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2019 (1) TMI 1974 - AT - Income TaxAllowability of depreciation - AO rejected the claim of the assessee on the ground that excavation/raising of coal is not manufacture or production of any article or thing - AO has disallowed 50% of additional depreciation claimed only on the ground that lack of details being filed - disallowance sustained by the ld. CIT(A) at 20% of the claim - HELD THAT - We are of the considered opinion that the matter should be restored to the file of the Assessing Officer for fresh adjudication, after considering the details of plant and machinery used by the assessee for the purpose of extraction/raising of coal. The assessee claims to have produced audit statements which gave all the required particulars before the Assessing Officer. We direct the assessee to once again produce all the details as required by the Assessing Officer in support of his claim for deduction of additional depreciation. The additional depreciation should be granted on such plant and machinery that have been used for the production of coal. The Assessing Officer should keep in mind that the assessee is a public sector undertaking and its accounts are audited by the Comptroller Auditor General of India and such audited statements have evidentiary value. Allowability of provision of NCWA-VIII and executives ad hoc payments - CIT-A deleted the addition - HELD THAT - As the nomenclature used was provision , the Assessing Officer was of the view that the liability in question is not crystallized. The assessee produced wage agreement arrived at with the unions in support of the claim that the liability in question is a crystallized liability. The issue in question is covered by the decision of the Nagpur Bench of the Tribunal in the case of Western Coalfield Ltd. 2009 (6) TMI 630 - ITAT NAGPUR Interim relief @15% of the basic wage affected from 1st July 2008 had been made from the month of April, 2008. The communication of this effect was received from Coal India Ltd. on 16.04.2008. The interim relief to employees is covered under National Coal Wage Agreement. Thus, we find no infirmity in the order of the ld. CIT(A). Excluding from the total income of the assessee, exempt income by way of interest on account of exempt RBI Bonds, which was wrongly included by the assessee in its total income - HELD THAT - The fresh claim was made for the exclusion before the ld. CIT(A). This was not adjudicated by the ld. CIT(A). The assessee relied on the judgment of Hon ble Supreme Court in the case of National Thermal Power Co. Ltd. 1996 (12) TMI 7 - SUPREME COURT and submitted that this issue should have been adjudicated by the ld. CIT(A) in accordance with law as the amount in question is not taxable under the Income Tax Act. On a conspectus of the matter, we admit this additional ground and set aside the issue to the file of the Assessing Officer for fresh adjudication in accordance with law. This fresh claim by way of a ground of appeal is admitted by us by applying the proposition of law laid down by the Hon ble Supreme Court in the case of National Thermal Power Co. Ltd.(supra). The Assessing Officer is directed to dispose off this issue on merits in accordance with law. Carry forward of unabsorbed allowance for deduction u/s 35E - HELD THAT - As relying on assessee own case we set aside the matter to the file of the Assessing Officer passing orders in accordance with this order of the Tribunal on this issue. Disallowance paid on account of donation - HELD THAT - As relying on assessee own case 2017 (7) TMI 1362 - ITAT KOLKATA expenditure in question was incurred in terms of the National Coal Wage Agreement under sub-title, Education Facility and Workers Education. This is not a donation per se, but an obligation imposed on the assessee in terms of the National Coal Wage Agreement. Nagpur Bench of the Tribunal the case of South Eastern Coalfields Ltd. 2002 (2) TMI 344 - ITAT NAGPUR noted as a fact that the contributions to the various schools were not incurred voluntarily, but the same was incurred to discharge the obligation, which fell on the assessee in terms of a National Coal Wage Agreement entered into with the employees' unions and such an agreement was enforceable under the law both under the Indian Contract Act as also the industrial Disputes Act. - Decided in favour of assessee. Deduction on account of expenditure on environmental expenses and on account of land reclamation expenses - HELD THAT - As decided in assessee's own case the appellant s case is not covered by sec.40A(9). Grants to Sports Recreation - HELD THAT - As in the assessee s own case while adjudicating on identical issues for the Assessment Year 2003-04 to 2007-08 have taken a view that the claim in question is allowable expenditure. The ld. DR could not controvert these submissions of the assessee that the orders in question cover this issue in favour of the assessee.
