEALTH CENT RE BUILDING AT RUPSA WHERE THE MILL WAS LOCATED, THE HONBLE GUJARAT HIG H COURT HELD THAT AGREED WITH THE TRIBUNAL VIEW AND HELD THAT THE ASS ESSEE MADE A SUBSTANTIAL CONTRIBUTIONS TO MEET THE COSTS OF EREC TION IN CONSIDERATION OF THE FACT THAT A HEALTH CARE CENTRE LOCATED NEAR THE FACTORY PREMISES WOULD PROVIDE TREATMENT TO THE AILING WORKMAN AND T HE AMOUNT SO CLAIMED WAS HELD ALLOWABLE. IN CASE OF RANBAXY LAB ORATORIES LTD.(SUPRA), WHERE THE ASSESSEE CONTRIBUTED TOWARDS CONSTRUCTION OF THE ITA NO. 47 & 183/JP/2018 RAJASTHAN STATE MINES AND MINERALS LTD.,VS. ACIT, J AIPUR 17 SCHOOL HOSPITAL, IT WAS HELD THAT THE HOSPITAL CONS TRUCTED BY THE SCHOOL WAS ENGAGED IN THE PROVIDING MEDICAL FACILITIES TO THE SCHOOL CHILDREN AND OTHER PEOPLE IN THE VICINITY OF THE SCHOOL AND THE BUSINESS EXPEDIENCY OR COMMERCIAL EXPEDIENCY MIGHT REQUIRE P ROVIDING FACILITIES LIKE SCHOOL, HOSPITAL ETC. FOR THE EMPLOYEES OR THE IR CHILDREN AND ACCORDINGLY CLAIM WAS HELD ALLOWABLE. IN LIGHT OF A BOVE, WE ARE OF THE VIEW THAT WHERE THE EXPENDITURE HAS BEEN INCURRED B Y THE ASSESSEE IN VICINITY OF ITS MINING AREAS AND ITS WORKERS AND IT S EMPLOYEES ARE ALSO BENEFITED BY INCURRENCE OF SUCH EXPENDITURE, THE AS SESSEE HAS ESTABLISHED THE NECESSARY NEXUS OF SUCH EXPENDITURE FOR THE PURPOSE OF SMOOTH RUNNING OF ITS BUSINESS OPERATION AND SUCH E XPENDITURE SHOULD BE HELD AS ALLOWABLE DEDUCTION. IN THE RESULT, WE D ELETE THE ADDITION MADE BY THE ASSESSING OFFICER UNDER THE HEAD OF RUR AL DEVELOPMENT EXPENSES AND GROUND SO TAKEN BY THE ASSESSEE IS ALL OWED. 22. IN GROUND NO. 2, THE ASSESSEE HAS CHALLENGED TH E ACTION OF THE LD. CIT(A) IN CONFIRMING THE DISALLOWANCE OF AMORTI ZATION OF MINING LAND OF RS. 3,97,32,278/- AND LEASEHOLD LAND OF RS. 8,18 ,248/- BY TREATING IT AS CAPITAL EXPENDITURE. FURTHER, THE ASSESSEE HAS ALSO RAISED A GROUND THAT THE ABOVE DISALLOWANCE HAS BEEN MADE ON THE BA SIS OF THE FINDINGS OF THE CO-ORDINATE BENCH IN ASSESSEES OWN CASE FOR AY 2007-08 BUT AT THE SAME TIME NOT ALLOWING THE BENEFIT OF TREATING SUCH EXPENDITURE AS CAPITAL EXPENDITURE AS DIRECTED BY THE TRIBUNAL. 23. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT CLAIM OF AMORTIZATION OF MINING LAND IS NOT ELIGIBLE U/S 35D(2). FURTHER, TH E ASSESSEE COULD NOT JUSTIFY ITS ALLOCATION IN THE YEAR UNDER CONSIDERAT ION TO CLAIM DEDUCTION ITA NO. 47 & 183/JP/2018 RAJASTHAN STATE MINES AND MINERALS LTD.,VS. ACIT, J AIPUR 18 U/S 37(1). ACCORDINGLY, HE DISALLOWED THE CLAIM OF AMORTIZATION OF LAND AMOUNTING TO RS.4,05,50,526/-. ON APPEAL, THE LD. C IT(A) AFTER REFERRING TO THE DECISION OF TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2007- 08 CONFIRMED THE DISALLOWANCE MADE BY AO. 24. DURING THE COURSE OF HEARING, THE LD AR SUBMITT ED THAT THE LD. CIT(A) HAS RELIED ON THE DECISION OF TRIBUNAL FOR A Y 2007-08 FOR NOT ALLOWING THE CLAIM OF AMORTIZATION. IN THE SAID DEC ISION, THE TRIBUNAL HAS REFERRED TO ITS EARLIER DECISION FOR AY 2010-11 IN ITA NO.124/JP/14 WHEREIN THE TRIBUNAL AFTER REFERRING TO THE DECISIO N OF SUPREME COURT IN CASE OF ADITYA MINERALS PVT. LTD. VS. CIT 156 CTR 9 7/8 SCC 97 AND IN CASE OF ENTERPRISING ENTERPRISES VS. DCIT HELD THAT EXPENSES INCURRED BY THE ASSESSEE FOR GETTING THE MINING LAND AND LEA SEHOLD LAND ARE CAPITAL