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TMI Blog2017 (5) TMI 1567X X X X Extracts X X X X X X X X Extracts X X X X ..... g the claim of Amortization of Mining Land and Leasehold Land - Held that:- As decided in assess's own case [2016 (2) TMI 1118 - ITAT JAIPUR] AO is directed to treat the expenditure as capital and grant relief if any available under the law - issue of allowability of expenditure is u/s 37(1) decided against assessee Apportionment of establishment and financial expenditure on the basis of turnover of the mining activity and wind power generation activity - Held that:- restore this issue to the file of the Assessing Officer to decide afresh after verifying the claim of the assessee that the entire expenditure related to operation and maintenance was borne by Suzlon Energies Ltd. So far the contention of Ld. Counsel for the assessee that this item was not subject matter of the reasons recorded for reopening. We do not see any merit as law is well settled that once reopening is valid the AO can also consider the other issues as cropped up the assessment proceedings. - Decided in favour of assessee for statistical purposes Disallowance of Rural Development Expenses by holding that same is not incurred wholly and exclusively for the purpose of business - Held that:- The issue of allowabi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e business of the undertaking. Therefore, we direct the Assessing Officer to allow deduction u/s 80IA on this receipt. Addition of average investment on account of administrative expenses - no efforts and loan funds were utilized in making the investment - Held that:- Assessing Officer in the present case has accepted that there is not direct nexus between the investment and expenses so incurred. After considering the totality of the fact and keeping in view the sum of 1,138/- had been disallowed by invoking the provision of Rule 8D without being satisfied about the claim of the assessee that no administrative expenses were incurred for earning of the exempt income. We direct the Assessing Officer to delete the disallowance. This ground of the assessee’s appeal is allowed. Addition of unpaid land tax u/s 43B - Held that:- It is undisputed fact that the land tax was not paid before due date of filing by the return of income u/s 139(1) as required by the provisions of section 43B. In view of the mandate of clause (a) of section 43B of the Act, we do not see any reason to interfere into the order of the Ld. CIT(A), same is hereby affirmed, the ground of the assessee’s appeal is dismis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3-14. Since common issues are involved in all these appeal, therefore, all these appeals were taken up together for hearing and are being disposed of by way of consolidated order for the sake of convenience and brevity. At the time of hearing, the Ld. Counsel for the assessee submitted that the Appeal in ITA No. 253/JP/2015 pertaining to the A.Y. 2007-08 may be taken up first, accordingly appeal pertaining to the assessment year 2007-08 is taken as lead case. Assessee's appeal in ITA No. 253/JP/2015. The Assessee has raised the following grounds of appeal. "1. The Ld. CIT(A) has erred on facts an in law in upholding the validity of the order passed by the AO u/s 147 of the IT Act. 2. The Ld. CIT(A) has erred on facts and in law in confirming the action of AO in disallowing the claim of amortization of mining land of ₹ 92,99,632/- and leasehold land of ₹ 7,26,239/- aggregating to ₹ 1,00,25,871/-. He has further erred in disallowing this claim only on the basis on the finding of his predecessor on this issue in AY 2010-11 ignoring that this claim was allowed in all earlier years and in subsequent years upto AY 2009-10 in regular assessment proceedings and that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tation and environment expenses of ₹ 2,96,49,172/- and ₹ 60,60,486/- respectively and disallowance of claim of deduction u/s 80IA on account of apportionment of the expenses and thus made an addition of ₹ 1,98,91,437/- on account of excess deduction claimed u/s 80IA of the Act. 3. Aggrieved by this, assessee preferred an appeal before Ld. CIT(A), who after considering the submissions upheld the action of the assessee for reopening of the assessment. Further, in respect of claim of amortization the Ld. CIT(A) by following the decision of his predecessor sustained the addition. However, in respect of allowability of deduction u/s 80IA in respect of receipt from sale of carbon emission reduction certificates (CERs in short), the Ld. CIT(A) held that the sale of Carbon emission reduction certificate are capital in nature. Therefore, the alternate ground taken by the assessee was allowed. However, the claim of the assessee before Ld. CIT(A) was with regard to allowability of deduction u/s 80IA in respect of sale of carbon emission reduction certificate was held to be not allowable. The Ld. CIT(A) in respect of apportionment of the expenses for the purpose of claim of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re-opening of the assessment was not justified. 4.2 We have heard the rival submissions, perused the material available on record and gone through the order of the authorities below. There is no dispute with regard to the position of law that the Assessing Officer can reopen the assessment, if he has reason to believe that any income chargeable to tax has escaped assessment for any assessment year. In the present case, in the original assessment, the Assessing Officer had not considered the issue of allowability of the Amortization of Mining Land and Leasehold Land. He had simply without making any enquiry allowed the claim of the assessee, which is not the mandate of the law. Therefore, we do not see any reason to interfere into the order of the Ld. CIT(A), same is hereby affirmed, this ground of the assessee's appeal is dismissed. 5. Ground no. 2, is against confirming the action of the Assessing Officer in disallowing the claim of Amortization of Mining Land of ₹ 92,99,632/- and Leasehold Land of ₹ 7,26,239/- aggregating to ₹ 1,00,25,871/-. The Ld. Counsel for the assessee vehemently argued that Ld. CIT(A) was not justified in confirming the action of the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adras Industrial Investment Corporation Ltd. vs. CIT 225 ITR 802, and also the judgment of the Hon'ble Gujrat High Court rendered in the case of DCIT vs Sun Pharmaceuticals Ind. Ltd. 329 ITR 479. 5.2 Per contra Ld. Departmental Representatives submitted that this issue was before this Hon'ble Tribunal in Appeal of the Assessee pertaining to the year 2010- 11 in ITA No. 124/JP/2014. The Hon'ble Tribunal was pleased to reject the claim of the assessee. He submitted that the issue of allowability of expenditure is u/s 37(1) of the Act has already been decided against the assessee. 5.3 We have heard the rival contentions, perused the material available on record. The identical issue was before this Hon'ble Tribunal in ITA No. 124/JP/2014 wherein the Tribunal had decided the issue against the assessee as under:- "20.1 The vexed question before us is the amortization of amount paid for getting the mining land/leasehold land by the assessee. Whether it is required to be treated as revenue expenditure and is required to be allowed u/s 37(1) of the Act or not? For the purpose of allowing any expenditure, it is necessary to look into the nature of expenditure. Section 37 of the Act provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of Madras Industrial Investment Corporation Ltd. Vs. CIT, 225 ITR 802 is not applicable to the facts and circumstances of the case. However, the judgment of Hon'ble Supreme court in the matter of Enterprising Enterprises (2007) 160 Taman 188 (SC) is squarely applicable to the facts and circumstances of the case and further the said judgment is of later date and, therefore, is required to be followed by the Bench. The judgment of NMDC Ltd. vs. JCIT (supra) is not applicable to the facts and circumstance of the case as in the said judgment the issue was not with respect to applicability of section 37 but was in respect to allowing the depreciation u/s 32 of the Act. The submission of the Ld. A/R for the Assessee is that the value of wasting asset will depreciate with the extraction of mineral, in our view, is preposterous. In our view, with passage of guidelines for protecting the environment, now it is the duty of the lesser/ assessee to submit and execute the mine closing plan so as to ensure that the land is used subsequent to the closure of the mining operation. Even otherwise, the mining activity is done not on the surface of the earth but on the core towards the lower side o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of wind power. However, he gave a finding that the expenditure incurred on head office and corporate office can be attributed to generation of income from wind power by not accepting the contention of the assessee that the entire operation and maintenance of wind power plant has been given to Suzlon Energies Ltd. Therefore, the assessee was not required to incur any expenditure. He submitted that Ld. CIT(A) has rightly held that the apportionment is to be made in the ratio of turnover of the wind power vis-a-vis the total turnover of the assessee as against the ratio of the total income done by the Assessing Officer. 7.1 On the contrary, the Ld. Departmental Representatives supported the order of the authorities below and submitted that the Ld. Authorized Representative made no submissions before the Assessing Officer, that the entire operation and maintenance of the wind power plant had been given to Suzlon Energies Ltd. therefore, the assessee was not required to incur any other expenditure. 7.2 We have heard the rival contentions, perused the material available on record and gone through the order of the authorities below. The Ld. CIT(A), after considering the submissions de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 15,98,59,668/- relating to income from wind power in the ratio of the turnover and compute deduction u/s 80IA accordingly. The balance addition, on the issue is directed to be deleted. This ground is partly allowed. 7.3 We find that in para 3 of the submissions before Ld. CIT(A), the assessee stated that in respect of the unallocated expenses of ₹ 15,67,45,594/- that none of these expenses pertain to the 80IA undertakings in as much as the entire operation and the maintenance of the power plant had been given to Suzlon Energies Ltd. Therefore, the assessee had not to incur any expenditure on salary/employees benefit, travelling conveyance and other expenses debited under the various heads of expense in corporate office/head office. No strategic planning, day to day management and supervision, financial management, marketing management, tendering, work allocation, contract awarding, control etc. was required for operating these power plants by the corporate office/head office. Hence, withdrawal of deduction u/s 80IA to the extent of ₹ 1,98,91,437/- on this account is grossly unjustified. Further, it is stated by the assessee, the ground no. 4.1 before this Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... absence of material proving the expenses incurred for the business of the assessee same cannot be allowed u/s 37 of the Act. Hence, this ground of assessee's appeal is dismissed. 9. Ground no. 6, is general in nature and needs no separate adjudication. 10. Ground no. 7 is prayer for cost; the assessee has not addressed any argument to demonstrated as to why cost should be awarded. Hence, this ground of the assessee's appeal is dismissed. 11. In the result, Appeal of the Assessee in ITA No. 253/JP/2015 is partly allowed for statistical purposes. Revenue's appeal in ITA No. 295/JP/2015 Now, we take up the Revenue's appeal in ITA No. 295/JP/2015 pertaining to A.Y. 2007-08. The Revenue has raised the following grounds of appeal. "1. Whether on the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in allowing relief to the assessee of ₹ 3,50,00,162/- by holding that receipts from Sale of Carbon Emission Certificates are of capital in nature. 