ACIT, SAMBALPUR vs. M/S MAHANADI COALFIELDS LTD, SAMBALPUR

1 Mah anadi Coalf ield Ltyd.,

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK

BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER

ITA No.421/CTK/2013: Assessment Year : 2010-2011 ITA No.301/CTK/2014: Assessment Year : 2011-2012 ITA No.278/CTK/2015: Assessment Year : 2012-2013 ITA No.447/CTK/2015: Assessment Year : 2013-2014 ITA No.264/CTK/2017: Assessment Year : 2014-2015

Mahanadi Coalfields Ltd., Vs. DCIT, Circle -2(1), Jagriti Vihar, Burla, Sambalpur. Sambalpur

PAN/GIR No.AABCM 5188 P (Appellant) .. ( Respondent)

ITA No.397/CTK/2013: Assessment Year : 2010-2011 ITA No.330/CTK/2014: Assessment Year : 2011-2012 ITA No.292/CTK/2015: Assessment Year : 2012-2013 ITA No.428/CTK/2015: Assessment Year : 2013-2014 ITA No.268/CTK/2017: Assessment Year : 2014-2015

DCIT, Circle -2(1), Vs. Mahanadi Coalfields Ltd., Sambalpur. Jagriti Vihar, Burla, Sambalpur

PAN/GIR No.AABCM 5188 P (Appellant) .. ( Respondent)

Assessee by : Shri S.S.Poddar/N.Kedia, AR Revenue by : Shri Piyush Kolhe, CIT DR

Date of Hearing : 07 /03/ 2018 Date of Pronouncement : /03/ 2018

O R D E R Per Pavan Kumar Gadale, JM These are appeals filed by the assessee and revenue against

separate orders of the CIT(A)-Cuttack, for the assessment years 2010-

2 Mah anadi Coalf ield Ltyd.,

2011 to 2014-2015, respectively. Since facts and some of the issues

involved are common, they were heard together and are being disposed

of by this common order for the sake of convenience.

India enterprise engaged in the business of extraction and sale of coal

from its coalfields located at Talcher & IB Valley and others in the State of

Odisha. The Assessing Officer completed the assessments u/s.143(3) of

the Act for the assessment years under consideration, making

additions/disallowance. On appeal, the CIT(A) partly allowed the appeals

of the assessee. Hence, both the assessee and the revenue are in appeal

before us.

has erred in confirming the action of the Assessing Officer in making

addition on account of valuation of closing stock of Rs.9108.67 for the

assessment year 2010-11, Rs.7060.22 lakhs for the assessment year

2011-12, Rs.8340.60 lakhs for the assessment year 2012-13 and

Rs.4714.00 lakhs for the assessment year 2013-14.

decision will apply mutatis-mutandis to other assessment years.

of annual report found that the assessee has declared in its printed

3 Mah anadi Coalf ield Ltyd.,

accounts in notes on account that the stock of coal valued by the

assessee as on 31.3.2010 lying at different collieries was Rs.34659.68

lakhs, which is calculated on the basis of lower of cost or net reaslisable

value mines wise, and if it is valued company as a whole, it will be

Rs.43768.35 lakhs, hence there is an understatement in valuation of

closing stock to the extent of Rs.9108.67 lakhs.

early 1970s and the coal being an essential commodity and wasting asset

was declared a controlled commodity and its price according to grades

was determined and announced by the Central Government under the

colliery control order, 1945. Since the price of coal was fixed b y the

Central Government (Administered price), there was no possibility of any

variation of such price unless announced by the Central Government.

Accordingly, since its inception, the assessee had been valuing its stock in

trade of coal under the net realisable value (method” based on the price

of coal notified by the Central Government from time to time till financial

year 1995-96. Meanwhile, with the liberalisation of Indian economy, the

Central Government through its notification deregulated the pricing of

various grade of coal to be followed by all its subsidiaries in the year

1995. Thereafter, the Board of Directors of Coal India Limited (CIL), the

Holding company in its 165th meeting decided to adopt the cost or market

price whichever is lower method for valuing stock of coal and conveyed its

decision to all its subsidiaries vide letter dated 9.6.1997 before finalisation

of the accounts for the financial year 1996-97. The reasons for such

4 Mah anadi Coalf ield Ltyd.,

change was also put up as a Board note of CIL reasoning for the change.

In compliance to the said directions of CIL, MCL Finance Department

issued a circular dated 26.7.1997 to all its Area Manager for valuation of

closing stock. It was further explained that MCL had underground as well

as open cast mines and the quality/grade of coal, the cost of production

and the sale price differs very widely, hence, a circular was issued by CIL

vide letter dated 15.5.2000 for implementation order on uniformity in

accounting by all the subsidiaries on the basis of the view formed by a

committee for the purpose that “since coal is a process of extraction from

a single mine and coal stock of each unit is to be valued”. Hence, all the

subsidiaries are valuing its stock at cost or market price, whichever is

lower mines wise since financial year 1996-97. From the valuation of

closing stock forming part of the circular issued by MCL Finance

Department vide letter dated 27.6.1997, it is observed that the market

price of different grade of coal differs from Rs.262.20 per Ton to

Rs.766.60 per Ton whereas the cost price or NRB whichever is lower

varied between Rs.94.73 per Ton to Rs.2439.51 per Ton. Further, it is

observed that for the financial year 2011-12 in the case of Nandira

Colliery, the cost of production of coal was Rs.2759. per ton whereas the

net reaslisable value was Rs.1140 per Ton and in the case of Talcher

Colliery, it was Rs.4480.68 per ton and Rs.2800 per ton respectively and,

accordingly, the stock was valued at cost or NRB whichever is lower. This

method of valuation is consistently followed by all the subsidiaries of CIL.

Accordingly, following the direction of CIL and as the grade, quality, cost

5 Mah anadi Coalf ield Ltyd.,

differed, MCL valuing its stock mine-wise as an independent cost centres

and profit-making centre consistently since 1996-97.

Act and found that the assessee cannot adopt the method of independent

valuation of closing stock. The Assessing Officer further emphasised that

the correct method of valuation of closing stock of raw coal has to be cost

of production or market price whichever is lower for the aggregate of coal

stock as on closing date of the accounting year and not by making unit

wise valuation of raw coal stock at different locations of the Company

and, therefore, made addition of Rs.9108.67 lakhs.

before the Assessing Officer. Whereas the CIT(A) dealt on the issue in

detail at pages 5-8 of the order and the submissions of the assessee in

respect of valuation as per the accounting policy adopted by the Coal

India Limited. The CIT(A) also listed out the basis of valuation but finally

concluded that the assessee is a person defined and taxable under the

provisions of Income tax Act. The CIT(A) also upheld the findings of the

Assessing Officer and confirmed that the valuation of coal is to be done

for the company rather than valuing it unit-wise.

authorities. Ld A.R. also filed written submissions referring to section

145A and judicial decisions. Ld A.R. submitted that the assessee

company was incorporated on 30 April, 1992 as a 1OO% subsidiary of

6 Mah anadi Coalf ield Ltyd.,

Coal India Limited (ClL) by taking over the Sambalpur Division of South

Eastern Coal Fields Limited. The Coal mining sector had been under

nationalisation since the early 70s and the coal being an essential

commodity and a wasting asset, was declared a controlled commodity and

its price (according to grades) was determined and announced by the

Central Govt under the Colliery Control Order, 1945. Since the price of

coal was fixed by the Central Govt (Administered price) there was no

possibility of any variation of such price unless announced by the Central

Govt. Accordingly Since its inception the assessee had been valuing its

stock in trade of coal under the 'Net Realisable Value' method based on

the price of coal notified by the Central Govt of India from time to time till

financial year 1995-96. Meanwhile with the liberalisation of the Indian

economy, the Central Govt. through its notification published in the

Gazzete of India, Extraordinary, dated 22nd March, 1995 deregulated the

pricing of various grades of coal to be followed by all of its subsidiaries.

