M/s Orissa Mining Corporation Ltd, Bhubaneswar V. CIT, Bhubaneswar

ITA 551/CTK/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65190 (ITAT-CUTTACK)
• Duration Of Justice: 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 14-11-2012
• Court: TRIBUNAL
• Department Lawyers: PARAMITA TRIPATHY
• Assessee Lawyers: V JAIN P V RAO ARS
• Keywords: Capital asset; Depreciation; Revenue expenditure
• Section: 43B; 37(1); 68; 145

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , H ONBLE SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER / I.T.A.NO S . 551/CTK/2012 / ASSESSMENT YEAR 2008 - 09 M/S.ORISSA MINING CORPORATION L T D., OMC HOUSE, BHUBANESWAR - 1, PAN: AAACO 3324 L - - - VERSUS - ADDL.COMMISSIONER OF INCOME - T AX, RANGE 1, BHUBANESWAR. ( /APPELLANT ) ( / RESPONDENT ) / I.T.A.NO S . 584 AND 552/CTK/2012 / ASSESSMENT YEARS 2006 - 07 AND 2008 - 09. ASST.COMMISSIONER OF INCOME - TAXC, CIRCLE 1(1), BHUBANESWAR - - - VERSUS - M/S.ORISSA MINING CORPORATION L T D., OMC HOUSE, BHUBANESWAR - 1, PAN: AAACO 3324 L ( /APPELLANT ) ( / RESPONDENT ) FOR THE ASSESSEE: / SHRI V.JAIN/ P.V.RAO, ARS FOR THE DEPARTMENT: / S MT. PARAMITA TRIPATHY, CIT - DR / DATE OF HEARING: 18.12.2012 / DATE OF PRONOUNCEMENT: 21.12.2012 / ORDER . . , , SHRI K.K.GUPTA, ACCOUNTANT MEMBER. ITA NO.584/CTK/2012 FILED BY THE REVENUE IS AGAINST THE ORDER DT.25.9.2012 OF THE COMMISSI ONER OF INCOME - TAX (APPEALS) FOR THE ASSESSMENT YEAR 2006 - 07. ITA NO.551/CTK/2012 FILED BY THE ASSESSEE AND ITA NO.552/CTK/2012 FILED BY THE REVENUE ARE AGAINST THE ORDER DT.31.8.2012 OF THE COMMISSIONER OF INCOME - TAX (APPEALS) FOR THE ASSESSMENT YEAR 2008 - 09. ALL THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NOS.551,552 AND 584/CTK/2012 (CROSS APPEALS) 2 ITA NO.584/CTK/2012 ( ASSESSMENT YEAR 2006 - 07) : 2. THIS APPEAL IS FILED BY THE REVENUE FOR THE ASSESSMENT YEAR 2006 - 07 RAIS ES THE FOLLOW ING GROUNDS. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION OF 1,10,37,70,526 MADE BY THE AO UNDER THE HEAD NET PRESENT VA L UE(NPV) TREATING THE SAME AS CAPITA L EXPENDITURE. 2. ON THE FACT S AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN HOLDING THAT PAYMENT OF NPV DOES NOT BRING ANY ENDURING BENEFIT TO THE ASSESSEE WHEREAS THE ASSESSEE ENJO YS L ONG RUN BENEF IT FOR YEARS TOGETHER BY RAISING MINERA L S FROM THE LAND FOR WHICH NPV IS PAID. 3. AT THE OUTSET THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE ITAT, CUTTACK BENCH VIDE CONSOLIDATED ORDER DT.12.08.2011 IN ASSESSEES OWN CASE IN ITA NO.76,2 26 AND 240/CTK/2010 FOR THE AYS 2002 - 03,2003 - 04 AND 2004 - 05, WHEN THE ISSUE WAS WITH RESPECT TO DELETION OF ADDITION UNDER THE HEAD NET PRESENT VALUE WAS CONSIDERED BY THE ASSESSING OFFICER AS CAPITAL AND NOT REVENUE AS CLAIMED BY THE ASSESSEE. THIS ISSU E WAS DEALT WITH BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2007 - 08 WHICH WAS BEFORE THE LEARNED CIT(A) INSOFAR AS IT WAS CONTENDED THAT THE PAYMENT OF SUCH AMOUNT WAS FOR PROTECTION OF ENVIRONMENTS AND NOT RELATING TO ANY PROPRIETARY RIGHTS WHICH WAS ORIGINALLY CONSIDERED BY THE ASSESSING OFFICER AS CAPITAL IN NATURE. THE LEARNED CIT(A) THEREFORE DISTINGUISHED THE FACTS AS WERE NARRATED IN THE CASE LAWS CITED BY THE LEARNED ASSESSING OFFICER WAS IN THE CASE OF PLACING RELIANCE IN THE C ASE OF ORISSA FOREST DEVELOPMENT CORPORATION LTD., WHICH ASSESSEE HAD ACTUALLY INCURRED POCKETS OF THE FOREST FOR REHABILITATION MADE PURSUANT TO GOVERNMENT ORDER WAS CONSIDERED OTHERWISE. THEREFORE, THE ASSESSEE HAS BEEN INCURRING SUCH EXPENDITURE ITA NOS.551,552 AND 584/CTK/2012 (CROSS APPEALS) 3 FROM VE RY BEGINNING COULD NOT BE AT THE TIME OF THIS ASSESSMENT YEAR ALONE BE SOUGHT TO HOLD BRIN G ING INTO EXISTENCE A CAPITAL ASSET. FINDING NO MERITS IN THE GROUNDS OF APPEAL RAISED BY THE REVENUE, WE UPHOLD THE ORDER OF THE LEARNED CIT(A) AND DISMISS THE APPEA L OF THE REVENUE. 4. ITA NO. 584/CTK/2012 FILED BY THE REVENUE FOR THE ASSESSMENT YEAR 2006 - 07 IS DISMISSED. ITA NO.551/CTK/2012 (ASSESSMENT YEAR 2008 - 09): 5. THIS APPEAL IS FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2008 - 09 RAISING THE FOLLOWING GROUN DS. 1. DISALLOWING PERIPHERAL DEVELOPMENT EXPENSES INCURRED FOR CONSTRUCTION OF BJB WOMENS HOSTEL AMOUNTING TO 1 CRORE ON THE GROUND THAT THERE IS NO INCIDENTAL BUSINESS CONNECTION IS INCORRECT AS THE AMOUNT WAS CONTRIBUTED TO THE COLLEGE WITH A RECIPR OCAL ARRANGEMENT OF ACCOMMODATION TO THE CHILDREN OF OMC EMPLOYEES IN THE LADIES HOSTEL. 2. AS THE PRIOR PERIOD EXPENDITURE AMOUNTING TO 55.65 LAKHS WAS CRYSTALLIZED DURING THE YEAR, ADDING BACK THE EXPENDITURE ON THE GROUND OF NOT HAVING BEEN ACCOUNTED ON MERCANTILE SYSTEM IS BAD IN LAW. 3. ADDITION OF OUTSTANDING EXPENSES AMOUNTING TO 39.44 CRORES U/S 41(1) OF THE I.T.ACT, 1961 ON THE GROUND THAT THE LIABILITY HAS CEASED TO EXIST IS HYPOTHETICAL AND INCORRECT. IN A PUBLIC SECTOR ENVIRONMENT NO LIABIL ITIES REMAIN UNPAID ALTHOUGH IT MAY TAKE LONGER TIME TO GET PAID OFF . 6. THE ASSESSEE COMPANY IS A GOVERNMENT OF ORISSA UNDERTAKING AND ITS BUSINESS COMPRISES OF MINING, PROCESSING AND SALE OF MINERALS. FOR THE ASSESSMENT YEAR 2008 - 09, THE ASSESSING OFFI CER COMPLETED THE ASSESSMENT MAKING VARIOUS ADDITIONS OUT OF WHICH THE ADDITIONS SUSTAINED BY THE LEARNED CIT(A) ON ACCOUNT OF PERIPHERAL DEVELOPMENT EXPENSES, PRIOR PERIOD EXPENDITURE AND THE OUTSTANDING EXPENSES ARE THE SUBJECT MATTER OF APPEAL PREFERRE D BY THE ASSESSEE. ITA NOS.551,552 AND 584/CTK/2012 (CROSS APPEALS) 4 7. AS REGARDS CONFIRMATION OF THE ADDITION IN RESPECT OF PERIPHERAL DEVELOPMENT EXPENSES INCURRED FOR CONSTRUCTION OF BJB WOMENS HOSTEL AMOUNTING TO 1 CRORE, THE LEARNED COUNSEL OF THE ASSESSEE ARGUED THAT THE PERIPHERAL DEVELOPMENT EXPENSES IS A NAME GI VEN TO CLAIM THIS EXPENDITURE AS DIRECTED BY THE HONBLE CHIEF SECRETARY TO GOVT. OF ORISSA AND CHIEF DEVELOPMENT COMMISSIONER, GOVT. OF ORISSA, BHUBANESWAR WAS