2. Whether on the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in allowing relief to the assessee u/s 80IA amounting to ₹ 1,67,18,177/- by not appreciating the facts brou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any tradable certificate or permit representing the right to emit one tonne of carbon dioxide or the mass of another greenhouse gases (GHG in short) (with a carbon dioxide equivalent (CO2e)), equivalent to one tonne of carbon dioxide." The Collins English Dictionary also defines a carbon credit as "a certificate showing that a Government of company has paid to have a certain amount of carbon dioxide removed from the environment." The "Investopedia Inc. investment dictionary" defines a carbon credit as a "permit that allows the holder to emit one tonne of carbon dioxide". Such permits (or CERs) "can be traded in the international market at their current market price." Certain industries especially in power, cement, steel, textile, fertilizer sectors rely on fossil fuels (coal, electricity derived from coal, natural gas and oil). The burning of fossil fuels is a major source of GHG emissions. The major greenhouse gases emitted by these industries are carbon dioxide, methane, nitrous oxide, hydro-fluorocarbon (HFCs), etc., all of which increase the atmosphere's ability to trap infra-red energy and, thus, affect the climate. Under the UN um ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 28 (iv) clearly brings the receipt from sale of CERs within the ambit of taxability. It reads as follows: 28. Profits and gains of business or profession.--The following income shall be chargeable to incometax under the head "Profits and gains of business or profession".....(iv) the value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession. There are following two conditions: (i) assessee receives any benefit or perquisite, (ii) they should arise in the course of business. "Benefit" means "advantage; Profit; Gains; Interest; Use; Promotion of welfare or Prosperity; helpful result; A benefaction or deed of Kindness; favour bestowed; privilege. "Benefit" is a word of wide import. It could be express or otherwise. The term "perquisite" means that it is an additional benefit and not a complete substitution of one's income. This is the benefit given to the industry during the course of production it has either not consumed fossil fuel or has consumed less than what was assigned to it. Therefore, sale proceeds of such savings of CERs arise, during the course of busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as the assessee is carrying on the business of power generation. The carbon credit is not even directly linked with power generation. On the sale of excess carbon credits the income was received and hence as correctly held by the Tribunal it is capital receipt and it cannot be business receipt or income." 4.5.2 Also, the ITAT, Jaipur in the case of Shree Cernent Ltd. in ITA No. 503, 504, 564, 569, 570, 505/JP/2012, dated 27.01.2014 has followed the decision of the ITAT, Hyderabad in the case of My Home Power Ltd and the decisions of the Chennai Tribunal in the cases of Sri Velayudhaswamy Spinning Mills Pvt. Ltd. and Ambika Cotton Mills Ltd. and has held that receipt on account of Carbon Credit is capital in nature and not chargeable to tax. The relevant extract of this order is given below "We have heard the rival submissions and perused the evidence on record. We find that Appellate Tribunal in Y Home Power Ltd Vs. DCIT [supra], have, after detailed examination, concluded that the receipts from Carbon Credit are capital in nature. We are inclined to follow the said decision and the other two decisions of Chennai Tribunal in Sri Velayudhaswamy Spinning Mills (P.) Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. 13.1. On the contrary, Ld. Counsel for the assessee reiterated the submissions as made in the written brief. That the allocation of expenses in the ratio of the total income of the eligible units to the total income of the assessee is incorrect. Even if allocation is to be made it should be made in the ratio to total turnover of the eligible units u/s 80IA to the total turnover of the assessee. The total turnover of the eligible units from sale of power is ₹ 8,49,48,646/- whereas the total turnover of the assessee is ₹ 530,88,19,416/-. Thus, the total turnover of the eligible units is only 1.60% of the total turnover of the assessee. 13.2 We have heard the rival contentions. We find that the assessee had also challenged the finding of the Ld. CIT(A) on this issue in ITA No. 253/JP/2015 and we have restored the issue to the file of the Assessing Officer by observing as under:- "7.3 We find that in para 3 of the submissions before Ld. CIT(A), the assessee stated that in respect of the unallocated expenses of ₹ 15,67,45,594/- that none of these expenses pertain to the 80IA undertakings in as much as the entire operation and the maintenance of the power plant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts of the case, the assessment order and the submissions of the appellant. The Assessing Officer has disallowed rural development expenses amounting to ₹ 2,96,49,172/- and afforestation, plantation and environment expenses amounting to ₹ 60,60,487/- on the ground that these expenses have been incurred for a social cause and general public good. The Assessing Officer has stated that this expenditure has not been laid out or expended wholly and exclusively for the purposes of business and therefore, is not an admissible expenditure u/s 37 (1) of the I. T Act. The appellant has stated that rural development expenditure has been incurred on repairs of road at different mining areas for the smooth transportation of vehicles, street lighting as well as for organizing medical camps, supply of school bags and stationary items to students of rural areas, construction of teen shades, meeting halls etc. In my view, the expenditure incurred by the appellant on repairs of road at different mining areas for the smooth transportation of vehicles, street lighting amounting to ₹ 1,76,01,218/- has been incurred for the purposes of the assessee's business as it facilitates smo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred on facts and in law in confkriming the above disallowance on the basis of findings of Hon'ble ITAT in assessee's own case for AY 2010-11 but at the same time not allowing the benefit of treating such expenditure as capital expenditure as directed by Hon'ble ITAT. 3. The Ld. CIT(A) has erred on facts and in law in confirming the disallowance of ₹ 18,70,932/- out of rural development expenses by holding that same is in the nature of expenditure on corporate social responsibility and thus not allowable u/s 37(1). 3.1 the Ld. CIT(A) has erred on facts and in law in confirming the said disallowance even when it was not a reason recorded for issuance of notice u/s 148 and that the said disallowance is not in the nature of income escaping assessment as per Explanation 3 to section 147. 4. The assessee craves right to add, alter or amend any of the grounds of the appeal. 5. The appropriate cost be awarded to the assessee." 18. The grounds raised in this appeal are identical as were in the ITA No. 253/JP/2015 pertaining to the A.Y. 2007-08. The Parties have adopted the same argument in ITA No. 253/JP/2015. The Ld. Counsel for the assessee reiterated the submissions as ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business or profession shall be allowed in computing the income chargeable under the head "profits and against of business of professions". [Explanation: For the removal of doubts, it is hereby declared that any expenditure incurred by an assessee for any purpose which is an offence or which is prohibited by law shall not be deemed to have been incurred for the purpose of business or profession and no deduction or allowance shall be made in respect of such expenditure.] [(2B) Notwithstanding anything contained in sub-section (1), no allowance shall be made in respect of expenditure incurred by an assessee on advertisement in any souvenir, brochure, tract, pamphlet or the like published by a political party.] Section 37, therefore, contemplates that if the nature of expenditure is not the capital/personal in nature, and is laid out or expended wholly and exclusively for the purpose of business or profession, then it is required to be allowed by the authority. In our view, the expenditure which were incurred for getting the mining land on leasehold basis on mining basis, is to be treated as capital expenditure because the leas will have the enduring benefit for making such an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... double taxed as the AO has already completed the assessment for the A.Y. 2011-12 on the basis of the written back of the amortization of the assets amounting to ₹ 5,79,10,137/-. In our view the assessee was taxed on the basis of the submissions made by it before the AO before the assessment for the A.Y. 2010-11 is finalized. The mere acceptance of the methodology by the AO for A.Y. 2011-12 will not withhold us to decide the issue on merit and in law for the A.Y. 2010-11. As per the law and principle, the authorities situated in lower ladder/tire of hierarchy is required to abide law/adjudication done by the superior authority. This is only way the judicial system works. The AO is quasi judicial authority and bound to follow the principle laid down by the Tribunal and not the vice versa. Therefore, the submission of the Ld. A/R for the assessee on this count is also rejected. However, it is made clear that the assesee would be entitled to all benefits as available in law and the assessee will not be subjected to double taxation for the A.Y. 2011-12. The AO is directed to give effect to the 69*9above said direction and nullify the effect of double taxation, if any, as claimed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pose. Revenue's appeal in ITA No. 804/JP/2016. 25. Now, we take up the Revenue's appeal i.e. 804/JP/2016 pertaining to the Assessment Year 2006-07. The Revenue has raised the following grounds of appeal. "1. Whether on the facts and in circumstances of the case and in law, the Ld. CIT(A) was justified in restricting the disallowance made by AO on account of Rural Development Expenses to ₹ 18,70,932/-. 2. Whether on the facts and in circumstances of the case and in Law, the Ld. CIT(A) was justified in deleting the disallowance of ₹ 1,51,24,052/- made by AO on account of afforestation, plantation, & environment expenses. 3. The appellant craves its rights to add, amend or alter any of the grounds on or before the hearing." 26. Ground no. 1 is against restricting the disallowance made by the Assessing Officer on Rural Development Expenses to ₹ 18,70,932. The identical ground was raised in the Revenue's appeal in ITA No. 295/JP/2015 as ground no. 3, pertaining to the Assessment year 2007-08 by observing as under:- "14.2 We have heard the rival contentions, perused the material available on record. We find that Ld. CIT(A) has given a finding on fact by obs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the purposes off the assessee's business. The above disallowance is therefore, directed to be deleted". 14.3 This finding on fact is not controverted by the Revenue by placing any contrary material on record. Therefore, we do not see any reason to interfere into the order of the Ld. CIT(A), same is hereby affirmed. The ground of the Revenue's appeal is dismissed." 26.1 For the same reasoning, as the parties have adopted the same arguments. This ground of the Revenue's appeal is dismissed. 