EXPENDITURE BUT AT THE SAME TIME DIRECTED T HE AO TO GIVE ALL BENEFITS AS CAPITAL EXPENDITURE. IT IS SUBMITTED TH AT THE ISSUE BEFORE THE SUPREME COURT IN THE ABOVE CASES WAS WHETHER THE PA YMENT FOR ACQUIRING LEASEHOLD RIGHT FOR EXTRACTING MINERALS W OULD BE A CAPITAL EXPENDITURE OR REVENUE EXPENDITURE AND IT WAS HELD THAT THE SAME IS CAPITAL EXPENDITURE. ACCORDINGLY, THE TRIBUNAL DIRE CTED THE AO TO TREAT THE EXPENDITURE AS CAPITAL AND GRANT RELIEF IF ANY AVAILABLE UNDER THE LAW. THEREFORE, IN VIEW OF THIS DIRECTION, THE EXPE NSES INCURRED BY THE ASSESSEE FOR ACQUIRING THE LICENSE TO CARRY OUT THE MINING BEING AN INTANGIBLE ASSET NEEDS TO BE ALLOWED OVER ITS USEFU L LIFE AS HELD BY HYDERABAD ITAT IN CASE OF NMDC LTD. VS. CIT BY FOLL OWING THE DECISION OF ITAT CUTTACK BENCH IN CASE OF EAST INDIA MINERAL S LTD. VS. JCIT OR ALTERNATIVELY DEPRECIATION U/S 32(1)(II) BE ALLOWED TO THE ASSESSEE AS THE PAYMENT FOR ACQUIRING THE LEASEHOLD RIGHT FOR EXTRA CTING MINERAL IS AN INTANGIBLE ASSET AND THE VIEW OF TRIBUNAL IN AY 201 0-11 HAS BEEN ITA NO. 47 & 183/JP/2018 RAJASTHAN STATE MINES AND MINERALS LTD.,VS. ACIT, J AIPUR 19 AFFIRMED BY THE HONBLE RAJASTHAN HIGH COURT IN ITS ORDER IN DB ITA NO.146/2016 DT. 13.12.2017. THE HONBLE RAJASTHAN H IGH COURT AT PARA 13 TO 13.2 (PB 54) AFTER REFERRING TO THE DEFINITIO N OF INTANGIBLE ASSET HELD THAT THE RIGHTS WHICH ARE GIVEN TO THE ASSESSE E ARE COMMERCIAL RIGHTS WHICH ARE AKIN TO LICENSE FOR MINING. ACCORD INGLY, HONBLE HIGH COURT ACCEPTED THE CONTENTION OF ASSESSEE FOR ALLOW ING DEPRECIATION U/S 32(1)(II) ON SUCH RIGHT IN THE MINING LAND. IN VIEW OF ABOVE, IT WAS SUBMITTED THAT THE AO BE DIRECTED TO ALLOW THE CLAI M OF DEPRECIATION U/S 32(1)(II) OF THE ACT. 25. THE HONBLE RAJASTHAN HIGH COURT IN ITS ORDER I N DB ITA NO.146/2016 DT. 13.12.2017 WHILE ADMITTING THE APPE AL HAS FRAMED THE SUBSTANTIAL QUESTION OF LAW AS UNDER: (II) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LICENCE TO USE THE LAND FOR MINING IS COVERED BY THE DEFINITIO N OF INTANGIBLE ASSETS U/S 2(11) OF THE ACT ENTITLING DEPRECIATION ALLOWAN CE U/S 32(1)(II) OF THE ACT. AND THEREAFTER, AT PARA 13 TO 13.2 OF ITS JUDGEMENT , THE HONBLE HIGH COURT HAS HELD AS UNDER: 13. HOWEVER, ON THE SECOND ISSUE, ON A CLOSE SCRUT INY OF SUB SECTION 32(II) OF THE INCOME TAX ACT WHICH READS AS UNDER:- SECTION 32, (1) IN RESPECT OF DEPRECIATION OF- (II) KNOW-HOW, PATENTS, COPYRIGHTS, TRADE MARKS, LI CENCES, FRANCHISES OR ANY OTHER BUSINESS OR COMMERCIAL RIGH TS OF SIMILAR ITA NO. 47 & 183/JP/2018 RAJASTHAN STATE MINES AND MINERALS LTD.,VS. ACIT, J AIPUR 20 NATURE, BEING INTANGIBLE ASSETS ACQUIRED ON OR AFTE R THE 1 ST DAY OF APRIL, 1988. 13.1 IN OUR CONSIDERATION OPINION THE RIGHTS WHICH ARE GIVEN TO THE ASSESSEE ARE OF COMMERCE RIGHTS WHICH ARE AKIN TO L ICENSE FOR MINING. 13.2 IN THAT VIEW OF THE MATTER, THE CONTENTION OF THE ASSESSEE REGARDING DEPRECIATION U/S 32(II) IS REQUIRED TO BE ACCEPTED, THEREFORE, THE SECOND ISSUE IS ANSWERED IN FAVOUR OF THE ASSES SEE AND AGAINST THE DEPARTMENT. 26. RESPECTFULLY FOLLOWING THE DECISION OF THE HON BLE RAJASTHAN HIGH COURT, THE AO IS DIRECTED TO ALLOW DEPRECIATION UND ER 32(1)(II) OF THE ACT. THE GROUND OF ASSESSEE IS THUS ALLOWED WITH S AID DIRECTIONS. 