ORISSA MINING CORPORATION LTD.,BHUBANESWAR vs. DCIT, CIRCLE-1(1), BHUBANESWAR, BHUBANESWAR

आदेश / O R D E R Per Bench : These are the cross appeals filed by the assessee and Revenue against the separate orders of CIT(A)-I, Bhubaneswar for the assessment years 2006-07, 2007-08, 2010-11, 2011-12, 2012-13 & 2013-14

2 ITA No.333/CTK/2014, ITA No.375/CTK/2016 ITA No.271/CTK/2017, ITA No.381/CTK/2015 ITA Nos.92&93/CTK/2016, ITA No.374/CTK/2016 & ITA No.243/CTK/2017

together and disposed of by this common order. First we shall decide

appeal of the assessee for the assessment year 2007-2008 in ITA

No.333/CTK/2014, wherein the assessee has taken the following

grounds :-

trading of minerals, COBP Plant, Ore Handling Plant etc. and following

Mercantile System of accounting and filed the return of income for the

assessment year 2007-2008 with total income at Rs.686,31,84,470/-

3 ITA No.333/CTK/2014, ITA No.375/CTK/2016 ITA No.271/CTK/2017, ITA No.381/CTK/2015 ITA Nos.92&93/CTK/2016, ITA No.374/CTK/2016 & ITA No.243/CTK/2017 and the return of income was processed u/s.143(1) of the Act.

Subsequently, the case was selected for scrutiny and notice u/s.143(2)

and 142(1) of the Act along with questionnaire were issued to the

assessee. In compliance to the notice, ld. AR of the assessee appeared

from time to time and submitted the details and the case was

discussed. The AO on perusal of the financial statements has made

addition in respect of peripheral development expenses, depreciation,

mine closure plan and disallowance u/s.80-G and assessed the total

income at Rs.723,25,24,529/- and passed order u/s.143(3) of the Act,

dated 26.03.2013. On appeal, the CIT(A) dismissed the appeal of the

assessee. Now, the assessee is in further appeal before the Income Tax

Appellate Tribunal for the assessment years under consideration.

Ground No.1 : Disallowance of Peripheral Development Expenses amounting to Rs.2,25,03,777/-.

alleging that he is unable to verify as to whether the expenditure

incurred was incidental to the business of the assessee or not. In

appeal, the CIT(A) has confirmed the addition made by the AO on the

ground that the said expenses are not incidental to the business of the

assessee.

4 ITA No.333/CTK/2014, ITA No.375/CTK/2016 ITA No.271/CTK/2017, ITA No.381/CTK/2015 ITA Nos.92&93/CTK/2016, ITA No.374/CTK/2016 & ITA No.243/CTK/2017 5. Ld. AR before us submitted that the issue is squarely covered in

favour of the assessee by the order of this Tribunal in assessee's own

case in ITA Nos. 69 & 183/CTK/2014, for the assessment year 2010-11

& 2011-12, order dated 17.05.2018, whereas ld. DR supported the

order of CIT(A).

available on record. The disputed issue of claim of peripheral

development expenses as envisaged by the ld. AR is incurred

exclusively for the purpose of business and allowable, whereas ld. DR

submitted that there is no nexus of claim of expenditure in assessee’s

business and referred to CIT(A) order. We find that the Tribunal in

assessee’s own case for the assessment year 2010-2011 & 2011-2012

in ITA No.69&183/CTK/2014, order dated 17.05.2018 at para 7 has

restored the matter to the file of AO relying its earlier order dated

20.09.2017 passed in ITA No.177/CTK/2013 for A.Y.2009-2010, after

observing as under :-

“7. We have heard rival submissions and perused the material available on record. The disputed issue of claim of peripheral development expenses as envisaged by the ld. AR is incurred exclusively for the purpose of business and allowable, whereas ld. DR submitted that there is no nexus of claim of expenditure in assessee’s business and referred to CIT(A) order. We find that the Tribunal in assessee’s own case for the assessment year 2009-2010 in ITA No.177/CTK/2013, order dated 20.09.2017 has restored the matter to the file of AO and observed as under :-

