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TMI Blog2018 (3) TMI 1197X X X X Extracts X X X X X X X X Extracts X X X X ..... ook value mine-wise was more than valuation as a group. 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 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 dispute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Addition made due to change in accounting method for repair job- Held that:- 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 of appeal of the assessee for assessment year 2011-12 is allowed for statistical purposes. Not allowing the correct depreciation after considering the sale of assets as per block assets concept and depreciation thereon - Held that:- The assessee company has shown the gain on sale of assets as profit for accounting purpose. As per section 32 of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot point out any specific mistake in the order of the CIT(A) Addition towards prospecting and boring expenses deleted Allowability of CMPDIL expenses to be allowed Addition towards cost of exploration and development expenditure - Held that:- 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 Overburden removal expenditure to be allowed Disallowance of the claim of additional depreciation on the ground that the assessee is not engaged in the business of manufacturing or production of any article or thing - Held that:- Since the coal is coming u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ards repair expenses of plant and machinery - no documentary evidence - Held that:- CIT(A) deleted the addition treating the claim of expenditure as revenue expenditure following the decision in the case of Sarvana Spg. Mills Pvt Ltd.(2007 (8) TMI 16 - SUPREME COURT OF INDIA ) and Vishal Paper Industries, (2013 (1) TMI 653 - PUNJAB AND HARYANA HIGH COURT ). No contrary decision was placed on record by the revenue. Addition towards perk tax - Held that:- We find that the amount towards 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 Addition being 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 - Held that:- 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 stock of coal represents the normal raising cost of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted accounts in notes on account that the stock of coal valued by the assessee as on 31.3.2010 lying at different collieries was ₹ 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 ₹ 43768.35 lakhs, hence there is an understatement in valuation of closing stock to the extent of ₹ 9108.67 lakhs. 7. The coal mining sector had been under nationalisation since the 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 996-97. 8. The Assessing Officer relied on the provisions of section 145A of the 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 ₹ 9108.67 lakhs. 9. Before the CIT(A), the assessee substantiated his claim made 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. 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ₹ 43768.35 lakhs against ₹ 34659.68 lakhs. The auditors also at para 11.15 of the 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 bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. 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%. 15. We found that the holding company, Coal India Limited is also 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 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 2012-13, ₹ 24010.50 lakhs for the assessment year 2013-14 and ₹ 15912.00 lakhs for the assessment year 2014-15 due to change in valuation of closing stock and overburden removal adjustment debit/credit. 17. The Assessing Officer found from the audit report that due to the change in method of valuation of closing stock as per uniform policy of Coal India Limited, the holding company, the profit for the year has been decreased by ₹ 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. 18. The CIT(A) having dealt on the submissions of the assessee and judicial d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed loan from the holding company, Coal India Limited as under: i) Loans from IBRD & JBIC : Rs.258,71 lakhs ii) On deferred payment : ₹ 13.64 lakhs iii) Other interest : ₹ 109.86 lakhs Total : Rs.282.21 lakhs. 24. The Assessing officer noted that a copy of letter dated 26.3.1998 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. 25. We have heard the rival submissions, perused the orders of lower authorities and materials available on record. Before us, ld A.R. explained the reasons of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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. 27. The issue common to Ground No.3.4 for the assessment year 2010- 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. 28. The Assessing Officer fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e hold that the lease hold rights are not eligible 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. 32. Ground No.3(5) relates to confirmation of disallowance of Prospecting & Boring expenses of ₹ 1138.73 separately claimed fin computation of income, and Ground No.3.8 relates to confirmation of disallowance of ₹ 278.39 lakhs charged to P&L appearing in schedule-12. 33. At the time of hearing, both the parties agreed that the issue is 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. 34. After hearing both the parties, we find that this issue has been dealt 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 workin- progress should also be considered on the same basis as directed while adjudica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure and revenue expenditure/amount spent on developing mines and commercially operating mines included under the head "development 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. 44. On appeal, referring to the decisions of the Tribunal in assessee's 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". 45. Before us, ld A.R. submitted that as per accounting policy 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. 47. In the present year under consideration, the CIT(A) has directed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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." 54. Facts being identical for the assessment year under consideration, following the decision of the Tribunal as above, we set aside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee has shown an interest income of 1197.52 crores and not ₹ 1196.28 crores as mentioned by the Ld. AO. The amount of Gross interest reflected in Form 26AS as on 13.01.2015 is ₹ 1181.54 crores u/s. 194A and ₹ 0.65 crore u/s. 193, totaling to ₹ 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pportunity 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. 66. Ground No.3(7) of appeal for the assessment year 2011-12 relates to addition of ₹ 305.32 lakhs made due to change in accounting method for repair job. 67. The Assessing Officer found that due to change in the accounting method of maintenance of expenditure on repair job regularly followed at the Central Workshop book profit of the assessee has been reduced by ₹ 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. 68. On appeal, the CIT(A) observed that there is no clarity regarding change in accounting method and not clear whether repairs expenses were charged to P&L account and hence, upheld the addition. 69. We have heard the rival submissions, perused the orders of the lower authorities and materials available on record. In the instant case, the assessee had changed the accounting method towards expenditur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r expense". In response to Assessing Officer/s requisition, the assessee submitted the details of ₹ 6.19 crores. On perusal of the same, the Assessing officer found that ₹ 4.41 crores was incurred towards "other welfare expenses" and ₹ 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. 