27. Ground no. 2 is against deleting the disallowance made on account of afforestation, plantation & environment expenses. The identical ground was raised by the Revenue in ITA No 295/JP/2015. The parties have adopted the same argument. This Tribunal in ITA No. 295/JP/2015 decided the issue as under:- "14.2 We have heard the rival contentions, perused the material available on record. We find that Ld. CIT(A) has given a finding on fact by observing as under:- "6.3 I have perused the facts of the case, the assessment order and the submissions of the appellant. The Assessing Officer has disallowed rural development expenses amounting to ₹ 2,96,49,172/- and afforestation, pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee any reason to interfere into the order of the Ld. CIT(A), same is hereby affirmed. The ground of the Revenue's appeal is dismissed." 27.1 For the same reasoning, this ground of the Revenue's appeal is dismissed. 28. Ground no. 3 is general in nature and needs no separate adjudication. 29. In the result, the Cross Appeals of the Assessee in ITA No.769/JP/2016 is partly allowed or statistical purpose whereas the Revenue's appeal in ITA No. 804/JP/2016 is dismissed. 30. Now, we take up Assessee and Revenues's appeal i.e. 254/JP/2015 & 296/JP/2015 pertaining to the A.Y. 2008-09 respectively. Assessee's appeal in ITA 254/JP/2015 First we take up assessee's appeal in ITA No. 254/JP/2015 pertaining to the A.Y. 2008-09. Assessee has raised the following grounds of appeal. "1. The Ld.CIT(A) has erred on facts and in law in upholding the validity of the order passed by AO u/s 147 of the IT Act. 2. The Ld. CIT(A) has erred on facts and in law in confirming the action of AO in disallowing the claim of amortization of mining land of ₹ 92,99,632/- and leasehold land of ₹ 8,02,482/- aggregating to ₹ 1,01,02,114/-. He has further erred in disallowing this claim only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r issuance of notice u/s 148 and that the said disallowance is not in the nature of income escaping assessment as per Explanation 3 to section 147. 7. The Ld. CIT(A) has erred on facts and in law in confirming the disallowance of ₹ 1,138/- u/s 14A of the IT Act, 1961. He has further erred in confirming the said disallowance even when it was not a reason recorded for issuance of notice u/s 148 and that the said disallowance is not in the nature of income escaping assessment as per Explanation 3 to section 147. 8. The Ld. CIT(A) has erred on facts and in law in confirming an addition of ₹ 3,15,50,975/- on account of unpaid land tax u/s 43B of the Act ignoring the fact that same is already offered for tax in AY 2010-11 and assessed by the AO. 9. The assessee craves right to add, alter or amend any of the grounds of the appeal. 10. The appropriate cost be awarded to the assessee." 31. The grounds No. 1,2,3,5 & 6 as raised in this appeal are identical as were in the ITA No. 253/JP/2015 pertaining to the A.Y. 2007-08. The respective Representative of the Parties have adopted the same argument in ITA No. 253/JP/2015 for these grounds. 32. Ground no. 1 is against the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not? For the purpose of allowing any expenditure, it is necessary to look into the nature of expenditure. Section 37 of the Act provides as under:- "Sec. 37(1) : Any expenditure (not being expenditure of the nature descried in sections 30 to 36 and not being in the nature of capital expenditure or personal expenses of the assessee), laid out or expended wholly and exclusively for the purpose of business or profession shall be allowed in computing the income chargeable under the head "profits and against of business of professions". [Explanation: For the removal of doubts, it is hereby declared that any expenditure incurred by an assessee for any purpose which is an offence or which is prohibited by law shall not be deemed to have been incurred for the purpose of business or profession and no deduction or allowance shall be made in respect of such expenditure.] [(2B) Notwithstanding anything contained in sub-section (1), no allowance shall be made in respect of expenditure incurred by an assessee on advertisement in any souvenir, brochure, tract, pamphlet or the like published by a political party.] Section 37, therefore, contemplates that if the nature of expenditure is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the mining operation. Even otherwise, the mining activity is done not on the surface of the earth but on the core towards the lower side of the surface. The surface can be put to use for beneficial purpose after the term of lease/mining activity is over and it can be exploited for commercial purposes by the owner/appropriate authority. The contention of the assessee is that the assessee will be double taxed as the AO has already completed the assessment for the A.Y. 2011-12 on the basis of the written back of the amortization of the assets amounting to ₹ 5,79,10,137/-. In our view the assessee was taxed on the basis of the submissions made by it before the AO before the assessment for the A.Y. 2010-11 is finalized. The mere acceptance of the methodology by the AO for A.Y. 2011-12 will not withhold us to decide the issue on merit and in law for the A.Y. 2010-11. As per the law and principle, the authorities situated in lower ladder/tire of hierarchy is required to abide law/adjudication done by the superior authority. This is only way the judicial system works. The AO is quasi judicial authority and bound to follow the principle laid down by the Tribunal and not the vice versa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of the liquidated damages. He submitted that liquidated damages are the charges paid by Suzlon Energy Ltd. to the assessee due to short-fall in the minimum guaranteed generation of power units given by it. These charges are nothing but the income from sale of power only as it was the commitment of the supplier of the wind mill that plant supplied by him would generate minimum guaranteed units of electricity. In case generation is less than fixed guaranteed units, the supplier i.e. Suzlon Energy Ltd. would fulfill the shortfall by making payment of fixed amount per unit which it generated less. Hence, amounts so received is nothing but the additional amount realized by the assessee in respect of the electricity generated by its power plant. The amount so received is therefore the profit or gain derived by the power undertaking from the business of generation and distribution of power. The Ld. Counsel for the assessee placed reliance upon the judgment of the Hon'ble Madhya Pradesh High Court rendered in the case of CIT vs. Prakash Oils Ltd. 58 DTR 276 (MP) also the judgment of the Hon'ble Delhi High Court in the case of CIT vs. Advance Detergents Ltd. 339 ITR 81 (2011) (Del. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n given to Suzlon Energies Ltd. Therefore, the assessee had not to incur any expenditure on salary/employees benefit, travelling conveyance and other expenses debited under the various heads of expense in corporate office/head office. No strategic planning, day to day management and supervision, financial management, marketing management, tendering, work allocation, contract awarding, control etc. was required for operating these power plants by the corporate office/head office. Hence, withdrawal of deduction u/s 80IA to the extent of ₹ 1,98,91,437/- on this account is grossly unjustified. Further, it is stated by the assessee, the ground no. 4.1 before this Tribunal that this issue was not taken while recording the reasons for issuance of notice and the said disallowance is not in the nature of income escaping essessment as per Explanation 3 to section 147. After considering the totality of the fact, we restore this issue to the file of the Assessing Officer to decide afresh after verifying the claim of the assessee that the entire expense related to operation and maintenance were borne by Suzlon Energies Ltd. So far the contention of Ld. Counsel for the assessee that this i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. This finding on fact is not rebutted by the assessee. In the absence of material proving the expenses incurred for the business of the assessee same cannot be allowed u/s 37 of the Act. Hence, this ground of assessee's appeal is dismissed." 37.1 For the same reasoning, this ground of the assessee's appeal is dismissed. 38. Apropos to ground no. 7 the Ld. Counsel for the assessee reiterated the submissions as made in the written brief. 38.1 On the contrary, Ld. Departmental Representatives supported the order of the Assessing Officer. 38.2 We have heard the rival contentions, perused the material available on record. It is contended that the Assessee had earned tax free dividend income from shares of ₹ 10 lakhs. It is stated that no efforts and loan funds were utilized in making the investment. Accordingly, no disallowance is called for. It is stated that the Assessing Officer accepted that no direct expenses incurred. However, he disallowed ₹ 1,138/- being ½% of the average investment on account of administrative expenses. 38.3 We find merit into the contentions of the assessee that on investment of ₹ 1 lakhs the assessee had earned dividend income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on and therefore the addition so confirmed by him needs to be deleted. 39.1 On the contrary, Ld. Departmental Representatives supported the order of the Assessing Officer and submitted that there is no illegality into the order of the authorities below. 39.2 We have heard the rival contentions, it is undisputed fact that the land tax was not paid before due date of filing by the return of income u/s 139(1) as required by the provisions of section 43B. In view of the mandate of clause (a) of section 43B of the Act, we do not see any reason to interfere into the order of the Ld. CIT(A), same is hereby affirmed, the ground of the assessee's appeal is dismissed. 40. Ground no. 9 is general in nature and needs no separate adjudication. 41. Ground no. 10 is prayer of awarded cost, no supporting evidence is placed by the assessee in support of this claim and identical claim was made in ITA No. 253/JP/2015. "10. Ground no. 7 is prayer for cost; the assessee has not addressed any argument to demonstrated as to why cost should be awarded. Hence, this ground of the assessee's appeal is dismissed." 41.1 For the same reasoning, this ground is dismissed. In the result, appeal of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 43.1 For the same reasoning, this ground of the Revenue's appeal is dismissed. 44. Ground no. 2, the facts and ground are identical as were in ITA No. 295/JP/2015 pertaining to the AY 2007-08. The Respective Representative of the Parties have adopted the same argument as were adopted in the ITA No. 295/JP/2015 as ground no. 2. We have decided this ground by observing as under:- "7.3 We find that in para 3 of the submissions before Ld. CIT(A), the assessee stated that in respect of the unallocated expenses of ₹ 15,67,45,594/- that none of these expenses pertain to the 80IA undertakings in as much as the entire operation and the maintenance of the power plant had been given to Suzlon Energies Ltd. Therefore, the assessee had not to incur any expenditure on salary/employees benefit, travelling conveyance and other expenses debited under the various heads of expense in corporate office/head office. No strategic planning, day to day management and supervision, financial management, marketing management, tendering, work allocation, contract awarding, control etc. was required for operating these power plants by the corporate office/head office. Hence, withdrawal of deduction u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t expenses amounting to ₹ 2,96,49,172/- and afforestation, plantation and environment expenses amounting to ₹ 60,60,487/- on the ground that these expenses have been incurred for a social cause and general public good. The Assessing Officer has stated that this expenditure has not been laid out or expended wholly and exclusively for the purposes of business and therefore, is not an admissible expenditure u/s 37 (1) of the I. T Act. The appellant has stated that rural development expenditure has been incurred on repairs of road at different mining areas for the smooth transportation of vehicles, street lighting as well as for organizing medical camps, supply of school bags and stationary items to students of rural areas, construction of teen shades, meeting halls etc. In my view, the expenditure incurred by the appellant on repairs of road at different mining areas for the smooth transportation of vehicles, street lighting amounting to ₹ 1,76,01,218/- has been incurred for the purposes of the assessee's business as it facilitates smooth transportation of minerals. Disallowance of the above expenditure is therefore, directed to be deleted. The balance expenditur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the finding of his predecessor on this issue in AY 2010-11 ignoring that this claim was allowed in all earlier years AY 2009-10 in regular assessment proceedings and that the claim is also supported by the decision of ITAT, Hyderabad Bench in case of NMDC Ltd. vs. JCIT in ITA No. 714/Hyd/ 2012 dt. 28.02.2014. 