HINDUSTAN INDUSTRIES AND MINING CORPORATION,KOLKATA vs. ITO, WARD - 3(2), SURI, BIRBHUM, BIRBHUM

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ITA 1174/KOL/2018Status: DisposedITAT Kolkata12 September 2018AY 2009-104 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that disallowances made under Section 154 for debatable issues or issues not discussed in the original assessment order are not permissible. Expenditure on filling land cavities after stone extraction was considered revenue expenditure.

What were the facts?

The assessee appealed against orders of the CIT(A) concerning rectification orders passed by the AO under Section 154. The appeals dealt with disallowances of general expenses, expenditure on land filling, and PF/ESI deposits.

What were the issues?

Whether the Assessing Officer can make disallowances under Section 154 for issues that are debatable or not apparent from the record. Whether expenditure on land filling after stone extraction is revenue or capital expenditure.

Which sections of the Income-tax Act were involved?

Section 154,Section 36(1)(va),Section 43B,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, KOLKATA ‘SMC’ BENCH, KOLKATA

Before: Sri J. Sudhakar Reddy]

Heard together (3 matters)

I.T.A. No.1174/Kol/2018
I.T.A. No.1175/Kol/2018
I.T.A. No.1176/Kol/2018

Read from the judgment's own cause title. This page is filed under one of them.

Per J. Sudhakar Reddy, AM :- These three appeals filed by the assessee are directed against the separate but identical orders of the Commissioner of Income Tax (Appeals) – Burdwan, Kolkata, (hereinafter the ‘Ld. CIT(A)’), dt. 27/03/2018, passed u/s 250 of the Income Tax Act, 1961 (hereinafter the ‘Act’), relating to Assessment Years 2009-10, 2010-11 & 2011-12. 2. Though these appeals are directed against separate orders of the ld. CIT(A), for the sake of convenience, they are heard together and disposed off together by way of this common order.

1.

Assessment Year: 2009-10 Assessment Year: 2010-11 & I.T.A. No.1176/Kol/2018 Assessment Year: 2011-12 Hindustan Industries and Mining Corporation

3.

Assessment Year 2009-10 & for the Assessment Year 2010-11, are on the issue of jurisdiction u/s 154 of the Act.

4.

For the Assessment Year 2009-10, the Assessing Officer has passed and order u/s 154 of the Act on 05/05/2013, which was confirmed by the ld. CIT(A). This order was passed purportedly rectifying three issues.

4.1. The first issue being the disallowance of general expenses. I find that in the assessment order dt. 30/12/2011, at page 3, in the body of the order, the Assessing Officer stated that it would not be unjustified and unreasonable if the general expenses are disallowed on an adhoc basis at 20% and whereas, while computing the disallowance, he disallowed 15% of these expenses. This mistake was corrected in the proceedings u/s 154 of the Act. I find no infirmity in this rectification as it is a mistake apparent on record.

4.2. The second ground of rectification was that the expenditure incurred by the assessee on land filling, is capital in nature. There is no discussion, on this issue in the body of the assessment order. Hence the disallowance cannot be made u/s 154 of the Act, as it is debatable in nature. The claim of the assessee is that the land is filled up, after blasting and excavating stone. Thus, this disallowance made u/s 154 of the Act, is deleted. 4.3. The third issue of disallowance is u/s 36(1)(va) of the Act. The disallowance was made on the ground that the deposits of PF & ESI Acts, were not made within the due dates specified in the respective enactments. No discussion on facts was made by the Assessing Officer in the assessment order on this issue. Thus, the disallowance by invoking proceedings u/s 154, is bad in law. Hence, this disallowance is deleted. Thus, this appeal of the assessee in Assessment Year 2009-10, is allowed in part.

Assessment Year: 2009-10 Assessment Year: 2010-11 & I.T.A. No.1176/Kol/2018 Assessment Year: 2011-12 Hindustan Industries and Mining Corporation for the Assessment Year 2010-11. The sole disallowance made u/s 154 of the Act, vide order dt. 08/05/2013, for this Assessment Year is u/s 43B. No discussion on this issue was made by the Assessing Officer in the assessment order. In the proceedings u/s 154 of the Act, the Assessing Officer scrutinized the contribution made by the assessee towards PF. Scrutiny is not allowed u/s 154 of the Act. What can be corrected is a mistake apparent on record. As it is not a mistake apparent on record, I delete this disallowance and allow the appeal of the assessee in for the Assessment Year 2010-11, is allowed in part.

6.

ITA No. 1176/Kol/2018 for the Assessment Year 2011-12. The sole issue that arises for my consideration is whether, expenditure on land incurred by the assessee for filling land where extraction of stone and chips have been made after blasting is allowable as revenue expenditure. It was also submitted that such filling up of land is mandatory and does not give the assessee any enduring benefit. Both the Assessing Officer as well as the ld. CIT(A), did not agree with the contentions of the assessee. In my view, the expenditure in question is in the revenue field. The nature of the business of the assessee is to blast the land and extract stone and chips. The expenditure incurred on filling cavities caused in the land is in the revenue field. Hence, we direct the Assessing Officer to allow the same. Accordingly the appeal of the assessee in ITA No. 1176/Kol/2018 for the Assessment Year 2011-12, is allowed.

7.

In the result, Assessment Year 2009-10, is allowed in part. ITA No. 1175/Kol/2018 for the Assessment Year 2010-11, is allowed in part. ITA No. 1176/Kol/2018 for the Assessment Year 2011-12, is allowed. Kolkata, the 12th day of September, 2018. Sd/- [J. Sudhakar Reddy] Accountant Member Dated : 12.09.2017 {SC SPS}

Assessment Year: 2009-10 Assessment Year: 2010-11 & I.T.A. No.1176/Kol/2018 Assessment Year: 2011-12 Hindustan Industries and Mining Corporation Copy of the order forwarded to: 1. Hindustan Industries and Mining Corporation 218, Block-J New Alipore Kolkata – 700 053 2. Income Tax Officer, Ward-3(2), Kolkata

3. CIT(A)- 4. CIT- , 5. CIT(DR), Kolkata Benches, Kolkata.

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