WERE AUTHORISED GOVT. OFFICERS INSOFAR AS INCURRING OF SUCH EXPENDITURE WAS TO BE CONTROLLED B Y THE GOVT. OF ORISSA, WHICH THE LEARNED CIT(A) HAS DIFFERED TO ACCEPT THAT THE EXPENSES WERE INCURRED FOR A COLLEGE WHICH IS SITUATED AT BHUBANESWAR AND THEREFORE HAD NOTHING TO DO WITH THE PERIPHERAL DEVELOPMENT EXPENSES. THEREFORE, HE SUBMITTED THAT TH E CLAIM WAS UNDER THE PROVISIONS OF SECTION 37(1) WHEN THE AUTHORITIES BELOW TRIED TO LINK THE SAME ON A FINDING WHETHER IT COULD BE AN EXPENDITURE NOT FOR THE PURPOSE OF ASSESSEES BUSINESS INSOFAR AS IT WAS NOT IN CONFORMITY OF THE CLAIMING OF EXPENSES AS WAS CLAIMED BY OTHER UNITS HOLDING MINES SUCH AS NALCO, ANOTHER PUBLIC S ECTOR UNDERTAKING WHEN THE TRIBUNAL WAS PLEASED TO ALLOW THIS EXPENDITURE WHICH DECISION IS ALSO BEING PLACED ON RECORD TO DISTINGUISH THAT THE INPUTS FOR THE INCURRING OF EXPENDITU RE HAS TO NECESSARILY MOVE FROM THE GOVERNMENT FOR ANOTHER GOVERNMENT UNDERTAKING TO FULFILL . THE ASSESSING OFFICER HAS RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF TRAVANCORE TITANIUM PRODUCTS LTD V. CIT, WHICH WAS FOR CONSIDERING THE P ROPOSITION FOR INCURRING THE EXPENDITURE WHETHER COULD BE DONATION AS WELL. IN SUPPORT OF THE CONTENTIONS AS BROUGHT ON RECORD BY THE ASSESSING OFFICER AND THE LEARNED CIT(A), THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT BECAUSE THE COLLEGE HAD AGREE D TO HAVE TWO ROOMS FOR THE EMPLOYEES OF THE ASSESSEE AND THE HALL OF THE COLLEGE WAS TO BE NAMED AS MC HALL WAS SUFFICIENT FOR CLAIMING THE EXPENDITURE U/S.37(1) AS WAS ALSO ITA NOS.551,552 AND 584/CTK/2012 (CROSS APPEALS) 5 CONSIDERED BY APPELLATE AUTHORITIES TO HOLD THAT GOVERNMENT AUTHORITIES INCURRI NG EXPENDITURE FOR SPORTS PROMOTION AND SOCIAL WELFARE ARE ALLOWED TO CLAIM SUCH EXPENDITURE. HE SUBMITTED THAT THERE IS NO CONTROVERSY OF IT ACTUALLY HAVING BEEN INCURRED INSOFAR AS ACKNOWLEDGING THE RECEIPT BY THE PRINCIPAL OF THE WOMEN COLLEGE AND ALSO THE BOARD RESOLUTION PASSED BY THE ASSESSEE TO CARRY OUT THE DIRECTION OF THE CHIEF SECRETARY AND CHIEF DEVELOPMENT OFFICER BEING THE SUPERIOR MOST GOVERNMENT AUTHORIT Y WHO CAN DIRECT FOR INCURRING CERTAIN EXPENDITURE AS PERIPHERAL DEVELOPMENT EXPENSES , I S BEING PLACED ON RECORD . 7.1. ON THE NEXT ISSUE BEING THE PRIOR PERIOD EXPENSES, IT WAS SUBMITTED BY THE LEARNED COUNSEL OF THE ASSESSEE THAT THE LEARNED CIT(A) HAS TRIED TO ADJUDICATE THE ISSUE BY PARTLY DELETING THE EXPENSES CLAIMED UNDER THE HEAD PRIO R PERIOD EXPENSES ON THE BELIE F THAT THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING OUGHT TO HAVE RENDERED EVIDENCE AS TO WHY THEY COULD NOT HAVE BEEN ACCOUNTED FOR IN THE YEAR WHICH THEY PERTAIN TO INSOFAR AS EVIDENCE MUST BE PRODUCED BEFORE THE ASSESSING OFFICER FOR THEIR ACCRUAL IN THE IMPUGNED ASSESSMENT YEAR. THE LEARNED COUNSEL OF THE ASSESSEE VEHEMENTLY ARGUED THAT THE PUBLIC SECTOR UNDERTAKING BEING A GOVERNMENT UNDERTAKING IS GOVERNED BY LAWS OVER AND ABOVE THE I.T.ACT AND THE COMPANI ES ACT WHICH REQUIRE MERCANTILE SYSTEM OF ACCOUNTING TO BE FOLLOWED INSOFAR AS THE COMPUTATION OF INCOME WAS TO BE MADE AS SET OUT BY THE INCOME - TAX ACT ITSELF, WHICH CLEARLY INDICATES THAT THE RENDERING OF INCOME HAS TO BE ON THE BASIS OF ARRIVING AT TRUE INCOME FOR THE IMPUGNED ASSESSMENT YEAR. IN OTHER WORDS, THE LEARNED COUNSEL OF THE ASSESSEE ARGUED THAT ESTABLISHING A CLAIM FOR FINDING AS TO WHAT IS THE BASIS FOR ESTABLISHING MERCANTILE SYSTEM OF ACCOUNTING HAS BEEN INCORPORAT ED IN THE LAW ITSELF U/S. 145A, SECTION 43B AND ONE OR TWO MORE SECTIONS UNDER THE ITA NOS.551,552 AND 584/CTK/2012 (CROSS APPEALS) 6 CAPITAL GAINS TAXATION SCHEME. IN OTHER WORDS, THE I.T.ACT COMPLETELY DOES NOT ALLOW TO BRING TO TAX INCOMES UNDER THE MERCANTILE SYSTEM OF ACCOUNTING WHEN THE LEARNED CIT(A) CONFINED HIS PART SUSTAI NING THE DISALLOWANCE ON THE BASIS THAT THE ASSESSEE WAS NOT ABLE TO ESTABLISH AS TO HOW THE INCOME THAT HAD ACCRUED IN A PARTICULAR YEAR WAS TO BE ACCOUNTED FOR IN A SUBSEQUENT YEAR. THE LEARNED COUNSEL OF THE ASSESSEE ARGUED THAT IT WAS NEVER THE CASE OF THE ASSESSEE THAT THE EXPENSES HAD ACCRUED WHEN THE EMPHASIS WAS THAT THE EXPENDI TURE HAD CRYSTALLIZED IN THE IMPUGNED YEAR WHEN ACCRUAL TOOK MORE THAN ONE YEAR TO TAKE SHAPE. 7.2. ON THE LAST ISSUE BEING OUTSTANDING EXPENSES, THE LEARNED COUNSEL OF THE A SSESSEE SUBMITTED THAT IT IS UNDISPUTED FACT THAT IT WAS NOT THE ENDEAVOUR OF THE ASSESSING OFFICER TO CONTRAV ENE THE PROVISIONS OF SECTION 41(1) INSOFAR AS THE ASSESSEE WAS NOT ABLE TO FURNISH THE DETAILS OF OUTSTANDING LIABILITIES PRIOR TO THE ASSESSMENT YEAR 2006 - 07 IN VIEW OF IT HAVING INCORPORATED ITS OPENING BALANCE IN THE COMPUTER SYSTEM. IT WAS SUBMITTED BEFORE THE LEARNED CIT(A) THAT EFFORTS HAD BEEN MADE TO LIQUIDATE THE LIABILITY INSOFAR AS A SUM OF ABOUT 11 CRORES HAD BEEN LIQUIDATED THEREFORE HE RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT V. SUGAULI SUGAR WORKS (P) LTD. ( 236 ITR 518) WHEN UNLESS THE CREDITOR AUTHORIZE THE ASSESSEE TO HOLD IT AS INCOME IT CANNOT BE BROUGHT TO TAX UNDER THE PROVISIONS OF SECTION 41(1) WHIC H HAS BEEN AGAIN CONFIRMED BY THE ITAT, DELHI BENCH REPORTED IN 11 ITR (T) 113. ON A SPECIFIC QUERY FROM THE BENCH THAT WHETHER THE ITEMS OF SUNDRY CREDITORS WAS BROUGHT TO TAX BY THE ASSESSING OFFICER, COULD BE RELATED TO THE LIMITATION ACT WHICH THE LEA RNED COUNSEL OF THE ASSESSEE REPLIED THAT IT WAS NOBODYS CASE TO REPAY THE CREDIT OR EVEN IF THE CREDITOR WAS NOT AVAILABLE THEREFORE COULD NOT BE CONSIDERED EVEN IF ASSUMING BUT NOT ACCEPTING THAT THE DETAILS TO BE FURNISHED TO THE ITA NOS.551,552 AND 584/CTK/2012 (CROSS APPEALS) 7 ASSESSING OFFICER WERE TO BE FINALIZED. 