2.1 The Ld. CIT(A) has erred on facts and in law in confirming the said disallowance even when it was not a reason recorded for issuance of notice u/s 148 and that the said disallowance is not in the nature of income escaping assessment as per Explanation 3 to section 147. 3. The Ld. CIT(A) has erred on facts and in law in confirming the action of AO in reducing the claim of deduction u/s 80IA by ₹ 1,68,53,256/- by holding that liquidated damages received on account of shortfall in the minimum guaranteed generation of power units is not an income derived from the power generation business of windmills. 3.1 The Ld. CIT(A) has erred on facts and in law in reducing claim of deduction u/s 80IA with reference to the receipts of the liquidated damaged even when it was not a reason recorded for issuance o notice u/s 148 and that the said reduction is not in the nature of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee by observing as under:- "4.2 We have heard the rival submissions, perused the material available on record and gone through the order of the authorities below. There is no dispute with regard to the position of law that the Assessing Officer can reopen the assessment if he has reason to believe that any income chargeable to tax has escaped assessment for any assessment year. In the present case, in the original assessment, the Assessing Officer had not considered the issue of allowability of the Amortization of Mining Land and Leasehold Land. He had simply without making any enquiry allowed the claim of the assessee, which is not the mandate of the law. Therefore, we do not see any reason to interfere into the order of the Ld. CIT(A), same is hereby affirmed, this ground of the assessee's appeal is dismissed." 49.1 Taking a consistent view, this ground of the assessee's appeal is dismissed. 50. Ground no. 2 to 2.1 is against confirmation of disallowance of amortization of expenses of mining land and leasehold land. Ground no. 2.1 is with regard to the confirmation of disallowance even when issue was not recorded in the reasons for issuance of notice u/s 148 of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 37, therefore, contemplates that if the nature of expenditure is not the capital/personal in nature, and is laid out or expended wholly and exclusively for the purpose of business or profession, then it is required to be allowed by the authority. In our view, the expenditure which were incurred for getting the mining land on leasehold basis on mining basis, is to be treated as capital expenditure because the leas will have the enduring benefit for making such an investment. Our view is also fortified by the judgment of Hon'ble supreme Court in the matter of Aditya Mineral vs. CIT(1999) 8SSC 97 and also by the judgment of Hon'ble Supreme Court in the matter of Enterprising Enterprises vs. DCIT in the Civil Appeal No. 5655 of 2006 whereby Hon'ble Supreme Court has held that "where the entire amount of lease is paid either at a time or in installment, it would be capital expenditure". Therefore, we are bound by the judgments passed by the Hon'ble Supreme Court. Thus the expenses laid by the assessee for the purposes of getting the mining land and leasehold land, are required to be treated as capital expenditure. The AO is, therefore, directed to treat the amount paid for getting the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... follow the principle laid down by the Tribunal and not the vice versa. Therefore, the submission of the Ld. A/R for the assessee on this count is also rejected. However, it is made clear that the assesee would be entitled to all benefits as available in law and the assessee will not be subjected to double taxation for the A.Y. 2011-12. The AO is directed to give effect to the above said direction and nullify the effect of double taxation, if any, as claimed by the assessee. In the light of the above, ground no. 2 of the assessee is dismissed." 5.4 Therefore, taking a consistent view, apropos to ground no. 2 is directed to treat the expenditure as capital and grant relief if any available under the law. Thus, ground no. 2 is disposed of in the terms indicated hereinbefore. 50.2 For the same reasoning, this ground of the assessee's appeal is disposed off. So far as the contention that the issue was not subject matter of reasons recorded is concerned, we have already decided this issue by holding that once the assessment is validly re-opened the AO can decided other issues as well. Hence, the ground no. 2.1 is dismissed. 51. Ground no. 3 is against reducing the claim of deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt rendered in the case of CIT vs. Prakash Oils Ltd. 58 DTR 276 (MP) also the judgment of the Hon'ble Delhi High Court in the case of CIT vs. Advance Detergents Ltd. 339 ITR 81 (2011) (Del.) further reliance is placed upon the judgment of the Hon'ble Supreme Court in the case of CIT vs. Meghalaya Steels Ltd. 383 ITR 217. The Ld. Counsel submitted that the damages are directly linked with the business of the assessee. Therefore, the deduction u/s 80IA is allowable on this amount. 35.2 On the contrary, the Ld. Departmental Representatives supported the order of the Ld. CIT(A). 35.3 We have heard the rival contentions, perused the material available on record. The Ld. CIT(A) disallowed the claim on the basis that the first degree nexus with the operation of the undertaking is missing. The Ld. CIT(A) has followed the decision of his predecessor pertaining to the A.Y. 2010-11. Admittedly, this payment is related to the contract between the assessee and the supplier. The contract is related to the wind mill independent of operation of the wind mill the payment of liquidated damages would not arise. It is only on the operation of the wind mill and the output of the equipment so instal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted under the various heads of expense in corporate office/head office. No strategic planning, day to day management and supervision, financial management, marketing management, tendering, work allocation, contract awarding, control etc. is required for operating these power plants by the corporate office/head office. Hence, withdrawal of deduction u/s 80IA to the extent of ₹ 1,98,91,437/- on this account is grossly unjustified. Further, it is stated by the assessee, the ground no. 4.1 before this Tribunal that this issue was not taken while recording the reasons for issuance of notice and the said disallowance is not in the nature of income escaping essessment as per Explanation 3 to section 147. After considering the totality of the fact, we restore this issue to the file of the Assessing Officer to decide afresh after verifying the claim of the assessee that the entire expense related to operation and maintenance has been given to Suzlon Energies Ltd. So far the contention of Ld. Counsel for the assessee that this item was not subject matter of the reasons recorded for reopening. We do not see any merit as law is well settled that once reopening is valid the AO can also co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee's appeal are dismissed. 54. Ground no. 6 is against confirmation the disallowance made u/s 14A of ₹ 3,612/-. Similarly, the ground was raised in ITA No 254/JP/2015 pertaining to the AY 2008-09. The Ld. Representative of the parties have adopted the same argument as were in ITA No.254/JP/2015 as Ground No. 7. We have decided this issue by observing as under:- "38. Apropos to ground no. 7 the Ld. Counsel for the assessee reiterated the submissions as made in the written brief. 38.1 On the contrary, Ld. Departmental Representatives supported the order of the Assessing Officer. 38.2 We have heard the rival contentions, perused the material available on record. It is contended that the Assessee had earned tax free dividend income from shares of ₹ 10 lakhs. It is stated that no efforts and loan funds were utilized in making the investment. Accordingly, no disallowance is called for. It is stated that the Assessing Officer accepted that no direct expenses incurred. However, he disallowed ₹ 1,138/- being ½% of the average investment on account of administrative expenses. 38.3 We find merit into the contentions of the assessee that on investm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into the order of the Ld. CIT(A), same is hereby affirmed, this ground of the assessee's appeal is dismissed. 58. In the result, appeal of the assessee in ITA No. 255/JP/2015 is partly allowed for statistical purposes. Revenue's appeal in ITA No. 297/JP/2015 59. Now, we take up Revenue's appeal in ITA No. 297/JP/2015. The revenue has raised the following grounds of appeal: "1. Whether on the facts and in the circumstances of the case and in law the Ld. CIT(A) has erred in allowing relief of ₹ 95,64,749/- out of expenditure incurred by the assessee under the head of 'Rural Development Expenses'. 2. Whether on the facts and in the circumstances of the case and in law the Ld. CIT(A) has erred in allowing relief of ₹ 64,01,492/- under the head 'afforestation, plantation and environment expenses' without appreciating the fact that these expenses have not been incurred in connection with the business of the assessee. 3. Whether on the facts and in the circumstances of the case and in law the Ld. CIT(A) has erred in allowing relief to the assessee u/s 80IA amounting to ₹ 1,85,03,376/- by not appreciating the facts brought out by the AO in assessment order with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edical camps, supply of school bags and stationary items to students of rural areas, construction of teen shades, meeting halls etc. is in the nature of expenditure on corporate social responsibility which has not been incurred wholly and exclusively for the purposes of the appellant's business and is not allowable u/s 37 (1) of the IT Act. Disallowance of this expenditure amounting to ₹ 1,20,47,954/- is therefore, upheld. 6.4 As regards, expenditure debited under the head - afforestation, plantation and environment expenses, it is seen from the ledger account that this expenditure has been incurred for maintaining the gardens at its corporate office, mining sites offices, obtaining environmental clearances, obtaining mining area lease, fees paid to Pollution Control Board, for assessing the quality of water etc. This expenditure therefore, has been made out and expended wholly and exclusively for the purposes off the assessee's business. The above disallowance is therefore, directed to be deleted". 