Issues Involved:
1. Allowability of additional depreciation u/s 32(1)(iia) of the Act. 2. Allowability of set off brought forward loss and unabsorbed depreciation. 3. Allowability of provision of NCWA-VIII and executive ad hoc payments. 4. Allowability of expenditure incurred on account of environment and land reclamation. 5. Allowability of grants for sports & recreation. 6. Unabsorbed allowance of deduction u/s 35E. 7. Disallowance of expenditure on account of donation. 8. Allowability of expenditure u/s 40A(9) and u/s 40A(3) of the Act. 9. Miscellaneous issues. Detailed Analysis: 1. Allowability of Additional Depreciation u/s 32(1)(iia): The assessee's claim for additional depreciation was initially rejected by the Assessing Officer (AO) on the grounds that excavation/raising of coal is not manufacture or production of any article or thing. The First Appellate Authority directed the AO to allow 80% of the claim. However, the AO disallowed 50% of the additional depreciation due to lack of detailed breakup of machinery. The Tribunal found that the AO disallowed 50% based on lack of details and not on the nature of the activity. The Tribunal restored the issue to the AO for fresh adjudication, directing the assessee to provide detailed plant and machinery used for coal extraction, considering the fact that the assessee is a public sector undertaking with audited accounts. 2. Allowability of Set Off Brought Forward Loss and Unabsorbed Depreciation: The Tribunal did not specifically address this issue in detail within the provided text, indicating that it may not have been a point of contention in the appeals discussed. 3. Allowability of Provision of NCWA-VIII and Executive Ad Hoc Payments: The AO disallowed the provision on the grounds that it was not a crystallized liability. The First Appellate Authority, following the ITAT Nagpur Bench decision in Western Coalfield Ltd., allowed the provision, recognizing it as a crystallized liability based on wage agreements. The Tribunal upheld this decision, finding no infirmity in the order of the First Appellate Authority. 4. Allowability of Expenditure on Environment and Land Reclamation: The AO disallowed these expenses, but the First Appellate Authority allowed them. The Tribunal upheld the decision of the First Appellate Authority, referencing its own previous decisions in the assessee's case for earlier assessment years, which allowed such expenditures as business expenses. 5. Allowability of Grants for Sports & Recreation: The AO disallowed these grants, but the First Appellate Authority allowed them. The Tribunal upheld this decision, referencing its own previous decisions in the assessee's case, which consistently allowed such expenditures as business expenses. 6. Unabsorbed Allowance of Deduction u/s 35E: The Tribunal referenced its own previous decision, which allowed the carry forward of unabsorbed deduction u/s 35E, directing the AO to consider the claim in accordance with the law. 7. Disallowance of Expenditure on Account of Donation: The AO disallowed the donation, but the Tribunal allowed the claim, referencing its own previous decisions which recognized such expenditures as obligations under the National Coal Wage Agreement, thus allowable as business expenses. 8. Allowability of Expenditure u/s 40A(9) and u/s 40A(3): The Tribunal referenced its own previous decisions, which allowed such expenditures when incurred as obligations under the National Coal Wage Agreement, directing the AO to adjudicate these issues in accordance with the law. 9. Miscellaneous Issues: Additional grounds raised by the assessee were admitted by the Tribunal, setting aside these issues to the AO for fresh adjudication in accordance with the law, consistent with previous decisions in the assessee's case. Conclusion: The Tribunal provided a detailed analysis and directions for each issue, often referencing its own previous decisions and those of other benches, ensuring consistency in the application of the law. The appeals were allowed in part, with several issues being remanded to the AO for fresh adjudication.
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