8. THE LEARNED CIT - DR, ON THE OTHER HAND , SUBMITTED IN RESPECT OF PERIPHERAL DEVELOPMENT EXPENSES THAT THE PERIPHERAL DEVELOPMENT EXPENSES AS THE NAME SUGGESTS IS ONLY TO DEVELOP THE PERIPHERY WHICH THE ASSESSING OFFICER FOUND WAS NOT IN ACCORDANCE WITH THE CLAIM OF EXPENDITURE WAS THEREFORE CONTRAVENING THE PROVISIONS INSOFAR AS THE ASSESSEE HAD NOT BEEN ABLE TO ESTABLISH THAT IT WAS FOR THE BUSINESS OF THE ASSESSEE TO BE CLAIMED U/S.37 ( 1 ) . SHE FULLY SUPPORTED THE ORDER OF THE AUTHORITIE S BELOW. 8.1. WITH RESPECT TO PRIOR PERIOD EXPENSES, SHE SUPPORTED THE COMPUTATION OF DISALLOWABLE PRIOR PERIOD EXPENSES AS CAN BE PERUSED FROM THE ORDER OF THE LEARNED CIT(A) INSOFAR AS THE ASSESSEE COULD NOT EXPLAIN THEIR ACCRUAL IN THE IMPUGNED ASSESSM ENT YEAR BUT RELATING TO EARLIER YEARS WHEN THE ASSESSEE HIMSELF HAS CLAIMED THEM UNDER THE HEAD PRIOR PERIOD EXPENSES. IT CLEARLY INDICATES THAT THE ASSESSEE WAS NOT FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING SCRUPULOUSLY AND WAS CLAIMING EXPENSES AS AND WHEN THEY WERE INCURRED. 8.2. WITH RESPECT TO THE LAST ISSUE, SHE SUBMITTED THAT THE ASSESSEE HAS ADMITTED THAT THEY WERE NOT ABLE TO RELATE THE OUTSTANDING LIABILITIES WHICH WAS IN ACCORDANCE WITH THE PROVISIONS OF SECTION 68 BUT TO BE EXPLAINED TO T HE SATISFACTION OF THE ASSESSING OFFICER WAS A LOUD THINKING BY THE ASSESSING OFFICER AND THE LEARNED CIT(A) THAT THEY COULD BE BROUGHT TO TAX UNDER THE PROVISIONS OF SECTION 41(1) AGAINST WHICH THE LEARNED COUNSEL OF THE ASSESSEE AS OF NOW HAS CITED CASE LAWS WHICH INDICATE THAT THE SAME CANNOT BE DONE UNILATERALLY. SHE SUBMITTED THAT IF GIVEN AN OPPORTUNITY, THE ASSESSING OFFICER WILL ESTABLISH THAT EVEN THE PURPORTED SUM OF 11.14 CRORES PAID AGAINST THIS LIABILITY WAS NOT DOCUMENTED OR EXPLAINED THEREFO RE THE ASSESSEE ADMITTEDLY DID NOT HAVE ANY DETAILS BEING A GOVERNMENT ITA NOS.551,552 AND 584/CTK/2012 (CROSS APPEALS) 8 UNDERTAKING WAS FIT FOR TAXING INCOME IN THIS YEAR ONLY. SHE ARGUED THAT ON HAVING WRITING OFF OF BAD DEBT AT THE INSTANCE OF THE ASSESSEES DEBTORS IS CLAIMED AS REVENUE EXPENDITURE. S IMILARLY A CREDITOR NOT EVEN IDENTIFIABLE BY THE ASSESSEE SHOULD BE ALLOWED BY THE ASSESSING OFFICER TO BE TAXED AS INCOME. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS. ON CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE INCLINED TO HOL D THAT THE PERIPHERAL DEVELOPMENT EXPENSES HAVE BEEN INCURRED BY THE ASSESSEE AS 100% GOVERNMENT OF ORISSA UNDERTAKING AT THE INSTANCE OF THE GOVERNMENT OF ORISSA TO BE INCURRED AS PERIPHERAL DEVELOPMENT EXPENSES WHICH EXPENDITURES HAVE BEEN ALLOWED BY THE TRIBUNAL IN CASE OF OTHER ASSESSEE WHEN THE EXPENSES WERE INCURRED FOR CARRYING OUT REHABILITATION, ADJUSTMENTS ETC., IN THE PERIPHERY OF THE MINES OF THOSE ASSESSES. IN OTHER WORDS, THE LEARNED COUNSEL OF THE ASSESSEE HAS TRIED TO EMPHASIZE THAT THE ASSE SSEE HAVING ITS HEAD OFFICE AT BHUBANESWAR WAS VERY MUCH TO TAKE CARE OF THE GOVERNMENT RUNNING COLLEGE AND HOSTEL WAS WITHIN ITS PERIPHERY, THEREFORE WAS PROPERLY SOUNDED OF BY THE CHIEF SECRETARY TO BE INCURRED AND WAS ACKNOWLEDGED BY THE PRINCIPAL OF TH AT COLLEGE WHEN THE TWO ROOMS HAVE BEEN GOT RESERVED FOR THE WARDS OF THE ASSESSEES EMPLOYEES AS WELL AS THE HALL CONSTRUCTED BY THIS AMOUNT WAS NAMED AS OMC HALL. THEREFORE AN ASSET HAS COME INTO BEING FOR THE ASSESSEE WHICH PERPETUATES THE ASSESSEES BUSINESS CLEARLY INDICATES THAT THE EXPENDITURE HAS BEEN INCURRED FOR THE ASSESSEES BUSINESS AND NOT FOR CHARITY OR AS A DONATION OR OTHERWISE AS CONSIDERED BY THE HONBLE SUPREME COURT IN THE CASE LAW RELIED UPON BY THE ASSESSING OFFICER AND THE LEARNED CIT(A). THE NAME CARRIED OUT BY THE RECIPIENT OF THIS AMOUNT IS SUFFICIENT TO SPREAD GOODWILL AND ADVERTISEMENT IN FAVOUR OF THE ASSESSEE AS POINTED TO BE CONSIDERED AS ALLOWABLE DEDUCTION ITA NOS.551,552 AND 584/CTK/2012 (CROSS APPEALS) 9 INSOFAR AS THE EXPENDITURE WAS MADE BY THE ASSESSEE BEING GOVERNME NT UNDERTAKING, FOR THE GOVERNMENT AT THE INSTANCE OF THE GOVERNMENT OF ORISSA. IN VIEW OF THE ABOVE, THE ADDITION OF THE SAID AMOUNT OF 1 CRORE ON ACCOUNT OF PERIPHERAL DEVELOPMENT EXPENSES IS DIRECTED TO BE DELETED. 9.1. ON THE SECOND ISSUE BEING PRIOR PERIOD EXPENSES, WE FIND THE CONTENTION OF THE LEARNED COUNSEL OF THE ASSESSEE JUSTIFIED THAT IT IS NOBODYS CASE THAT THE ACCOUNTING OF PRIOR PERIOD EXPENSES HAVE TO BE OTHERWISE. A PRACTICAL METHOD OF ACCOUNTING IS CONSIDERED MERCANTILE WHEN THE CONCEPT OF DERIVING REAL INCOME IN THE HANDS OF THE ASSESSEE IN YEAR TO YEAR BASIS IS A MUNDANE REQUIREMENT INSOFAR AS INCOME TAX IS LEVIED FOR THE IMPUGNED ASSESSMENT YEAR ONLY. THE VERY INTENTION ON THE BASIS TO CLAIM IT AS PRIOR PERIOD EXPENSES INDICATES THAT T HESE EXPENSES WERE NOT KNOWN TO THEM BUT PERTAIN TO THAT YEAR AND THEY COULD NOT HAVE BEEN ACCOUNTED IN THE YEAR WHEN THEY MAY HAVE ACCRUED WHICH DEFICIENCY W AS REQUIRED TO BE FULFILLED B Y THE LEARNED CIT(A) WHEN THE SUBSTANTIAL AMOUNT WAS DELETED BY HIM A S COMPUTED BY THE ASSESSING OFFICER AS PRIOR PERIOD EXPENSES. THE SUSTENANCE OF PART ADDITION ON ACCOUNT OF PRIOR PERIOD EXPENSES HAVE BEEN DEALT ITEM - WISE BY HIM IN HIS ORDER, WHICH WE ARE INCLINED TO REPRODUCE AS FOLLOWS, HAS TO BE CONSIDERED OTHERWISE. (I) PAY & ALLOWANCES - RS.968,561/ - : THIS WAS STATED TO BE ARREAR SALARY PAID TO SHRI BARINDER SINGH. IT IS SEEN THAT THE ORDER OF REINSTATEMENT WAS PASSED ON 16.11.2006 IN CASE OF THIS OFFICER AND HIS LEAVE FOR THE PRECEDING PERIOD WAS SANCTIONED ON 16.0 3.2007 ALONG WITH SANCTION OF INCREMENTS FOR THE PRECEDING YEARS ON THAT DAY. ON THE BASIS OF THESE ORDERS PASSED BY THE OMC, THE LIABILITY HAD CRYSTALLIZED IN FINANCIAL YEAR 2006 - 07 AND IN 2007 - 08; (II) ARREAR SALARY - RS.3,11,927/ - : - ARREAR SALARY OF R S.3,11,927/ - CONSISTED OF LEAVE SALARIES ONLY. A COPY OF THE ORDER FROM AG, ODISHA WAS FILED IN RESPECT OF DR. UMAKANTA MISHRA AMOUNTING TO RS.L,34,610/ - . SINCE THIS ORDER IS DATED 10.08.2007, THE ITA NOS.551,552 AND 584/CTK/2012 (CROSS APPEALS) 10 AMOUNT IS ALLOWABLE AS THE LIABILITY CRYSTALLIZED DURING FI NANCIAL YEAR 2007 - 08. IN RESPECT OF THE BALANCE AMOUNT NO DETAILS OR EVIDENCES WERE