14.3 This finding on fact is not controverted by the Revenue by placing any contrary material on record. Therefore, we do not see any reason to interfere into the orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee's business as it facilitates smooth transportation of minerals. Disallowance of the above expenditure is therefore, directed to be deleted. The balance expenditure incurred under the head - rural development expenses, amounting to ₹ 1,20,47,954/- on account of medical camps, supply of school bags and stationary items to students of rural areas, construction of teen shades, meeting halls etc. is in the nature of expenditure on corporate social responsibility which has not been incurred wholly and exclusively for the purposes of the appellant's business and is not allowable u/s 37 (1) of the IT Act. Disallowance of this expenditure amounting to ₹ 1,20,47,954/- is therefore, upheld. 6.4 As regards, expenditure debited under the head - afforestation, plantation and environment expenses, it is seen from the ledger account that this expenditure has been incurred for maintaining the gardens at its corporate office, mining sites offices, obtaining environmental clearances, obtaining mining area lease, fees paid to Pollution Control Board, for assessing the quality of water etc. This expenditure therefore, has been made out and expended wholly and exclusivel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enance were borne by Suzlon Energies Ltd. Thus, Ground no. 4 to 4.1 of the assessee 's appeal is allowed for statistical purposes." 13.3 Therefore, this ground of the Revenue's appeal is also restored to the file of the Assessing Officer for decision afresh." 62.1 For the same reasoning, this ground is restored to the file of the AO for decision afresh. 63. Ground no. 4 is against partly allowing the apapeal of the assessee by holding that the payment of MR Cess to the State Government is a liability of the assessee independent of its customers. The Ld. Departmental Representatives supported the order of the AO. He submitted that MR Cess is indirect tax collected through customer at the time of sale at the rate specified by the State Government. 63.1. On the contrary, Ld. Counsel for the assessee reiterated the submissions as made in the written brief and submitted that the addition has been made by the AO for the difference in MR Cess paid and the MR Cess recovered from the customers. Payment of MR Cess to the Government is an independent liability of the assessee. The recovery of MR Cess from its customer is independent of its liability of payment of such cess to the Governme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers. The Hon'ble Supreme Court of India in the case of CIT Vs. Shoorji Vallabhadas & Co, (46 ITR 144) has held that in any accrual system, the probability of improbability of realization has also to be considered in a realistic manner. In the case of Chainrup Sampatram v. CIT (24 ITR 481) the Hon'ble Apex Court held that while anticipated loss is taken into account, anticipated profit is not brought in account, as no prudent trader would care to show increased profit before its actual realization. The Accounting Standar-9 (AS-9) is also in conformity with the above judgments. Therefore, the appellant could not have credited receipts from customers on account of unrecovered MR Cess. The provisions of Section 145A are not applicable in the present case because the cess has been levied with retrospective effect which could not be recovered from the customers. Moreover, expenditure on account of MR Cess, paid to the State Government of Rajasthan, is clearly an allowable expenditure like other cess, levies or indirect taxes. Therefore, the disallowance made by the AO is not correct. The AO is directed to verify whether the MR cess of ₹ 60,31,23,017/- has been paid in accordance wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has erred on facts and in law in directing the AO to apportion the establishment and financial expenditure of ₹ 23,61,30,172/- on the basis of turnover of the mining activity and wind power generation activity for allowing deduction u/s 80IA on the income from generation of power ignoring the fact that expenditure relatable to power generation undertaking has already ;been debited for working out the income of the said units. 6. The Ld. CIT(A) has erred on facts and in law in confirming the disallowance of ₹ 5,49,980/- out of social welfare expenses. 7. The Ld. CIT(A) has erred on fats and in law in confirming the disallowance of ₹ 6,725/- u/s 14A of the IT Act, 1961. 8. The assessee craves right to add, alter or amend any of the grounds of the appeal. 9. The appropriate cost be awarded to the assessee." 67. Ground no. 1, the facts and ground are identical in ITA No. 295/JP/2015 pertaining to the AY 2007-08. The Respective Representative of the Parties have adopted the same argument as were adopted in the ITA No. 295/JP/2015 as ground no. 3. We have decided this ground by observing as under:- "14. Ground no. 3 is against deleting the disallowance in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 37 (1) of the IT Act. Disallowance of this expenditure amounting to ₹ 1,20,47,954/- is therefore, upheld. 6.4 As regards, expenditure debited under the head - afforestation, plantation and environment expenses, it is seen from the ledger account that this expenditure has been incurred for maintaining the gardens at its corporate office, mining sites offices, obtaining environmental clearances, obtaining mining area lease, fees paid to Pollution Control Board, for assessing the quality of water etc. This expenditure therefore, has been made out and expended wholly and exclusively for the purposes off the assessee's business. The above disallowance is therefore, directed to be deleted". 14.3 This finding on fact is not controverted by the Revenue by placing any contrary material on record. Therefore, we do not see any reason to interfere into the order of the Ld. CIT(A), same is hereby affirmed. The ground of the Revenue's appeal is dismissed. 67.1 Therefore, taking a consistent view, this ground of the assessee's appeal is dismissed. 68. Ground no. 2 the facts are identical in ITA No. 253/JP/2015 pertaining to the AY 2007-08. The Respective Representative of the Part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to be allowed by the authority. In our view, the expenditure which were incurred for getting the mining land on leasehold basis on mining basis, is to be treated as capital expenditure because the leas will have the enduring benefit for making such an investment. Our view is also fortified by the judgment of Hon'ble supreme Court in the matter of Aditya Mineral vs. CIT(1999) 8SSC 97 and also by the judgment of Hon'ble Supreme Court in the matter of Enterprising Enterprises vs. DCIT in the Civil Appeal No. 5655 of 2006 whereby Hon'ble Supreme Court has held that "where the entire amount of lease is paid either at a time or in installment, it would be capital expenditure". Therefore, we are bound by the judgments passed by the Hon'ble Supreme Court. Thus the expenses laid by the assessee for the purposes of getting the mining land and leasehold land, are required to be treated as capital expenditure. The AO is, therefore, directed to treat the amount paid for getting the mining land and leasehold land as capital expenditure. The AO is further directed to give all benefits as a capital expenditure. The judgment relied upon by the assessee of Hon'ble Supreme Court in the matter of M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntitled to all benefits as available in law and the assessee will not be subjected to double taxation for the A.Y. 2011-12. The AO is directed to give effect to the above said direction and nullify the effect of double taxation, if any, as claimed by the assessee. In the light of the above, ground no. 2 of the assessee is dismissed." 5.4 Therefore, taking a consistent view, apropos to ground no. 2 is directed to treat the expenditure as capital and grant relief if any available under the law. Thus, ground no. 2 is disposed of in the terms indicated hereinbefore. 68.1 For the same reasoning, this ground of the assessee's appeal is disposed of. 69. Ground no. 3 the ground and the facts are identical in ITA No. 253/JP/2015 pertaining to the AY 2007-08. The Respective Representative of the Parties have adopted the same argument as were adopted in the ITA No. 253/JP/2015 as ground no. 3. We have decided this ground by observing as under:- "6. At the time of hearing Ground no. 3 was not pressed by the Ld. Counsel for the assessee. Therefore, ground no. 3 is dismissed as not pressed." 69.1 For the same reasoning, this ground of the assessee's appeal is dismissed as not pressed. 70 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have decided this ground by observing as under:- "7.3 We find that in para 3 of the submissions before Ld. CIT(A), the assessee stated that in respect of the unallocated expenses of ₹ 15,67,45,594/- that none of these expenses pertain to the 80IA undertakings in as much as the entire operation and the maintenance of the power plant had been given to Suzlon Energies Ltd. Therefore, the assessee had not to incur any expenditure on salary/employees benefit, travelling conveyance and other expenses debited under the various heads of expense in corporate office/head office. No strategic planning, day to day management and supervision, financial management, marketing management, tendering, work allocation, contract awarding, control etc. was required for operating these power plants by the corporate office/head office. Hence, withdrawal of deduction u/s 80IA to the extent of ₹ 1,98,91,437/- on this account is grossly unjustified. Further, it is stated by the assessee, the ground no. 4.1 before this Tribunal that this issue was not taken while recording the reasons for issuance of notice and the said disallowance is not in the nature of income escaping assessment as per Exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Ltd. This fact is not disputed by the Revenue. In our considered view, the operation of Rule 8D is not automatic. The assessing officer is required to satisfy himself about the correctness of the claim that no expenditure was incurred by the assessee. The Assessing Officer in the present case has accepted that there is not direct nexus between the investment and expenses so incurred. After considering the totality of the fact and keeping in view the sum of ₹ 1,138/- had been disallowed by invoking the provision of Rule 8D without being satisfied about the claim of the assessee that no administrative expenses were incurred for earning of the exempt income. We direct the Assessing Officer to delete the disallowance. This ground of the assessee's appeal is allowed." 73.1 For the same reasoning, this ground is allowed. 74. Ground no. 8 is general in nature and needs no separate adjudication. 75. Ground no. 9 is prayer for cost, the assessee has not placed any material on record under the facts of the present case, we do not see any reason to award the cost to assessee. Hence, this ground is dismissed. 76. In the result appeal of the assessee in ITA No. 256/JP/2015 is partly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e towards State Renewal Fund. At the outset, the Ld. Counsel submitted that this issue is covered in favour of the assessee by the judgment of the Hon'ble Rajasthan High Court rendered in the case of CIT vs. Jodhpur Co-operative Marketing Society (2005) 275 ITR 372(Raj.) 78.1 On the contrary, Ld. Departmental Representatives supported the order of the Assessing Officer. 