77. The CIT(A) upheld the addition in the absence of required details and explanations. 78. Before us, ld A.R submitted that the expenditure in question 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). 79. We heard the rival submissions, we find that the expenditure is appearing under note 25 of "welfare expenses". Ld A.R. submitted that the assessee has sufficient materials to justify the expenditure. Accordingly, we consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. 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. 85. The next issue is against deletion of ₹ 86.34 lakhs towards compensation of land for the assessment year 2010-2011. 86. Having heard the rival submissions, we find that the assessee has debited compensation for land of ₹ 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 selfemployment. 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 hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 92. The next issue relates to loss on sale of discarded assets of ₹ 33.11 lakhs for the assessment year 2010-2011. 93. After hearing the rival submissions and perusing the orders of lower authorities, we find that the Assessing Officer disallowed ₹ 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 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 ₹ 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 ₹ 33.11 lakhs. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iture 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 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. 47. We have noted that these expenses have been treated as capital expenses by the Assessing Officer only on the ground of the 'enduring benefit in nature' which by implication suggests that it's a preparatory work for mine development but then what such an approach overlooks is that all the mines are revenue mines and the extraction of coal, on commercial basis, has already started in these cases. Therefore, Assessing Officer's observation to the effect that "extraction of coal is a long process and the nature of work done have an enduring benefit to the assessee" could have been relevant when coal extraction process had not s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espectfully following the judicial precedence and decision of the 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. 100. The next issue raised by the revenue is against deletion of ₹ 1487.46 lakhs towards cost of exploration and development expenditure. 101. We have heard the rival submission, perused the orders of lower authorities and materials available on record. The assessee has claimed separately in the computation of income of ₹ 1487.46 lakhs towards the cost of exploration and other development expenditure. The Assessing Officer disallowed ₹ 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 been clearly disclosed in Accounting Policy(Schedule-O). The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orthern 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 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 conjectu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 106. The next issue relates to deletion of ₹ 3371.57 lakhs and ₹ 6481.34 lakhs towards admissibility of additional depreciation for the assessment years 2010-11 and 2011-12, respectively. 107. The Assessing Officer has disallowed the claim of additional 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). 108. Having heard the rival submission and perusing the materials 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 Hon'ble Supreme Court in the case of Sesa Goa Ltd (supra) has held as under: Extraction and processing of ore amounts to "production" withi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndum 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. 112. The next issue relates to deletion of ₹ 1694.10 lakhs made on account of provisions. 113. The Assessing Officer found that in the computation of return of income, the assessee has added provision of ₹ 401.33 lakhs to the returned figure. The Assessee could not explain how gross provision debited for ₹ 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 ₹ 688.82 la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 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 incometax 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evy at fixed rate is not directly related to any training expenses incurred. Therefore, he made the addition. 120. The CIT(A) deleted the addition by observing as under: "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 ₹ 520.40 lakh made by the AO is deleted." 121. No contrary decision was placed on record by the ld D.R. It was also submitted before us that in the subsequent years, the revenue has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount 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. 126. The next issue relates to deletion of disallowance u/s.14A of the Act of ₹ 189.74 lakhs and ₹ 516.59 lakhs towards for the assessment year 2012-13 and 2013-14, respectively. 127. We have heard the rival submissions, perused the orders of lower authorities and materials available on record. In the instant case, the assessee had received tax free income of ₹ 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 ₹ 478.53 crores as on 31.3.2012 and the expenditure towards finance cost claimed by the assessee was ₹ 5.38 crores and hence, the Assessing Officer resorted to Rule 8D and calculated the disallowance u/s.14A at ₹ 1.897 crores. Similarly, in the assessment year, the Assessing Officer calculated the disallowance u/s.14A of the Act at ₹ 5.1659 crores. 128. On appeal, the CIT(A) directed the Assessing Officer to delete t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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. 132. The next issue relates to deletion of addition of ₹ 2834.00 lakhs towards CSR expenses for the assessment year 2012- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 136. We after hearing the rival submissions, find no infirmity in the 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) @ ₹ 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 ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 139. Before us, ld A.R. submitted that similar disallowance made 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 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. 140. The next issue relates to deletion of disallowance of ₹ 7347.88 lakhs towards Central Excise duty. 141. We have heard the rival submissions, perused the orders of lower authorities and materials available on record. In the instant case, the assessee had created a provision of ₹ 7347.88 lakhs regarding central excise duty on coal to meet the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 51 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. 148. The next issue relates to deletion of addition towards per tax of ₹ 168.54 lakhs for the assessment year 2011-12. 149. Having heard both the sides, we find that the amount towards 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. 150. The next which requires our adjudication in revenue's appeal for the assessment year 2014-15 relates to deletion of addition of ₹ 4594.00 lakhs towards difference in opening stock of coal. 151. The Assessing Officer made an addition of ₹ 4594 lakhs 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. 152. The CIT(A) deleted ..... X X X X Extracts X X X X X X X X Extracts X X X X
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