27. IN GROUND NO. 3, THE ASSESSEE HAS CHALLENGED TH E CONFIRMATION OF ACTION OF THE AO IN NOT ALLOWING THE LEAVE ENCASHME NT EXPENDITURE OF RS. 29,39,32,282/- CLAIMED BY THE ASSESSEE. 28. THE LD AR SUBMITTED THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE COMPANY IN ORDER TO MEET ITS LIABILITY TOW ARDS LEAVE ENCASHMENT OF THE EMPLOYEES FORMED A SCHEME WITH LI FE INSURANCE CORPORATION OF INDIA (LIC) UNDER THE NAME RAJASTHA N STATE MINES & MINERALS LTD.- EMPLOYEES GROUP LEAVE ENCASHMENT SCH EME. THE TOTAL LIABILITY AS PER THE VALUATION REPORT SUBMITTED BY LIC WORKED OUT AT RS.29,43,66,142/- INCLUDING INSURANCE PREMIUM FOR T HE POLICY OF RS.25,000/- PER EMPLOYEE. ACCORDINGLY, THE ASSESSEE PAID RS.29,43,66,142/- TO LIC UNDER THE SAID POLICY AND THE SAME WAS REFLECTED IN THE BALANCE SHEET AS LONG TERM INVESTM ENT. ITA NO. 47 & 183/JP/2018 RAJASTHAN STATE MINES AND MINERALS LTD.,VS. ACIT, J AIPUR 21 29. IT WAS SUBMITTED BY THE LD AR THAT THE AMOUNT P AID TO LIC UNDER THE ABOVE SCHEME, BY MISTAKE, WAS NOT CLAIMED IN TH E RETURN OF INCOME. ACCORDINGLY, ASSESSEE VIDE ITS LETTER DT. 08.11.201 6 REQUESTED THE AO TO ALLOW THE SAME U/S 37(1) R.W.S. 43B(F). THE AO, HOW EVER, OBSERVED THAT CLAIM COULD NOT BE ALLOWED TO THE ASSESSEE UNLESS T HE ASSESSEE CLAIM IT IN THE RETURN OF INCOME OR BY FILING THE REVISED RE TURN AS HELD IN CASE OF GOETZ INDIA LTD. VS. CIT 284 ITR 323. 30. ON APPEAL, THE LD. CIT(A) HELD THAT THE HONBLE SUPREME COURT IN CASE OF GOETZ INDIA LTD. VS. CIT 284 ITR 323 HAS AL LOWED THE TRIBUNAL TO CONSIDER SUCH CLAIM WHICH WAS NOT MADE BY WAY OF RETURN OF INCOME. THUS, THIS LIBERTY WAS NOT GIVEN TO THE CIT(A) WHOS E POWERS ARE COTERMINOUS WITH THE AO. ACCORDINGLY, THE ORDER OF AO WAS CONFIRMED. 31. IT WAS SUBMITTED THAT THERE IS NO DISPUTE THAT AMOUNT CONTRIBUTED BY THE ASSESSEE TO LIC TOWARDS THE LIABILITY OF LEA VE ENCASHMENT OF THE EMPLOYEES IS ALLOWABLE U/S 37(1) R.W.S. 43B(F). THE ONLY ISSUE IS WHETHER THE SAME CAN BE ALLOWED TO ASSESSEE EVEN WH EN IT IS NOT CLAIMED IN THE RETURN IN VIEW OF THE DECISION OF SU PREME COURT (SUPRA). IT WAS SUBMITTED THAT HONBLE SUPREME COURT IN THIS CASE AT PARA 4 HAS HELD AS UNDER:- 4. THE DECISION IN QUESTION IS THAT THE POWER OF T HE TRIBUNAL UNDER S. 254 OF THE IT ACT, 1961, IS TO ENTERTAIN F OR THE FIRST TIME A POINT OF LAW PROVIDED THE FACT ON THE BASIS OF WH ICH THE ISSUE OF LAW CAN BE RAISED BEFORE THE TRIBUNAL. THE DECISION DOES NOT IN ANY WAY RELATE TO THE POWER OF THE AO TO ENTERTAIN A CLAIM FOR DEDUCTION OTHERWISE THAN BY FILING A REVISED RETURN . IN THE CIRCUMSTANCES OF THE CASE, WE DISMISS THE CIVIL APP EAL. HOWEVER, ITA NO. 47 & 183/JP/2018 RAJASTHAN STATE MINES AND MINERALS LTD.,VS. ACIT, J AIPUR 22 WE MAKE IT CLEAR THAT THE ISSUE IN THIS CASE IS LIM ITED TO THE POWER OF THE ASSESSING AUTHORITY AND DOES NOT IMPINGE ON THE POWER OF THE TRIBUNAL UNDER S. 254 OF THE IT ACT, 1961. THER E SHALL BE NO ORDER AS TO COSTS. THUS, THE HONBLE SUPREME COURT HELD THAT AO CANNOT ENTERTAIN A CLAIM OF DEDUCTION OTHERWISE THAN BY WAY OF FILING REVISE D RETURN OF INCOME BUT AT THE SAME TIME HELD THAT THIS DOES NOT IMPUGN ED ON THE POWER OF TRIBUNAL U/S 254. IN THAT CASE, THE LD. CIT(A) HAS ALLOWED THE CLAIM OF ASSESSEE BUT THE TRIBUNAL UPHELD THE ORDER OF AO. I N THESE FACTS, IT