5 ITA No.333/CTK/2014, ITA No.375/CTK/2016 ITA No.271/CTK/2017, ITA No.381/CTK/2015 ITA Nos.92&93/CTK/2016, ITA No.374/CTK/2016 & ITA No.243/CTK/2017 “7. We have heard the rival submissions and perused the material on record and judicial decision cited above. Prima facie, the peripheral expenses is incurred by the assessee as per the notification and the sanctions of the Government to maintain the relationship with people working at mines and adjoining areas. The peripheral expenses consists of various claims submitted by the ld. AR, which according to us are to be verified and test checked, further on perusal of the assessment order there is no proper findings on the disputed issue, the ld. AR filed written submissions and supported his arguments with the paper book containing details and annexures supporting the claims and judicial decisions. Accordingly, in the interest of substantial justice since the above information was filed and the same was not available with the AO. We direct the AO to examine and check the genuineness of claim and pass the order on merits after providing adequate opportunity of hearing to the assessee and remit the disputed issue to the file of AO and allow the grounds of appeal of the assessee for statistical purposes.”

Respectfully following the order of the Tribunal, we restore the disputed issue to the file of AO to examine and check the genuineness of claim and pass order on merits after providing adequate opportunity of hearing to the assessee and this ground of appeal for i.e. A.Y.2010-2011 & 2011- 2012 is allowed for statistical purposes.”

Respectfully following the above observations of the Tribunal, we

restore this issue to the file of AO to examine the genuineness of the

claim of the assessee and pass order accordingly after providing

adequate opportunity of hearing to the assessee. Accordingly, ground

No.1 of appeal of the assessee is allowed for statistical purposes.

Ground No.2 : Disallowance of Additional Depreciation of Rs.44,31,012/-

that additional depreciation claimed by the company on additions to

assets during the year amounting to Rs.44,31,012/- has not been

6 ITA No.333/CTK/2014, ITA No.375/CTK/2016 ITA No.271/CTK/2017, ITA No.381/CTK/2015 ITA Nos.92&93/CTK/2016, ITA No.374/CTK/2016 & ITA No.243/CTK/2017 considered. However, the AO did not accept the contention of assessee

and added the difference amount of Rs.44,31,012/- back to the total

income of the assessee. In appeal the CIT(A) observed that the assessee

could not explain in what manner the findings of AO are not correct

and confirmed the disallowance on account of additional depreciation

made by the AO.

the assessee furnished details of depreciation claimed along with

additional depreciation for additions to Plant & Machinery made

during the year. The Tax Auditor's report on depreciation claimed

u/s.44AB was also furnished to substantiate the additional claim of

depreciation. However, the AO refused to take cognizance of the fact

and simply ignored the claim of additional depreciation. It was also the

contention of ld. AR that during the year the assessee made additions to

plant & machinery amounting to Rs.2,90,31,535/- which consist of Rs.

1,52,78,585/- being more than 6 months and Rs. 1,37,52,950/- being

less than 6 months. Drawing our attention to the table mentioned in the

page 3 of the paper book, ld. AR submitted that additional depreciation

as per the law @ 20% for more than 6 months and @10% for less than

6 months was claimed. Ld. AR also drew our attention to Annexure-2

placed at page 23 of the paper book, which is audit report, and

7 ITA No.333/CTK/2014, ITA No.375/CTK/2016 ITA No.271/CTK/2017, ITA No.381/CTK/2015 ITA Nos.92&93/CTK/2016, ITA No.374/CTK/2016 & ITA No.243/CTK/2017 submitted that the assessee has correctly claimed the additional

depreciation and the disallowance made on this account is unjustified

and the same deserves to be deleted.

authorities.

perusing the entire material placed on record along with the orders of

both the authorities below, we find that the AO made the disallowance

of depreciation on the basis that the explanation of the assessee was

not convincible and in the same line, the CIT(A) also upheld the action

of AO as the assessee could not substantiate his claim properly. Now,

the ld. AR drawing our attention to the audit report placed in the paper

book at page 23, submitted that the tax auditor’s report was submitted

before both the authorities below to substantiate the additional claim

of depreciation, however, both the authorities below have not

considered the same, therefore, ld. AR submitted that the issue may be

restored to the file of AO for consideration of the tax audit report and

allow the additional depreciation. Ld. DR has no objection if the issue is

set aside to the file of AO for further verification. Accordingly, we

restore the issue of additional depreciation to the file of AO for further

verification and pass order as per law after considering the

8 ITA No.333/CTK/2014, ITA No.375/CTK/2016 ITA No.271/CTK/2017, ITA No.381/CTK/2015 ITA Nos.92&93/CTK/2016, ITA No.374/CTK/2016 & ITA No.243/CTK/2017 documents/evidences. Needless to say, the assessee should be given

reasonable opportunity of hearing. The assessee is also directed to

cooperate with the AO for early disposal of the issue. Ground No.2 of

appeal of the assessee is allowed for statistical purposes.