FURNISHED; (III) MISCELLANEOUS EXPENSES: - MISCELLANEOUS EXPENSES RELATE TO SUPPLY OF EXPLOSIVES DURING FINANCIAL YEAR 2004 - 05 AND, HENCE, PROVISION SHOULD HAVE BEEN MADE I N THAT YEAR. IN ANY CASE, NO EVIDENCE WAS FURNISHED THAT THE SAME ACCRUED DURING THE YEAR; (IV) REPAIR TO THE BUILDING - RS.4,35,364/ - : THIS AMOUNT RELATES TO PURCHASE OF GCI SHEETS ON 30.12.2005 AND REPAIRS IN PURSUANCE TO AGREEMENT ENTERED IN FINANCIAL YEAR 2004 - 05. ACCORDINGLY, THE PROVISION SHOULD HAVE BEEN MADE DURING THAT YEAR. IN ANY CASE, NO EVIDENCE WAS FURNISHED THAT THE SAME ACCRUED DURING THE YEAR; (V) RAISING EXPENSES - RS.12,02,5101 - : THESE EXPENSES MOSTLY CONSIST OF RAISING OF MINERAL ORE AT DUBNA MINES FOR 1998 - 99, 1999 - 2000, 2000 - 01 AND 200 1 - 02, ALSO INCLUDES OVER BURDEN CUTTING IN 2001 AND IN RESPECT OF AGREEMENTS/ACTIVITIES DONE IN 2001 - 02. ACCORDINGLY, PROVISIONS SHOULD HAVE BEEN MADE IN THOSE YEARS IN RESPECT OF THESE EXPENSES. IN ANY CASE, NO EVIDENCE WAS FURNISHED THAT THE SAME ACCRUED DURING THE YEAR. (VI) RENT, RATES & TAXES RS.4,58,432/ - : IN FACT, THESE ARE RENT PAID FOR PRIVATE PLOTS TAKEN ON LEASE BY OMC. AS PER DETAILS FILED, THE RENT WAS FINALIZED BY THE MANAGING DIRECTOR OF THE ASSESSEE ON 16.12.2006. THUS, THE PROVISION SHOULD HAVE BEEN MADE IN THE FINANCIAL YEAR 2006 - 07. IN ANY CASE, NO EVIDENCE WAS FURNISHED THAT THE SAME ACCRUED DURING THE YEAR. (VII) R&M TO MACHINERY RS.23,02,201/ - : THE WORK BY M/S. MCNA11 BHARAT IS IN RESPONSE TO WORK ORDER OF THE ASSESSEE DATED 31.10.2002 AND THE BILL S WERE RAISED BY THIS CONCERN ON THE ASSESSEE ON 09.12.2004, 24.10.2006, 05.09.2000 AND 05.09.2003. ACCORDINGLY, PROVISION SHOULD HAVE BEEN MADE I N THE RELEVANT FINANCIAL YEARS. IN A NY CASE, NO EVIDENCE WAS FURNISHED THAT T HE SAME ACCRUED DURING THE YEAR. A MERE GLANCE OF THE ABOVE WOULD SUGGEST THAT THE EXPENSES ARE OF A NATURE WHICH MAY NOT HAVE CRYSTALLIZED EVEN AFTER A GAP OF ONE YEAR WAS EXPLAINED BY THE ASSESSEE APPELLANT BEFORE HIM. HE REQUIRED THE EVIDENCE OF THEIR ACCRUAL IN THE IMPUGNED ASSESSMENT YEAR WHEN IT WAS THE ASSESSEES CLAIM ITA NOS.551,552 AND 584/CTK/2012 (CROSS APPEALS) 11 THAT THEY HAVE CRYSTALLIZED IN THE IMPUGNED ASSESSMENT YEAR INSOFAR AS THEY ALL ARE REVENUE IN NATURE AND CANNOT BE CONSIDERED FOR DISALLOWANCE EVEN IF THEY WERE INCURRED OR ACCRUED IN THE YEAR THEY PERTAIN TO. IN OTHER WORDS, WE FIND THE CONTENTION OF THE LEARNED COUNSEL OF THE ASSESSEE APPROPRIATE THAT THERE IS NO METHOD TO FORESEE AS TO WHAT REVENUE EXPENDITURE WOULD HAVE TO BE PROVIDED FOR AFT ER END OF THE ASSESSMENT YEAR IF THE ACCOUNTS ARE TO BE BALANCED FOR APPROVAL BY THE SHARE HOLDERS WITHIN SIX MONTHS OF THE CLOSE OF THE FINANCIAL YEAR. THEREFORE, A CONCEPT OF CLAIMING THEM AS PRIOR PERIOD EXPENSES ON THE BASIS THEY HAVING BEEN ACTUALLY I NCURRED IN THE IMPUGNED ASSESSMENT YEAR HAS BEEN DECLARED AS PRIOR PERIOD EXPENSES IN ACCORDANCE WITH THE CONCEPT OF MERCANTILE SYSTEM OF ACCOUNTING. IN THIS VIEW OF THE MATTER, WE ARE OF THE CONSIDERED VIEW THAT THE PRIOR PERIOD EXPENSES ARE BOUND TO BE A LLOWED IN THE IMPUGNED ASSESSMENT YEAR HAVING CRYSTALLIZED IN THE IMPUGNED ASSESSMENT YEAR. THEREFORE, THE PART CONFIRMATION OF THE ADDITION MADE BY THE LEARNED ASSESSING OFFICER ON THIS COUNT IS THEREFORE DIRECTED TO BE DELETED. 9.2. WITH RESPECT TO THE OUTSTANDING LIABILITIES IT HAS BEEN SUBMITTED BY THE RIVAL PARTIES THAT DUE TO INCORPORATING THE OPENING BALANCE OF THE OUTSTANDING LIABILITIES ON THE COMPUTER SYSTEM IT WAS NOBODYS CASE THAT EITHER THE LIABILITIES ARE BOGUS OR ARE NOT FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE HAVING BEEN ALLOWED AS EXPENDITURE BY THE ASSESSING OFFICER IN THE YEARS PRIOR TO IT. THEREFORE, IT WAS NOT THE CASE OF THE ASSESSING OFFICER TO UNILATERALLY HOLD THEM AS TAXABLE UNDER THE PROVISIONS OF SECTION 41(1) WHICH HAS BEEN SPECIFICALLY CONSIDERED NOT PERMISSIBLE AS PER THE SUPREME COURT DECISION CITED AT THE BAR AND ALSO BECAUSE THE LEARNED CIT(A) CONSIDERED THE ISSUE FOR SUSTENANCE BY HOLDING A VIEW THAT IN ABSENCE OF ANY EVIDENCE ESTABLISHING THE PART PAYMENT HAS BEEN MA DE , THE WHOLE OF THE AMOUNT WAS ITA NOS.551,552 AND 584/CTK/2012 (CROSS APPEALS) 12 TO BE DISALLOWED. THE LEARNED COUNSEL OF THE ASSESSEE HAS AGREED TO THE PROPOSITION THAT THE DETAILS OF THESE LIABILITIES WILL BE WORKED OUT TO THE ASSESSING OFFICER AS EARLY AS POSSIBLE INSOFAR AS THE LIABILITIES PERTAIN TO EXPENDITURE HAVING BEEN INCURRED WHICH HAVE REMAINED UNPAID DUE TO ADMINISTRATIVE REASONS THEREFORE CANNOT BE SUBJECTED TO TAX IN THE IMPUGNED ASSESSMENT YEAR ALONE. THE UNDISPUTED FACTS ARE THAT THE LIABILITIES HAVE BEEN BROUGHT FORWARD FROM EARLIER YE ARS THEREFORE IS A FINDING OF FACT BY THE ASSESSING OFFICER AND NOT BECAUSE HE PROPOSED TO TAX THE SAME U/S.411) UNILATERALLY. THE LEARNED COUNSEL OF THE ASSESSEE HAS SUBMITTED THAT THE DETAILS WILL BE FURHISHED AND IT WILL BE ON THE PART OF THE ASSESSEE T O RENDER THE SAME AS INCOME U/S.41(1) AS AND WHEN THERE WILL BE ANY CESSATION OF LIABILITY. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY INFIRMITY IN THE CONTENTION OF THE LEARNED COUNSEL OF THE ASSESSEE AND AS SUCH, THE ADDITION MADE ON THIS COUNT IS DIRECTED TO BE DELETED. 10. IN THE RESULT, ITA NO.551/CTK/2012 FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2008 - 09 IS ALLOWED. ITA NO.552/CTK/2012 (ASSESSMENT YEAR 2008 - 09) : 11. THE REVENUE HAS FILED THIS APPEAL FOR THE ASSESSMENT YEAR 2008 - 09 RAISING THE FOLLO WING GROUNDS. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION OF RS.3 , 73,89,55,820/ - ON THE ISSUE OF VALUATION OF CLOSING STOCK. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD . CIT(A) IS NOT JUSTIFIED IN IGNORING THE FACT THAT THE SATES ARE ASSURED FOR WHICH A MARKET EXISTS AND THERE IS NEGLIGIBLE RISK OF FAILURE TO SATE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN IGNORING THE FAC T THAT AS PER THE CLARIFICATION ISSUED BY THE ICAI IN JANUARY 1994 ALL MANDATORY ITA NOS.551,552 AND 584/CTK/2012 (CROSS APPEALS) 13 ACCOUNTING STANDARDS APPLY I.R.O. FINANCIAL STATEMENTS AUDITED U/S.44AB OF THE ACT. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN IGNORING THE FACT THAT PARA 6.2 OF AS - 9 ON REVENUE RECOGNITION ISSUED BY THE ICAI SPECIFICALLY, INTER ALIA, APPLIES TO INDUSTRIES DEALING WITH MINERALS TO WHICH SPECIAL CONDITIONS APPLY AND THUS AS - 9 IS SQUARELY APPLICABLE IN ASSESSEES CASE AND THE APPL ICATION IS MANDATORY IN SUCH CASES. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN IGNORING THE FACT THAT AS - 2(REVISED) WHICH DEALS WITH VALUATION OF INVENTORIES DOES NOT APPLY TO MINERAL ORES TO THE EXTENT THAT THEY ARE MEASURED AT NET REALIZABLE VALUE IN ACCORDANCE WITH WELL ESTABLISHED PRACTICES IN THESE INDUSTRIES. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN IGNORING THE FACT THAT AS - 9 IS MANDATORY ON REVENUE RECO GNITION APPLIES TO EXTRACTION OF MINERAL ORES ALSO. 7. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN PLACING RELIANCE ON THE CASE LAWS MENTIONED IN THE APPELLATE ORDER IN DELEING THE IMPUGNED ADDITION AS THEY WERE PRONOUNCED IN DIFFERENT CONTEXTS AND NOT SIMILAR TO THE CASE. 8. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN CONCLUDING THAT THE METHOD OF VALUATION ADOPTED BY THE ASSESSEE IS AN ACCEPTABLE METHOD OF ACCOUNTING F OR THE REASON THAT IT IS CONSISTENTLY FOLLOWED BY THEM AND FOLLOWED BY SIMILAR OTHER ENTITIES. 9. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION OF RS.4,69,45,200/ - ON THE ISSUE OF COMPENSATORY AFFORESTATION. 10. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN IGNORING THE FACT THAT THE EXPENDITURE INCURRED ON COMPENSATORY AFFORESTATION IS CAPITAL IN NATURE SINCE THE SAME GIVES ENDURING BENEFIT. 11. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CT(A) IS NOT JUSTIFIED IN IGNORING THAT THE CASE LAWS RETIED UPON ITA NOS.551,552 AND 584/CTK/2012 (CROSS APPEALS) 14 BY THE AO IN SUPPORT OF THE ADDITION ON THE ISSUE OF COMPENSATORY AFFORESTATION ARE RELEVANT ON THE ISSUE. 12. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN IGNORING THAT PAYMENT OF NPV (COMPENSATORY AFFORESTATION) FOR RENEWAL OF L EASE IS NOT MADE REGULARLY B UT FOR THE SPECIFIC PERIOD THE L EASE WHICH ITSELF SIG NIFIES THAT THE SAME GIVES A L ONG TERM BENEFIT AND HENCE CAPITAL IN NATURE. 13. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION OF RS.1,28,91,419/ - ON THE ISSUE OF ERP SOFTWARE EXPENSES. 14. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN IGNORING THE FACT THAT THE EXPENDITURE INCURRED AS ERP SOFTWARE EXPENSES IS CAPITAL IN NATURE. 15. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN IGNORING THE FACT THAT THE ERP SOFTWARE EXPENSES RESULTED IN THE CREATION OF AS ASSET OF ENDURABLE NATURE AND HENCE TO BE TREATED AS CAPITAL. 16. THE APPELLANT CRAVES TO ALTER, AMEND OR ADD ANY OTHER GROUND THAT MAY BE CONSIDERED NECESSARY IN COURSE OF THE APPEAL PROCEEDING. 12. GROUND NOS. 1 TO 8 RELATES TO THE VALUATION OF CLOSING STOCK AS ENUMERATED BY THE ASSESSING OFFICER PARTLY INDICATES THE SUPPORT IT HAS GATHERED FOR BRINGING TO TAX A SUM OF 373.89 CRORES TO TAXATION BEING THE VALU ATION OF CLOSING STOCK AT NET REALIZABLE VALUE WHEN THE CONSISTE NT SYSTEM OF VALUATION OF CLOSING STOCK HAS BEEN AT LOWER OF COST OR AT NET REALIZABLE VALUE WHEN THE NET REALIZABLE VALUE HAS BEEN ASSUMED TO BE ALWAY S HIGHER THAN THE COST. GROUND NOS.9 TO 12 ARE WITH RESPECT TO THE DELETION OF THE DISALLOWANCE OF NPV AMOUNTING TO 4,69,45,200 BEING HELD BY THE ASSESSING OFFICER AS CAPITAL IN NATURE CLAIMED BY THE ASSESSEE ON REVENUE ACCOUNT. GROUND NO.13 TO 16 ARE WIT H RESPECT TO CAPITALIZATION OF ERP SOFTWARE ITA NOS.551,552 AND 584/CTK/2012 (CROSS APPEALS) 15 EXPENSES AMOUNTING TO 1,28,91,419 WHICH HAS BEEN HELD BY THE LEARNED AS REVENUE NATURE TO BE DELETED FROM DISALLOWANCE. 13. THE LEARNED CIT - DR INITIATING HER ARGUMENTS SUBMITTED THAT THE ASSESSING OFFICER PROCEE DED TO BRING ON RECORD THE METHOD OF VALUATION BY THE ASSESSEE COMPANY ITS CLOSING STOCK BY IDENTIFYING THAT THE ASSESSEE HAD NOT SCRUPULOUSLY FOLLOWED THE METHOD OF VALUATION OF STOCK INSOFAR AS AS - 9 ISSUED BY THE CHARTERED ACCOUNTANT INSTITUTE OF INDIA DEALS WITH RECOGNITION OF REVENUE WHICH COULD BE EXTENDED FOR VALUATION OF THE CLOSING STOCK THOUGH CONSERVATIVELY AND THE EXCLUSION CLAUSE FOR VALUATION OF CLOSING STOCK AS INSCRIBED IN AS - 2 DOES NOT SPEAK ABOUT THE VALUATION OF THE INVENTORY OF NET REALI ZABLE VALUE BASIS. SHE SUBMITTED THAT THE ASSESSING OFFICER THEREFORE TOOK UPON HIMSELF TO DERIVE THE NET REALIZABLE VALUE AFTER CONSIDERING THE POLICY OF THE COMPANY IN RESPECT OF SALES AND MARKETING OF ORE WHEN HE CONSIDERED THAT THE DOMESTIC SALES AND E XPORT SALES ARE ON THE BASIS PREDETERMINED PRICE WHICH HE TRIED TO DOCUMENT BY INDICATING THAT THE VALUATION OF CLOSING STOCK AT LOWER OF COST OR NET REALIZABLE VALUE WAS FAULTY. AS CAN BE PERUSED IN THE ASSESSMENT ORDER, THE CLOSING STOCK VALUATION OF THE IRON ORE, MANGANESE AND CHROME ORES WERE TO BE ASSIGNED A VALUE WHICH THEY WOULD FETCH HAVING BEEN EXCAVATED IN THE IMPUGNED ASSESSMENT YEAR WAS TO BE VALUED AT THEIR REALIZABLE VALUE. THE QUANTITY IS NOT IN DISPUTE AND THEREFORE THE TOTAL VALUATION OF TH E CLOSING STOCK AS DETERMINED BY HIM AND AS DETERMINED BY THE ASSESSEE HIMSELF ARE AS FOLLOWS. ITA NOS.551,552 AND 584/CTK/2012 (CROSS APPEALS) 16 ITA NOS.551,552 AND 584/CTK/2012 (CROSS APPEALS) 17 SHE POINTED OUT THAT THE LEARNED CIT(A) TRIED TO TAKE UP THE CASE OF THE ASSESSEE APPELLANT BEFORE HIM INSOFAR AS HE HELD THAT THE NET REALIZABLE VA LUE HAS TO BE ADOPTED AGAINST THE POLICY OF THE ASSESSEE TO DETERMINE THE COST OF THE CLOSING STOCK HELD BY IT INSOFAR AS THAT WILL BE PRE PONING THE INCOME OF THE ASSESSEE WHICH WOULD ARISE TO IT ONLY WHEN THE SALES ARE MADE. SHE SUBMITTED THAT THE LEARNE D CIT(A) ALSO