WAS HELD THAT TRIBUNAL HAS POWER TO ALLOW A CLAIM EVEN IF NOT RAISED BEFORE THE AO PROVIDED THE FACTS ARE AVAILABLE ON RECORD. THUS, THIS DECISION NOWHERE STATES THAT CIT(A) HAS NO POWER TO ENTERTAI N THE CLAIM WHICH IS NOT MADE IN THE RETURN. ACCORDINGLY, EVEN THE CIT(A ) HAS THE POWER TO ENTERTAIN THE CLAIM MADE BEFORE HIM. RELIANCE IN TH IS CONNECTION IS PLACED ON THE FOLLOWING CASES WHERE THE DECISION OF SUPREME COURT (SUPRA) HAS BEEN CONSIDERED:- CIT VS. SAM GLOBAL SECURITIES LTD. (2014) 360ITR 68 2 (DEL) CIT VS. MITESH IMPEX & ORS. (2014) 104 DTR 169 (GUJ ) CIT VS. PRUTHVI BROKERS & SHAREHOLDERS (P) LTD. 349 ITR 336 (BOM) CIT VS. RAMCO INTERNATIONAL 332 ITR 306 (P&H) IN VIEW OF ABOVE, IT WAS SUBMITTED THAT THE AO BE D IRECTED TO ALLOW THE CLAIM OF CONTRIBUTION MADE TO LIC TOWARDS THE LIABI LITY OF LEAVE ENCASHMENT OF THE EMPLOYEES. ITA NO. 47 & 183/JP/2018 RAJASTHAN STATE MINES AND MINERALS LTD.,VS. ACIT, J AIPUR 23 32. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE ASSESSEE TOOK A POLICY FRO M LIC NAMED AS RAJASTHAN STATE MINES & MINERALS LIMITED EMPLOYE E GROUP LEAVE ENCASHMENT SCHEME. THE PAYMENT OF LEAVE ENCASHMENT IS A CONTRACTUAL LIABILITY, A CHARGE ON ASSESSEE'S PROFI T. TO ENSURE TIMELY PAYMENT OF LEAVE ENCASHMENT TO ITS EMPLOYEES, THE S CHEME IS DEVISED BY THE LIC, WHICH WORKS OUT THE LEAVE ENCASHMENT LI ABILITY AND FIXATION OF PREMIUM AS PER VALUATION REPORT. THE LIABILITY I S THUS ASCERTAINED AND CRYSTALLIZED ON A SCIENTIFIC METHOD BY THE LIC. THU S, THE ASSESSEE'S PAYMENT OF RS. 29.39 CRORES DURING THE YEAR TOWARDS THE SAME IS WITHIN THE FRAMEWORK OF THE LEAVE ENCASHMENT SCHEME AND IN OUR CONSIDERED VIEW, THE SAME IS AN ALLOWABLE BUSINESS DEDUCTION A ND THE AO IS DIRECTED TO ALLOW THE SAID CLAIM OF THE ASSESSEE EV EN THOUGH THE SAME HAS NOT BEEN MADE IN THE RETURN OF INCOME BUT DURIN G THE ASSESSMENT PROCEEDINGS AND ALL THE NECESSARY FACTS ARE ON RECO RD. IN THE RESULT, ASSESSEES GROUND OF APPEAL IS ALLOWED. 33. IN GROUND NO. 4, THE ASSESSEE HAS CHALLENGED TH E ACTION OF THE LD. CIT(A) IN HOLDING THAT ISSUE OF CHARGEABILITY O F INTEREST U/S 234A IS MANDATORILY AND CONSEQUENTIAL BY NOT DECIDING THE G ROUND THAT THE RETURN FILED ON OR BEFORE THE DATE PRESCRIBED U/S 1 39(1) AND THUS THE SAME IS NOT LEVIABLE. 34. IN THIS REGARD, THE LD. AR HAS CONTENDED THAT T HE DUE DATE OF FILING OF RETURN OF INCOME FOR THE YEAR UNDER CONSI DERATION WAS EXTENDED BY THE CBDT VIDE ITS ORDER U/S 119 DATED 26 TH SEPTEMBER, 2014 FROM 30TH SEPTEMBER 2014 TO 30 TH NOVEMBER 2014 AND SINCE THE RETURN ORIGINALLY FILED BY THE ASSESSEE ON 28.11.2014 WAS WITHIN SUCH EXTENDED PERIOD, INTEREST U/S 234A WAS NOT CHARGEABLE. ITA NO. 47 & 183/JP/2018 RAJASTHAN STATE MINES AND MINERALS LTD.,VS. ACIT, J AIPUR 24 35. IN THIS REGARD, WE REFER TO THE ORDER ISSUED BY THE CBDT U/S 119 DATED 26 TH SEPTEMBER, 2014 WHICH READS AS UNDER:- SECTION 44AB OF THE INCOME-TAX ACT, 1961 (THE ACT ) READ WITH RULE 6G OF THE INCOME-TAX RULES, 1962 (THE RULES) REQU IRES CERTAIN PERSON TO FILE TAX AUDIT REPORT IN FORM NO.3CA/FORM NO.3CB ALONG WITH PRESCRIBED PARTICULARS IN FORM NO.3CD. VIDE NO TIFICATION NO. 33/2014 DATED 25 TH JULY, 2014, THE FORMS FOR FILING TAX AUDIT, REPORT HAVE BEEN REVISED. AS PER SECTION 44AB OF THE ACT, THE TAX AUDIT REPORT HAS TO BE OBTAINED AND FURNISHED ELECTRONICA LLY BY 30 TH NOVEMBER OF THE ASSESSMENT YEAR IN CASE OF AN ASSES SEE WHO IS REQUIRED TO FURNISH REPORT UNDER SECTION 92E OF THE ACT AND 30 T H SEPTEMBER OF THE ASSESSMENT YEAR IN CASE OF OTHER A SSESSEES. 