ACIT, CIRCLE-13(1), HYDERABAD vs. THE SINGARENI COLLIERIES COMPANY LIMITED, KOTHAGUDEM

PDF · subscribers
ITA 778/HYD/2026Status: HeardITAT Hyderabad16 October 2026AY 2022-239 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the order of the Ld. CIT(A) and dismissed the appeal of the Revenue. The Tribunal noted that the Ld. CIT(A) deleted the addition by following the decision of the Tribunal in the assessee's own case for AYs 2015-16, 2016-17, and 2020-21. The Tribunal referred to its own earlier decisions in ITA Nos. 300, 301, and 308/Hyd/2024 for AYs 2015-16, 2016-17, and 2020-21, where it had followed its decision for AYs 2011-12 to 2014-15 and dismissed the Revenue's grounds on the identical issue. The Tribunal found that the issue regarding the applicable rate of depreciation on mine development expenditure is covered by its previous decisions in the assessee's own case. Since the Revenue had not brought any distinguishing facts or change in law, the Tribunal respectfully followed its aforesaid decisions and upheld the deletion of the addition of Rs. 37,05,69,508/-. The operative direction was the deletion of the addition.

What were the facts?

The Revenue is in appeal against the order of the CIT(A) for Assessment Year 2022-23. The assessee, The Singareni Collieries Company Ltd., a government company engaged in coal mining and power generation, filed its return declaring a total income of Rs. 12,09,29,71,690/-. The Assessing Officer (AO) completed the assessment under section 143(3) read with section 144B, making additions of Rs. 69,71,96,353/-. The dispute concerns depreciation on mine development expenditure. The assessee claimed depreciation at 15% treating it as 'plant and machinery', while the AO restricted it to 10% by classifying it as 'building'. The CIT(A) deleted the addition of Rs. 37,05,69,508/- made by the AO on this account.

What were the issues?

1. Whether civil structures like tunnels, retaining walls, and RCC bridges, incurred as mine development expenditure within coal mines, are to be treated as 'Plant and Machinery' eligible for depreciation at 15%, or as 'building' eligible for depreciation at 10% (Section 32 of the Income Tax Act, 1961)? Assessee's Contention: The assessee argued that coal mines and mine development constitute 'plant' as held by the Jurisdictional High Court in CIT v. Singareni Collieries Co. Ltd. (221 ITR 48). Mine development expenditure is integral to coal extraction and the Income Tax Appellate Tribunal (ITAT) Hyderabad has consistently allowed depreciation at 15% in the assessee's own case from AY 2011-12 onwards, including recent orders for AYs 2015-16, 2016-17, and 2020-21. The pendency of departmental appeals does not dilute the binding nature of ITAT decisions, and the AO's action is contrary to judicial discipline. Revenue's Contention: The Revenue contended that these structures fall under the definition of 'building' and are eligible for depreciation at 10%, not 'plant and machinery' at 15%. The AO's decision was to maintain consistency of the departmental stand, as appeals filed by the Revenue were pending.

Which sections of the Income-tax Act were involved?

Section 32,Section 143(3),Section 144B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Hyderabad ‘B‘ Bench, Hyderabad

Before: Shri Ravish SoodShri Madhusudan Sawdia

Hearing: 15/10/2026

आयकर अपील�य अ�धकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘B‘ Bench, Hyderabad �ी रिवश सूद,�ाियक सद� एवं �ी मधुसूदन साविड़या लेखा सद� सम� | Before Shri Ravish Sood, Judicial Member A N D Shri Madhusudan Sawdia, Accountant Member आ.अपी.सं /ITA No.778/Hyd/2026 (िनधा�रण वष�/Assessment Year: 2022-23) Assistant Commissioner of Vs. The Singareni Colleries Income Tax, Circle 13(1) Company Ltd, Hyderabad KHAMMAM PAN:AAACT8873F (Appellant) (Respondent) िनधा��रती �ारा/Assessee by: Adv. M V Anil Kumar राज� व �ारा/Revenue by: Shri Waseem UR Rehman, CIT (DR) सुनवाई की तारीख/Date of hearing: 15/10/2026 घोषणा की तारीख/Pronouncement: 16/10/2026 ORDER Per Madhusudhan Sawdia, A.M.: This appeal is filed by the Revenue, feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC) Delhi (“Ld. CIT(A)”) dated 05.01.2026 for the A.Y. 2022-23. 2. The Revenue has raised the following grounds of appeal:

“1. The Ld CIT(A) has erred both in Law and on facts in holding that civil structures like tunnels, retaining walls, RCC bridges be treated as 'Plant and Machinery' for allowing depreciation @ 15% without considering that they fall under the definition of 'building' and eligible for depreciation @ 10%. 2. Any other ground may be urged at the time of hearing

3.

The brief facts of the case are that the assessee is a government company engaged in coal mining and power generation. The assessee filed its return of income for assessment year 2022-23 on 15.11.2022, declaring total income of Rs. 12,09,29,71,690/-. The case of the assessee was selected for complete scrutiny under CASS. After considering the submissions of the assessee, the Assessing Officer (“AO”) completed the assessment under section 143(3) read with section 144B of the Income Tax Act, 1961 (“the Act”), vide order dated 20.03.2024, making aggregate additions of Rs. 69,71,96,353/- and determining the total income of the assessee at Rs. 12,79,01,68,043/-.

4.

Aggrieved with the assessment order, the assessee preferred an appeal before the Ld. CIT(A), who partly allowed the appeal of the assessee.

5.

Aggrieved by the relief granted by the Ld. CIT(A), the Revenue is in appeal before this Tribunal. At the outset, we find that the solitary issue arising from the grounds of appeal of the Revenue relates to the deletion of the addition of Rs. 37,05,69,508/- made by the AO on account of depreciation on mine development expenditure incurred within the coal mines. The assessee claimed depreciation at 15% by treating the same as plant, whereas the AO treated it as building and restricted the depreciation to 10%.

6.

We have heard the rival submissions and perused the material available on record. In this regard, we have gone through para nos. 5 to 5.3 of the impugned order, which is to the following effect:

5.

Ground No. 4 to 6: The appellant, a Government company engaged in coal mining and power generation, filed its return of income for AY 2022-23 on 05.11.2022 declaring total income of Rs.12,09,29,71,690/-. The case was selected for compulsory scrutiny under CASS. Assessment was completed u/s 143(3) r.w.s. 144B on 26.03.2024 determining total income at Rs.12,79,01,68,043/- after making additions aggregating to Rs.69,71,96,353/-. 5.1 The issue requiring adjudication is whether depreciation on mine development expenditure incurred within coal mines is allowable at 15% as applicable to plant and machinery, or at 10% treating the same as building. The AO restricted depreciation on mine development expenditure to 10% on the ground that such expenditure partakes the character of buildings. Though acknowledging that ITAT had decided the issue in favour of the appellant in earlier years, the AO made the disallowance solely to “maintain consistency of departmental stand”, as appeals filed by the Revenue were stated to be pending. 5.2 The appellant contended that coal mines and mine development constitute “plant” as held by the Jurisdictional High Court in CIT v. Singareni Collieries Co. Ltd. (221 ITR 48) .Mine development expenditure is incurred within mines and is integrally connected with extraction of coal. The Hon’ble ITAT Hyderabad has consistently allowed depreciation @15% in appellant’s own case from AY 2011-12 onwards. In the recent ITAT orders dated 12.06.2025 for AYs 2015-16, 2016- 17 and 2020-21 have again decided the issue in favour of the appellant. The pendency of departmental appeal does not dilute the binding nature of ITAT decisions. The AO’s action is contrary to judicial discipline and not justified.

5.3 I have carefully considered the assessment order, grounds of appeal, submissions and judicial precedents. It is an undisputed fact that the Hon’ble Jurisdictional High Court has held coal mines to be “plant”. The Hon’ble ITAT Hyderabad has consistently held that mine development expenditure incurred within mines and essential for extraction of coal assumes the character of plant and machinery. The latest Hon’ble ITAT order dated 12.06.2025 has reaffirmed this position in appellant’s own case, dismissing Revenue’s appeals. The AO has not brought any distinguishing facts for the year under appeal. The sole basis for disallowance is pendency of appeals, which is not a legally sustainable ground. It is well settled that judicial discipline mandates following binding appellate decisions unless reversed by a higher forum. Further, the functional test laid down by the Hon’ble Supreme Court in CIT v. Karnataka Power Corporation (247 ITR 268) squarely applies. The structures in question are integral to mining operations and cannot be equated with ordinary buildings. Accordingly, I hold that mine development expenditure is eligible for depreciation @15% as plant and machinery. Hence, the disallowance of depreciation of Rs.37,05,69,508/- is deleted in appeal.”

7.

On perusal of the above, we find that the Ld. CIT (A) deleted the addition by following the decision of this Tribunal in the assessee’s own case for the A.Y. 2015-16, 2016-17 and 2020-21. We have also perused para nos. 26 to 28 of the order of this Tribunal in the assessee’s own case in ITA Nos. 300, 301 and 308/Hyd/2024 for assessment years 2015-16, 2016-17 and 2020-21, which is to the following effect:

8.

On perusal of the above, we find that while deciding the Revenue’s appeals on the identical issue, the Tribunal followed its earlier decision in the assessee’s own case for assessment years 2011-12 to 2014-15 and dismissed the grounds raised by the Revenue. Thus, the issue regarding the applicable rate of depreciation on mine development expenditure stands covered by the decisions of this Tribunal in the assessee’s own case. The Revenue has not brought to our notice any distinction in the facts or any change in the applicable law warranting a different view for the year under consideration. Accordingly, respectfully following the aforesaid decisions of this Tribunal in assessee’s own case, we uphold the order of the Ld. CIT(A) deleting the addition of Rs. 37,05,69,508/-.

9.

In the result, the appeal of the Revenue is dismissed.

Order pronounced in the Open Court on 16th October, 2026.

Sd/- Sd/- (RAVISH SOOD) (MADHUSUDAN SAWDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER Hyderabad, dated 16th October, 2026. Vinodan/sps Copy to: S.No Addresses 1 Assistant Commissioner of Income Tax Circle 13(1) Room No.224, 2nd Floor, Block 2B, IT Tower, AC Guards, Masab Tank, Hyderabad 500004 2 The Singareni Colleries Company Ltd, D.No.22/3, GM(Finance) SCCL Head Office, Kothagudem, Bhajanamandir, SO Kothagudem, Khammam 507110 Khammam 3 Pr. CIT, Hyderabad 4 DR, ITAT Hyderabad Benches 5 Guard File

By Order Digitally signed by TUMMALACHARLA TUMMALACHARLA LAKSHMI NARAYANA DN: cn=TUMMALACHARLA LAKSHMI LAKSHMI NARAYANA, c=IN, o=INCOME TAX APPELLATE TRIBUNAL, ou=INCOME TAX NARAYANA APPELLATE TRIBUNAL, CHENNAI BENCH Date: 2026.10.16 15:31:04 +05'30'

Page 9 of 9

More judgments on Section 32

All 2,762 judgments and leading authorities on Section 32 →

Recent GST High Court judgments

Search GST case law →