ERRED IN FOLLOWING THE ASSESSEES CONTENTION THAT ALL OTHER SIMILAR PUBLIC SECTOR UNDERTAKINGS ARE ALSO ADOPTING VALUATION AT LOWER OF COST OR MARKET VALUE WHEN IT WAS THE CASE OF THE ASSESSING OFFICER THAT IN CASE OF A NATURAL PRODUCT BEING ORE THE NET REALIZABLE VALUE WAS TO BE CONSIDERED. SHE ALSO POINTED OUT THAT MAHANADI COAL FIELD LTD., HAS ADOPTED AS - 9 METHOD ON VALUATION OF STOCK WAS CONFIRMED BY THE TRIBUNAL INSOFAR AS THE CONTROL ITEM BEING COAL WAS TO BE SOLD AT A PRICE DETERMINED BY THE GOVERNMENT AND NOT BECAUSE THE ROYALTY WAS PAID TO THE GOVERNMENT. SHE THEREFORE, SUBMITTED THAT THE LEARNED CIT(A) CONSIDERING THE CASE OF THE ASSESSEE WAS NOT FOR APPLICABILITY OF RESJUDICATA OUGHT TO HAVE CONSIDERED BY ALLOWING THE ASSESSING OFF ICERS COMPUTATION OF VALUATION OF CLOSING STOCK HELD BY THE ASSESSEE IN THE IMPUGNED ASSESSMENT YEAR. ON A SPECIFIC QUERY FROM THE BENCH TO THE ITA NOS.551,552 AND 584/CTK/2012 (CROSS APPEALS) 18 LEARNED CIT - DR WHETHER THE ASSESSING OFFICER HAD ALSO EXTENDED THE SAME VALUATION FOR THE OPENING STOCK FOR TH E SUBSEQUENT ASSESSMENT YEAR, SHE ANSWERED IN THE NEGATIVE. 14. THE LEARNED COUNSEL OF THE ASSESSEE REPLYING ON THIS ISSUE SUBMITTED THAT IT IS A CASE OF ASSESSING OFFICER DETERMINING THE PROFIT WHICH WAS TO BE EARNED BY THE ASSESSEE ON THE SALES THEREOF I N THE SUBSEQUENT YEAR INSOFAR AS THE CONSISTENT SYSTEM OF ACCOUNTING OF VALUATION OF THE CLOSING STOCK HAS BEEN AT A LOWER OF COST OR THE NET REALIZABLE VALUE . IT IS NOBODYS CASE THAT NET REALIZABLE VALUE CAN BE LOWER THAN THE COST INSOFAR AS THE ACCOU NTING STANDARD DOES NOT PRESCRIBE THE ACCOUNTING ON THE BASIS OF EVENTS OCCURRING AFTER THE BALANCE SHEET DATE WITH RESPECT TO STOCK WHICH IS VALUED TO DETERMINE THE TRUE AND CORRECT INCOME FOR ANY SPECIFIC ASSESSMENT YEAR TO PAY TAX THERE UPON. HE SUBMITT ED THAT T HE ASSESSING OFFICER HAS MADE THE ADDITION ON THE GROUND THAT THE ASSESSEE IS MANDATORILY REQUIRED TO FOLLOW ACCOUNTING STANDARD ISSUED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA. FURTHER AS PER THE ACCOUNTING STANDARD - 2 READ WITH ACCOUNTI NG STANDARD - 9, ASSESSEE SHOULD HAVE VALUED THE STOCK OF ORE AT NET RELEASABLE VALUE WHICH IS HIGHER THAN THE COST AS AGAINST THE METHOD ADOPTED BY THE ASSESSEE OF VALUING THE ORE AT COST OR NET REALIZABLE VALUE WHICHEVER IS LOWER . THE RE ASONING HAS BEEN GI VEN BY THE AO IN PARA 1.3 ON PAGE 2 TO 5. THE LEARNED CIT(A) HAS DELETED THE SAID ADDITION AND THE REASONING HAS BEEN GIVEN IN PARA 4.3 WHICH CAN BE SUMMARIZED AS UNDER: 4.3. THE ASSESSEE HAS BEEN CONSISTENTLY VALUING A METHOD OF VALUATION I.E. COST OR NET RELIZABLE VALUE WHICHEVER IS LESS FOR THE PURPOSE OF VALUING THE CLOSING STOCK. 4.3.1 THAT THE METHOD OF VALUATION OF CLOSING STOCK IS A MATTER ENTIRELY WITHIN THE DISCRETION OF THE ASSESSEE BY MAKING REFERENCE TO THE ITA NOS.551,552 AND 584/CTK/2012 (CROSS APPEALS) 19 JUDGMENT OF THE SUPREME COURT IN THE CASE OF BRITISH PAINTS LTD. 188 ITR 44 (SC). 4.3.2 THAT THE CLOSING STOCK IS TO BE VALUED AT COST OR MARKET PRICE WHICHEVER IS LOWER AND IT IS NOW GENERALLY ACCEPTED AS AN ESTABLISHED RULE OF COMMERCIAL PRACTICE AND ACCOUNTANCY BY QUOTING FROM THE JUDGMENT OF THE SUPREME COURT IN CHAINRUP SAMPATRAM VS. CIT 24 ITR 481 (SC). THE CIT(A) FURTHER HELD THAT THE PROFIT FOR THE PURPOSE OF INCOME TAX HAS TO BE COMPUTED IN CONFORMITY WITH THE ACCOUNTING PRINCIPLES OF COMMERCIAL ACCOUNTING, UNLESS OF COURSE, SUCH PRIN CIPLES HAVE BEEN SUPERSEDED OR MODIFIED BY LEGISLATIVE ENACTMENTS. UNREALIZED PROFIT IN THE SHAPE OF APPRECIATED VALUE OF GOODS REMAINING UNSOLD AT THE END OF AN ACCOUNTING YEAR AND CARRIED OVER TO THE FOLLOWING YEARS ACCOUNT IN A BUSINESS I.E. CONTINUING ARE NOT BROUGHT INTO CHARGE AS A MATTER OF PRACTICE, THOUGH, LOSS DUE TO A FALL IN PRICE BELOW COST IS ALLOWED EVEN IF SUCH LOSS HAS NOT BEEN ACTUALLY REALIZED. 4.3.3 THE CIT(A) APPLYING THE PRINCIPLES OF LAW ENUNCIATED BY THE VARIOUS COURTS INCLUDING THE HONBLE SUPREME COURT HELD THAT IT IS CLEAR THAT THE ASSESSEES METHOD OF VALUATION OF CLOSING STOCK WHICH IS COST OR NRV, WHICHEVER IS LOWER AND WHICH IT HAS BEEN FOLLOWING CONSISTENTLY IS A VALID AND APPROPRIATE METHOD WHICH NEED NOT BE INTERFERED WITH. 4.3.3.2 THE CIT(A) ALSO GAVE A FI NDING ON THE REASONING OF THE AO THAT PARA 6.2 OF AS - 9 MANDATES VALUATION OF ORE AT NET REALIZABLE VALUE. THE CIT(A) HAS HELD THAT THIS FINDING IS NOT BASED ON FACTS WHICH HE HAS ALSO STATED IN THE ORDER. IN PARA 4.3.3.3 T HE CIT(A) ALSO HELD THAT THERE IS NO MONOPOLISTIC CONDITION. FURTHER IN PARA 4.3.3.5 THE CIT(A) BY MAKING A REFERENCE TO THE ANNUAL ACCOUNTS OF THE OTHER ENTITIES IN THE INDUSTRY HELD THAT THESE ARE ALSO FOLLOWING THE COST AT COST OR NET REALIZABLE VALUE A ND THERE IS NO SUCH ESTABLISHED PRACTICE IN THE INDUSTRY. THE ASSESSING OFFICERS CONTENTION IS THAT CLOSING STOCK IS TO BE VALUED AT MARKET PRICE I.E AT THE NET REALIZABLE VALUE. IN THIS REGARD RELIANCE IS BEING PLACED BY THE ASSESSING OFFICER ON CLAUSE 3 (A) OF ACCOUNTING STANDARD OF ITA NOS.551,552 AND 584/CTK/2012 (CROSS APPEALS) 20 ICAI AS - 2 AND A S - 9 FURTHER IT IS BEING STATED THAT THE VALUATION AS PER THIS ACCOUNTING STANDARD IS MANDATORY FOR THE PURPOSE OF COMPUTATION OF INCOME UNDER THE INCOME TAX ACT, 1961 . THE THIRD CONTENTION RAISED BY THE ASSESSIN G OFFICER IS THAT THE ASSESSING OFFICER CAN REJECT THE METHOD OF ACCOUNTING IF HE IS NOT SATISFIED WITH THE CORRECTNESS OR COMPLETENESS OF THE ACCOUNTS AS PER THE RELEVANT PROVISIONS OF THE INCOME TAX ACT, 1961. IN THIS REGARD IT WILL BE IMPORTANT TO FIRST TEST THIS CONTENTION OF THE ASSESSING OFFICER THAT AO CAN REJECT THE METHOD OF ACCOUNTING IF HE IS NOT SATISFIED WITH THE CORRECTNESS OR COMPLETENESS OF THE ACCOUNTS AS PER THE RELEVANT PROVISIONS OF THE INCOME TAX ACT. THERE IS A MANDATE UNDER SECTION 44 AA OF THE ACT, WHEREBY EVERY PERSON CARRYING ON BUSINESS OR PROFESSION IS REQUIRED TO KEEP AND