2. IN VIEW OF THE REPRESENTATIONS RECEIVED BY THE CENT RAL BOARD OF DIRECT TAXES (`THE BOARD'), THE DUE DATE FOR OBT AINING AND FURNISHING OF TAX AUDIT REPORT UNDER SECTION 44A13 OF THE ACT FOR ASSESSMENT YEAR 2014-15 IN RESPECT OF ASSESSEES WHO ARE NOT REQUIRED TO FURNISH REPORT UNDER SECTION 92E OF THE ACT HAS BEEN EXTENDED FROM 30TH SEPTEMBER, 2014 TO 30 NOVEMBER, 2014 VIDE ORDER NO.133/24/2014-TPI DATED 20 TH AUGUST, 2014 IN EXERCISE OF POWER OF THE BOARD UNDER SECTION 119 OF THE ACT. IT HAS BEEN FURTHER CLARIFIED THAT THE TAX AUDIT REPORT FILED D URING THE PERIOD FROM 01.04.2014 TO 24.07.2014 IN THE PRE-REVISED FO RMS SHALL BE TREATED AS VALID TAX AUDIT REPORT UNDER SECTION 44A B. 3. AFTER THE EXTENSION OF THE DUE DATE FOR OBTAININ G AND FURNISHING OF TAX AUDIT REPORT UNDER SECTION 44AB OF THE ACT, A NUMBER OF REPRESENTATIONS HAVE BEEN RECEIVED IN THE BOARD REQ UESTING, FOR ITA NO. 47 & 183/JP/2018 RAJASTHAN STATE MINES AND MINERALS LTD.,VS. ACIT, J AIPUR 25 EXTENSION OF DUE DATE FOR FURNISHING OF RETURN OF I NCOME FOR THE ASSESSEES WHO ARE REQUIRED TO OBTAIN AND FURNISH TA X AUDIT REPORT UNDER SECTION 44AB OF THE ACT AND FOR WHOM THE DUE DATE FOR FURNISHING RETURN OF INCOME UNDER SECTION 139(1) OF THE ACT IS 30 TH SEPTEMBER, 2014. WRIT PETITIONS HAVE ALSO BEEN FILE D IN VARIOUS HIGH COURTS FOR DIRECTING THE BOARD TO EXTEND THE DUE DA TE FOR FURNISHING OF RETURN OF INCOME FROM 30 TH SEPTEMBER, 2014 TO 30 TH NOVEMBER, 2014 IN CONFORMITY WITH THE EXTENSION OF THE DUE DATE FO R FILING OF TAX AUDIT REPORT. 4. IN THE HIGH COURT OF DELHI, A WRIT PETITION NO. 5990/2014 HAS BEEN FILED ON THIS ISSUE. HOWEVER, BEFORE THE PRONO UNCEMENT OF JUDGMENT, THE PETITIONER WITHDREW THE WRIT PETITION ON 23 RD SEPTEMBER, 2014. THE HIGH COURT OF MADRAS PASSED IN TERIM ORDER ON 24.09.2014 IN WRIT PETITIONS NO.25443 AND 26306 TO 26310 OF 2014 AND DIRECTED THE BOARD TO CONSIDER THE REQUEST OF THE ASSESSEES IN GENERAL AND CONSIDER THE EXTENSION OF TIME FOR FURNISHING THE RETURN OF INCOME, IN TUNE WITH THE O RDER PASSED BY THE BOARD IN F. NO.133/24/2014-TPL DATED 20.08.2014 . IT HAS BEEN REPORTED THAT THE HIGH COURT OF JUDICATURE AT HYDER ABAD FOR THE STATE OF TELANGANA AND THE STATE OF ANDHRA PRADESH DISPOSED THE WRIT PETITION NO.28159 AND 28627 OF 2014 WITH A DIR ECTION TO THE BOARD TO DISPOSE OF THE REPRESENTATION OF THE PETIT IONERS. THE HIGH COURT OF BOMBAY DISPOSED OF WRIT PETITION NO.2492 O F 2014 VIDE ORDER DATED 25.09.2014 AND DIRECTED THE BOARD TO LO OK INTO THE PRACTICAL DIFFICULTIES OF THE PETITIONERS AND TAKE A JUST AND PROPER DECISION IN THIS MATTER. ITA NO. 47 & 183/JP/2018 RAJASTHAN STATE MINES AND MINERALS LTD.,VS. ACIT, J AIPUR 26 5. THE GUJARAT HIGH COURT ALLOWED SPECIAL CIVIL APP LICATION NO.12656 OF 2014 WITH SPECIAL CIVIL APPLICATION NO. 12571 OF 2014 AND VIDE JUDGMENT DATED 22.09.2014 DIRECTED THE BOA RD TO MODIFY THE ORDER UNDER SECTION 119 OF THE ACT DATED 20.08. 