78.2 We have heard the rival contentions, we find that the Ld. CIT(A) has decided the issue in para 2.1 and 2.2 by following the judgments of the Hon'ble High Court as under:- "2.1. In this year, the assessee has claimed expenditure of ₹ 20,00,000/- in respect of contribution to State Renewal Fund. This issue also arose in the case of appellant in AY 2010-11 and earlier years. The main points of the Assessment Order, on this issue, have been narrated in the appeal order of CIT(A)-II, Jaipur (Appeal no. 325/12-13, dated 05.12.2013) for A.Y. 2010-11. The main points of the submissions of the appellant, on this issue, have been narrated the above appeal order. Therefore, the assessment order and the submissions of the appellant are not being again narrated in this order for the sake of brevity. In AY 2010-11, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) has given a finding on fact by observing as under:- "6.3 I have perused the facts of the case, the assessment order and the submissions of the appellant. The Assessing Officer has disallowed rural development expenses amounting to ₹ 2,96,49,172/- and afforestation, plantation and environment expenses amounting to ₹ 60,60,487/- on the ground that these expenses have been incurred for a social cause and general public good. The Assessing Officer has stated that this expenditure has not been laid out or expended wholly and exclusively for the purposes of business and therefore, is not an admissible expenditure u/s 37 (1) of the I. T Act. The appellant has stated that rural development expenditure has been incurred on repairs of road at different mining areas for the smooth transportation of vehicles, street lighting as well as for organizing medical camps, supply of school bags and stationary items to students of rural areas, construction of teen shades, meeting halls etc. In my view, the expenditure incurred by the appellant on repairs of road at different mining areas for the smooth transportation of vehicles, street lighting amounting to ₹ 1,76,01,218/- has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd gone through the order of the authorities below. The Ld. CIT(A) has followed the decision of his predecessor pertaining to AY 2010-11. Against this order, the Revenue had filed an appeal before this Tribunal in ITA No. 144/JP/2014 wherein the Tribunal was pleased to dismiss the ground raised by the Revenue. Therefore, taking a consistent view, for the same reasoning, the ground raised in this appeal is also dismissed. Ground no. 3 of the Revenue's appeal is dismissed. 81. Ground no. 4, is against deleting the addition of ₹ 1,75,79,531/- on account of prior period expenses. Ld. D/R supported the order of the AO. 81.1 On the contrary, the Ld. Counsel for the assessee supported the order of the AO and submitted that this issue also cropped up in the Assessment Year 2010-11 and matter traveled up to the stage of Tribunal wherein the issue was decided in favour of the assessee. The facts are identical in this year also since the expenses have crystallized in the year under consideration. Therefore, the Ld. CIT(A) was justified in deleting the addition 81.2 We have heard the rival contention, we have find that in Ld. CIT has given finding on fact in para 6.1 and 6.2 of his or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'ble court, under the identical facts confirmed the view of the Tribunal in holding that Carbon credit is not an offshoot of business but an offshoot of environmental concerns. No asset is generated in cost of business but it is generated due to environmental concerns. Therefore, on sale of excess carbon credits correctly held by the Tribunal as a capital receipt. In view of the judgment of Hon'vble Andhra Pradesh High Court, we do not see any reason to disturb the finding of Ld. CIT(A), same is hereby affirmed. The Revenue has not brought to our notice any contrary biding precedent. Hence, this ground of Revenue's appeal is dismissed." 82.1 For the same reasoning, this ground of the Revenue's appeal is dismissed. 83. Ground no. 6 the ground and the facts are identical in ITA No. 295/JP/2015 pertaining to the AY 2007-08. The Respective Representative of the Parties have adopted the same argument as were adopted in the ITA No. 295/JP/2015 as ground no. 2. We have decided this issue by observing as under:- "13.2 We have heard the rival contentions. We find that the assessee had also challenged the finding of the Ld. CIT(A) on this issue in ITA No. 253/JP/2015 and we have restor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 32,75,233/- on the mistaken belief that it pertains to the Sonari Lignite Mines. The appellant has clarified that this expenditure pertains to Kasanu and Matasukh Mines at Nagor which are already operational and mines development expenses are allowable u/s 35E. The appellant has stated that it has itself added back the mine development expenses of Sonari Lignite Mines and therefore, there is no question of any further disallowance. The contention of the appellant is correct. The AO is directed to delete the disallowance of the above mine development expenses since it does not pertain to Sonari Lignite Mines but to operational Mines which have not completed ten years of operations. This ground is allowed." 84.3 This finding is not controverted by the Revenue by placing any contrary material on record. Therefore, this ground of the Revenue's appeal is dismissed. 85. Ground no. 8 is against allowing the reduction of ₹ 5,79,10,137/- claimed by the assessee on account of written back excess amortization. Ld. Departmental Representatives supported the order of the AO. 85.1 On the contrary, Ld. Counsel for the assessee reiterated the submissions and supported the order of the Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion upon the finalization of appeal proceedings on this issue instead of directing the AO to reduce the same in computing the total income. 4. The Ld. CIT(A) has erred on facts and in law in confirming the action of AO in reducing the claim of deduction u/s 80IA by ₹ 2,71,43,220/- by holding that liquidated damages received on account of shortfall in the minimum guaranteed generation of power units is not an income derived from the power generation business of windmills. 5. The Ld. CIT(A) has erred on facts and in law in directing the AO to apportion the establishment and financial expenditure of ₹ 27,45,50,244/- on the basis of turnover of the mining activity and wind power generation activity for allowing deduction u/s 80IA on the income from generation of power ignoring the fact that expenditure relatable to power generation undertaking has already been debited for working out the income of the said units. 6. The Ld. CIT(A) has erred on facts and in law in confirming the action of AO in disallowing the claim of deduction of ₹ 7,96,71,000/- in respect of mine closure expenses provided in the books of accounts. He has further erred in confirming the disall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contentions, we find that the Ld. CIT(A) has given finding on fact in para 5.3 as under:- "5.3 I have perused the facts of the case, the assessment order and the submission of the appellant. The AO has disallowed mines development expenditure of ₹ 6,64,150/- pertaining to the Sonari Lignite Mines on the ground that the assessee has not been able to show that commercial production has been started in these mines during the previous year under consideration. The appellant has stated that it has filed a letter of acceptance dated 21.11.2011 from one M/s Durga Construction Co., Vodobara for the work of renewal of overburden, raising and loading of saleable lignite form these mines, transportation etc. I have examined the submissions of the appellant and find that it has not been able to shown that commercial production from these mines have commenced during the year under consideration. Mere acceptance of a work by a contractor does not enable the appellant to discharge its onus that commercial production has commenced during the year under consideration. Therefore, the disallowance of mines development expenses made by the AO is unheld. This ground is dismissed." 91.3 This fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al party.] Section 37, therefore, contemplates that if the nature of expenditure is not the capital/personal in nature, and is laid out or expended wholly and exclusively for the purpose of business or profession, then it is required to be allowed by the authority. In our view, the expenditure which were incurred for getting the mining land on leasehold basis on mining basis, is to be treated as capital expenditure because the leas will have the enduring benefit for making such an investment. Our view is also fortified by the judgment of Hon'ble supreme Court in the matter of Aditya Mineral vs. CIT(1999) 8SSC 97 and also by the judgment of Hon'ble Supreme Court in the matter of Enterprising Enterprises vs. DCIT in the Civil Appeal No. 5655 of 2006 whereby Hon'ble Supreme Court has held that "where the entire amount of lease is paid either at a time or in installment, it would be capital expenditure". Therefore, we are bound by the judgments passed by the Hon'ble Supreme Court. Thus the expenses laid by the assessee for the purposes of getting the mining land and leasehold land, are required to be treated as capital expenditure. The AO is, therefore, directed to treat the amount p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ority and bound to follow the principle laid down by the Tribunal and not the vice versa. Therefore, the submission of the Ld. A/R for the assessee on this count is also rejected. However, it is made clear that the assesee would be entitled to all benefits as available in law and the assessee will not be subjected to double taxation for the A.Y. 2011-12. The AO is directed to give effect to the above said direction and nullify the effect of double taxation, if any, as claimed by the assessee. In the light of the above, ground no. 2 of the assessee is dismissed." 5.4 Therefore, taking a consistent view, apropos to ground no. 2 is directed to treat the expenditure as capital and grant relief if any available under the law. Thus, ground no. 2 is disposed of in the terms indicated hereinbefore. 92.3 For the same reasoning, this ground of the assessee is also disposed of in the terms of the above direction. 92.4 Ground no. 3.1 is against directing the AO to reduce the excess amortization of mining/leasehold land of ₹ 5,79,10,137/- written back in the year under consideration on account of change in method of amortization upon the finalization of appeal proceedings on this issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0IA on this receipt. This ground of the assessee's appeal is allowed." 93.1 Therefore, taking a consistent view, this ground is allowed in the light of our decision in para 35.3 in ITA No. 254/JP/2015 pertaining to AY 2008-09. The AO is directed to allow the deduction u/s 80IA on this receipt. 94. Ground no. 5, is against apportion the establishment and financial expenditure of ₹ 27,45,50,244/-. We find that identical issue was raised in ITA No 253/JP/2015 pertaining to AY 2007-08. We have decided this ground by observing as under:- "7.3 We find that in para 3 of the submissions before Ld. CIT(A), the assessee stated that in respect of the unallocated expenses of ₹ 15,67,45,594/- that none of these expenses pertain to the 80IA undertakings in as much as the entire operation and the maintenance of the power plant had been given to Suzlon Energies Ltd. Therefore, the assessee had not to incur any expenditure on salary/employees benefit, travelling conveyance and other expenses debited under the various heads of expense in corporate office/head office. No strategic planning, day to day management and supervision, financial management, marketing management, tendering, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve heard the rival contention, perused the material available on record. The Ld. CIT(A) has rejected the claim by following the decision of his predecessor pertaining to the AY 2010-11. The Co-ordinate Bench in assessee's own case has held as under:- "30.5 Further the judgment in the matter of Bharat Earth Movers Ltd Vs. CIT, 112 Taxman 61 (SC) and Calcutta Company Ltd, 37 ITR are applicable. Beside, in the said judgment it was categorically held that the mines closure liability is a ascertained liability. As per matching principle as well as the mercantile system of accounting, the liability is allowable in principle under section 37 of the Act. In view of the above, the ground of the assessee is allowed and the AO is directed to give the benefit of deduction of ₹ 2,94,04,000/- towards mines closure expenses in the A.Y. 2010-11." The facts are identical in this year, as well taking a consistent view, the AO is directed to given benefit of deduction of ₹ 4,69,61,000/- in respect of mine closure expenses. This ground of the assessee's appeal is allowed." 