MAINTAIN SUCH BOOKS OF ACCOUNT AND OTHER DOCUMENTS AS MAY ENABLE THE ASSESSING OFFICER TO COMPUTE HIS TOTAL INCOME IN ACCORDANCE WITH THE PROVISIONS OF THE ACT. FURTHER AS PER SECTION 145(1) OF THE ACT, INCOME CHARGEABLE UNDER THE HEAD PROFIT AND GAINS FROM BUSINESS OR PROFESSION IS TO BE COMPUTED IN ACCORDANCE WITH THE SYSTEM OF ACCOUNTING REGULARLY EMPLOYED BY THE ASSESSEE. FURTHER IN TERMS OF SECTION 145(2) OF THE ACT, THE CENTRAL GOVERNMENT HAS BEEN GIVEN POWER TO NOTIFY IN OFFICIAL GAZETTE FROM TIME TO TIME ACCOUNTING STANDARDS TO BE FOLLOWED BY ANY CLASS OF ASSESSEE OR IN RESPECT OF ANY CLASS OF INCOME. FURTHER AS PER SUB - SECTION (3) WHERE THE ASSESSING OFFI CER IS NOT SATISFIED ABOUT THE CORRECTNESS OR COMPLETENESS OF THE ACCOUNTS OF THE ASSESSEE, OR WHERE THE METHOD OF ACCOUNTING PROVIDED IN SUB - SECTION (1) OR THE ACCOUNTING STANDARD AS NOTIFIED UNDER SECTION 2 HAVE NOT BEEN REGULARLY FOLLOWED BY THE ASSESSE E, THE ASSESSING OFFICER MAY MAKE AN ASSESSMENT IN THE MANNER PROVIDED IN SECTION 144. ACCORDINGLY THE REQUIREMENT OF THE ACT IS TO KEEP AND MAINTAIN BOOKS OF ACCOUNT, TO FOLLOW A SYSTEM OF ACCOUNTING WHICH IS BEING REGULARLY EMPLOYED, AND TO FOLLOW THE ITA NOS.551,552 AND 584/CTK/2012 (CROSS APPEALS) 21 AC COUNTING STANDARD AS HAVING BEEN NOTIFIED BY THE CENTRAL GOVERNMENT IN THIS REGARD. THERE IS NO DISPUTE ABOUT THE FACT THAT THE ASSESSEE HAS KEPT AND MAINTAINED THE BOOKS OF ACCOUNT. THERE IS NO DISPUTE THAT THE ASSESSEE HAS BEEN FOLLOWING A SYSTEM OF ACCO UNTING REGULARLY EMPLOYED BY IT. THE DISPUTE FROM THE ASSESSMENT ORDER IS THAT ASSESSEE HAS NOT FOLLOWED THE ACCOUNTING STANDARD. AS PER SECTION 145(3), THE POWER OF THE ASSESSING OFFICER TO TINKER WITH THE ACCOUNTS ARISE ONLY WHEN THE ACCOUNTING STANDARDS NOTIFIED UNDER SECTION 145(2) HAVE NOT BEEN FOLLOWED BY THE ASSESSEE. IN THIS REGARD IT WILL BE RELEVANT TO FIND OUT WHAT ACCOUNTING STANDARDS HAVE BEEN NOTIFIED BY THE CENTRAL GOVERNMENT UNDER SECTION 145(2) WHICH HAS NOT BEEN FOLLOWED. THE CENTRAL GOVER NMENT HAS SO FAR NOTIFIED ONLY TWO ACCOUNTING STANDARDS VIDE NOTIFICATION NO. 5.0. 69(E) DATED 25TH JANUARY, 1986. THE ACCOUNTING STANDARD - I IS RELATING TO DISCLOSURE OF ACCOUNTING POLICIES. THE ACCOUNTING STANDARD - IL IS RELATING TO DISCLOSURE OF PRIOR PER IOD AND EXTRAORDINARY ITEMS AND CHANGES IN ACCOUNTING POLICIES. THERE IS NO ACCOUNTING STANDARD NOTIFIED BY THE CENTRAL GOVERNMENT FOR VALUATION OF INVENTORY. THUS THERE CANNOT BE ANY ALLEGATION THAT ASSESSEE HAS NOT FOLLOWED THE ACCOUNTING STANDARD NOTIFI ED UNDER SECTION 145(2) OF THE INCOME TAX ACT. THE AC HENCE GETS NO JURISDICTION TO TINKER WITH THE ASSESSEES ACCOUNTS. ACCORDINGLY THE VERY FIRST CONTENTION OF THE ASSESSING OFFICER THAT THE ACCOUNTING STANDARD AS - 2 WHICH HAS BEEN ISSUED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA IS MANDATORY FOR THE PURPOSE OF COMPUTATION OF INCOME UNDER THE INCOME TAX ACT IS WRONG. THERE IS NO SUCH REQUIREMENT UNDER THE INCOME TAX ACT. FURTHER THE ASSESSING OFFICER S CONTENTION THAT IT CAN REJECT THE METHOD OF A CCOUNTING IS ALSO WRONG SINCE THERE IS NO BASIS IN THE PRESENT CASE TO REJECT THE METHOD OF ACCOUNTING BEING FOLLOWED BY THE ASSESS EE. IT IS NOT THE CASE OF THE ASSESSING OFFICER ITA NOS.551,552 AND 584/CTK/2012 (CROSS APPEALS) 22 THAT THE ASSESSEE HAS NOT KEPT AND MAINTAINED THE BOOKS OF ACCOUNT. IT IS NOT THE CASE OF THE AC THAT THE SYSTEM OF ACCOUNTING IS NOT BEING REGULARLY FOLLOWED BY THE ASSESSEE. IN VIEW OF THE ABOVE, THE ASSESSING OFFICER CANNOT INVOKE THE PROVISIONS OF SECTION 145(3) WHICH GIVES THE POW ER TO THE AO TO REJECT THE BOOKS OF ACC OUNT. 15 . HAVING HEARD BOTH PARTIES ON THIS ISSUE WE ARE OF THE CONSIDERED VIEW THAT THE LEARNED CIT(A) HAS GIVEN FULL CREDENCE TO THE FINDING OF THE ASSESSING OFFICER TO THE MOOT QUESTION WHETHER IT WAS THE ASSESSING OFFICERS ENDEAVOR TO ADOPT A PARTICULAR METHO D OF VALUATION BEING FULLY A WARE OF THE FACT THAT BEING A PUBLIC SECTOR UNDERTAKING IT WAS TO MAINTAIN ITS ACCOUNT ON MERCANTILE SYSTEM OF ACCOUNTING WHEN THE COST DETERMINED BY IT TO VALUE ITS STOCK WAS IN ACCORDANCE WITH THE PRINCIPLES OF ACCOUNTING STA NDARD FOLLOWED BY THE ASSESSEE INSOFAR AS THE LEARNED COUNSEL OF THE ASSESSEE HAS SUBMITTED THAT THE METHOD OF ACCOUNTING HAS BEEN PRESCRIBED BY THE I.T.ACT,1961 U/S.145 AND THE ACCOUNTING STANDARDS NOTIFIED HAVE TO BE ADOPTED FOR THE PROVISIONS OF SECTIO N 145(2). THEREFORE, THE VALUATION OF INVENTORIES AS INSCRIBED BY THE AS - 2 INDICATE THAT THE INVENTORIES OF MINING INDUSTRIES ARE TO BE MEASURED AT NET REALIZABLE VALUE IN ACCORDANCE WITH THE WELL ESTABLISHED PRACTICE IN THOSE INDUSTRIES. THIS MEANS THAT THE ASSESSEE HAS THE OPTION TO CHOOSE THE LOWER OF THE COST OR NET REALIZABLE VALUE CONSISTENTLY WHEN THE NET REALIZABLE VALUE HAS BEEN DEFINED AS ESTIMATING OF SELLING PRICE IN THE ORDINARY COURSE OF BUSINESS BEING LESS THAN ESTIMATED COST OF COMPLETION A ND THE ESTIMATED COST NECESSARY TO MAKE THE SALES. IT IS NOT THE CASE OF THE ASSESSEE THAT THE NET REALIZABLE VALUE IS NOT KNOWN OR COULD NOT BE KNOWN WHICH CAN BE KNOWN AT THE TIME OF SALE ONLY. BUT IN ORDER TO ADOPT THE CONSISTENT SYSTEM OF VALUATION AT LOWER OF COST OR NET REALIZABLE VALUE THE ASSESSEE DETERMINED THAT THE COST WOULD BE LESS THAN ITA NOS.551,552 AND 584/CTK/2012 (CROSS APPEALS) 23 THE REALIZABLE VALUE. THEREFORE, THERE COULD BE VARIETY OF REVENUE RECOGNITION AS INSCRIBED IN AS - 9 WHICH WAS ALSO CONSIDERED BY THE LEARNED CIT(A) IN DETAIL AND DISTINGUISHED BY THE LEARNED CIT(A) TO HOLD THAT WHEN A SALE IS ASSURED IN A FORWARD CONTRACT OR THE GOVERNMENT GUARANTEE OR WERE MARKET EXISTS AND THERE IS A NEGLIGIBLE RISK OF FAILURE OF SALE, THE GOODS INVOLVED ARE OFTEN VALUED AT NET REALIZABLE VALUE. SUCH AMOUNTS WHILE NOT REVENUE AS DEFINED IN THE ACCOUNTANT STANDARD ARE SOMETIMES RECOGNIZED IN THE STATEMENT OF PROFIT & LOSS APPROPRIATELY DESCRIBED (REFER TO MAHANADI