2014 BY EXTENDING THE DUE DATE FOR FURNISHING THE RETURN OF INCOME TO 30 TH NOVEMBER, 2014. IT HAS ALSO BEEN FURTHER STATED IN THE SAID ORDER THAT IT WOULD BE OPEN FOR THE BOARD TO QUALIFY SUCH RELAXATION BY EXTENDING THE DUE DATE FOR ALL PURPOSES, EXCEPT FOR THE PURPOSE OF EXPLANATION 1 TO SECTION 234A OF THE ACT. 6. IN COMPLIANCE TO THE JUDGMENT OF HIGH COURT OF G UJARAT AND AFTER CONSIDERING THE REPRESENTATIONS MADE FOR EXTE NSION OF DUE DATE FOR FURNISHING OF RETURN OF INCOME IN COMPLIAN CE WITH THE DIRECTIONS OF THE OTHER HIGH COURTS, THE BOARD, IN EXERCISE OF POWER CONFERRED BY SECTION 119 OF THE ACT, HEREBY E XTENDS, SUBJECT TO PARA 7 BELOW, THE 'DUE-DATE' FOR FURNISH ING RETURN OF INCOME FROM 30 TH SEPTEMBER, 2014 TO 30 TH NOVEMBER, 2014 FOR THE ASSESSMENT YEAR 2014-15 FOR ALL PURPOSES OF THE ACT, IN CASE OF AN ASSESSEE, WHO, (I) IS REQUIRED TO FILE HIS RETURN OF INCOME BY 30T H SEPTEMBER, 2014 AS PER CLAUSE (A) OF EXPLANATION 2 TO SUB-SECT ION (1) OF SECTION 139 OF THE INCOME-TAX ACT, 1961, AND (II) IS ALSO REQUIRED TO GET HIS ACCOUNTS AUDITED U NDER SECTION 44AB OF THE ACT OR IS A WORKING PARTNER OF A FIRM W HOSE ACCOUNTS ARE REQUIRED TO BE AUDITED UNDER SECTION 44AB OF TH E ACT. 7. THERE SHALL BE NO EXTENSION OF THE DUE DATE FO R THE PURPOSES OF EXPLANATION 1 TO SECTION 234A (INTEREST FOR DEFAULTS ITA NO. 47 & 183/JP/2018 RAJASTHAN STATE MINES AND MINERALS LTD.,VS. ACIT, J AIPUR 27 IN FURNISHING RETURN) OF THE ACT AND THE ASSESSEES SHALL REMAIN LIABLE FOR PAYMENT OF INTEREST AS PER THE PROVISION S OF SECTION 234A OF THE ACT. 8. FOR REMOVAL OF DOUBT, IT IS CLARIFIED THAT FOR A N ASSESSEE (OTHER THAN WORKING PARTNER OF A FIRM WHICH IS REQU IRED TO OBTAIN AND FURNISH TAX AUDIT REPORT), WHO IS REQUIRED TO F ILE ITS RETURN OF INCOME BY 30TH SEPTEMBER, 2014 BUT NOT REQUIRED TO OBTAIN AND FURNISH TAX AUDIT REPORT UNDER SECTION 44AB, THE DU E DATE FOR FURNISHING OF RETURN OF INCOME FOR ASSESSMENT YEAR 2014-15 REMAINS AS 30TH SEPTEMBER, 2014. 36. WE ALSO REFER TO THE DECISION OF THE HONBLE SUPREME COURT IN CASE CIT V. PRANNOY ROY REPORTED IN 179 TAXMAN 53 WHEREIN IT WAS HELD AS UNDER: 1. THIS APPEAL HAS BEEN PREFERRED AGAINST THE ORDER O F THE HIGH COURT OF DELHI IN CWP NO. 1745 OF 1999 PASSED ON 21-12-20 01. 2. THE RESPONDENT-ASSESSEES EARNED SUBSTANTIAL CAPITA L GAINS FOR THE ASSESSMENT YEAR 1995-96 FOR WHICH THE INCOME-TAX RE TURN WAS DUE TO BE FILED ON 31-10-1995. THE RETURN WAS FILED ON 29- 9-1996, I.E., AFTER A DELAY OF ABOUT 11 MONTHS. HOWEVER, THE TAXES DUE WE RE PAID ON 25-9- 1995, I.E., BEFORE THE DUE DATE OF FILING OF THE RE TURN. THOUGH THE RETURNED INCOME WAS ACCEPTED ON 29-1-1998, YET INTE REST WAS CHARGED UNDER THE PROVISIONS OF SECTION 234A OF THE INCOME- TAX ACT, 1961 (FOR SHORT 'THE ACT') ON THE GROUND THAT THE TAX PAID ON 25-9-1995 COULD NOT BE REDUCED FROM THE TAX DUE ON ASSESSMENT. BEING AG GRIEVED, THE ASSESSEES FILED A REVISION PETITION UNDER SECTION 2 64 OF THE ACT ON 9-11- 1998, BEFORE THE ADMINISTRATIVE COMMISSIONER REQUES TING TO DELETE THE INTEREST CHARGED UNDER SECTION 234A OF THE ACT. THE ADMINISTRATIVE COMMISSIONER, VIDE ORDER DATED 9-3-1999, UPHELD THE ACTION OF THE ASSESSING AUTHORITY AND DISMISSED THE REVISION PETI TION. 3. THE ASSESSEES, BEING FURTHER AGGRIEVED, FILED A WR IT PETITION IN THE HIGH COURT OF DELHI WHICH HAS BEEN DISPOSED OF BY T