M/s Bengal Emta Coal Mines Ltd., Kolkata V. DCIT, CC-XVI, KOLKATA, Kolkata

ITSSA 17/KOL/2014

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4632 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 8 month(s) 18 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 16-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 28-01-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P K SRIHARI
• Keywords: Reopening of assessment; Opportunity of being heard; Tax effect; Revenue expenditure
• Section: 153A

Judgement Text

1 IT(SS)A NO. 16-17/KOL/2014 M/S. BENGAL EMTA COAL MINES LTD., AY 2008-09&2009-1 0 , A , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA ( ) BEFORE . . , /AND . , ) [BEFORE SHRI A. T. VARKEY, JM & SHRI M. BALAGANESH , AM] I.T(SS).A. NOS. 16 & 17/KOL/2014 ASSESSMENT YEARS: 2008-09 & 2009-10 M/S. BENGAL EMTA COAL MINES LTD. (PAN: AABCB2949R) VS. DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-XVI, KOLKATA. APPELLANT RESPONDENT DATE OF HEARING 14.08.2018 DATE OF PRONOUNCEMENT 16.10.2018 FOR THE APPELLANT S/SHRI MANISH MALIK & SATISH KHOS LA, ADVOCATES FOR THE RESPONDENT SHRI P. K. SRIHARI, CIT, DR ORDER PER SHRI A.T.VARKEY, JM BOTH THESE APPEALS PREFERRED BY THE ASSESSEE ARE AG AINST THE SEPARATE ORDERS OF THE LD. CIT(A), CENTRAL-II, KOLKATA DATED 18.11.2013 FOR AY S 2008-09 AND 2009-10. SINCE GROUNDS ARE IDENTICAL, EXCEPT VARIANCE IN AMOUNT, A ND FACTS ARE COMMON WE DISPOSE OF BOTH THE APPEALS BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE BY TAKING THE APPEAL FOR AY 2008-09 AS THE LEAD CASE. 2. THE SOLE GROUND OF APPEAL IS AGAINST THE ACTION OF THE LD. CIT(A) IN CONFIRMING THE ACTION OF THE AO IN DISALLOWING THE DEVELOPMENT EXP ENDITURE AMOUNTING TO RS.27,66,182/-. 3. BRIEF FACTS OF THE CASE AS NOTED BY THE AO ARE T HAT THE ASSESSEE COMPANY HAS CLAIMED DEVELOPMENT EXPENSES OF RS.30,73,535/- IN ITS ORIGI NAL RETURN OF INCOME BY MERGING IT WITH THE AMOUNT ELIGIBLE FOR DEDUCTION U/S. 35E OF THE A CT. HOWEVER, AT THE TIME OF FILING THE 2 IT(SS)A NO. 16-17/KOL/2014 M/S. BENGAL EMTA COAL MINES LTD., AY 2008-09&2009-1 0 RETURN IN RESPONSE TO NOTICE U/S. 153A OF THE ACT, THE ASSESSEE COMPANY HAS TREATED THE SAID SUM AS REVENUE EXPENDITURE ON THE REASONING THAT IT WAS INCURRED AFTER THE COMMENCEMENT OF COMMERCIAL PRODUCTION. ACCORDING TO AO, THIS AS PECT OF ALLOWBILITY OF DEVELOPMENT EXPENSES INCURRED AFTER THE COMMERCIAL PRODUCTION W AS EXAMINED AND ANALYSED BY THE LD. CIT(A), CENTRAL-II, KOLKATA IN HIS ORDER IN ASSESSE ES OWN CASE FOR AY 2002-03 AND OBSERVED THAT . IN ANY CASE, TO MEET THE JUSTICE AND TO BE CONSISTE NT WITH THE FACT THAT APPELLANT CANNOT MAKE A FRESH CLAIM OF