Ground No.3: Disallowance of Mine Closure Plan (MCP) expenses of Rs.1,97,00,000/-

decided by the Tribunal in ITA No.69/CTK/2014 along with other

connected appeals, order dated 17.05.2018 for the assessment year

2010-2011. On the other hand, ld. DR relied on the order of both the

lower authorities.

the entire material available on record on the issue in question, we find

that the very similar issue has been decided by this bench of the

Tribunal in the case of M/s Mahanadi Coalfields Ltd. in ITA

No.181/CTK/2018 vide order dated 24.09.2019, wherein the Tribunal

in para 14 has observed as under :-

9 ITA No.333/CTK/2014, ITA No.375/CTK/2016 ITA No.271/CTK/2017, ITA No.381/CTK/2015 ITA Nos.92&93/CTK/2016, ITA No.374/CTK/2016 & ITA No.243/CTK/2017 per the guidelines dated 07.01.2013 issued by the Ministry of Coal, Govt. of India. But on being asked by the bench as to when the above provision amount was paid, the ld. AR was unable to explain the same before us. Therefore, this issue is sent back to the file of AO for verification as to when the provisions were made by the assessee in his books of accounts as per the guidelines issued by the Ministry of Coal (supra) and paid for claiming the deductions as per the provisions of Income Tax Act. Accordingly, this ground of Revenue is allowed for statistical purposes.

Respectfully, following the above observations of the Tribunal in the

case of M/s Mahanadi Coalfields Ltd. (supra), we restore this issue to

the file of AO for verification as to when the provisions were made by

the assessee in his books of accounts as per the guidelines issued by the

Government of India and paid for claiming the deductions as per the

provisions of Income Tax Act. Accordingly, this ground of Revenue is

allowed for statistical purposes.

Ground No.4&5 : Disallowance of deduction u/s.80G of the Act at Rs.7,52,58,750/-

donation u/s.80-G of the Act. The AO found that the donation of

Rs.5,00,00,000/- was paid to CM’s relief fund during F.Y.2005-06 vide

Cheque No.326840 dated 29.03.2006. Therefore, the AO did not allow

the same in the year under consideration. The CIT(A) in appeal

confirmed the addition made by the AO holding that the claim of the

assessee is not related to the impugned assessment year.

10 ITA No.333/CTK/2014, ITA No.375/CTK/2016 ITA No.271/CTK/2017, ITA No.381/CTK/2015 ITA Nos.92&93/CTK/2016, ITA No.374/CTK/2016 & ITA No.243/CTK/2017 14. Before us, ld.AR, at the outset, drew our attention to the page

No.37 of the paper book regarding donation received by the Director,

Environment-Cum-Spl. Secretary to Government of Odisha

acknowledging that amount of Rs.5 crores received towards

contribution of assessee-OMC to Orissa Environment Management

Fund Trust. Ld. AR also drew our attention to page 40 of the paper

book regarding donation made to Chief Minister’s Relief Fund bearing

Cheque No.231855, dated 31.03.2007. And, ld. AR submitted that the

donations made by the assessee deserves to be allowed u/s.80-G of the

Act. On the other hand, ld.DR relied on the orders of authorities below.

perusing the entire material placed on record along with the orders of

both the authorities below as well as the documents filed by the

assessee in the form of paper book, we find that the assessee has made

donations of Rs.5 corers through Cheque No.324545 dated 31.03.2007

to Orissa Environment Management Fund Trust and Rs.5 crores to

Chief Minister’s Relief Fund vide Cheque No.231855, dated 31.03.2007.

From the documents submitted by the assessee before us, we find that

the letter of acknowledgement issued by the Director, Environment-

Cum-Spl. Secretary to Government of Odisha is dated 03.05.2007 and in

the letter it is mentioned that the date of cheque is 31.03.2007.