Thereafter, the Board of directors of Coal India Limited decided to adopt

the 'cost or market price whichever is lower' method for valuing stock of

coal and conveyed its decision to all its subsidiaries through letter dated

09.06.1997 before finalisation of the accounts for the said financial year

1996-97. Subsequently, there are directions of MCL Finance Dept by

circular letter No. 732 dated 27.06.1997 for valuation of closing stock of

coal to all its area manager. The assessee company has underground as

well as opencast mines and the quality and grade of coal, the cost of

production and the sale price differs very widely. Hence, all the

7 Mah anadi Coalf ield Ltyd.,

subsidiaries are valuing its stock at cost or market price whichever is

lower mines wise. From the valuation of closing stock for the FY 2006-07,

it can be seen that the cost at Hingula OCP is only Rs. 80.37 per ton

whereas the NRV of Orient mine no. 4 is Rs. 200/- per ton which means

that the cost of production at orient mine no. 4 is more than the NRV. The

accounting policy of the assessee during the FY 1996-97 in respect of

valuation of coal referred at para 7 .4 of Audited accounts and the effect

of change at para 4.2 (ii) is a furnished. Further, circular was issued by

the Holding company i.e. Coal India Limited to all its subsidiaries for

implementation of uniform accounting vide letter dated 15.05.2000 as

decided by a committee constituted for the specific purpose of valuation

and "coal stock of each unit is to be valued'. This method of valuation of

coal, mines wise, is followed consistently. Further, ld A.R. also explained

that the assessee is having various units of production, cost centre, sales

and accounting and the units are commonly known as areas. The coal is

produced at different mines and such mines are operating under the

administrative control of a particular area, therefore, accounts are being

maintained for each area in respect of production and sales. The

valuation of closing stock in respect of each area is derived separately and

net realisable value is also ascertained area wise. Ld A.R. submitted

that the valuation of closing stock is done at cost or NRV whichever is

lower and followed consistently. Hence, the method of valuation adopted

by the assessee is the most scientific method and gives a more accurate

picture of valuation of closing stock as compared to the method adopted

8 Mah anadi Coalf ield Ltyd.,

by the Assessing Officer. Ld A.R. submitted that the method of valuation

of closing stock is followed by all the subsidiaries of Coal of India Limited

in accordance with uniform Accounting policy of Coal India Limited. The

assessee being a public sector undertaking and accounts are audited by

statutory auditor and the Comptroller and Auditor General of India and

the method of valuation of closing stock is being accepted by the auditors

as well as the revenue in all the earlier years and filed written

submissions, supporting evidence to substantiate that the assessee is

following a uniform accounting policy by Coal India Limited and prayed for

deletion. Moreover, the Assessing Officer has not made any addition

during the assessment year 2014-15 and assessment year 2015-16 as

the book value was more than the global value taken playing hot and cold

simultaneously.

authorities and materials available on record. The disputed issue with

respect to valuation of closing stock as envisaged by ld A.R. that the

assessee is following uniform accounting policy adopted by Coal India

Limited and its subsidiaries. We have perused the provisions of

applicability of Accounting Standard and as per Accounting Standard -2,

Valuation of inventories, the prime objective is that a primary issue in

accounting for inventories is the determination of the value at which

inventories are carried in the financial statements until the related

9 Mah anadi Coalf ield Ltyd.,

revenues are recognised. The Accounting Standard -2 has been revised

in 2016, whereas the assessment year involved in the present case is

2010-2011. Though in the revised AS-2, it was mentioned that

“producers’ inventories of livestock, agricultural and forest products, and

mineral oils, ores and gases to the extent that they are measured at net

realisable value in accordance with well-established practices in those

industries” but the assessee company holds the mines and made the

valuation independently for each mine and also established the cost

centres for revenue purposes. The cost centres provide the profit or loss

incurred by each mine in its operation. The AS-2 mentions that in the

case of ore, the valuation is measured at net realisable value in

accordance with the well-established practices in those centres. There is

no dispute with respect to the cost of value of closing stock but on the

overall aspect where the valuation has to be made by the company by

itself or accretion of valuation of stock at mines independently. Ld A.R.

demonstrated the facts before us by referring to the annual report and

notes on account. On perusal of Schedule-P to the notes on account for

the said financial year, the auditors have expressed the method of

valuation of closing stock at para 6.2.2. as “stock of coal is valued

separately for each mine at cost or net realisable value, whichever is

lower” as per uniform Accounting Policy of CIL and further, it was

mentioned that if the valuation of coal is done for the company, rather

than valuing it unit-wise, valuation made by the assessee is Rs.43768.35

lakhs against Rs.34659.68 lakhs. The auditors also at para 11.15 of the

10 Mah anadi Coalf ield Ltyd.,

notes on account Schedule-P disclosed that if valuation of coal is done

for the group as a whole, rather than valuing it mines-wise, the value of

coal stock would have been Rs.43768.35 lakhs. On perusal of share

capital, it reveals that the total share capital of the assessee is held by

the holding company -Coal India Limited.

Limited is adopted by all the subsidiaries and the assessee is 100%

subsidiary. As such the Accounting policy is adopted and accepted by the

statutory auditors and the Comptroller and Auditor General of India and

Income tax Department. We found that as per the AS-2 , the method of

valuation and inventories are mandatory and the valuation has to be in

accordance with the guidelines of ICAI. On perusal of the annual report

at page 98, we found that the assessee has valued the stock separately

for each mine at cost or net realisable value and the aggregate value as

on 31.3.2010 in respect of cost has been worked out to Rs.34659.68 lakh.

The auditors also explained that the valuation of coal is made by the

assessee company mine-wise and valuation of closing stock of coal if

taken group as a whole would have been Rs.43768..35 lakhs.

Rs.43768,35 lakhs – Rs.346659.68 lakhs = Rs.9108.07 lakhs, which the

Assessing Officer considered being undervaluation of closing stock. Ld

A.R.’s contention is that all the subsidiaries of Coal India Limited have

been following this uniform accounting policy and there is no dispute.

11 Mah anadi Coalf ield Ltyd.,

Only in assessee’s case, ld A.R. expressed that the revenue having

accepted in the earlier years made addition in respect of difference. We,

on perusal of the assessment order found that the Assessing Officer has

relied on the printed balance sheet and having supported with the

provisions of section 145A of the Act and has not accepted the value of

closing stock whereas the provisions of Section 145A prescribes the

method of accounting policy regularly employed by the assessee. In the

present case, the assessee is a 100% subsidiary of Coal India Limited and

as per the directions of the Holding company, uniform accounting policy

has been adopted regularly and this regular method of accounting comply

with the provisions of valuation of stock and accounting principles. These

facts are not disputed. The method of valuation of closing stock shall be

in consonance with the accounting standard of ICAI and the provisions of

section 145A of the Act. In the present case, the Coal India Limited,

which is a Government of India enterprise holding 100% shares of the

assessee company and similar shareholding in other subsidiaries, which

the ld A.R. explained that they are adopting this method. The audit

report of the assessee referred at page 94 prescribes the method of

valuation and inventories of stock and spare parts ad also the justification

of loss of stock + and -5%.

following same method of valuation for his inventories as discussed in

their Annual report and similar method of accretion/deccretion of stock

is dealt in the profit and loss account, which is also not disputed and

12 Mah anadi Coalf ield Ltyd.,

available in the public domain. Ld A.R. also emphasised that similar

additions were made by the assessee upto assessment year 2013-14 and

for subsequent assessment years, there is no addition in the assessment

as the book value mine-wise was more than valuation as a group. It is

further observed that the quality/grade of coal, cost of production and

sale price has wide difference between mines to mines, hence, it is not

practical nor justified to value stock for all mines as a group. Further,

valuation of closing stock does not give any profit for book purpose nor

for income tax purposes as the same valuation is considered as valuation

of opening stock in subsequent year. Moreover, as there is a wide

difference between the quality/grade of coal, cost of production mines-

wise, sale price mines-wise; hence taking the global view for valuation of

closing stock can never be justified rather the valuation of coal mines-

wise gives the real cost of production for the purpose of valuation of stock

in place of valuation for MCL as a whole. We considering the overall

circumstances and uniform accounting policy issued by Coal India Limited

and the submission of ld A.R. alongwith documentary evidence and the

undisputed fact that the assessee company is a 100% subsidiary of Coal

India Limited and similar accounting policy is adopted by the other

subsidiaries, are of the opinion that the method of valuation has to be

test checked by the Assessing Officer so that this uniform Accounting

Policy applicable to the assessee as a subsidiary company. The policy of

valuation of mines independently and has been accepted by the parent

company i.e. Coal India Limited and independently reflects in financial

13 Mah anadi Coalf ield Ltyd.,

statements. The change in valuation policy is for realisation of values

and the assessee being Government Enterprises, the accounts are audited

by the Statutory Auditors and Comptroller and Auditor General of India.

We are of the substantive view that the lower authorities have to verify

the uniform Accounting Policy adopted by other subsidiaries, which are in

the similar line of business as per Coal India Ltd letter dated 31.3.2010

(supra). Accordingly, we remit this disputed issue to the file of the

Assessing Officer who shall verify and call for the information in respect of

other subsidiaries who are following this method of accounting and if so,

same be considered on merits and the assessee shall co-operate in

submitting the information and this ground of appeal is allowed for

statistical purposes. Consequently, this ground taken by the assessee for

other assessment years i.e. 2011-12 to 2013-14 are allowed for statistical

purposes.

Rs.31475.28 lakhs for the assessment year 2010-2011, Rs.25778.15

lakhs for the assessment year 2011-12, Rs.32242.12 lakhs for the

assessment year 2012-13, Rs.24010.50 lakhs for the assessment year

2013-14 and Rs.15912.00 lakhs for the assessment year 2014-15 due to

change in valuation of closing stock and overburden removal adjustment

debit/credit.

change in method of valuation of closing stock as per uniform policy of

14 Mah anadi Coalf ield Ltyd.,

Coal India Limited, the holding company, the profit for the year has been

decreased by Rs.314.75 lakhs. In the assessment proceedings, the

assessee has filed explanations in respect of effect of change in valuation

of closing stock of coal. This explanation has been referred at page 58 of

the assessment order and the assessee has relied on the judicial decisions

that the method of valuation necessitated in the current financial year and

the method of valuation of closing stock, whereas the Assessing Officer

has dealt on the provisions of section 145(2) of the Act and observed that

the change in the method of valuation is not by the statute and in the

earlier years also, the assessee has adopted the same by changing the

valuation of closing stock.

judicial decisions confirmed the addition made by the Assessing Officer.

valuation is based on the final recommendation of Uniform Accounting

Committee, 2009-10 of Coal India Limited vide letter

No.CIL/CGM(F)/31025/969 dated 31.3.2010 issued to all subsidiaries.

Therefore, the method of calculation of cost per ton followed in the earlier

years has been changed and an improved method of valuation has been

followed during the year under consideration. Ld A.R. referred to the

objectives of stock valuation of inventories and method of valuation of

inventories and judicial decisions to substantiate that the action of the

15 Mah anadi Coalf ield Ltyd.,

Assessing officer in making the addition in respect of decrease in profit

cannot be accepted.

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 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.

16 Mah anadi Coalf ield Ltyd.,

No.3(5) for the assessment year 2011-12 relates to interest paid to

foreign institution through CIL.

Rs.382.21 lakhs in its balance sheet as unsecured loan from the holding

company, Coal India Limited as under:

i) Loans from IBRD & JBIC : Rs.258,71 lakhs ii) On deferred payment : Rs. 13.64 lakhs iii) Other interest : Rs. 109.86 lakhs Total : Rs.282.21 lakhs.

from the Ministry of Finance, Department of Economic Affairs, Govt of

India was filed by the assessee. On perusal of the same, the Assessing

officer observed that the World Bank has sanctioned loan to CIL and not

to MCL. As such the interest liability on dues of the holding company

cannot partake the character of any interest paid or payable by the

assessee company to World bank and the assessee has not provided the

details of deduction of TDS. Therefore, the Assessing Officer has made

addition whereas the CIT(A) relied on the amendment to section 40(a)(ia)

by the Finance At 2012 w.e.f. 2013-14 and is of the opinion that the

present assessment year does not get the benefit of the provisions and

confirmed the addition.

17 Mah anadi Coalf ield Ltyd.,

authorities and materials available on record. Before us, ld A.R. explained

the reasons of interest liability and also the transaction from World bank

to the CIL and the assessee reflecting the loan payable to the holding

company and emphasised that the TDS was not required to deduct the

interest on loan in terms of letter dated 26.3.1998 and referred at paper

book at pages 13 to 14. Hence, no TDS is required to be made for

payments to World Bank and also the provisions of section 40(a)(ia) of

the Act are not applicable. Ld A.R. explained that the total interest

liability of Rs.382.21 lakhs consists of interest payable to CIL of loans

from IBRD and JBIC of Rs.258.71 lakhs and deferred payment to M/s.

Liebherr France S.S. France of Rs.13.64 lakhs and other interest on cess

collected from customers of Rs.109.86 lakhs. The Assessing Officer has

disallowed this claim whereas the interest payment to World bank, no

TDS has to be deducted and similarly interest income on deferred

payment to M/s. Liebherr France S.A France, as disclosed in the balance

sheet, interest is not taxable as per Double Taxation Avoidance

Agreement (DTAA) between France and India. In respect of other

interest on cess collected from customers of Rs.109.86 lakhs, as per

directive of Hon’ble Supreme Court judgment dated 31.7.2001, the

money is refundable to the customer alongwith interest and the assessee

could not identify the customers/parties to whom the refund is to be

made and, therefore, no TDS was made and this fact was also reflected

in the audited balance sheet as per the submission of the ld A.R.

18 Mah anadi Coalf ield Ltyd.,

World bank and M/s. Liebherr France S.A. France that no TDS on

interest liability arose due to agreement with World Bank and Double

Taxation Avoidance Agreement with France. In respect of other interest

on cess collected from customers of Rs.109.86 lakhs, as per the Supreme

Court judgment dated 31.7.2001 the money is refundable to the

customers alongwith interest. But the assessee has expressed that the

company has not identified the customers to whom the refund is to be

made and this fact was disclosed in schedule -P of the audit report at

page 99. We perused the audit report at page 10.0 (a) at page 99-100

where these facts were explained that the assessee company has not

identified the customers to whom the refund is to be made and, therefore,

the finalisation of liability to refund the same is yet to be done. We are of

the opinion that this vital fact needs to be verified and examined as

explained by ld A.R. that from assessment year 2012-13 this interest

claim was allowed. Accordingly, in the interest of justice, we remit this

issue to the file of the Assessing Officer who shall verify the different

payments of interest made to World bank as covered by the letter of

Govt. of India vide letter dated 26.3.1998 and direct the Assessing Officer

to verify the payment of interest in the hands of the recipients are offered

to tax and decide on merits and allow this ground of appeal for statistical

purposes. Ground No.3(3) for assessment year 2010-11 and Ground

No.3(5) for assessment year 2011-12 is allowed for statistical purposes.

19 Mah anadi Coalf ield Ltyd.,

11 and Ground No.3(2) for assessment year 2011-12 relates to addition

made towards charges paid for lease hold land. Ground No.3(2) for the

assessment year 2012-13, Ground No.3(1) for assessment year 2013-14

and Ground No.3(1) for assessment year 2014-15 relates to depreciation

on lease hold land. These grounds are inter-connected.

Rs.2514.44 lakhs u/s.37(1) of the Act towards charge against leasehold

land for lease period exhausted. Further, the assessee also claimed

alternate clam of depreciation u/s.32(1)(ii) i.e. depreciation on intangible

assets. The Assessing Officer did not accept the alternate claim of the

assessee and made the addition.

Tribunal in assessee’s own case in ITA No.226,227/CTK/2009, 456,457 &

458/CTK/2010 and No.50,51,52 & 53/CTK/2011 and also referring

various judicial decisions on this issue, has confirmed the addition.

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

2008-09 in ITA No.73/CTK/2012 order dated 3.1.2018. The findings

portions are as under:

“45. Ld D.R. objected to the admission of additional grounds on the ground that the grounds have to be dismissed as the lease hold rights are not eligible for depreciation u/s.32(1)(ii) of the Act considering it as intangible asset. He referred to the decision of Hon’ble High Court of Bombay in the case of CIT vs. Techno Shares

20 Mah anadi Coalf ield Ltyd.,

Stocks Ltd., 225 CTR 337 (Bom), wherein, it has been held that the depreciation under section 32 is restricted to the tangible/intangible assets which are specifically enumerated therein and depreciation is not allowable on all tangible/intangible assets. He also referred to the decision of ITAT Mumbai Benches in the case of Dabur India ltd. vs ACIT, 159 TTJ 563 (Mumbai), wherein also, it was held that the tenancy rights cannot be construed as intangible assets falling within meaning Explanation to section 32(1) and, therefore, there is no question of allowing depreciation on said rights.

for depreciation u/s.32(1)(ii) of the Act considering it as intangible rights

and, accordingly, dismiss the ground of appeal of the assessee.

Prospecting & Boring expenses of Rs. 1138.73 separately claimed fin

computation of income, and Ground No.3.8 relates to confirmation of

disallowance of Rs.278.39 lakhs charged to P&L appearing in schedule-12.

covered against the assessee by the decision of the Tribunal in assessee’s

own case for the assessment years 2004-05 to 2007-08, respectively.

21 Mah anadi Coalf ield Ltyd.,

with by this Bench of the Tribunal in assessee’s own case for the

assessment years 2004-05 to 2007-08 in ITA No.227/CTK/2009 and

others order dated 12.9.2011 as under:

“We find that the learned CIT(A) has considered the issue and held that the expenditure booked under the head prospecting and boring and appearing in the fixed asset schedule and work- in-progress should also be considered on the same basis as directed while adjudicating development expenses. We have already adjudicated the issue on “Development expenses” and upheld the order of the CIT(A) for the reasons as discussed in paragraphs 21 and 22 of this order. Therefore, we uphold the impugned order of the ld CIT(A) on the issue of disallowance of prospecting & boring expenses (P&B) and dismiss the ground raised by the assessee in this regard.” 35. Since there is no change of facts in the year under consideration,

following the precedent, we confirm the order of the CIT(A) and dismiss

Ground No.3.5 and Ground No.3.8 of appeal of the assessee.

relates to claim of expenditure on assets not belonging to company were

not pressed by ld A.R. of the assessee and, therefore, same are dismissed

as not pressed.

Rs.17.38 lakhs.

the assessee has claimed Rs.17.38 lakhs towards write off/write back of

different items in Schedule -16(B) of the P&L account. Since the assessee

22 Mah anadi Coalf ield Ltyd.,

failed to substantiate the basis of write off, the Assessing Officer added

the same to the total income of the assessee.

expenditure in question is a legitimate expenditure as the first item

relates to survey of four machines which are no more usable and the

second item pertains to cost of stolen assets. All these expenditures were

duly approved by the Board of Directors for write off.

directed the Assessing Officer to calculate the write off/write back

considering the facts that when the discarded asset is sold and when the

asset is destroyed as per the provisions of the Act.

of the CIT(A) as he has simply directed the Assessing Officer to calculate

the write off/write back on the basis of guidelines given in the impugned

order. Hence, this ground of appeal of the assessee is dismissed.

lakhs.

produce the details in conformity with the direction of the ITAT on similar

issues for earlier years such as bifurcation of capital expenditure and

revenue expenditure/amount spent on developing mines and

commercially operating mines included under the head “development

23 Mah anadi Coalf ield Ltyd.,

expenditure”. Therefore, the Assessing Officer did not accept the

contention of the assessee as 100% revenue expenditure and hence,

rejected the claim of the assessee.

own case for the assessment years 1999-2000 to 2002-03 and also for

the assessment year 2004-05 to 2007-08, the CIT(A) has directed the

Assessing Officer to follow the direction of the Tribunal regarding

segregation of expenses under the head “development expenditure”.

consistently followed by the assessee, the development expenditure is

considered under the head “fixed assets/capital work in progress. During

the year under consideration, the assessee has claimed entire amount

incurred towards development expenditure as revenue expenditure. It

was submitted by ld A.R. that similar claim of the assessee has been

allowed by the revenue for the assessment years 2012-13 onwards.

Assessing Officer to follow the direction of the Tribunal referred to supra

regarding segregation of expenses under the head “development

expenditure”. Hence, we see no error in the order of the CIT(A), which is

hereby confirmed and ground of appeal of the assessee is dismissed.

11 and 2011-12, the grievance of the assessee is that the CIT(A) erred in

allowing short credit of TDS by Rs.926.53 lakhs and Rs.49.01 lakhs.

24 Mah anadi Coalf ield Ltyd.,

claimed by the assessee u/s.143(3) of the Act. The Assessing Officer has

allowed credit of Rs.8311.51 lakhs as against total claim of Rs.9238.04

lakhs.

TDS as claimed on the basis of TDS certificates after verifying the same

with NSDL following the decision of the Tribunal in assessee’s case for the

assessment year 2008-09 in ITA No.136/CTK/2012. Hence, the assessee

should not have any grievance as to the allowance of short deduction of

TDS since the CIT(A) has directed to allow credit of TDS on verification.

Hence, this ground of appeal of the assessee is dismissed for the

assessment year 2010-11 and 2011-12.

obsolescence and shortage of stores for the assessment year 2011-12.

the assessee has provided an amount of Rs.21.72 lakhs towards

obsolescence of stores, which, as per the assessee, was arrived at after

technical appraisal of stores articles which mainly pertains to spares store

of those machineries and HEMM which has already been scrapped. The

Assessing Officer disallowed on the ground that the assessee could not

furnish the details as well as evidence thereof, which was confirmed in

appeal by the CIT(A)

25 Mah anadi Coalf ield Ltyd.,

Cuttack Bench of the Tribunal in assessee’s own case for the assessment

years 2003-04 to 2007-08 in ITA Nos.226 & 277/CTK/2009 and ITA

Nos.456, 457 & 458/CTK/2010. The decision is also followed in the

assessment year 2008-09 in ITA No.73/CTK/2012 order dated 3.1.2018

The relevant portion is reproduced as under:

“We have heard both the parties and perused the material available on record. We find that the authorities below have disallowed the claim of the assessee mainly on the ground that no details thereof could be furnished by the assessee. The ld A.R of the assessee vehemently contended that the details thereof wee produced before the ld CIT(A) including the area-wise details of amount charged against non-moving stores and spares. He also submitted a copy of such details which is found placed at page 165 of the paper book. If that is so, in our considered view, without examining such details furnished before him the CIT(A) is not justified in upholding the disallowance as made by the AO. Therefore, for the ends of justice, we set aside the impugned order of the ld CIT(A) and restore this issue to the file of the AO for consideration afresh in the light of details furnished by the assessee when claim as mandatory percentage to actual identification has to be considered to be established by the assessee and pass necessary consequential order in accordance with law giving due and proper opportunity of being heard to the assessee.”

following the decision of the Tribunal as above, we set aside the order of

the CIT(A) and restore the file to the Assessing Officer for consideration

afresh in the light of details furnished by the assessee after affording

reasonable opportunity of hearing to the assessee. Hence, this ground is

allowed for statistical purposes.

26 Mah anadi Coalf ield Ltyd.,

of the assessee is that the CIT(A) erred in confirming the addition of

Rs.21.47 crores made by the Assessing Officer on account of difference

between interest income as per accounts and as per 26AS.

Rs.1196.28 crores as receipts from interest income whereas as per 26AS

statement, the receipts come to Rs.1217.75 crores. The assessee

explained that the information submitted by banks relating to interest was

not fully correct as they sometimes furnish data as per maturity of FDRs

whereas the assessee was accounting for the income on accrual basis.

The Assessing Officer did not accept the explanation of the assessee and

for want of evidence, added the difference amount of Rs.21.47 crores to

the total income of the assessee.

income of Rs.1197.52 crores whereas the Assessing Officer has

mistakenly taken it as Rs.1196.28 crores. However, the CIT(A) observed

that the interest income reflected in 26AS cannot be ignored.

Accordingly, he directed the Assessing officer to add the difference of

Rs.20.23 crores as against Rs.2147 crores.

and following mercantile system of accounting and accordingly all the

income and expenditure are being accounted for on accrual basis. The

27 Mah anadi Coalf ield Ltyd.,

assessee is an organized and large entity. The PSU maintains proper

books of account and suitable evidence for all income accrued and

expenses incurred. Suitable evidence depends on various factors like

nature of income/payment, nature of claimant, nature of payer/payee,

place of receipt/payment, amount of receipts/payment etc. In such an

organization there is suitable internal check and control. Business is

carried in a professional manner. Moreover, the accounts of the assessee

are subjected to audit by the Statutory auditor, CAG and other Govt,

agencies and none of them has raised any point in this respect. Ld A.R.

submitted that the assessee has shown an interest income of 1197.52

crores and not Rs. 1196.28 crores as mentioned by the Ld. AO. The

amount of Gross interest reflected in Form 26AS as on 13.01.2015 is Rs.

1181.54 crores u/s. 194A and Rs. 0.65 crore u/s. 193, totaling to Rs.

1182.19 crores which is much lower than the amount of interest income

shown by the assessee. This clearly establish that Form No. 26AS is not at

all a reliable document for arriving at the income of the assessee.

Moreover, the assessee is correctly accounting its income and expenditure

on accrual basis irrespective of amount reflected in 26AS. Ld A.R.

referred to Copy of Form 26AS for FY 2011-12 along with its summary

contained at Page no. 2-28 of P/B. ld A.R. also referred to a set of

voucher contained at Page no. 83-91 of P/B, which contains the voucher

relating to creation of FDR, booking of interest, booking of TDS and

maturity of FDR on the basis of statement/bank advice given by bank .

This will clearly explain the method of accounting followed by the

28 Mah anadi Coalf ield Ltyd.,

assessee in respect of FDRs and interest thereon. It is pertinent to

mention here that in the immediately preceding and succeeding financial

years also i.e. FY 2010-11 and 2012-13 the amount of income shown by

the assessee is always higher than the amount appearing in Form 26AS.

To support this, ld A.R. referred to Copy of Form 26AS along with its

summary contained at Page no. 29-82 of P/B for the FY 2010-11 & 2012-

13 respectively. Hence, ld A.R. prayed for deletion of the addition.

amount of Gross interest reflected in Form 26AS as on 13.01.2015 is Rs.

1181.54 crores u/s. 194A and Rs. 0.65 crore u/s. 193, totaling to Rs.

1182.19 crores which is much lower than the amount of interest income

shown by the assessee. From the above, it is clearly established that

there is difference in the 26AS and income shown by the assessee.

Moreover, the assessee is correctly accounting its income and expenditure

on accrual basis irrespective of amount reflected in 26AS. In view of

above, we remit the matter to the file of the Assessing officer to verify the

amount shown by the assessee and reflected in 26AS statement. If the

contention of the assessee is found to be correct, the Assessing Officer is

directed to allow the claim of the assessee. This ground of assessee for

assessment year 2012-13 is allowed for statistical purposes.

to addition of Rs.552.46 lakhs towards site expenditure.

29 Mah anadi Coalf ield Ltyd.,

Rs.552.46 lakhs towards site maintenance through journal entry made on

31.3.2011. Since the assessee could not explain the basis of making such

provision on the last date of accounting period and furnish party wise

actual payment, the Assessing Officer disallowed the same.

the ground that the assessee has not been able to correlate the

documents and the basis of journal entry made.

can be produced and prayed for an opportunity to explain with evidence.

We, after considering the rival submissions, find that the assessee has

claimed Rs.552.46 lakhs towards site maintenance expenses through a

journal entry. The basis of the entry made by the assessee has not been

explained but as the ld A.R. explained and prayed for an opportunity to

substantiate its claim, we consider it appropriate to remit the issue to the

file of the Assessing officer to pass the issue afresh. Ground No.3(6) of

the assessee for assessment year 2011-12 is allowed for statistical

purposes.

to addition of Rs.305.32 lakhs made due to change in accounting method

for repair job.

30 Mah anadi Coalf ield Ltyd.,

method of maintenance of expenditure on repair job regularly followed at

the Central Workshop book profit of the assessee has been reduced by

Rs.305.32 lakhs. Since the assessee could not substantiate the deviation

in respect of repair job, the Assessing Officer added the same to the total

income of the assessee.

change in accounting method and not clear whether repairs expenses

were charged to P&L account and hence, upheld the addition.

lower authorities and materials available on record. In the instant case,

the assessee had changed the accounting method towards expenditure on

repair job. The ld A.R.’s contention that the expenses incurred on repairs

jobs at the Central Workshop under finished good and work-in-progress

and due to such change, the profit for the year has been reduced by

Rs.305.32 lakhs and such expenditure incurred is revenue expenditure.

We find force in the submission of ld A.R. that due to change in

accounting method, the profit has been reduced and the expenditure is

only for repair jobs but same could not be substantiated and, accordingly,

we restore the issue to the file of the Assessing Officer and the Assessing

Officer shall examine the case and pass the order on merits. This ground

31 Mah anadi Coalf ield Ltyd.,

of appeal of the assessee for assessment year 2011-12 is allowed for

statistical purposes.

and Ground No.3(5) of appeal for assessment year 2014-15 is as is

under:

“CSR expenses”

therefore, same is dismissed as not pressed.

incorrect interest allowance u/s.244 is not pressed by ld A.R. and hence,

same is dismissed as not pressed.

CIT(A) erred in not allowing the correct depreciation after considering the

sale of assets as per block assets concept and depreciation thereon.

The assessee company has shown the gain on sale of assets as profit for

accounting purpose. As per section 32 of the Act the gain on sale of

assets is not taxable if the remaining assets are more than that and, the

depreciation should be allowed thereon. Therefore, we remit this issue to

the file of the Assessing Officer allow the correct depreciation by reducing

the value of block of assets by sale value. This ground of appeal of the

assessee for A.Y. 2011-12 is allowed for statistical purposes.

32 Mah anadi Coalf ield Ltyd.,

assessment year 2014-15 is not pressed due to smallness of amount and

hence, same is dismissed as not pressed.

against confirmation of addition of Rs.5.01 crores made on other

expenses .

crores as “other expense”. In response to Assessing Officer/s requisition,

the assessee submitted the details of Rs.6.19 crores. On perusal of the

same, the Assessing officer found that Rs.4.41 crores was incurred

towards “other welfare expenses” and Rs.0.60 crores was incurred

towards “miscellaneous -other resettlement”. Since the assessee failed to

justify the expenses, the Assessing Officer added the same to the total

income of the assessee.

and explanations.

pertains to employee welfare expenditure appearing as “other expenses”

under Note 25 of “welfare expenses” annexed to profit and loss account.

During the assessment proceedings, the assessee furnished the details of

expenditure but same were not considered. Ld A.R. submitted that

similar addition made in the assessment year 2007-08 has been deleted

by the CIT(A).

33 Mah anadi Coalf ield Ltyd.,

appearing under note 25 of “welfare expenses”. Ld A.R. submitted that

the assessee has sufficient materials to justify the expenditure.

Accordingly, we consider it appropriate to remit this issue to the file of the

Assessing Officer for verification and allow this ground of appeal of the

assessee for statistical purposes.

are general in nature, hence require no separate adjudication.

purposes.

Now we take up the appeals of the revenue for assessment years 2010-11 to 2014-15 in ITA Nos.397/CTK/2013,No.330/CTK/2014, ITA No.292/CTK/2015, ITA No.428/CTK/2015 & ITA No.268/CTK/2017.

No.6 of appeal for the assessment year 2011-2012 is that the CIT(A)

erred in deleting the addition made towards VRS.

disallowed Rs.55.54 lakhs in the assessment year 2010-2011 and

Rs.106.18 lakhs in the assessment year 2011-2012 on the ground that

the did not explain the basis of such computation of provisions towards

VRS. But the CIT(A) deleted the addition observing that the claim of the

34 Mah anadi Coalf ield Ltyd.,

assessee is in conformity with section 35DAA which relates to

amortization of expenditure incurred under VRS. Ld D.R. could not

controvert the above findings of the CIT(A). Hence, we see no reason to

interfere with the order of the CIT(A) for both the assessment years and

hence, same is dismissed.

Rs.1431.90 lakhs and Rs.3759.58 lakhs towards community development

expenses for the assessment years 2010-11 and 2011-12, respectively.

authorities and materials available on record. The Assessing Officer did

not allow the claim of the assessee on the ground that the assessee failed

to produce any documentary evidence to prove that in villages

surrounding mining sites at Talcher/Ib valley and other places and even

at headquarters at Burla, the various community development

expenditure relating to creation of assets have been made in compliance

to any direction issued by Govt. of India/District Administration or any

other Competent authority. The ld CIT(A) following the decision of this

Bench of the Tribunal in assessee’s own case for the assessment years

2005-06 to 2007-08 in ITA Nos.50,51,52 & 53/CTK/2011 has deleted the

addition. Ld D.R. could not show any error in the order of the CIT(A).

Hence, this ground of appeal for the assessment year 2010-11 and 2011-

12 is dismissed.

35 Mah anadi Coalf ield Ltyd.,

compensation of land for the assessment year 2010-2011.

debited compensation for land of rs.86.34 lakhs under the head “social

facilities expenses". The Assessing Officer disallowed the amount paid

towards compensation paid to land owners stating that the amount paid

relatable to acquisition of their land. The CIT(A) deleted the addition

observing that the amount was incurred in compliance to Orissa

Resettlement & Rehabilitation Policy, 2006’ and the same has been paid

for one-time payment in lieu of employment and training for self-

employment. This amount is reflected in the balance sheet of the

assessee for the year ending 31.3.2011. Since the amount has been paid

for the purpose of business operation, the CIT(A) has rightly deleted the

addition. We also observe that in the subsequent years, similar claim of

the assessee has been allowed by the revenue. Hence, we find no error in

his order, which is hereby confirmed and this ground of appeal of the

revenue is dismissed.

lakhs towards environment/ecology/improvement expenses for the

assessment year 2010-11 and 2011-12.

36 Mah anadi Coalf ield Ltyd.,

claim of the assessee of Rs.467.64 lakhs towards

environment/ecology/improvement for the assessment year 2010-2011

for the reasons that the assessee did not file the details of such

expenditure. Similarly, for the same reason, the Assessing Officer

disallowed Rs.829.61 lakhs for the assessment year 2011-12. The CIT(A)

deleted the addition observing that the assessee has filed all the relevant

details before the Assessing Officer and all such payments are duly

audited by Statutory auditors and CAG. Even otherwise, it was stated

that similar claim of the assessee has been allowed in the preceding

assessment years.

plantation, other environmental expenses, environmental monitoring cost

of air, water and noise and dust mitigating equipment, etc, which is

necessitated in the areas where coal mines are situated as per the

guidelines of Corporate Social Responsibility. Hence, we find no error in

the order of the CIT(A) as the expenditures are audited by the auditors

and reflected in the balance sheet of the assessee. Ae also find that

similar claim of the assessee has been allowed in the subsequent

assessment years. This ground of the revenue for the assessment years

2010-11 and 2011-12 is dismissed.

37 Mah anadi Coalf ield Ltyd.,

Rs.400.03 lakhs and Rs.461.91 lakhs towards social facilities expenses for

the assessment years 2010-11 and 2011-12, respectively.

claim of the assessee of Rs.451.95 lakhs on the ground that supporting

details were not furnished by the assessee in respect of expenditure

incurred towards social facilities, which was deleted in first appeal.

the addition made by the Assessing Officer that in order sheet, it has

been mentioned that the required details have been furnished by the

assessee before the Assessing officer. Hence, it cannot be said that the

details as called for have not been furnished. We also find that the in

subsequent years identical claim of the assessee has been allowed by the

revenue. Hence, we do not find any reason to interfere with the order of

the CIT(A), which is hereby confirmed and ground of appeal of the

revenue is dismissed for the assessment year 2010-11 and 2011-12.

Rs.33.11 lakhs for the assessment year 2010-2011.

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

38 Mah anadi Coalf ield Ltyd.,

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.

deletion of Rs.278.39 lakhs and Rs.4162.50 lakhs towards prospecting

and boring expenses for the assessment year 2010-11 and 2012-13,

respectively.

ordinate bench of the Tribunal in assessee’s own case for the assessment

years 2004-05 to 2007-08 in ITA Nos. 05,51 & 52/CTK/2011 order dated

12.9.2011, wherein, the Tribunal has upheld the action of the CIT(A) in

deleting the addition. In the year under consideration also, the CIT(A)

following the decision of the Tribunal has deleted the addition made by

the Assessing officer. Hence, we find no error in his order, which is

hereby confirmed and ground of appeal of the revenue is dismissed for

the assessment year 2010-11 and 2012-13.

39 Mah anadi Coalf ield Ltyd.,

lakhs, Rs.1913.00 lakhs, Rs.2656.00 lakhs and Rs.2288 lakhs for the

assessment years 2010-11, 2011-12, 2012-13, 2013-14 and 2014-15,

respectively towards CMPDIL expenses.

disallowed the claim of the assessee towards CMPDIL expenses for want

of necessary details. Before the CIT(A), the assessee contended that the

Assessing officer has never asked for any details but disallowed the

expenditure without undertaking the subject. It was submitted that the

CMPDIL (Central Mines Planning & Design Institute) is another subsidiary

company of Coal India Limited having its head-quarter at Ranchi with

Regional Institute in different locations in India. They are providing

various services as per Memorandum of undertaking entered with MCL.

The CIT(A) segregated the services by CMPDIL in the impugned order and

deleted the addition made by the Assessing Officer stating that the

assessee has furnished the required details as called for, which is evident

from order sheet entry. Hence, the revenue is in appeal before us for all

the assessment years under consideration.

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

40 Mah anadi Coalf ield Ltyd.,

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.

41 Mah anadi Coalf ield Ltyd.,

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.”

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.

Rs.1487.46 lakhs towards cost of exploration and development

expenditure.

authorities and materials available on record. The assessee has claimed

separately in the computation of income of Rs.1487.46 lakhs towards the

cost of exploration and other development expenditure. The Assessing

Officer disallowed Rs.1487.46 lakhs. Before the CIT(A), it was submitted

by the assessee that the above expenditure incurred in respect of blocks

in one five year plan period is kept into capital work-in-progress till the

end of subsequent two-five year plan periods for formation of projects

beyond which it is written-off by way of amortisation over a period of 20

years or working life of the mines whichever is less and these facts have

42 Mah anadi Coalf ield Ltyd.,

been clearly disclosed in Accounting Policy(Schedule-O). The CIT(A)

refers to section 35E(1) of the Act and relying on the judicial decisions

observed that in the case of winning of minerals, exploration is an

essential pre-activity. Expenses incurred towards exploratory and

prospecting activities are normally of capital expenditure but amortization

thereof over a period of ten years has specially been provided for and

same will be allowed in equal instalments over a period of 10 years

against the profit arising from the commercial exploitation of any mine.

Hence, the CIT(A) directed to work out the amortisation of qualifying

expenditure as per section 35E(1) of the Act. This finding of fact was not

controverted by ld D.R. during the course of hearing. Hence, we dismiss

this ground of appeal of the revenue and uphold the findings of the

CIT(A).

account of overburden removal expenditure of Rs.50383.53 lakhs,

Rs.9875.22 lakhs, Rs.159043.50 lakhs, Rs.129209.00 lakhs and

Rs.126929.70 lakhs for the assessment years 2010-11, 2011-12, 2012-

13, 2013-14 and Rs.2014-15, respectively.

the assessee towards overburden removal expenditure of Rs.50383.53

lakhs, Rs.9875.22 lakhs, Rs.159043.50 lakhs, Rs.129209.00 lakhs and

43 Mah anadi Coalf ield Ltyd.,

Rs.126929.70 lakhs for the assessment years 2010-11, 2011-12, 2012-

13, 2013-14 and Rs.2014-15, respectively.

including the decision of this Bench in the case of ACIT vs. Patnaik

Minerals Pvt Ltd., and others for A.Y. 2009-10, wherein, it has been

categorically held that the expenditure incurred on removal of overburden

in coal in mining is a revenue expenditure, The CIT(A) following the

decision of ITAT, Jabalpur in the case of Northern Coalfields Ltd vs ACIT in

ITA No.42 & 43 of 2002 and also the decision of this Bench of the Tribunal

in the case of Patnaik Minerals Pvt Ltd. (supra) has deleted the addition

made by the Assessing Officer.

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

44 Mah anadi Coalf ield Ltyd.,

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.

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 Norther

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

45 Mah anadi Coalf ield Ltyd.,

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.

Rs.6481.34 lakhs towards admissibility of additional depreciation for the

assessment years 2010-11 and 2011-12, respectively.

depreciation on the ground that the assessee is not engaged in the

business of manufacturing or production of any article or thing. On

appeal, the CIT(A) deleted the addition made by the Assessing Officer by

following the various judicial decisions including the Hon’ble Supreme

Court in the case of CIT s. Sesa Goa Ltd., 271 ITR 331 (SC).

available on record, we find that the assessee company is producing coal

and the coal became excisable vide Notification No.1/2011-Central Excise

of Ministry of Finance, Department of Revenue w.e.f 1.3.2011. The

46 Mah anadi Coalf ield Ltyd.,

Hon’ble Supreme Court in the case of Sesa Goa Ltd (supra) has held as

under:

Extraction and processing of ore amounts to "production" within the meaning of s. 32A(2)(b)(iii) since ore is "a thing" which is the result of human activity or effort—Some other provisions of the Act, particularly s. 33(1)(b)(B) r/w item No. 3 of Fifth Schedule and s. 35E also show that mining of ore is treated as "production"— Language of these sections is similar to the language of s. 32A(2)— There is no reason to assume that the word "production" was used in a different sense in s. 32A—Consequently, assessee was entitled to investment allowance in respect of machinery used in mining activity.”

Hence, since the coal is coming under the purview of mining ore and is

treated as production, following the decision of the Hon’ble Supreme

Court in the case of Sesa Goa (supra), we hold that the CIT(A) is fully

justified in deleting the addition for the assessment years 2010-11 and

2011-12. We also observe that in the subsequent assessment years, the

revenue has not accepted the contention of the assessee on this issue.

This ground of appeal of the revenue is dismissed for both the assessment

years under consideration.

Rs.2321.01 lakhs towards employee’s remuneration and benefits for the

assessment years 2010-11 and 2011-12, respectively.

authorities and materials available on record. For the assessment year

2010-11, the Assessing Officer has disallowed Rs.3555.00 lakhs towards

performance based pay pertaining to years 2007-08 and 2008-09 on the

47 Mah anadi Coalf ield Ltyd.,

ground that the liability was ascertained and had crystalised during

financial year 2009-10 and Rs.1573.76 lakhs towards superannuation

benefits pertaining to years 2006-07, 2007-08 and 2008-09 on the

ground that the assessee has not produced such scheme. Similarly, for

the assessment year 2011-12, the Assessing Officer found that the

provision made by the assessee towards incremental liability for various

employees benefit schemes and remuneration on the basis of actuarial

valuation, which is not contingent in nature and, therefore, disallowed

Rs.2321.00 lakhs.

towards performance related pay and superannuation benefits has

accrued and crystallised during the year under consideration, which is

evident from the Office Memorandum dated 2/7.5.2009 issued by Coal

India Limited, the holding company of the assessee. Based on the said

Office Memorandum and also relying on judicial decisions, the CIT(A)

deleted the addition. It was informed during the course of hearing that

no such addition has been made in the subsequent assessment years

against the claim of the assessee. Therefore, we see no reason to

interfere with the order of the CIT(A) and dismiss this ground of appeal of

the revenue for the assessment year 2010-11 and 2011-12, respectively.

account of provisions.

48 Mah anadi Coalf ield Ltyd.,

income, the assessee has added provision of Rs.401.33 lakhs to the

returned figure. The Assessee could not explain how gross provision

debited for Rs.1696.10 lakhs could be considered as accrued liability

which has arisen and crystalised during the financial year 2009-10 and

why unascertained liability should not be a mere provision of contingent

in nature.

In the appellate proceedings before the CIT(A), the assessee

furnished the details of provisions and the total being Rs.688.82 lakhs,

whereas the Assessing Officer mentioned total of Rs.1696.10, which is

apparent mistake on record. It was further submitted that the Assessing

Officer has added the positive items only and left the negative total of

Rs.1294.77 lakhs, the details of which, are mentioned in the impugned

order. It was also submitted that the assessee has itself added the

provision of Rs.401.33 lakhs in the computation of income from such

addition, the amount towards obsolescence of store (Rs.-2.09 lakh) and

shortage of stores (Rs.5.08 lakh) has been claimed separately. Hence,

the net addition should have been Rs.398.34 lakhs (Rs.401.33 lakhs –

(Rs.5.08 lakhs – Rs.2.09 lakhs). Hence, this has resulted into double

effect i.e. of Rs.5.98 lakhs, which should be allowed.

49 Mah anadi Coalf ield Ltyd.,

The CIT(A) considered the submissions of the assessee and also

relied on the Annual Reports & accounts of the assessee for the financial

year 2009-10 and found that as per Schedule-16(A) to the P&L account ,

the provision is Rs.401.33 lakhs. The Assessing Officer has taken positive

items but left behind the negative items and, accordingly, deleted the

addition of Rs.1289.78 lakhs. Regarding the submission of the assessee

that net addition in the computation of taxable income should have been

Rs.398.34 lakhs, the CIT(A) directed the Assessing Officer to examine it

from the record and take remedial measures as per the provisions of the

Act.

Having heard the rival submissions, we see no reason to interfere

with the order of the CIT(A) on this issue, which is hereby confirmed and

ground of appeal of the revenue is dismissed.

fund of Rs.5889.12 lakhs and Rs.6125.28 lakhs for the assessment years

2010-11 and 2011-12, respectively.

for the assessment year 2005-06 to 2007-08 in ITA Nos.51,52 &

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:

50 Mah anadi Coalf ield Ltyd.,

“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.

Rs.312.65 lakhs and Rs.2821.46 lakhs for the assessment years 2010-11

and 2011-12, respectively.

ITAT, Nagpur in the case of Western Coalfields Ltd in ITA

Nos.164/Nag.1986 for the assessment year 1979-80, wherein, the

Tribunal upheld the findings of the CIT(A) observing that in such line of

business, it is not possible to have the full items of expenses incurred at

once given time. As and when the debit notes are raised the same will

have to be debited to the accounts. In the present case, the CIT(A)

observed that the expenditure is an outcome of crystalisation of liability

51 Mah anadi Coalf ield Ltyd.,

rather than a result of any error or omission. The CIT(A) referred to

CBDT Notification No.S.O.69€ dated 25.1.1996 ( 218 ITR (St) 1, wherein,

the CBDT has clarified that the term ‘prior period items’ means material

charges or credits which arise in the previous year as a result of errors or

omissions in the preparation of financial statements of one or more

previous years and also further clarification that the charge or credit

arising on the outcome of a contigency, which at the time of occurrence

could not be estimated accurately shall not constitute the correction of an

error but a change in the estimate and such an item shall not be treated

as a prior period item. This finding of fact of the CIT(A) was not

controverted by ld D.R. during the course of hearing. Hence, respectfully

following the decision of the ITAT Nagpur Bench in the case of Western

Coalfield Ltd. (supra), we dismiss this ground of appeal of the revenue for

the assessment year 2010-11 and 2011-12, respectively.

training expenses for the assessment year 2010-11.

account, a sum of Rs.630.50 lakhs towards training expenses includes a

sum of Rs.520.40 lakhs levied by the Coal India Limited @ 50 paise per

ton of coal dispatched, in reality such levy at fixed rate is not directly

related to any training expenses incurred. Therefore, he made the

addition.

52 Mah anadi Coalf ield Ltyd.,

“I have gone through the related documents in respect of training expenses incurred by the appellant company under the broad head “social facilities expenses”. The expenditure in question is levied by Coal India Ltd., the holding company on coal produced on account of payment to the Indian In statute of Coal Management, Ranchi. This act has been disclosed at para No.14.2 to Notes on accounts (Schedule-F) of the Annual Report & Accounts of the appellant company. Similar expenditure i.e. apex office expenditure was disallowed by the AO in the earlier years i.e. AY 2005-06, 2006-07 & 2007-08. On appeal, the above disallowance was deleted by the CIT(A). On second appeal by the Department, the ITAT, Cuttack has dismissed the appeal on the above point in ITA No.051, 052 & 053/CTK/2011. In view of the above, the disallowance of Rs.520.40 lakh made by the AO is deleted.”

was also submitted before us that in the subsequent years, the revenue

has not made any such disallowance. Hence, we dismiss this ground of

appeal of the revenue and uphold the findings of the CIT(A).

Rs.2000.00 lakhs towards renovation of railway siding.

Rs.2000.00 lakhs towards repair of railway tracks and claimed the same

as deduction. The Assessing Officer disallowed the same on the ground of

non-current repair expenditure having long term benefits for the

company.

53 Mah anadi Coalf ield Ltyd.,

expenditure on repair of rail tracks and submitted that the assessee has

deposited total advance of Rs.3335.94 lakhs with Railways against which

a deduction of Rs.700.13 lakhs is made by railways towards general

charges and departmental charges upfront. It was submitted that out of

fund available for execution of work, Rs.2223.39 lakh was incurred till

June, 2011, to substantiate that the total expenditure till June, 2011 was

Rs.2923.52 lakhs (Rs.700.13 lakhs + Rs.2223.39 lakhs). The assessee

relied on the decision of Hon’ble Calcutta High Court in the case of

Cultural Enterprises Corp vs CIT, 196 ITR 488 (Cal) and P&H High Court

in the case of CIT vs. Vishal Paper Ind, 351 TIR 478 (P&H). The CIT(A)

by following the above said decisions relied by ld A.R. of the assessee

deleted the addition.

lower authorities and materials available on record and also perused the

decisions relied upon by ld CIT(A) in the impugned order. In the case of

Cultural Enterprises Cor (supra), it has been held that even where a sum

of money is spent for repairs in a particular year because of the fact that

regular repairs are allowed to fall in arrears and repairs on an extensive

scale have to be undertaken to remedy the effect of several years’

negligence, the expenses for such arrears are allowable. Similarly, in the

case of Vishal Paper Industries (supra), it has been held that the increase

of life by repair and maintenance of the existing assets beyond their

54 Mah anadi Coalf ield Ltyd.,

original estimated economic life could not be a ground to return a finding

that it was not a case of repairs. We find that ld D.R. could not point out

any specific error in the order of the CIT(A) or place any positive material

on record that the amount spent on repair of railway tracks are not

allowable expenditure. In view of above, we uphold the findings of the

CIT(A) and dismiss this ground of appeal of the revenue.

the Act of Rs.189.74 lakhs and Rs.516.59 lakhs towards for the

assessment year 2012-13 and 2013-14, respectively.

lower authorities and materials available on record. In the instant case,

the assessee had received tax free income of Rs.18.32 crores from

interest on 8.5% tax free bonds, interest on IRFC bonds and dividend

from mutual fund. The Assessing officer observed that the value of assets

which yielded the above income was Rs.478.53 crores as on 31.3.2012

and the expenditure towards finance cost claimed by the assessee was

Rs.5.38 crores and hence, the Assessing Officer resorted to Rule 8D and

calculated the disallowance u/s.14A at Rs.1.897 crores. Similarly, in the

assessment year, the Assessing Officer calculated the disallowance

u/s.14A of the Act at Rs.5.1659 crores.

55 Mah anadi Coalf ield Ltyd.,

the addition made u/s.14A of the Act for both the assessment years under

consideration.

lower authorities and materials available on record. The Assessing Officer

on perusal of audit report found that the amount of deduction

inadmissible in terms of section 14A in respect of expenditure incurred in

relation to income which does not form part of the total income, whereas

the value of assets which yielded income and not includible in the total

income and calculated the disallowance u/s.14A of the Act. On appeal,

the CIT(A) directed the Assessing Officer to delete the addition. We

notice that sub-section(1) of section 14A provides that for the purpose of

computing total income under chapter IV of the Act, no deduction shall be

allowed in respect of expenditure incurred by the assessee in relation to

income which does not form part of the total income under the Act. In the

present case, the Assessing Officer has not given any reason for

calculating the disallowance. The assessee submitted that there were no

borrowings except very old for specific purposes. The CIT(A) in the order

has also stated that the Assessing Officer has not verified whether the

differential amount of the asset has come from any borrowing by the

assessee or it is simply the investment from the reserve & surplus. We

are of the substantive view and deem it proper to restore the issue back

to the file of the Assessing Officer to verify whether the assessee has

56 Mah anadi Coalf ield Ltyd.,

borrowed money or surplus from reserve & surplus amount and redecide

the issue afresh as per law and after giving opportunity of hearing to the

assessee. This ground of appeal of the revenue is allowed for statistical

purpose for the assessment year 2012-13 and 2013-14, respectively.

reclamation of land and Mines closure expenditure of Rs.5935.75 lakhs,

Rs.10821.00 lakhs, Rs.6474.00 lakhs and Rs.7012.00 lakhs for the

assessment years 2011-12, 2012-13, 2013-14 and 2014-15, respectively.

lower authorities and materials available on record. The Assessing Officer

has disallowed the claim of the assessee the above provision should not

be allowed as business expenditure. The CIT(A) observed that the

assessee has created the provision for mines closure plan as per the

guidelines of the Ministry of Coal, Government of India, which states that

the assessee is to prepare the plan and divide the expenditure among

useful life of the mines by creating provision for such in each year.

Further, the guidelines required the company financial assurance by

opening an Escrow account with the Coal Controller Organisation as

exclusive beneficiary. Therefore, the assessee company has made a fresh

provision for expenditure towards mines closure plan and has reversed

the earlier provision booked under the head reclamation of land. Hence, in

view of the guidelines, the assessee has deposited in the Escrow Account

57 Mah anadi Coalf ield Ltyd.,

the provision. We find no good reason could be given by ld D.R. pointing

out the requirement to interfere with the order of the CIT(A), which is in

the spirt of guidelines issued by Ministry of Coal, Government of India.

We, therefore, do not find any merit in this ground of appeal of the

Revenue and, accordingly, same is dismissed for the assessment years

2011-12, 2012-13, 2013-14 and 2014-15.

lakhs towards CSR expenses for the assessment year 2012-13.

lower authorities and materials available on record. The Assessing Officer

has observed that the assessee has claimed Rs.28.34 crores as Corporate

Social Responsibility expenses. The Assessing Officer observed that the

assessee has not established the attributability of expenditure to the

business affairs of the assessee. Therefore, he disallowed the same. The

CIT(A)observed that there is an imposition on the assessee by section

135 of the Companies Act, 1913 read with Schedule VII thereto and

Companies (Corporate Social Responsibility) Rules, 2014 that the

assessee has to incur the expenditure and as per which, the assessee

company was bound to incur such expenditure. Corporate Social

Responsibility (CSR) is a concept which suggests that it is the

responsibility of the corporations operating within society to contribute

towards economic, social and environmental development that creates

58 Mah anadi Coalf ield Ltyd.,

positive impact on society at large. Although there is no fixed definition,

however the concept revolves around that fact the corporations need to

focus beyond earning just profits. It was also submitted before us ld

A.R. of the assessee in the subsequent assessment years, no such

addition has been made by the Revenue. Hence, we do not find any good

reason to interfere with the order of the CIT(A) and dismiss this ground of

appeal of the revenue for the assessment year 2012-13.

service charges to CIL of Rs.5156.00 lakhs, Rs.5395.00 lakhs and

Rs.5522.00 lakhs for the assessment years 2012-13, 2013-14 and 2014-

15, respectively.