DEDUCTION ON REOPENED ASSESSMENT PROCEEDINGS, I ESTIMATE 10% OF THE DEVELOPMENT EXPENSES, I.E. RS.2 ,66,233/- AS REVENUE EXPENDITURE FOR THE PURPOSE OF BUSINESS AND DIRECT THE ASSESSING OF FICER TO ALLOW THIS DEDUCTION FROM THE TOTAL INCOME OF THE APPELLANT. ACCORDING TO AO, IN THE PRESENT CASE THE FACT IS SIMILAR TO THE SITUATION ANALYSED BY THE LD. CIT(A) IN ASSESSE ES OWN CASE FOR AY 2002-03. IN SUCH A SITUATION BY FOLLOWING THE RATIO AS DECIDED BY THE LD. CIT(A) FOR AY 2002-03 IN ASSESSEES CASE, ONLY 10% OF SUCH EXPENDITURE WAS TREATED AS R EVENUE EXPENDITURE AND THE REMAINING 90% I.E. RS.27,66,182/- WAS ADDED BACK BY THE AO TO THE TOTAL INCOME OF THE ASSESSEE. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO CONFIRMED THE ACTION OF AO BY OBSERVING AS UNDER: 6. I HAVE CONSIDERED THE SUBMISSION OF THE APPELL ANT AND PERUSED THE ASSESSMENT ORDER. I HAVE ALSO GONE THROUGH THE ORDER OF THE CIT(A) ON T HIS ISSUE FOR AY 2002-03. IT IS OBSERVED THAT THE CIT(A) THAT THE ASSESSEE COMPANY HAD INCUR RED EXPENSES FOR DEVELOPMENT BEYOND THE EARMARKED AREA. UNDER THE CIRCUMSTANCES, THE CIT(A ) ALLOWED 10% OF DEVELOPMENT EXPENSES AS DEDUCTION. IN THE APPEAL FOR THE YEAR UNDER CON SIDERATION, THE APPELLANT HAS NOT EXPLAINED AS TO HOW THE FACTS OF THE CASE IN THIS YEAR ARE DI FFERENT THAN AY 2002-03. IN VIEW OF ABOVE, I AM NOT INCLINED TO INTERFERE WITH THE DECISION TAKE N BY THE AO. HIS ACTION OF ALLOWING DEDUCTION @ 10% OF THE DEVELOPMENT EXPENSES IS UPHE LD. THE GROUND NO.2 IS DISMISSED. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT THE ASSESSEE HAS CLAIMED DEVELOP MENT EXPENDITURE OF RS.30,73,535/- IN ITS ORIGINAL RETURN OF INCOME BY MERGING WITH THE DEDUCTION CLAIMED U/S. 35E OF THE ACT. HOWEVER, PURSUANT TO THE SEARCH, A RETURN IN RESPON SE TO NOTICE U/S. 153A OF THE ACT WAS FILED BY THE ASSESSEE WHEREIN THE ENTIRE EXPENDITUR E PERTAINING TO DEVELOPMENT EXPENSES AND 3 IT(SS)A NO. 16-17/KOL/2014 M/S. BENGAL EMTA COAL MINES LTD., AY 2008-09&2009-1 0 THOSE FALLING WITHIN THE KEN OF DEDUCTION U/S. 35E OF THE ACT WERE CLUBBED TOGETHER AND CLAIMED AS REVENUE EXPENDITURE, BEING THE EXPENDITU RE INCURRED IN THE YEARS UNDER APPEAL. THE AO IN THE ASSESSMENT OBSERVED THAT SINCE THE AS SESSEE HAD SHIFTED ITS STAND OF CLAIM OF EXPENDITURE FROM THE ORIGINAL RETURN TO THE RETURN FILED IN RESPONSE TO 153A OF THE ACT, THE FRESH CLAIM MADE IN SEC. 153A RETURN CANNOT BE ENTE RTAINED. THIS IN OUR CONSIDERED OPINION IS NOT TENABLE AS PER LAW IN VIEW OF THE SPECIFIC P ROVISIONS MENTIONED IN SEC. 153A OF THE ACT THAT ONCE AN ASSESSMENT GETS ABATED ON THE DATE OF SEARCH, NO ASSESSMENT NEEDS TO BE FRAMED ON THE ORIGINAL RETURNS FILED BY THE ASSESSE E. HENCE, THE ONLY ASSESSMENT THAT CAN BE FRAMED IN THIS SCENARIO WOULD BE THE ASSESSMENT U/S . 153A OF THE ACT WHICH ALSO MENTIONS DETERMINATION OF TOTAL INCOME OF THE ASSESSEE. NEE DLESS TO MENTION THAT THE TOTAL INCOME OF THE ASSESSEE IS TO BE DETERMINED AFTER TAKING INTO ACCOUNT ALL THE LEGITIMATE CLAIMS OF EXPENDITURE MADE BY THE ASSESSEE IN THE RETURN FILE D THEREON. WE FIND THAT BOTH THE AO AS WELL AS THE LD. CIT(A) HAD MERELY PROCEEDED ON THE DECISION TAKEN IN ASSESSEES OWN CASE BY THE LD. CIT(A) FOR AY 2002-03 IN RESPECT OF SUBJ ECT MENTIONED EXPENDITURE. IN THE ASSESSMENT YEAR 2002-03, THE LD. CIT(A) ALLOWED 10% AS REVENUE EXPENDITURE AND TREATED THE REMAINING 90% AS DEFERRED REVENUE EXPENDITURE. THE APPEAL PREFERRED BY THE ASSESSEE AGAINST SUCH ORDER WAS QUASHED BY THIS TRIBUNAL HOL DING THE REOPENING OF ASSESSMENT BAD IN LAW. WE ALSO FIND THAT FOR THE AY 2006-07, THE LD. CIT(A) HAD ALLOWED DEVELOPMENT EXPENDITURE AS PER PARA 6.5 OF HIS ORDER PAGE 18 AS REVENUE EXPENDITURE BARRING RS. 1 CRORE DONATED TO WEST BENGAL STATE HEALTH & FAMILY. AN A PPEAL PREFERRED BY THE REVENUE AGAINST THE AFORESAID ORDER OF LD. CIT(A) BY SUCH ORDER BEF ORE THIS TRIBUNAL WAS DISMISSED DUE TO LOW TAX EFFECT. THUS LD. CIT(A)/AO ERRED IN FOLLOWI NG THE ORDER OF LD. CIT(A) FOR AY 2002-03 WHICH ORDER HAS BEEN QUASHED BY THIS TRIBUN AL AND IS NON-EST IN THE EYES OF LAW. HENCE, WE FIND THAT BOTH THE LOWER AUTHORITIES FOR THE YEARS UNDER APPEAL OUGHT TO HAVE ADJUDICATED THE CLAIM OF EXPENDITURE INCURRED DURIN G THE YEARS UNDER APPEAL AFRESH UNINFLUENCED BY THE EARLIER DECISION TAKEN FOR THE EARLIER YEARS. SINCE THIS MATTER REQUIRES FACTUAL EXAMINATION BY THE AO, WE DEEM IT FIT AND A PPROPRIATE IN THE INTEREST OF JUSTICE AND FAIR-PLAY TO REMAND THIS ISSUE TO THE FILE OF THE A O FOR DE NOVO ADJUDICATION. NEEDLESS TO 4 IT(SS)A NO. 16-17/KOL/2014 M/S. BENGAL EMTA COAL MINES LTD., AY 2008-09&2009-1 0 MENTION HERE THAT THE ASSESSEE BE GIVEN REASONABLE OPPORTUNITY OF BEING HEARD. ACCORDINGLY, THE GROUNDS OF APPEAL OF ASSESSEE FOR BOTH THE YEARS ARE ALLOWED FOR STATISTICAL PURPOSES. 5. IN THE RESULT, ALL THE APPEALS OF ASSESSEE ARE A LLOWED FOR STATISTICAL PURPOSES. ORDER IS PRONOUNCED IN THE OPEN COURT ON 16/10/201 8 SD/- SD/- (M. BALAGANESH) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 16TH OCTOBER, 2018 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 APPELLANT M/S. BENGAL EMTA COAL MINES LTD., 5B, N ANDLAL BASU SARANI, KOLKATA-700 071. 2 RESPONDENT DCIT, CENTRAL CIRCLE-XVI, KOLKATA. 3 4 5 CIT(A)-CENTRAL-II, KOLKATA. (SENT THROUGH E-MAIL) CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, SR. PVT. SECRETARY