COAL FIELD LTDS ITAT DECISION). NOW THE LEARNED CIT(A) THEREFORE PROCEEDED TO CONS IDER THE REVENUE RECOGNITION METHOD IN DETAIL WHEN THE ACCOUNTING POLICY WERE TO BE DEALT WITH BY THE LEARNED CIT(A) ON THE IMPLEMENT OF NON - COMPLIANCE WITH THE ACCOUNTING STANDARD AS ENUMERATED BY THE INSTITUTE AND THE ACCOUNTING STANDARD AS ENUMERATED BY THE I.T.ACT. HE NOTED THAT THE QUALIFICATIONS DISCLOSURE MAY OR MAY NOT HAVE ANY IMPACT ON THE COMPUTATION OF TOTAL STOCK FOR THE PURPOSE OF THE ACT WHEN SECTION 145 PROVIDES THAT S ECTION SHOULD BE FOLLOWED BY THE ASSESSEE TO WHOM THEY ARE APPLICABLE. SEC TION 44AB T HEREFORE REQUIRES THE ASSESSEE TO MAINTAIN A REPORT ON ACCOUNTS OF RELEVANT INFORMATION FURNISHED IN FORM 3CD. FORM 3CD VIDE CLAUSE 11(D) REQUIRES REPORTING OF THE DETAILS OF DEVIATION, IF ANY, IN THE METHOD OF ACCOUNTING EMPLOYED IN THE PREVIOU S YEAR FROM ACCOUNTING STANDARDS PRESCRIBED UNDER SECTION 145 AND THE EFFECT THEREOF ON THE PROFIT OR LOSS. THEREFORE, HE CONSIDERED THE NULLITY TO BE BROUGHT OUT BY THE ASSESSING OFFICER THERE BEING NO MATERIAL DIFFERENCE BETWEEN THE AS(IT - I) AND AS(IT - I I) NOTIFIED BY THE GOVERNMENT AND CORRESPONDING AS - 1 AND AS - 5 OF THE CHARTERED ACCOUNTANTS INSTITUTE OF INDIA. THEREFORE, CONSIDERING THE TOTALITY OF THE FACTS AND ON THE FACT FINDING THAT WHETHER THE ASSESSING OFFICER WAS TO ADOPT THIS VALUATION BEING HIG HER THAN THE COST INPUT OF THE ITA NOS.551,552 AND 584/CTK/2012 (CROSS APPEALS) 24 ASSESSEE FOR THE SUBSEQUENT YEAR WOULD BE AVAILABLE TO IT FOR THE PURPOSE OF AT THE TIME OF THE OPENING STOCK WHICH WOULD BE SOLD WHETHER THE INCOME BEING THE REALIZABLE VALUE TO BE REDUCED FROM THE INCOME RENDERED TO TAX BY THE ASSESSEE WAS NOT ANSWERED IN THE AFFIRMATIVE. WE, THEREFORE, DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT(A) WHO HAS RIGHTLY DELETED THE ADDITION OF 373.89 CRORES ON THE FACTS AND CIRCUMSTANCES WHICH HAVE BEEN ELABORATELY BROUGHT OUT IN HIS ORDER , WHICH NEEDS NO INTERFERENCE . WE UPHO LD THE SAME. 16. ON THE SECOND ISSUE OF DELETION OF THE ADDITION OF 4,6 9,45,200, WE FIND THAT THE ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE I T AT AS WAS ALSO CONSIDERED FOR THE ASSESSMENT YEAR 2006 - 07 INSOFAR AS IT HAS BEEN RIGHTLY BROUGHT ON RECORD BY THE LEARNED CIT(A) THAT THE ASSESSEE BEING A P UBLIC SECTOR UNDERTAKING COULD NOT CLAIM THE LAND ON WHICH THE AFFORESTATION WORK HAS BEEN CARRIED OUT TO CLAIM EXPENSES MUCH LESS DEPRECIATION AS WAS CONSIDERED IN THE CASE OF ORISSA FOREST DEVELOPMENT CORPORATION LTD. WE UPHO LD THE IMPUGNED ORDER OF THE LEARNED CIT(A) ON THIS ISSUE. 17. ON THE LAST ISSUE BEING THE DELETION OF ADDITION OF 1,28,91,419 ON THE ISSUE OF ERP SOFTWARE EXPENSES, WE ARE OF THE CONSIDERED VIEW THAT THE LEARNED CIT(A) RIGHTLY CONSIDERED THAT ARP SOFTWARE EXPENSES WERE INCURRED BY T HE ASSESSEE AS NOTED BY HIM AS UNDER : 9.3.2. THE ASSESSEES CASE IN FACT IS STILL MUCH SIMPLER. THE EXPENDITURE DISALLOWED BY THE AO HAS NOT BEEN INCURRED ON PURCHASE OF ERP SOFTWARE. AS HAS BEEN SUBMITTED BY THE ASSESSEE, THE EXPENDITURE RELATING TO PUR CHASE AND INSTALLATIO N OF ERP SOFTWARE AMOUNTING TO 3,L4,10,81 3/ - SPREAD OVER A PERIOD 2004 - 05 TO 2007 - 08 HAVE BEEN CAPITALIZED. THE AMOUNT OF RS. 1.29 CRORES DISALLOWED BY THE AO CONSISTS OF 39 ITEMS SPREAD OVER A PERIOD OF 30.06.2007 TO 31.03.2008. THES E ITEMS ITA NOS.551,552 AND 584/CTK/2012 (CROSS APPEALS) 25 INCLUDE REPAIR CHARGES OF ISDN LINES. TRAIN ING ON COMPUTERS, MAINTENANCE SUPPORT, SPARES, AMC, REPAIR OF LAN, SAP TRAINING ETC. THUS, THE LD. ARS ARGUMENT THAT THESE EXPENSES ARE THE RECURRING EXPENSES INCURRED IN THE RUNNING OF THE ERP SYSTEM AND , HENCE, IS ALLOWABLE AS A REVENUE EXPENDITURE U/S.37 HAS FORCE. AS I HAD ALREADY OBSERVED IN EARLIER PARA, EVEN THE PURCHASE OF SOFTWARE HAS BEEN HELD AS ALLOWABLE AS REVENUE EXPENDITURE. IN THIS CASE, THE AO HAS NOT QUESTIONED THE GENUINENESS OF THE EXPE NDITURE OR ITS BUSINESS PURPOSE OR THAT THE EXPENDITURE IS EXCEPTIONALLY HIGH OR OF A VERY SPECIAL NATURE. IN VIEW OF THE ABOVE DISCUSSION, THE ADDITION ON ACCOUNT OF ERP SOFTWARE EXPENSES AMOUNTING TO RS.1,28,91,419/ - IS DELETED. GROUND NO. 6 IS THUS DECI DED IN FAVOUR OF THE APPELLA NT. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, WE DO NOT FIND ANY INFIRMITY IN THE IMPUGNED ORDER OF THE LEARNED CIT(A) IN THIS REGARD AND AS SUCH IT NEEDS NO INTERFERENCE . 18. I N THE RESULT, I TA NO. 552/CTK/2012 FILE D BY THE REVENUE FOR THE ASSESSMENT YEAR 2008 - 09 IS DISMISSED. 19. TO SUM UP (1) ITA NO.584/CTK/2012 FILED BY THE REVENUE FOR THE ASSESSMENT YEAR 2006 - 07 IS DISMISSED. (2) ITA NO.551/CTK/2012 FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2008 - 09 IS ALL OWED. (3) ITA NO.552/CTK/2012 FILED BY THE REVENUE FOR THE ASSESSMENT YEAR 2008 - 09 IS DISMISSED. SD/ - SD/ - ( . . . ) , (K.S.S.PRASAD RAO), JUDICIAL MEMBER ( . . ) , , (K.K.GUPTA), ACCOUNTANT M EMBER. ( ) DATE: 21.12.2012 ( ), (H.K.PADHEE), SENIOR.PRIVATE SECRETARY. ITA NOS.551,552 AND 584/CTK/2012 (CROSS APPEALS) 26 - COPY OF THE ORDER FORWARDED TO: 1 . THE A SSESSEE : M/S.ORISSA MINING CORPORATION LTD ., OMC HOUSE, BHUBANESWAR - 1, 2 THE DEPARTMENT : 1. ADDL.COMMISSIONER OF INCOME - TAX, RANGE 1, BHUBANESWAR. 2. ASST.COMMISSIONER OF INCOME - TAX, CIRCLE 1(1), BHUBANESWAR 3 . / THE CIT, 4 . ( )/ THE CI T(A), 5 . / DR, CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY, / BY ORDER, APPENDIX XVII SEA L TO BE AFFIXED ON THE ORDER SHEET BY THE SR. P.S./P.S. AFTER DICTATION IS GIVEN 1. DATE OF DICTATION 18.12.2012 . 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 20 .12 .2012 OTHER MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.... 5. DATE ON WHICH THE FA IR ORDER COMES BACK TO THE SR. P.S./P.S . 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 21.12.2012 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER ................ 9. DATE OF DESPATCH OF THE ORDER ..