11 ITA No.333/CTK/2014, ITA No.375/CTK/2016 ITA No.271/CTK/2017, ITA No.381/CTK/2015 ITA Nos.92&93/CTK/2016, ITA No.374/CTK/2016 & ITA No.243/CTK/2017 Similarly, the letter of acknowledgement issued by the Special

Secretary to Government of Odisha is dated 09.04.2007 and in the

letter it is mentioned that the date of cheque is 31.03.2007. Ld. AR also

filed statement of bank account and submitted that both the

transactions have been made during the year under consideration i.e.

assessment year 2007-2008, therefore, the donations paid by the

assessee may be allowed u/s.80-G of the Act. From the above

submissions of the assessee and on perusal of the documents placed

before us in the form of paper book by the assessee, we are of the

opinion that the issue requires verification on the part of the AO.

Accordingly, we remit this issue to the file of AO for further verification

and the assessee is directed to submit the documents substantiating

the claim that the donations have been paid during the impugned

assessment year. Needless to say the assessee should be given

sufficient opportunity of hearing. Ground Nos.4&5 of appeal of the

assessee are allowed for statistical purposes.

adjudication.

No.333/CTK/2014 is allowed for statistical purposes.

12 ITA No.333/CTK/2014, ITA No.375/CTK/2016 ITA No.271/CTK/2017, ITA No.381/CTK/2015 ITA Nos.92&93/CTK/2016, ITA No.374/CTK/2016 & ITA No.243/CTK/2017 18. Now, we shall take appeal of the assessee in ITA

No.375/CTK/2016, for A.Y.2012-2013 wherein the assessee has taken

following grounds of appeal :-

do not require any adjudication.

somewhere in the above para while deciding the appeal of the assessee

for A.Y.2007-2008, wherein we have restored both the issues to the file

of AO for further verification. Therefore, in the light of the observations

made in the appeal of the assessee for A.Y.2007-2008, both these

13 ITA No.333/CTK/2014, ITA No.375/CTK/2016 ITA No.271/CTK/2017, ITA No.381/CTK/2015 ITA Nos.92&93/CTK/2016, ITA No.374/CTK/2016 & ITA No.243/CTK/2017 grounds are also remitted back to the file of AO for further verification.

Accordingly, ground Nos.1 & 3 are allowed for statistical purposes.

period expenses amounting to Rs.1.36 crores.

decided by the Tribunal in ITA No.69/CTK/2014 along with other

connected appeals, order dated 17.05.2018 for the assessment year

2010-2011. On the other hand, ld. DR relied on the order of both the

lower authorities.

17.05.2018 in assessee’s own case for the assessment year 2010-2011

and found that the Tribunal has decided the issue relying on the

decision of this bench of the Tribunal in assessee’s own case for

A.Y.2009-2010, in ITA No.177/CTK/2013, dated 20.09.2017. The

relevant observations of the Tribunal are as under :-

14 ITA No.333/CTK/2014, ITA No.375/CTK/2016 ITA No.271/CTK/2017, ITA No.381/CTK/2015 ITA Nos.92&93/CTK/2016, ITA No.374/CTK/2016 & ITA No.243/CTK/2017

by the coordinate bench of this Tribunal in assessee’s own case in ITA No.551/CTK/2012, order dated 18.12.2012 at para 9.1 page 9 where the Tribunal has dealt on the each issue of prior period expenses which reads as under :-

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 nobody's 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 these 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 was required to be fulfilled by the learned CIT(A) when the substantial amount was deleted by him as 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 16.03.2007 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 Rs.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.1,34,610/-. Since this order is dated 10.08.2007, the amount is allowable as the liability crystallized during financial year 2007-08. In respect of the balance amount no details or evidences were furnished;

(iii) Miscellaneous expanses;- Miscellaneous expenses relate to supply of explosives during financial year 2004-05 and, hence, provision should have been made in that year. In any case, no evidence was furnished that the same accrued during the year;

15 ITA No.333/CTK/2014, ITA No.375/CTK/2016 ITA No.271/CTK/2017, ITA No.381/CTK/2015 ITA Nos.92&93/CTK/2016, ITA No.374/CTK/2016 & ITA No.243/CTK/2017

(iv)Repair to the building - Rs.4,35,364/-: This amount relates to purchase of GGI 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.12,02,510/-: These expenses mostly consist of raising of mineral ore at Dubna mines for 1998- 99, 1999-2000, 200001 and 2001-02, 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. Mcnall Bharat is in response to work order of the assessee dated 31.10.2002 and the bills 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 in the relevant financial years. In any case, no evidence was furnished that the 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 assessee's claim 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 after 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