HE IMPUGNED ORDER. THE HIGH COURT, WHILE ACCEPTING THE WRIT PETITION A ND SETTING ASIDE THE ITA NO. 47 & 183/JP/2018 RAJASTHAN STATE MINES AND MINERALS LTD.,VS. ACIT, J AIPUR 28 INTEREST CHARGED UNDER SECTION 234A OF THE ACT, HAS COME TO THE CONCLUSION THAT INTEREST IS NOT A PENALTY AND THAT THE INTEREST IS LEVIED BY WAY OF COMPENSATION TO COMPENSATE THE REVENUE IN OR DER TO AVOID IT FROM BEING DEPRIVED OF THE PAYMENT OF TAX ON THE DU E DATE. THE HIGH COURT ALSO HELD THAT INTEREST WOULD BE PAYABLE IN A CASE WHERE TAX HAS NOT BEEN DEPOSITED PRIOR TO THE DUE DATE OF FILING OF THE INCOME-TAX RETURN. 4. THE REVENUE HAS CHALLENGED THE AFORESAID DECISION BY FILING A SPECIAL LEAVE PETITION BEFORE THIS COURT WHEREIN LEAVE WAS GRANTED ON 20-1- 2003. 5. HAVING HEARD COUNSEL ON BOTH SIDES, WE ENTIRELY AG REE WITH THE FINDING RECORDED BY THE HIGH COURT AS ALSO THE INTE RPRETATION OF SECTION 234A OF THE ACT AS IT STOOD AT THE RELEVANT TIME. 6. SINCE THE TAX DUE HAD ALREADY BEEN PAID WHICH WA S NOT LESS THAN THE TAX PAYABLE ON THE RETURNED INCOME WHICH WAS ACCEPT ED, THE QUESTION OF LEVY OF INTEREST DOES NOT ARISE. THUS, WE FIND N O MERIT IN THIS APPEAL AND THE SAME IS DISMISSED. 37. FOLLOWING THE SUPREME COURT DECISION, THE CBDT HAS COME OUT WITH A CIRCULAR NO. 2/2015 [F.NO.385/03/2015-IT (B)] DATED 10-2-2015 WHICH READS AS UNDER: INTEREST UNDER SECTION 234A OF THE INCOME-TAX ACT, 1961 (HEREINAFTER THE ACT) IS CHARGED IN CASE OF DEFAULT IN FURNISHING RETURN OF INCOME BY AN ASSESSEE. THE INTEREST IS CH ARGED AT THE SPECIFIED RATE ON THE AMOUNT OF TAX PAYABLE ON THE TOTAL INCOME, AS REDUCED BY THE AMOUNT OF ADVANCE TAX, TDS/TCS, A NY RELIEF OF TAX ALLOWED UNDER SECTION 90 AND SECTION 90A, ANY D EDUCTION ALLOWED UNDER SECTION 91 AND ANY TAX CREDIT ALLOWED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 115JAA AN D SECTION 115JD OF THE ACT. SINCE SELF-ASSESSMENT TAX IS NOT MENTIONED AS A COMPONENT OF TAX TO BE REDUCED FROM THE AMOUNT ON W HICH ITA NO. 47 & 183/JP/2018 RAJASTHAN STATE MINES AND MINERALS LTD.,VS. ACIT, J AIPUR 29 INTEREST UNDER SECTION 234A OF THE ACT IS CHARGEABL E, INTEREST IS BEING CHARGED ON THE AMOUNT OF SELF-ASSESSMENT TAX PAID BY THE ASSESSEE EVEN BEFORE THE DUE DATE OF FILING OF RETU RN. 2. IT HAS BEEN HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF CIT V. PRANNOY ROY 309 ITR 231/[2009] 179 TAXMAN 53 (SC) THAT THE INTEREST UNDER SECTION 234A OF THE ACT ON DEFAU LT IN FURNISHING RETURN OF INCOME SHALL BE PAYABLE ONLY ON THE AMOUN T OF TAX THAT HAS NOT BEEN DEPOSITED BEFORE THE DUE DATE OF FILIN G OF THE INCOME-TAX RETURN FOR THE RELEVANT ASSESSMENT YEAR. ACCORDINGLY, THE PRESENT PRACTICE OF CHARGING INTEREST UNDER SEC TION 234A OF THE ACT ON SELF-ASSESSMENT TAX PAID BEFORE THE DUE DATE OF FILING RETURN WAS REVIEWED BY CBDT. 3. THE BOARD HAS DECIDED THAT NO INTEREST UNDER SEC TION 234A OF THE ACT IS CHARGEABLE ON THE AMOUNT OF SELF-ASSESSM ENT TAX PAID BY THE ASSESSEE BEFORE THE DUE DATE OF FILING OF RE TURN OF INCOME. 4. THIS CIRCULAR MAY BE BROUGHT TO THE NOTICE OF AL L OFFICERS FOR COMPLIANCE. 