Rs.5156.00 lakhs, Rs.5395.00 lakhs and Rs.5522.00 lakhs for the

assessment years 2012-13, 2013-14 and 2014-15, respectively towards

services charges to Coal India Limited. As the assessee could not justify

the payment, the Assessing Officer disallowed the same. Before the

CIT(A), the assessee delineated the services rendered by Coal India

Limited, for which, the assessee was required to make such payment to

the holding company. The CIT(A) found that similar disallowance was

deleted by the CIT(A) in earlier years and the same was confirmed by the

ITAT. Therefore, the CIT(A) deleted the addition made by the Assessing

Officer.

59 Mah anadi Coalf ield Ltyd.,

order of the CIT(A) who has followed the decision of the Tribunal order

dated 12.9.2011 for the assessment years 2004-05 to 2007-08 in

assessee’s own case, wherein, it has been held as under:

“ 41. The amount in question is claimed by the assessee- Company to have been paid to Coat India Ltd., (CIL) @ Rs.5 per ton of coal produced towards rendering various services like procurement, foreign contract, marketing & corporate services based n agreement entered with them. The Assessing Officer observed that this payment to Coal India Limited has been worked out on the basis of Rs.5 per ton of coal produced and not for any expenses incurred or services rendered on actual basis by the CIL. Accordingly, he was of the view that this payment is basically on presumptive basis and cannot be said that the whole amount is spent for wholly and exclusively for business purpose. Thereafter, he examined the debit memo and concluded that the payment in question under the head of “apex office expenses” by the assessee to the holding company is totally predetermined and presumptive and without any logical linkage to the quantum of services rendered. This payment by the subsidiary to the holding company which is not commensurate with the services/benefits also cannot escape from the provision of section 40A(2). On the basis of above, the Assessing officer disallowed 10% of such expenditure. It was the stand of the assessee that Coal India Limited was formed by Govt. of India as a Public Sector Undertaking whole 100% shares are held by the President of India and controlled through Ministry of Coal. after making lot of permutation and combinations by CIL, it was found that if Rs.5 per ton of coal produced is contributed by all the subsidiaries are reimbursement of expenses, it will be sufficient to take care of apex office expenses and accordingly, the amount was paid in pursuance of an agreement entered into between the assessee and CIL. These facts are not disputed by the revenue. But, however, the ld AO has disallowed 10% of such expenses presumably u/s.40A(2) on adhoc basis. The AO has not justified such disallowance in his order. The ld CIT(A) in his order observed that books of account of the assessee company are audited where the comments of the Comptroller and Auditor General of India u/s.619(4) of the Companies Act, 1956 on the accounts are also available. We fin that the AO has not disputed the payment o apex office expenses to CIL. In view of the above, we have no hesitation to uphold the impugned order of the ld CIT(A) on this issue the AO having disallowed 10% out of such expenses without any cogent

60 Mah anadi Coalf ield Ltyd.,

reasons. Therefore, the ground raised by the revenue on this issue is dismissed.” We find no good reason could be given by ld D.R. pointing out the

requirement to interfere with the order of the CIT(A), which is in

consonance with the order of this Bench of the Tribunal in assessee’s own

case. Hence, we dismiss this ground of appeal of the revenue for the

assessment years 2012-13, 2013-14 and 2014-15, respectively.

grants to School and Institution of Rs.1674.00 lakhs, Rs.1868.00 lakhs

and Rs.2818.00 lakhs for the assessment years 2012-13, 2013-14 and

2014-15, respectively.

institution of Rs.1674.00 lakhs, Rs.1868.00 lakhs and Rs.2818.00 lakhs

for the assessment years 2012-13, 2013-14 and 2014-15, respectively

being not satisfied how such expenditure is related to business of the

assessee. On appeal, the CIT(A) deleted the disallowance on the ground

that since the mines are located in remote areas where no civil facilities

are facilities and in order to retain the employees at those areas, the

assessee was required to provide for schools and other institutions.

Therefore, the expenditure is relatable to welfare of the employees of the

company.

by the revenue in the case of Northern Coalfields Ltd., was deleted by the

ITAT, Jabalpur vide order dated 21.10.2013. Ld D.R. could not point out

61 Mah anadi Coalf ield Ltyd.,

any specific reasons to deviate from the findings of the CIT(A). Hence,

we dismiss this ground of appeal of revenue the assessment years 2012-

13, 2013-14 and 2014-15, respectively.

Rs.7347.88 lakhs towards Central Excise duty.

lower authorities and materials available on record. In the instant case,

the assessee had created a provision of Rs.7347.88 lakhs regarding

central excise duty on coal to meet the statutory liability for the impugned

financial year. The Assessing Officer disallowed the above provision of

Rs.7347.88 lakhs on the ground that the assessee could not produce any

evidence of actual payment of Central Excise duty for the month of

march, 2011 and whether the provision made towards Central Excise

Duty was fully paid before the due date of filing of the return of income.

On appeal, before the CIT(A), the assessee submitted the details of excise

duty of Rs.7776.03 lakhs upto June, 2011. The CIT(A) observed that the

assessee has paid the amount more than the provision created for this

purpose. Therefore, he deleted the addition made by the Assessing

Officer. The above findings of the CIT(A) was not controverted by ld D.R.

and, therefore, we are inclined to uphold the order of the CIT(A) and

dismiss this ground of appeal of the revenue.

62 Mah anadi Coalf ield Ltyd.,

development expenditure of Rs.2457.35 lakhs for the assessment year

2011-12.

for consideration before this Bench of the Tribunal in assessee’s own case

for the assessment years 2003-04 to 2006-07 on revenue’s appeals and

the Tribunal has upheld the findings of the CIT(A). In the present year

the CIT(A) has followed the decision of the Tribunal for the earlier

assessment years(supra). Hence, we dismiss this ground of appeal of the

revenue.

paid to CIL of Rs.314.64 lakhs for the assessment year 2011-12.

paras 24-25 above. Hence, this ground of revenue is dismissed.

of plant and machinery of Rs.157.45 lakhs for the assessment year 2011-

12.

of lower authorities, find that the Assessing Officer disallowed the claim

of Rs.157.45 lakhs towards repairs expenses of plant and machinery on

the ground of documentary evidence. On appeal, the CIT(A) deleted the

addition treating the claim of expenditure as revenue expenditure

63 Mah anadi Coalf ield Ltyd.,

following the decision of Hon’ble apex court in the case of Sarvana Spg.

Mills Pvt Ltd., 293 ITR 201(SC) and Hon’ble P&H High Court in the case of

Vishal Paper Industries, 351 ITR 578(P&H). No contrary decision was

placed on record by the revenue. Hence, we uphold the findings of the

CIT(A) and dismiss this ground of appeal of the revenue.

of Rs.168.54 lakhs for the assessment year 2011-12.

Perk Tax is not claimed as an expenditure, rather it is reflected in balance

sheet under the broad head “loans & advance”. Since there was no claim

by the assessee, there is no reason to disallow the same by the Assessing

officer. The CIT(A) has rightly deleted the addition made by the

Assessing Officer. Hence, this ground of revenue for the assessment year

2011-12 is dismissed.

assessment year 2014-15 relates to deletion of addition of Rs.4594.00

lakhs towards difference in opening stock of coal.

being the difference in valuation of closing stock as on 31.3.2012 and

opening stock as on 1.4.2013 being not satisfied with the explanation

given by the assessee.

64 Mah anadi Coalf ield Ltyd.,

observing as under:

“I have considered the matter and perused the explanation of the assessee. The assessee's explanation is that the concerned development mines in question was converted to revenue mines and, therefore, the cost of coal was transferred to opening stock as on 1.4.2013. The assessee further explains that the stock of coal represents the normal raising cost of the coal which was not charged to the P&L account during the FY 2012-13 and after conversion of mines from Development to Revenue, the same was charged to P&L account in the FY 2013-14^by bringing the opening stock under P&L account as the sale proceeds of the same stock was credited to the P&L account in the place of Development expenses. The assessee pleads that this is an established accounting policy being followed by the assessee which will be evident from Note-33 of Significant Accounting Policies' wherein at clause 3.4 the accounting policy relating to Development mines is given. The contention of the assessee appears to be correct. The AO has perhaps failed to understand the implications of the entries in question while making the impugned addition. In this view of the matter, I find no justification in the impugned addition and, therefore, direct for deletion of Rs.45.94 crores.”

order of the CIT(A). Therefore, we confirm the findings of the CIT(A) and

dismiss this ground of appeal of revenue for the assessment year 2014-

15.

154 In the result, appeals filed by the revenue for the assessment years

2010-11, 2011-12, 2013-14 & 2014-15 are dismissed and appeal for

assessment year 2012-13 is partly allowed for statistical purposes.

Order pronounced on 20/03/2018. Sd/- sd/- (N.S Saini) (Pavan Kumar Gadale) ACCOUNTANT MEMBER JUDICIALMEMBER Cuttack; Dated 20 /03/2018

65 Mah anadi Coalf ield Ltyd.,

B.K.Parida, SPS

Copy of the Order forwarded to : 1. The Appellant : Mahanadi Coalfields Ltd., Jagriti Vihar, Burla, Sambalpur