95.1 Therefore, taking a consistent view, this issue is also allowed. The AO is directed to allow deduction on mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by the Revenue. In our considered view, the operation of Rule 8D is not automatic. The assessing officer is required to satisfy himself about the correctness of the claim that no expenditure was incurred by the assessee. The Assessing Officer in the present case has accepted that there is not direct nexus between the investment and expenses so incurred. After considering the totality of the fact and keeping in view the sum of ₹ 1,138/- had been disallowed by invoking the provision of Rule 8D without being satisfy about the claim of the assessee that no administrative expenses were incurred for earning of the exempt income. We direct the Assessing Officer to delete the disallowance. This ground of the assessee's appeal is allowed." 97.1 For the same reasoning, this ground is allowed. The AO is directed to delete the disallowance. 98. Ground no. 9, is general in nature and needs no separate adjudication. 99. Ground no. 10, the facts are identical in ITA No. 256/JP/2015 pertaining to the AY 2011-12. The Respective Representative of the Parties have adopted the same argument as were adopted in the ITA No. 256/JP/2015 as ground no. 9. We have decided this issue by observing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15 as ground no. 1. We have decided this issue by observing as under:- "78.2 We have heard the rival contentions, we find that the Ld. CIT(A) has decided the issue in para 2.1 and 2.2 by following the judgments of the Hon'ble High Court as under:- "2.1. In this year, the assessee has claimed expenditure of ₹ 20,00,000/- in respect of contribution to State Renewal Fund. This issue also arose in the case of appellant in AY 2010-11 and earlier years. The main points of the Assessment Order, on this issue, have been narrated in the appeal order of CIT(A)-II, Jaipur (Appeal no. 325/12-13, dated 05.12.2013) for A.Y. 2010-11. The main points of the submissions of the appellant, on this issue, have been narrated the above appeal order. Therefore, the assessment order and the submissions of the appellant are not being again narrated in this order for the sake of brevity. In AY 2010-11, the CIT(A)-II, Jaipur, has held as under- "Assessing Officer disallowed contribution made to State Renewal Fund by treating the same as diversion of income. However, appellant submitted that this issue is covered in its favour by the order of ITAT. It is seen that similar addition was made in AY 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dopted in the ITA No. 295/JP/2015. We have decided this issue by observing as under:- "14.2 We have heard the rival contentions, perused the material available on record. We find that Ld. CIT(A) has given a finding on fact by observing as under:- "6.3 I have perused the facts of the case, the assessment order and the submissions of the appellant. The Assessing Officer has disallowed rural development expenses amounting to ₹ 2,96,49,172/- and afforestation, plantation and environment expenses amounting to ₹ 60,60,487/- on the ground that these expenses have been incurred for a social cause and general public good. The Assessing Officer has stated that this expenditure has not been laid out or expended wholly and exclusively for the purposes of business and therefore, is not an admissible expenditure u/s 37 (1) of the I. T Act. The appellant has stated that rural development expenditure has been incurred on repairs of road at different mining areas for the smooth transportation of vehicles, street lighting as well as for organizing medical camps, supply of school bags and stationary items to students of rural areas, construction of teen shades, meeting halls etc. In m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the deleting the addition o ₹ 3,16,22,808/-. The Ld. Departmental Representatives supported the order of the Assessing Officer and submitted that Ld. CIT(A) was not justified in deleting the addition. He submitted that the Assessing Officer has rightly held the expenditure incurred on compensation paid to the farmers for excavation of gypsum. 80.1 On the contrary, the Ld. Counsel for the assessee supported the order of the Ld. CIT(A) and submitted that there is no infirmity into the order of the Ld. CIT(A). 80.2 We have heard the rival contentions, perused the material available on record and gone through the order of the authorities below. The Ld. CIT(A) has followed the decision of his predecessor pertaining to AY 2010-11 against this order. The Revenue had filed an appeal before this Tribunal in ITA No. 144/JP/2014 wherein the Tribunal had dismissed the ground raised by the Revenue. Therefore, taking a consistent view, the ground raised in this appeal is also dismissed. Ground no. 3 of the Revenue's appeal is dismissed." 104.1 Therefore, taking a consistent view, this ground of Revenue's appeal is dismissed. 105. Ground no. 4, the ground and the facts are identical i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A)-II, Jaipur and the orders of the ITAT, Jaipur, in the case of the assessee, the above disallowance is directed to be deleted. This ground is allowed." 81.3 This finding is not controverted by the Revenue by placing any contrary material on record. Therefore, this ground of the Revenue's appeal is dismissed." 105.1 Therefore, taking a consistent view, this ground is dismissed. 106. Ground no. 5, the ground and the facts are identical in ITA No. 257/JP/2015 pertaining to the AY 2012-13. The Respective Representative of the Parties have adopted the same argument as were adopted in the ITA No. 257/JP/2015 as ground no. 5. We have decided this issue by observing as under:- "94. Ground no. 5, is against apportion the establishment and financial expenditure of ₹ 27,45,50,244/-. We find that identical issue was raised in ITA No 253/JP/2015 pertaining to AY 2007-08. We have decided this ground by observing as under:- "7.3 We find that in para 3 of the submissions before Ld. CIT(A), the assessee stated that in respect of the unallocated expenses of ₹ 15,67,45,594/- that none of these expenses pertain to the 80IA undertakings in as much as the entire operation and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sonari Mines. 3. The Ld. CIT(A) has erred on facts and in law in confirming the action of AO in disallowing the claim of amortization of mining and leasehold land of ₹ 1,57,17,105/- and 8,18,720/- respectively, ignoring that this claim was allowed in all earlier years upto AY 2009-10 in regular assessment proceedings and that the claim is also supported by the decision of ITAT, Hyderabad Bench in case of NMDC Ltd. Vs. JCIT in ITA No. 714/Hyd 2012 dt. 28.02.2014. 4. The Ld. CIT(A) has erred on facts an in law in confirming the action of AO in reducing the claim of deduction of u/s 80IA by ₹ 3,92,20,020/- by holding that liquidated damages received on account of shortfall in the minimum guaranteed generation of power units is not an income derived from the power generation business of windmills ignoring the decision of Supreme Court in case of CIT vs. Meghalaya Steel 383 ITR 217. 5. The Ld. CIT(A) has erred on facts and in law in directing the AO to apportion the establishment and financial expenditure of ₹ 24,09,78,291/- on the basis of turnover of the mining activity and wind power generation activity for allowing deduction u/s 80IA on the income from genera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opment expenses of ₹ 6,64,150/-. The Ld. Counsel for the assessee submitted that Ld. CIT(A) was not justified in confirming the addition. 91.1 On the contrary, the Ld. Departmental Representatives has supported the order of the Ld. CIT(A). 91.2 We have heard the rival contentions, we find that the Ld. CIT(A) has given finding on fact in para 5.3 as under:- "5.3 I have perused the facts of the case, the assessment order and the submission of the appellant. The AO has disallowed mines development expenditure of ₹ 6,64,150/- pertaining to the Sonari Lignite Mines on the ground that the assessee has not been able to show that commercial production has been started in these mines during the previous year under consideration. The appellant has stated that it has filed a letter of acceptance dated 21.11.2011 from one M/s Durga Construction Co., Vodobara for the work of renewal of overburden, raising and loading of saleable lignite form these mines, transportation etc. I have examined the submissions of the appellant and find that it has not been able to shown that commercial production from these mines have commenced during the year under consideration. Mere acceptance o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bts, it is hereby declared that any expenditure incurred by an assessee for any purpose which is an offence or which is prohibited by law shall not be deemed to have been incurred for the purpose of business or profession and no deduction or allowance shall be made in respect of such expenditure.] [(2B) Notwithstanding anything contained in sub-section (1), no allowance shall be made in respect of expenditure incurred by an assessee on advertisement in any souvenir, brochure, tract, pamphlet or the like published by a political party.] Section 37, therefore, contemplates that if the nature of expenditure is not the capital/personal in nature, and is laid out or expended wholly and exclusively for the purpose of business or profession, then it is required to be allowed by the authority. In our view, the expenditure which were incurred for getting the mining land on leasehold basis on mining basis, is to be treated as capital expenditure because the leas will have the enduring benefit for making such an investment. Our view is also fortified by the judgment of Hon'ble supreme Court in the matter of Aditya Mineral vs. CIT(1999) 8SSC 97 and also by the judgment of Hon'ble Supreme C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7/-. In our view the assessee was taxed on the basis of the submissions made by it before the AO before the assessment for the A.Y. 2010-11 is finalized. The mere acceptance of the methodology by the AO for A.Y. 2011-12 will not withhold us to decide the issue on merit and in law for the A.Y. 2010-11. As per the law and principle, the authorities situated in lower ladder/tire of hierarchy is required to abide law/adjudication done by the superior authority. This is only way the judicial system works. The AO is quasi judicial authority and bound to follow the principle laid down by the Tribunal and not the vice versa. Therefore, the submission of the Ld. A/R for the assessee on this count is also rejected. However, it is made clear that the assesee would be entitled to all benefits as available in law and the assessee will not be subjected to double taxation for the A.Y. 2011-12. The AO is directed to give effect to the above said direction and nullify the effect of double taxation, if any, as claimed by the assessee. In the light of the above, ground no. 2 of the assessee is dismissed." 5.4 Therefore, taking a consistent view, apropos to ground no. 2 is directed to treat the expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owed." 93.1 Therefore, taking a consistent view, this ground is allowed in the light of our decision in para 35.3 in ITA No. 254/JP/2015 pertaining to AY 2008- 09, this ground of assessee's appeal is allowed. The AO is directed to allowed deduction u/s 80IA on this receipt." 