38. IN LIGHT OF ABOVE, THE POSITION THAT EMERGES I S THAT THOUGH THE DUE DATE FOR FILING THE RETURN OF INCOME HAS BEEN E XTENDED BY THE CBDT BUT AT THE SAME TIME, FOR THE PURPOSES OF LEVY OF I NTEREST UNDER SECTION 234A, THE SAME HAS NOT BEEN EXTENDED. AT THE SAME TIME, THE HON'BLE SUPREME COURT IN THE CASE OF DR PRANNOY ROY (SUPRA) HAS HELD THAT THE INTEREST UNDER SECTION 234A OF THE ACT ON DEFAU LT IN FURNISHING RETURN OF INCOME SHALL BE PAYABLE ONLY ON THE AMOUN T OF TAX THAT HAS NOT BEEN DEPOSITED BEFORE THE DUE DATE OF FILIN G OF THE INCOME- TAX RETURN WHICH HAS BEEN ACCEPTED FOR THE RELEVANT ASSESSMENT ITA NO. 47 & 183/JP/2018 RAJASTHAN STATE MINES AND MINERALS LTD.,VS. ACIT, J AIPUR 30 YEAR. THEREFORE, WHERE THE TAXES HAVE BEEN DEPOSITE D BEFORE THE ORIGINAL DUE DATE OF FILING OF RETURN OF INCOME AND EVEN THOUGH THE RETURN OF INCOME HAS BEEN FILED WITHIN THE EXTENDED DUE DATE SO NOTIFIED BY THE CBDT, THERE WONT BE ANY LEVY OF IN TEREST UNDER SECTION 234A OF THE ACT WHERE THE RETURNED INCOME H AS BEEN ACCEPTED OR THERE COULD BE ANOTHER SCENARIO, WHERE THE TAXES DEPOSITED ARE HIGHER THAN THE TAXES FINALLY DETERMI NED BY THE AO. IN THE PRESENT CASE, IT HAS BEEN INFORMED BY THE LD AR DURING THE COURSE OF HEARING THAT AS AGAINST THE FINAL TAX LIA BILITY AMOUNTING TO RS 125,01,45,555 WHICH HAS BEEN DETERMINED BY THE A O PURSUANT TO ORDER UNDER SECTION 143(3), THE ASSESSEE HAS ALR EADY DEPOSITED TAXES BY WAY OF TDS (RS 1,81,22,023), ADVANCE TAX (RS 1,07,15,00,000) AND SELF-ASSESSMENT TAX (RS 17, 00,00,000) AMOUNTING TO RS 125,96,22,023 WELL BEFORE THE ORIGI NAL DUE DATE OF FILING OF RETURN OF INCOME. IT SEEMS THAT THE AO WH ILE WORKING OUT THE INTEREST UNDER SECTION 234A AMOUNTING TO RS 32, 10,470 HAS NOT GIVEN CREDIT OF SELF-ASSESSMENT TAX PAID BY THE ASS ESSEE AMOUNTING TO RS 17,00,00,000. APPARENTLY, THE REASON FOR THE SAME COULD BE THAT THE ONLINE FUNCTIONALITY TO DETERMINE THE INTE REST LIABILITY IN THE IT SYSTEM OF THE DEPARTMENT STILL DOESNT ALLOW CRE DIT FOR SELF- ASSESSMENT TAX WHILE WORKING OUT THE INTEREST UNDER SECTION 234A INSPITE OF THE CBDT CIRCULAR NO. 2/2015 DATED 10-2-2015 WHICH CLEARLY ALLOWS SUCH CREDIT. TO OUR MIND, THE MATTER IS SQUARELY COVERED BY THE DECISION OF THE H ONBLE SUPREME COURT IN FAVOUR OF THE ASSESSEE. IN SUCH A SCENARI O, WHERE THE TAXES DEPOSITED BEFORE FILING THE RETURN OF INCOME WERE MORE THAN THE TAXES FINALLY DETERMINED ON REGULAR ASSESSMENT, THE INTEREST UNDER SECTION 234A IS HELD NOT LEVIABLE. WE THEREF ORE SET-ASIDE THE ITA NO. 47 & 183/JP/2018 RAJASTHAN STATE MINES AND MINERALS LTD.,VS. ACIT, J AIPUR 31 MATTER TO THE FILE OF THE AO FOR LIMITED PURPOSES O F VERIFICATION OF THE TAX DEPOSIT FIGURES BEFORE FILING OF THE RETURN OF INCOME SO SUBMITTED BY THE LD AR AND WHERE THE SAME IS FOUND TO BE IN ORDER, ALLOW THE NECESSARY RELIEF TO THE ASSESSEE. IN THE RESULT, THE GROUND OF APPEAL IS ALLOWED WITH ABOVE DIRECTIONS. IN THE RESULT, RESPECTIVE APPEALS ARE DISPOSED OFF IN LIGHT OF ABOVE FINDINGS AND DIRECTIONS. ORDER PRONOUNCED IN THE OPEN COURT ON 24/10/2018. SD/- SD/- FOT; IKWY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 24/10/2018 * GANESH KR. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S RAJASTHAN STATE MINES & MINERALS LTD., JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- ACIT, CIRCLE-06, JAIPUR 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE { ITA NO. 47 & 183/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR