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Income Tax Appellate Tribunal, CUTTACK BENCH CUTTACK
Before: SHRI GEORGE MATHAN & SHRI GIRISH AGRAWAL
O R D E R Per Bench : to 17/CTK/2023 and ITA No.41/CTK/2023 are appeals filed by the assessee against the respective orders of the ld. CIT(A), 2 ITA Nos.14-17&41/CTK/2023 ITA Nos.70-73&147/CTK/2023 ITA No.69/CTK/2023 National Faceless Appeal Centre(NFAC), Delhi, dated 30.11.2022, 2.12.2022 & 18.01.2023 in the respective appeals for the assessment years 2016-2017 to 2020-2021.
ITA Nos.70 to 73/CTK/ and ITA No.147/CTK/2023 are appeals filed by the revenue against the orders of the ld. CIT(A), National Faceless Appeal Centre(NFAC), Delhi, dated 30.11.2022, 2.12.2022 & 18.01.2023 in the respective appeals for the assessment years 2016-2017 to 2020- 2021.
ITA No.69/CTK/2023 is an appeal filed by the revenue against the deletion of penalty levied u/s.271(1)(c) of the Act by the ld. CIT(A), National Faceless Appeal Centre(NFAC), Delhi, dated 30.11.2022, passed in DIN & Order No.ITBA/NFAC/S/250/2022-23/1047723977(1) for the assessment year 2015-2016.
As the issues in all the appeals are interconnected and relating to the same assessee, therefore, all these appeals are disposed off by this common order. ITA Nos.14 to17/CTK/23 and ITA No.41/CTK/23 (Assessee’s Appeal) 5. In these appeals substantial common issues are involved, they are being disposed off on issue-wise basis.
Ground No.2 in all the above appeals is against insufficient opportunity provided to the assessee.
Ld. AR has not made any serious arguments on the issue and consequently the said ground stands dismissed.
3 ITA Nos.70-73&147/CTK/2023 ITA No.69/CTK/2023 8. Ground No.3.1 in all the five appeals is relating to the issue of depreciation of leasehold lands.
At the time of hearing, it was fairly agreed by both the sides that this issue is now squarely covered by the decision of the coordinate bench of the Tribunal in assessee’s own case in ITA No.73/CTK/2012 and other connected appeals for the assessment years 2008-2009 to 2012-2013 vide an order dated 17.08.2022, wherein the coordinate bench of the Tribunal in para 8 has held as follows:- 8. We have considered the rival submissions. At the outset, it is clear that the issue whether the said expenditure being the upfront lease premium is a capital expenditure or revenue expenditure has been decided against the assessee by the Co-ordinate Bench of this Tribunal in assessee’s own case referred (supra). Consequently, the said expenditure is liable to be treated as capital expenditure only and stand of the AO and ld CIT(A) stands upheld. Coming to the arguments of ld AR that said expenditure having been incurred for the purpose of business and if the same is to be treated as capital expenditure, a capital asset has got created and the depreciation or amortization is to be granted once such expenditures are treated as a capital expenditure. The said expenditure goes to the balance sheet as creation of asset most specifically an “intangible asset”. Once the asset is created in the balance sheet, the option is to grant depreciation on the same. The allowance of depreciation unfortunately has been held against the assessee in assessee’s own case in the earlier years. Thus, what is now happened that the intangible asset has accumulated even though the asset has expired in the form of expiry of the lease period. Thus, the balance sheet of the assessee would carry an asset which no Mahanadi Coalfields Ltd P a g e 7 | 8 more exists for the purpose of Income tax Act. This would clearly not show the true and correct picture of the affairs of the company. When the lease period expires and the land reverts to the State Government, the asset has got extinguished. Such asset cannot be left without giving it the valid treatment under accounting principles. Obviously, such value of the capitalized asset cannot be adjusted to the capital of the assessee company as the asset would not exist once the lease expires. The option here would be to write off the value of the asset on the extinguishment of the asset being the expiry of the lease. However, considering the fact that the ld A.R. has specifically claimed for the benefit of amortization by applying the principles laid down by the CBDT in its Circular No.9 of 2014 dated 23.4.2014, the 4 ITA Nos.70-73&147/CTK/2023 ITA No.69/CTK/2023 AO is directed to grant the assesse amortization of the said expenditure representing the lumpsum amount of upfront lease premium over the period of lease period in respect of each lease. The amortization is to be granted equally for each of the year during the lease period. Accordingly, ground taken by the assessee in each of the assessment year stands partly allowed.
In view of the above, respectfully following the decision of the coordinate bench of the Tribunal in assesee’s case (supra), on identical directions, the AO is directed to grant the assessee amortization of the said expenditure representing lumpsum amount of upfront lease premium over the period of lease period in respect of each lease. Accordingly, this ground raised
by the assessee in all the impugned appeals stands partly allowed.
11. The next issue is in regard to the valuation of closing stock of coal (due to the impact of overburden removal expenditure) which is ground No.3.2 of assessee’s appeal for the assessment year 2016-2017 in . It was the submission that the issue is squarely covered by the decision of the coordinate bench of the Tribunal in assessee’s own case for the assessment years 2010-2011 to 2014-2015 passed in ITA No.421/CTK/2013 and the connected appeals, dated 20.03.2018, wherein in para 21 the coordinate bench of this Tribunal has held as follows :-
21. We have heard the rival submissions, perused the orders of lower authorities and materials available on record. This dispute is interconnected with the method of valuation of closing stock. Valuation of closing stock has been changed due to Uniform Accounting Policy of Coal India Limited. We found that a reference made by the Assessing Officer on the audited accounts that Reduction in value of stock is due to overall adjustment is as per the Uniform Accounting Policy adopted by the Coal India Limited. Ld A.R. demonstrated before us with a copy of letter of Uniform Accounting Committee recommendation and supported with paper 5 ITA Nos.70-73&147/CTK/2023 ITA No.69/CTK/2023 book. Accordingly, we consider it appropriate to restrict our view on the method of valuation of closing stock mine-wise and the valuation of closing stock of coal are interconnected and since we have discussed on the applicability of the provisions, facts and reasons for valuation of stock centre on the first disputed issue. Therefore, we remit this disputed issue to the file of the Assessing Officer for appropriate adjudication afresh and the ground of appeal of the assessee is allowed for statistical purposes. Hence, this issue for the assessment years 2010-11 to 2014-15 is restored to the file of the Assessing officer for fresh adjudication.
12. It was submitted that the issue had been restored to the file of AO for fresh adjudication. Ld. AR drew our attention to page 42 of the paper book, which was an order giving effect to the order of the Tribunal for the assessment year 2010-2011,dated 31.12.2019 to submit that the AO has considered this issue and has given a finding in para 7.6 of his order and the value of closing stock as reported by the assessee in its profit and loss account was accepted. The relevant observation of the AO in para 7.6 reads as under :- 7.6 The above submission of the assessee as well as the replies received from the other subsidiary companies of Coal India Limited, have been duly considered. It has been found that the assessee has been consistently following the method of removing OBR expense while valuing its Closing Stock on regular basis w.e.f.A.Y.2010-11 based on the recommendation the holding company, Coal India Limited. Since, the above method is being followed consistently thereafter not only by the assessee, but by other companies in the same line of trade i.e. coal extraction, there is no need to disturb the same and follow the older method. Another reason which is found relevant in deciding the matter is that the whole exercise is revenue-neutral. If Closing Stock as on 31.03.2010 relevant for A.Y. 2010-11 is to be adjusted by considering the OBR adjustment cost, then the Opening Stock as on 01.04.2010 also has to be re-casted. Since the assessee is in the highest tax bracket (30%), no additional gain to the revenue would accrue if valuation of Closing Stock of Coal is done by taking OBR Adjustment Cost. Therefore, no adverse inference is drawn on this issue. Hence, the value of Closing Stock as reported by the assessee in its Profit & loss Account is accepted.
6 ITA Nos.70-73&147/CTK/2023 ITA No.69/CTK/2023 13. It was the submission that similar orders to be passed for the impugned assessment year in respect of the Tribunal order, referred to supra.
In reply, ld. CIT-DR submitted that the issue was squarely covered by the decision of the coordinate bench of the Tribunal in assessee’s own case along with other connected appeals, referred to supra.
We have considered the rival submissions. A perusal of the order of the coordinate bench of the Tribunal in assessee’s own case for the assessment year 2010-2011, referred to supra, clearly shows that the issue of valuation of closing stock has been restored to the file of the AO for appropriate adjudication afresh. After the appropriate adjudication, no addition itself has been made by the AO. In these circumstances, as it is noticed that the principle which has been accepted by the revenue and which has been applied by the AO, is admittedly resulted into zero addition. Consequently, the addition made by the AO and confirmed by the ld. CIT(A) for the assessment year 2016-2017 on account the valuation of the closing stock of coal due to the impact of overburden removal expenditure, stands deleted.
The next issue is in regard to the addition made u/s.14A r.w.r.8D, which is ground No.3.3 in the assessment year 2016, ground No.3.2 in the assessment year 2017-2018 to 2020-2021.
It was the submission of the ld. AR that the ld. AO has computed the disallowance u/s.14A of the Act without excluding the investments 7 ITA Nos.70-73&147/CTK/2023 ITA No.69/CTK/2023 which have not earned to the exempt income of the assessee. It was the prayer that the AO may be directed to recompute the disallowance u/s.14A of the Act after excluding the investments which have not earned the assessee any exempt income.
In reply, ld. CIT-DR submitted that admittedly under rule 8D, the computation of the disallowance for the purpose of Section 14A of the Act is to be made considering the investments which have generated the exempt income.
We have considered the rival submissions. A perusal of the provisions of Rule 8D(2), shows that the wording used is, “the amount of expenditure directly relating to the income which does not form part of total income and so also the average of the valuation of the investments, the income from which does not or shall not form part of the total income”. This being so, the AO is directed to recompute the disallowance u/s.14A of the Act by considering only such investments which has generated exempt income in the hands of the assessee. Thus the issue relates to ground No.3.3 for the assessment year 2016-2017 and ground No.3.2 raised in all other assessment years i.e. AY.2017-2018 to 2020-2021 is partly allowed for statistical purposes.
The next issue is in regard to the development expenses, which has been raised in ground No.3.4 for the assessment year 2016-2017 and 3.3 for the assessment year 2017-2018.
8 ITA Nos.70-73&147/CTK/2023 ITA No.69/CTK/2023 21. Ld. AR submitted that he does not want to press the above ground as the assessee has already obtained the necessary relief. Thus, this issue in ground No.3.4 for the assessment year 2016-2017 and 3.3 for the assessment year 2017-2018 is dismissed as not pressed.
The next issue in regard to the short credit of advance tax of Rs.1255 crores and TDS, which is raised in Ground No.4 in the appeal of the assessee for A.Y.2016-2017.
It was the submission that the ld. AR did not wish to press this ground as the assessee has already got the benefit of the full credit in the advance tax. Thus, this issue is dismissed as not pressed.
The next issue is in regard to the penalty proceedings, which is raised by the assessee in Ground No.5 for the assessment year 2016- 2017 and Ground No.4 for the assessment year 2017-2018 to 2020-2021.
This ground is premature and consequently the same is dismissed as premature.
The next issue raised in ground No.3.3, 3.4 & 3.5 in appeal of the assessee for A.Y.2020-2021, are in regard to credit towards public distribution tax, disallowance u/s.36(1)(va) of the Act and reduction in refund.
It was submitted by the ld. AR that the ld. CIT(A) has decided the issue in favour of the assessee. However, the AO has not given the assessee the benefit of the order of the ld. CIT(A).
9 ITA Nos.70-73&147/CTK/2023 ITA No.69/CTK/2023 28. In reply, ld.CIT-DR submitted that the issues having been already adjudicated in favour of the assessee by the ld. CIT(A), the assessee could not agitate the same before the Tribunal.
We have considered the rival submissions. As it is noticed that the ld. CIT(A) has adjudicated these three issues in favour of the assessee. Thus, these issues no more arise out of the order of the ld. CIT(A) for being agitated before the Tribunal. Consequently, the said grounds are dismissed as not arising out of the order of the ld. CIT(A).
The last issue is in regard to allowance of interest u/s.244A of the Act on the refunds, which is raised in ground No.3.6 in the appeal of the assessee for A.Y.2020-2021.
The allowance of interest u/s.244A of the Act on the refunds is consequently in nature and consequently the AO shall consider the same when giving effect to the appellate order.
In the result, appeals of the assessee are partly allowed for statistical purposes. ITA Nos.70 to 73/CTK/2023 & 147/CTK/2023 (Revenue’s Appeals) 33. It was submitted by the ld. CIT-DR that the first issue in all the appeals is in regard to overburden removal expenses representing the stripping activity adjustment.
It was fairly agreed by both the sides that the issue is squarely covered by the order of the coordinate bench of the Tribunal in assessee’s own case in ITA No.397/CTK/2013, dated 20.03.2018 along 10 ITA Nos.70-73&147/CTK/2023 ITA No.69/CTK/2023 with other connected appeals, wherein the coordinate bench of the Tribunal in para 105, held as follows :- 105. We heard the rival submissions, perused the orders of lower authorities and materials available on record. The dispute arise in this ground of appeal
is whether the expenditure incurred on removal of overburden in coal is allowable expenditure or not. We find that similar issue arose in the case of Northern Coalfield ltd, wherein, on similar facts, the Jabalpur Bench of the Tribunal after a thorough and detailed discussion on the issue, has deleted the addition. The relevant portion is reproduced hereunder:
40. We are unable to find any legally sustainable merits in this objection either. "The criterion on the basis which call is taken as to be whether a mine can be treated as a development mine or as a revenue mine is, as we have noted in paragraph 22 earlier in this order, is uniform all along not only in this case of this assessee but in the case of other similarly placed assessees, and the revenue authorities have accepted that criterion all along. It is a purely a factual matter which permeates through different assessment years, and for the detailed reasons discussed earlier, there is no good reason to disturb this criterion. In any case, the authorities below have neither suggested any alternative criterion, which will be appropriate on the facts of this case, nor have they have demonstrated that the facts implicit in their stand actually exist. As a matter of fact, the apprehensions of the Assessing Officer seem to be purely hypothetical and in the realm of conjectures and surmises inasmuch as not one instance is shown in which the overburden removal expenses, booked in the accounts as revenue expenditure, actually pertain to removal of overburden only at the surface level and should be, therefore, treated as capital expenditure. Similarly, while - declining the deduction of overburden removal as capital expenditure, the Assessing Officer, as also the CIT(Aj, has not treated any part of this expenditure, which essentially includes the expenditure incurred on removing overburden in the process of coal mining and production, as revenue expenditure. It seems to be more or less an undisputed position, given the nature of overburden removal expenses as we have discussed earlier, that a part of the overburden removal expenses is admittedly revenue expenditure, but if we have to uphold the stand of the authorities below, entire overburden removal expenses is required to be treated as capital expenditure eligible only for amortization under section 35D. In any case, there is nothing on record to establish, or even suggest, that expenses incurred on removal of overburden at the surface level, which were capital expenditure in nature, have been claimed as revenue deduction on the strength of coal mining in another piece of land within that coal mine.
11 ITA Nos.70-73&147/CTK/2023 ITA No.69/CTK/2023 41. In view of these discussions, as also bearing in mind entirety of the case, we consider it fit and proper to direct the Assessing Officer to delete the disallowance of Rs 2,05,616.72 lakhs. The assessee gets the relief accordingly." This findings of the Tribunal has been upheld by the Hon'ble M.P.High Court in ITA No.71/Jab/2014 order dated 24.4.2015.Following the above decision, The Jabalpur Bench of this Tribunal in the case of Northern Coalfield Ltd for the assessment year 2011-12 has deleted the similar addition. We also find that similar addition made in the case of Western Coalfields Ltd., for the assessment year 1978-79 to 1984-85 by the Assessing Officer was deleted by the CIT(A) and on further appeal, the Nagpur Bench of this Tribunal has upheld the findings of the CIT(A). Before us, ld D.R. could not place any contrary judgment of the higher forum to controvert the above decisions of the Tribunal and also High Court. The CIT(A) has followed the decision of the Tribunal while deleting the addition made by the Assessing Officer. Hence, we do not find any reason to interfere with the order of the CIT(A), which is hereby confirmed and this ground of appeal of revenue is dismissed for the assessment years 2010-11 to 2014-15.
35. We have considered the rival submissions. As it is noticed that the issues is squarely covered by the decision of the coordinate bench of the Tribunal in assesee’s own case for the assessment year 2010-2011, referred to supra, on identical findings, we confirm the order of the ld. CIT(A). Consequently, this ground stands dismissed.
36. The next issue is in regard to rehabilitation charges, which has been raised by the revenue in its appeals for A.Y.2016-2017, 2017-2018, 2018-2019 & 2020-2021 and the issue is squarely covered by the decision of the coordinate bench of the Tribunal in assessee’s own case for A.Y.2010-2011 in ITA No.397/CTK/2013, dated 20.03.2018 along with other connected appeals, wherein the Tribunal in para 115 has held as follows :- 115. Identical issue had come up for adjudication in assessee's own case for the assessment year 2005-06 to 2007-08 in ITA Nos.51,52 12 ITA Nos.70-73&147/CTK/2023 ITA No.69/CTK/2023 & 53/CTK/2011, wherein, the Tribunal has confirmed the deletion of disallowance by the CIT(A) in the appeals filed by the revenue. The relation portion of findings of the Tribunal is as under: "13. The learned AR of the assesses reiterated the submissions as were made before the learned CIT(A) and submitted that the assessee Company has contributed the aforesaid amount under the head "Contribution to Rehabilitation Fund" under the direction of Govt, of India, Ministry of Coal conveyed to CIL as additional levy from all the subsidiaries except ECL and BCCL since these two companies are already sick and additional burden of levy may cause disharmony. On receipt of the said letter by CIL, the Board of Directors of CIL decided and instructed all its subsidiaries to pay @ ?6 per Ton of dispatch of coal to CIL. These facts could not be negated by the Revenue before us. Whenever the assessee is able to establish that the assessee Company has incurred the expenditure on the directions/instructions of the Central/State Government and other Govt, organisation which are having direct control over the business of the assessee Company then the same are allowable as deductions as business expenditure u/s.37(l) of the income- tax Act,1961. This was so held by the ITAT, Cuttack Bench in assessee's own case for the Assessment Years 1999-2000 to 2002-03. Since the assessee has paid the amount in question under the direction df the Ministry of Coal, Government of India, the ld IT(A) is justified in deleting the disallowances relying on the above order of the ITAT, Cuttack bench holding the same as business expenditure allowable u/s.3791). We, therefore, uphold the impugned order of the ld CIT(A) on this issue and dismiss the ground raised by the revenue." Following the judicial precedent, we dismiss this ground of appeal of the revenue for the assessment years 2010-11 and 2011-12, respectively.
37. In these circumstances, respectfully following the decision of the coordinate bench of the Tribunal in assessee’s own case, referred to supra, the findings of the ld. CIT(A) on this issue stands upheld and the said ground raised by the revenue stands dismissed.
38. The next issue is in regard to the development expenses, which has been raised by the revenue in its appeals for A.Y.2016-2017.
13 ITA Nos.70-73&147/CTK/2023 ITA No.69/CTK/2023 39. Ld. AR submitted that the assessee does not wish to contest this issue and is agreed that the order of the ld.CIT(A) on this issue may be reversed. Considering the submissions of the ld.AR, the order of the ld. CIT(A) on this issue which is being raised for the assessment year 2016- 2017 stands reversed and that of the AO is restored.
The next issue is in regard to the loss on sale/discard of assets, which has been raised by the revenue in its appeal for A.Y.2016-2017, 2017-2018 & 2018-2019.
It was fairly agreed by the both the sides that the issue is squarely covered by the decision of the coordinate bench of the Tribunal in assessee’s own case passed in ITA No.397/CTK/2013, dated 20.03.2018 along with other connected appeals, wherein the Tribunal in para 93 has held as follows :- 93. After hearing the rival submissions and perusing the orders of lower authorities, we find that the Assessing Officer disallowed Rs.33.11 lakhs claimed by the assessee on the ground that the accounting treatment for transfer of fixed assets showing loss by the assessee cannot be considered as correct so as to allow deduction in computation of profit & gains from business. The CIT(A) on perusal of Annual reports & account of the assessee for the financial year 2009-2010, observed that the assessee has shown profit on sale of assets of Rs.1589.25 lakhs under the head "other income" as per Schedule-4 to P&L account and claimed as loss on sale/discarded assets of Rs.33.11 lakhs. Therefore, the CIT(A) deleted the addition. Before us, Ld D.R. could not point out any specific mistake in the order of the CIT(A), which is hereby confirmed and ground of appeal
of revenue for assessment year 2010-11 is dismissed.
42. Respectfully, following the order of the coordinate bench of the Tribunal, the findings of the ld.CIT(A) on this issue stands upheld and the ground raised by the revenue in the above appeals are dismissed.
14 ITA Nos.70-73&147/CTK/2023 ITA No.69/CTK/2023 43. The next issue is in respect of clean energy cess & central excise duty, which has been raised by the revenue in its appeal for A.Y.2017- 2018.
It was submitted by the ld. AR that this was a demand which had been raised by the Excise authority against the assessee during the assessment year 2017-2018 and provisions have been made accordingly. In the assessment year 2018-2019, the provision was reversed, insofar as the demand was withdrawn and consequently the ld.CIT(A) had directed for deletion of addition. The revenue has not been able to point out any specific error in the order of the ld. CIT(A) on this issue and consequently the same stands upheld. Thus, the order of the ld. CIT(A) on this issue stands confirmed and this ground of revenue is dismissed.
The next issue is in regard to the expenditure which is penal in nature.
It was the submission that the AO had disallowed payment of Rs.6.57 crores to the Government department, District Forest Office, towards environment clearance charges. The AO had treated the same as penal in nature. The ld. CIT(A) in the case of Western Coal Fields ltd. (2009) 124 TTJ (Nag) 659, held that the demand is in the nature of compensation towards afforestation scheme and the same is basically compensatory for use of forest assets and consequently deleted the addition. The revenue has not been able to produce any evidence or make any submission to show that the said expenditure was penal in 15 ITA Nos.70-73&147/CTK/2023 ITA No.69/CTK/2023 nature. This being so, as admittedly the said expenditure is compensatory in nature as it is towards environment clearance and afforestation, the findings of the ld. CIT(A) stands upheld and consequently the said ground in revenue’s appeal for the assessment year 2017-2018 stands dismissed.
The next issue in regard to the expenses on buyback of shares, which has been raised by the revenue in its appeal for A.Y.2017-2018.
Ld. CIT-DR vehemently supported the order of the AO.
In reply, ld. AR submitted that the expenses on buyback of shares were incurred towards professional charges paid for obtaining the valuation certificate required as per the law for buyback of the assessee’s shares. It was the submission that the ld. CIT(A) has followed the decision of the Hon’ble Supreme Court in the case of General Insurance Corporation, reported in 286 ITR 232, to submit that the expenditure is not capital in nature.
We have considered the rival submissions. A perusal of the facts of the present case clearly shows that the expenses have been incurred towards professional charges paid for obtaining valuation certificate. This valuation certificate is a requirement as per law in the purpose of valuing its shares when a company proposes it to buyback its own shares. The said expenditure obviously cannot be a capital expenditure and it is a revenue expenditure. Consequently, the findings of the ld. CIT(A) on this issue stands upheld and the said ground of revenue is dismissed.
16 ITA Nos.70-73&147/CTK/2023 ITA No.69/CTK/2023 51. The next issue is in regard to disallowance of capital expenditures, which has been raised by the revenue in its appeal for A.Y.2019-2020.
It was submitted by the ld.CIT-DR that the AO had disallowed Rs.0.02 crores as the expenses on the buyback of the shares. It was the submission that the ld. CIT(A) held that the professional charges paid for obtaining the valuation certificate required as per law for buyback of the share was revenue expenditure.
We have considered the rival submissions. It is noticed that the issue is identical to the issue raised in the revenue’s appeal in regard to the expenses on the buyback of the shares to the identical findings the order of the ld. CIT(A) stands upheld and this ground of revenue is dismissed.
The next issue is in regard to the disallowance of demurrage expenses, which has been raised by the revenue in its appeal for A.Y.2019-2020.
It was submitted by the ld. CIT-DR that the assessee has incurred expenditure under demurrage expenses, the same is penal in nature. It was submitted that demurrage expenses are liable to be disallowed as they are penal in nature. It was the submission that the ld. CIT(A) has deleted the addition by holding that the demurrage charges paid to railways is in ordinary course of business and not penal in nature.
In reply, the ld. AR supported the order of the ld. CIT(A).
17 ITA Nos.70-73&147/CTK/2023 ITA No.69/CTK/2023 57. We have considered the rival submissions. The revenue has not been able to show with any cogent evidence of the expenses incurred by the assessee on demurrage expenses, which is a payment made to the railways was penal in nature. This being so, the finding of the ld. CIT(A) on this issue stands upheld and this ground of appeal of the revenue for A.Y.2019-2020 is dismissed.
58. The last issue in the revenue’s appeal for A.Y.2020-2021 is in regard to CMPDIL Expenses being Central Mines Planning & Design Institute expenses.
59. It was submitted that this issue is squarely covered by the decision of the coordinate bench of the Tribunal in assessee’s own case in ITA No.37/CTK/2013, dated 20.03.2018 along with other connected appeals, wherein the coordinate bench of the Tribunal in para 98 has held as follows :-
98. After hearing the rival submissions and perusing the orders of lower authorities, we find that the expenditure is incurred towards services rendered by CMPDIL as per MOU between the assessee and CMPDIL. We also find that similar addition was made in the case of Northern Coalfields Limited and the Jabalpur Bench of this Tribunal vide order dated 5.5.2015 in ITA No.18/Jab/2014 and ITA No.55/Jab/2014 for the assessment year 2010-11 has deleted the addition by observing as under: "46. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position.
47. We have noted that these expenses have been treated as capital expenses by the Assessing Officer only on the ground of the 'enduring benefit in nature' which by implication suggests that it's a preparatory work for mine development but then what such an approach overlooks is that all the mines are revenue mines and the extraction of coal, on commercial basis, has already started in these cases. Therefore, Assessing Officer's 18 ITA Nos.70-73&147/CTK/2023 ITA No.69/CTK/2023 observation to the effect that "extraction of coal is a long process and the nature of work done have an enduring benefit to the assessee" could have been relevant when coal extraction process had not started but that is not the case here. We have noted that the CMPDIL (i.e. Central Mine Planning & Design Institute), a subsidiary of the Coal India Limited, is admittedly providing technical support and services to the assessee it the mining operations. It conducts mine survey in the existing mines in order to ensure that the mining is carried out in the right direction and in the optimal manner. We have also noted that it is beyond and dispute and controversy that none of the mines of the assessee is a development mine, and, as such)' the expenses of this nature cannot said to be relating to preparatory work or of capital nature for that reason. When mining itself is an ongoing activity and the mines are in the nature of revenue mines, it is illogical to proceed on the basis that the expenditure I connection with such an ongoing mining process can be treated as capital in nature as in the nature of a preparatory activity. All the eleven mines of the assessee are revenue mines, and, therefore, any expenditure incurred by the assessee on its mines can only be in respect of the revenue mines only. The observations made by the CIT(A) to the effect that there is nothing to show that these expenses are incurred in respect of revenue mines, is, therefore, wholly unwarranted and it only shows his not applying the mind to the facts of the case. While the AO disallowed the expenses that it is capital expenditure in nature, the CIT(A) upheld it on the ground that there is no material to come to the conclusion that this expenditure pertains to revenue mines. The basis on which the CIT(A) upheld the disallowance is clearly wrong. We have also noted that in the earlier assessment years, this issue has been decided in favour of the assessee and matter rests there. We also noted that this issue has been decided, in assessee's own case for the assessment year 2008-09, in favour of the assessee by a coordinate bench of this Tribunal. Such deviations from accepted past history of the case, as canvassed before us by the revenue authorities, are made only in exceptional situation and no such case has been successfully made out before us. In view of these discussions, as also bearing in mind entirety of the case, we deem it fit and proper to direct the AO to delete this disallowance of Rs.1973.98 lakhs as well. The assessee gets the relief accordingly."
Respectfully following the judicial precedence and decision of the Co-ordinate Bench of this Tribunal, we uphold the findings of the CIT(A) in deleting the addition made for all the assessment years under consideration. Thus, this ground of appeal is dismissed.
19 ITA Nos.70-73&147/CTK/2023 ITA No.69/CTK/2023 60. Respectfully following the judicial pronouncements and the decision of the coordinate bench of this Tribunal, we uphold the finding of the ld. CIT(A) on this issue, and consequently this ground of revenue stands dismissed.
Thus, all appeals of the revenue in ITA Nos.70-73/CTK/2023 & 147/CTK/2023 are dismissed. ITA No.69/CTK/2023 (Revenue’s Appeal for A.Y.2015-2016) 62. This is an appeal filed by the revenue against the order of the ld. CIT(A), National Faceless Centre (NFAC), Delhi, dated 30.11.2022, passed in DIN & Order No.ITBA/NFAC/S/250/2022-23/1047723977(1) for the assessment year 2015-2016, wherein the ld. CIT(A) has deleted the penalty levied u/s.271(1)(c) of the Act.
It was submitted by the ld. CIT-DR that the AO had levied penalty on account of various disallowance made in the assessment order for the assessment year 2015-2016. It was the submission that there was concealment of income insofar as the addition in respect of the disallowance u/s.14A of the Act had also been confirmed by the ld. CIT(A) in appeal. It was the submission that the order of the ld. CIT(A) deleting the penalty levied u/s.271(1)(c) of the Act is liable to be reversed.
In reply, ld. AR submitted that in the course of assessment substantial additions have been made. It was the submission that on appeal, the ld. CIT(A) had deleted part of the additions and substantial portion of the addition has also been deleted by the ITAT on further 20 ITA Nos.70-73&147/CTK/2023 ITA No.69/CTK/2023 appeal. After giving effect to the order of the Hon’ble ITAT the addition in respect of the disallowance u/s.14A of the Act remained. It was the submission that on the returned income of the assessee of nearly Rs.5095 crores, the addition remained was in respect of the disallowance u/s.14A of the Act. It was the submission that even in respect disallowance u/s.14A of the Act, the issue had been restored to the file of AO for readjudication. It was the submission that none of the other additions as proposed by the AO remained and even the disallowance u/s.14A of the Act was only a deemed disallowance and it was not a concealment of income. It was the submission that the ld. CIT(A) had considered these issues and had followed the principle laid down by the Hon’ble Delhi High Court in the case of CIT Vs. Electrolux Kelvenator Ltd. [2014] 44 taxmann.com 369 (Delhi) as also the decision of the Hon’ble Supreme Court in the case of Reliance Petro Products Pvt. Ltd., reported in 322 ITR 158 (SC) to delete the penalty. It was the submission that the order of the ld. CIT(A) is liable to be upheld.
We have considered the rival submissions. A perusal of the facts of the present case clearly show that the assessee had disclosed nearly Rs.5095 crores. The penalty has been levied by the AO on the basis of the assessment order itself, wherein Rs.5095 crores disclosed by the assessee was enhanced to Rs.7893 crores in the scrutiny assessment and subsequently reduced to Rs.7702 crores after the rectification u/s.154 of the Act. The assessment order passed u/s.143(3) of the Act on 21 ITA Nos.70-73&147/CTK/2023 ITA No.69/CTK/2023 31.12.2017, which is a foundation of the penalty order has been whittled down and practically all the additions except for the expenditure related to the exempt income u/s.14A of the Act which admittedly is a deemed income, has been sustained. This too after the issue was restored by the Tribunal for readjudication by the AO. Thus, the very additions made in the original assessment order had all been deleted and the issue u/s.14A of the Act had also been restored by the AO for readjudication. Thus, the very foundation of the penalty no more survives and on this ground itself the penalty is liable to be deleted and we confirm the order of the ld. CIT(A) in cancellation of the penalty on this additional finding.
Further, the addition that has been sustained is barely 0.1% of the returned income and in such case normally no penalty is exigible, insofar as it cannot be alleged by any stretch of imagination that there is mens rea much less an attempt by the assessee to conceal any particulars of its income or to furnish inaccurate particulars of its income. Thus, on this ground also the penalty levied u/s.271(1)(c) of the Act is not acceptable and the order of the ld.CIT(A) stands confirmed.
Further, a perusal of the order of the ld. CIT(A) shows that the ld. CIT(A) has categorically considered the decision of the Hon’ble Supreme Court in the case of Reliance Petro Products Pvt. Ltd., reported in 322 ITR 158 (SC), wherein the principle has been laid down that if there is no finding that any details which were supplied by the assessee in its return of income was found to be incorrect or erroneous or false, no penalty 22 ITA Nos.14-17&41/CTK/2023 ITA Nos.70-73&147/CTK/2023 ITA No.69/CTK/2023 u/s.271(1)(c) of the Act could be levied. This finding of the ld. CIT(A) has also not been dislodged by the revenue and on this ground also the order of the ld. CIT(A) in cancelling the penalty levied u/s.271(1)(c) of the Act by the AO would be liable to be upheld and we do so.
In the result, appeal filed by the revenue being ITA No.69/CTK/2023 stands dismissed.
In the result, all appeals of the assessee are partly allowed for statistical purposes and all the appeals of revenue are dismissed.. Order dictated and pronounced in the open court on 17/10/2023.