16 ITA No.333/CTK/2014, ITA No.375/CTK/2016 ITA No.271/CTK/2017, ITA No.381/CTK/2015 ITA Nos.92&93/CTK/2016, ITA No.374/CTK/2016 & ITA No.243/CTK/2017 as prior period expenses on the basis they having been actually incurred 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 allowed 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. Whereas the assessee in the assessment proceedings could not substantiate the claim with proper explanations and evidence, therefore, in the interest of substantial justice, we provide one more opportunity as prayed by the ld. AR to represent its case before the AO with the evidences/documents of prior period expenses and the AO shall examine the genuineness and crystallisation of the expenses in the financial year and assessee should be provided adequate opportunity of hearing and shall cooperate in submitting the information. Accordingly, we restore the disputed issue to the file of AO and allow the grounds of appeal of the assessee for statistical purposes.” Respectfully we follow the order of the Tribunal and we restore the matter to the file of AO who shall examine the genuineness and crystallisation of the expenses in the financial year and the assessee should be provided adequate opportunity of hearing and shall cooperate in submitting the information. Accordingly, This ground of appeal for i.e. A.Y.2010-2011 & 2011-2012 is allowed for statistical purposes.

Following the above observations of the Tribunal, we also restore this

issue to the file of AO for examination of genuineness and

crystallization of the expenses in the financial year. Needless to say the

assessee shall be given reasonable opportunity of hearing. Ground No.3

is allowed for statistical purposes.

375/CTK/2016 is allowed for statistical purposes.

17 ITA No.333/CTK/2014, ITA No.375/CTK/2016 ITA No.271/CTK/2017, ITA No.381/CTK/2015 ITA Nos.92&93/CTK/2016, ITA No.374/CTK/2016 & ITA No.243/CTK/2017 25. Now, we shall take appeal of the assessee in ITA

No.271/CTK/2017, for A.Y.2013-2014 wherein the assessee has taken

following grounds of appeal :-

do not require any adjudication.

somewhere in the above para while deciding the appeal of the assessee

for A.Y.2007-2008, wherein we have restored both the issues to the file

of AO for further verification. Therefore, in the light of the observations

made in the appeal of the assessee for A.Y.2007-2008, both these

grounds are also remitted back to the file of AO for further verification.

Accordingly, ground Nos.1 & 3 are allowed for statistical purposes.

18 ITA No.333/CTK/2014, ITA No.375/CTK/2016 ITA No.271/CTK/2017, ITA No.381/CTK/2015 ITA Nos.92&93/CTK/2016, ITA No.374/CTK/2016 & ITA No.243/CTK/2017 28. Ground No.2 relates to disallowance made on account of prior

period expenses amounting to Rs.1.17 crores.

the above para while deciding the appeal of the assessee for A.Y.2012-

2013 in ITA No.375/CTK/2016, wherein we have restored the issue to

the file of AO for for examination of genuineness and crystallization of

the expenses in the financial year. Therefore, in the light of the

observations made in the appeal of the assessee for A.Y.2012-2013, this

ground is also remitted back to the file of AO for for examination of

genuineness and crystallization of the expenses in the financial year.

Accordingly, ground No.2 is allowed for statistical purposes.

No.271/CTK/2017 is allowed for statistical purposes.

in ITA No.381/CTK/2015, wherein the assessee has taken the following

grounds :-

19 ITA No.333/CTK/2014, ITA No.375/CTK/2016 ITA No.271/CTK/2017, ITA No.381/CTK/2015 ITA Nos.92&93/CTK/2016, ITA No.374/CTK/2016 & ITA No.243/CTK/2017 3. The said expenditure incurred amounting to Rs.35,88,55,396/- includes not only Periphery Development expenses but also CSR expenses of OMC. 4. That the appellant craves leave to add or to amend the above grounds of appeal before or at the time of hearing of the appeal. 5. For these and among other grounds to be urged at the time of hearing, adequate relief as may be deemed fit be granted in the matter. 32. Ground Nos.4 & 5 are general in nature and therefore, the same

do not require any adjudication.

somewhere in the above para while deciding the appeal of the assessee

for A.Y.2007-2008, wherein we have restored both the issues to the file

of AO for further verification. Therefore, in the light of the observations

made in the appeal of the assessee for A.Y.2007-2008, both these

grounds are also remitted back to the file of AO for further verification.

Accordingly, ground Nos.1, 2 & 3 are allowed for statistical purposes.

A.Y.2006-2007 is allowed for statistical purposes.

Nos.92&93/CTK/2016 for the assessment years 2010-2011 & 2011-

2012 arising out of the order of CIT(A) in confirming the penalty levied

u/s.271(1)(c) of the Act.

20 ITA No.333/CTK/2014, ITA No.375/CTK/2016 ITA No.271/CTK/2017, ITA No.381/CTK/2015 ITA Nos.92&93/CTK/2016, ITA No.374/CTK/2016 & ITA No.243/CTK/2017 36. At the outset, ld. AR submitted that the AO has deleted the

penalty for the A.Y.2010-2011 & 2011-2012 as per the direction of the

Tribunal for the above assessment years in ITA No.69&183/CTK/2014,

therefore, when the returned income of the assessee has been accepted

by the AO, then there is no question of penalty arises. Accordingly, ld.

AR submitted that the penalty levied in both the years under

consideration may kindly be deleted. On the other hand, ld.DR did not

controvert to the above submissions of the assessee.

record, we find that the issue/addition/disallowance on which basis

the AO has levied penalty, has been decided by the Tribunal vide order

dated 17.05.2018 passed in ITA Nos.69&183/2014. As submitted by ld.

AR before us that the penalty has been deleted by the AO considering

the direction of the Tribunal in the assessee’s own case vide order

dated 17.05.2018. Accordingly, the penalty proceedings initiated by

the AO for both the years under consideration have become

infructuous as the same has already been deleted by the AO. Thus, both

the appeals of the assessee in ITA No.92&93/CTK/2016 are dismissed

as has become infructuous.

A.Ys.2010-2011& 2011-2012 are dismissed.

21 ITA No.333/CTK/2014, ITA No.375/CTK/2016 ITA No.271/CTK/2017, ITA No.381/CTK/2015 ITA Nos.92&93/CTK/2016, ITA No.374/CTK/2016 & ITA No.243/CTK/2017 39. Now, we shall take both appeals of the Revenue in ITA

No.374/CTK/2016 & ITA No.243/CTK/2017 for the assessment years

2012-2013 & 2013-2014. Similar grounds have been taken by the

Revenue in both the appeals except different in figure. For the sake of

convenience we shall take into consideration the grounds taken by the

Revenue for A.Y.2012-2013 as under :-

with regard to deleting the addition made on account of NPV payment.

payment is in the nature of capital expenditure and made addition. On

appeal, the CIT(A) has deleted the addition by relying on the order of

coordinate bench of the Tribunal in assessee’s own cases for preceding

years, wherein similar addition has been deleted.

assessee supported the order of CIT(A).

22 ITA No.333/CTK/2014, ITA No.375/CTK/2016 ITA No.271/CTK/2017, ITA No.381/CTK/2015 ITA Nos.92&93/CTK/2016, ITA No.374/CTK/2016 & ITA No.243/CTK/2017

available on record. We find that this disputed issue is squarely

covered by the decision of coordinate bench of the Tribunal in

assessee’s own case for assessment years 2008-09. We have perused

the order of Tribunal in assessee’s own case for the assessment year

2008-09 in ITA No.552/CTK/2012, wherein the Tribunal has held as

under :-

“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 Officer's endeavor to adopt a particular method of valuation being fully aware 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 standard 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 Section 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 and 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 or 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 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 Ltd's ITAT decision). Now the

23 ITA No.333/CTK/2014, ITA No.375/CTK/2016 ITA No.271/CTK/2017, ITA No.381/CTK/2015 ITA Nos.92&93/CTK/2016, ITA No.374/CTK/2016 & ITA No.243/CTK/2017

learned CIT(A) therefore proceeded to consider 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 Section should be followed by the assessee to whom they are applicable. Section 44AB therefore 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 previous 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-II) 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 higher than the cost input of the 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 Rs.373.89 crores on the facts and circumstances which have been elaborately brought out in his order, which needs no interference. We uphold the same.

We respectfully following the judicial precedence do not see any reason

to interfere in the order of CIT(A) and we uphold the same and dismiss

this ground of appeal of Revenue for both the assessment years under

consideration i.e. A.Y.2012-2013 & 2013-2014.

24 ITA No.333/CTK/2014, ITA No.375/CTK/2016 ITA No.271/CTK/2017, ITA No.381/CTK/2015 ITA Nos.92&93/CTK/2016, ITA No.374/CTK/2016 & ITA No.243/CTK/2017 44. Thus, appeals of the Revenue for assessment years 2012-2013 & 2013-2014are dismissed.