114.1 For the same reasoning, this ground is allowed. 115. Ground no. 5, the ground and the facts are identical in ITA No. 257/JP/2015 as ground no. 5 pertaining to the Assessment Year 2012-13. We have decided this ground by observing as under:- "94. Ground no. 5, is against apportion the establishment and financial expenditure of ₹ 27,45,50,244/-. We find that identical issue was raised in ITA No 253/JP/2015 pertaining to AY 2007-08. We have decided this ground by observing as under "7.3 We find that in para 3 of the submissions before Ld. CIT(A), the assessee stated that in respect of the unallocated expenses of ₹ 15,67,45,594/- that none of these expenses pertain to the 80IA undertakings in as much as the entire operation and the maintenance of the power plant had been given to Suzlon Energies Ltd. Therefore, the assessee had not to incur any expenditure on salary/employees benefit, trave ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. Vs. DCIT 96 ITD 186 (Mum.), the Hon'ble Madras High Court rendered in the case of CIT Vs. Madras Refinery Ltd. 266 ITR 170 (Mad.) (HC) and CIT Vs. India Radiators Ltd. 236 ITR 719 (Mad.) (HC). 72.1 On the contrary, the Ld. Departmental Representatives supported the order of the authorities below. 72.3 We have heard the rival contentions; we are unable to accept the contentions of the Ld. Counsel for the assessee that the expenditure is allowable as the same was related to the business of the assessee. The assessee has not furnished material suggesting that these expenses were made for the purpose of business of the assessee as the amount u/s 37(1) is allowable only when it is expend wholly and exclusively for the business of purpose. Therefore, we do not see any reason to interfere into the order of the Ld. CIT(A) same is hereby affirmed. This ground is dismissed." 96.1For the same reasoning, this ground of assessee's appeal is dismissed." 116.1 For the same reasoning, this ground is dismissed. 117. Ground no. 7, the facts are identical in ITA No. 257/JP/2015 as ground no. 8 pertaining to the Assessment Year 2012-13. We have decided this ground by observing as under:- "9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is ground is dismissed. 120. In the result, Appeal of the Assessee in ITA No. 1028/JP/2016 is partly allowed for statistical purpose. ITA No. 1097/JP/2016 121. Now, we take up Revenue's appeal in ITA No.1097/JP/2016 pertaining to the AY 2013-14. The Revenue has raised the followings grounds of appeal:- "1. Whether on the facts and circumstances of the case and in law the Ld. CIT(A) was justified in directing to delete addition of ₹ 20,00,000/- made by the AO by disallowing of contribution to State Renewal Fund despite the fact that it was application of income and not expenditure incurred for business expediency. 2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in restricting the disallowance made out of Rural Development Expenses to ₹ 23,95,996/- out of ₹ 60,94,904/- disallowed by the AO. 3. Whether on the facts and circumstances of the case and in law the Ld. CIT(A) was justified in deleting the disallowance made out of Afforestation, Plantation, & Environment Expenses of ₹ 53,09,413/-. 4. Whether on the facts and circumstances of the case and in law the Ld. CIT(A) was justified in allowing the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udgments of the Hon'ble High Court as under:- "2.1. In this year, the assessee has claimed expenditure of ₹ 20,00,000/- in respect of contribution to State Renewal Fund. This issue also arose in the case of appellant in AY 2010-11 and earlier years. The main points of the Assessment Order, on this issue, have been narrated in the appeal order of CIT(A)-II, Jaipur (Appeal no. 325/12-13, dated 05.12.2013) for A.Y. 2010-11. The main points of the submissions of the appellant, on this issue, have been narrated the above appeal order. Therefore, the assessment order and the submissions of the appellant are not being again narrated in this order for the sake of brevity. In AY 2010-11, the CIT(A)-II, Jaipur, has held as under- "Assessing Officer disallowed contribution made to State Renewal Fund by treating the same as diversion of income. However, appellant submitted that this issue is covered in its favour by the order of ITAT. It is seen that similar addition was made in AY 2006-07 in the case of the appellant, but it was decided by Hon'ble ITAT Bench 'A' Jaipur in ITA No. 783/JP/2009 & 740/JP/2009 in AY 2006-07 through order dated 31.03.2010 in f avour of the appellant, wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng on fact by observing as under:- "6.3 I have perused the facts of the case, the assessment order and the submissions of the appellant. The Assessing Officer has disallowed rural development expenses amounting to ₹ 2,96,49,172/- and afforestation, plantation and environment expenses amounting to ₹ 60,60,487/- on the ground that these expenses have been incurred for a social cause and general public good. The Assessing Officer has stated that this expenditure has not been laid out or expended wholly and exclusively for the purposes of business and therefore, is not an admissible expenditure u/s 37 (1) of the I. T Act. The appellant has stated that rural development expenditure has been incurred on repairs of road at different mining areas for the smooth transportation of vehicles, street lighting as well as for organizing medical camps, supply of school bags and stationary items to students of rural areas, construction of teen shades, meeting halls etc. In my view, the expenditure incurred by the appellant on repairs of road at different mining areas for the smooth transportation of vehicles, street lighting amounting to ₹ 1,76,01,218/- has been incurred for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material available on record. We find that Ld. CIT(A) has given a finding on fact by observing as under:- "6.3 I have perused the facts of the case, the assessment order and the submissions of the appellant. The Assessing Officer has disallowed rural development expenses amounting to ₹ 2,96,49,172/- and afforestation, plantation and environment expenses amounting to ₹ 60,60,487/- on the ground that these expenses have been incurred for a social cause and general public good. The Assessing Officer has stated that this expenditure has not been laid out or expended wholly and exclusively for the purposes of business and therefore, is not an admissible expenditure u/s 37 (1) of the I. T Act. The appellant has stated that rural development expenditure has been incurred on repairs of road at different mining areas for the smooth transportation of vehicles, street lighting as well as for organizing medical camps, supply of school bags and stationary items to students of rural areas, construction of teen shades, meeting halls etc. In my view, the expenditure incurred by the appellant on repairs of road at different mining areas for the smooth transportation of vehicles, stree ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure. 80.1 On the contrary, the Ld. Counsel for the assessee supported the order of the Ld. CIT(A) and submitted that there is no infirmity into the order of the Ld. CIT(A). 80.2 We have heard the rival contentions, perused the material available on record and gone through the order of the authorities below. The Ld. CIT(A) has followed the decision of his predecessor pertaining to AY 2010-11. Against this order, the Revenue had filed an appeal before this Tribunal in ITA No. 144/JP/2014 wherein the Tribunal was pleased to dismiss the ground raised by the Revenue. Therefore, taking a consistent view, for the same reasoning, the ground raised in this appeal is also dismissed. Ground no. 3 of the Revenue's appeal is dismissed." 125.1 For the same reasoning, this ground is dismissed. 126. Ground No. 5, the fact are identical in ITA No. 298/JP/2015 pertaining to the AY 2011-12. The Respective Representatives of the parties have adopted the same argument as were adopted in ITA No. 298/JP/2015. We have decided this issue by observing as under:- "84. Ground no. 7 is against deletion of addition of ₹ 32,75,233/- on account of mines development expenses. Ld. Departmenta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a 6.1 and 6.2 of his order as under:- "6.1 In this year, the assessee has claimed prior period expenditure of ₹ 1,75,79,531/-. This issue also arose in the care of appellant in AY 2010-11 and earlier years. The main points of the Assessment order, on this issue, have been narrated in the appeal order of CIT(A)- II, Jaipur (Appeal no. 325/12-13, dated 05.12.2013) for AY 2010-11. The main points of the submissions of the appellant, on this issue, have been narrated the above appeal order. Therefore, the assessment order and the submissions of the appellant are not being again narrated in this order for the sake of brevity. In AY 2010-11, the CIT(A)-II, Jaipur, has held as under- "From the submission of the appellant it is clear that Hon'ble ITAT, Jaipur Bench has been allowing Prior Period Expenses in the case of various Government Undertakings in the year in which such expenses are finally sanctioned and approved. Even in the appellant's own case the issue has been decided in favour of the appellant in AY 2000-01 by Hon'ble Jaipur Bench ITAT vide order dated 22-12-2006. My predecessors have allowed prior period expenses in orders dated 10.08.2011 in AY 2008-09 and 18.10.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue in favour of the assessee. 70.1 On the contrary, the Ld. Departmental Representatives supported the order of the authorities below. 70.2 We have heard the rival contention, perused the material available on record. The Ld. CIT(A) has rejected the claim by following the decision of his predecessor pertaining to the AY 2010-11. The Co-ordinate Bench in assessee's own case has held as under:- "30.5 Further the judgment in the matter of Bharat Earth Movers Ltd Vs. CIT, 112 Taxman 61 (SC) and Calcutta Company Ltd, 37 ITR are applicable. Beside, in the said judgment it was categorically held that the mines closure liability is a ascertained liability. As per matching principle as well as the mercantile system of accounting, the liability is allowable in principle under section 37 of the Act. In view of the above, the ground of the assessee is allowed and the AO is directed to give the benefit of deduction of ₹ 2,94,04,000/- towards mines closure expenses in the A.Y. 2010-11." The facts are identical in this year, as well taking a consistent view, the AO is directed to given benefit of deduction of ₹ 4,69,61,000/- in respect of mine closure expenses. This ground of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owever, ground no. 4.1 is dismissed. 129.1 For the same reasoning, this ground is allowed for statistical purposes. 130. Ground No. 9, the fact are identical in ITA No. 295/JP/2015 pertaining to the AY 2007-08. The Respective Representatives of the parties have adopted the same argument as were adopted in ITA No. 295/JP/2015 as ground no. 1. We have decided this issue by observing as under:- "12.3 Since, the Ld. CIT(A) has followed the judgment of the Hon'ble Andhra Pradesh High Court rendered in the case of My Home Power Ltd. 365 ITR 82(supra) where the Hon'ble court, under the identical facts confirmed the view of the Tribunal in holding that Carbon credit is not an offshoot of business but an offshoot of environmental concerns. No asset is generated in cost of business but it is generated due to environmental concerns. Therefore, on sale of excess carbon credits correctly held by the Tribunal as a capital receipt. In view of the judgment of Hon'vble Andhra Pradesh High Court, we do not see any reason to disturb the finding of Ld. CIT(A), same is hereby affirmed. The Revenue has not brought to our notice any contrary binding precedent. Hence, this ground of Revenue's appeal i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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