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TMI Blog2018 (10) TMI 1120X X X X Extracts X X X X X X X X Extracts X X X X ..... e material on record, we find that the direction of the ITAT in the earlier Assessment Years holds good for the relevant assessment years under consideration. Therefore, respectfully following the decision of the coordinate Bench on similar set of facts, we direct the A.O. to recalculate the expenses allowable under CSR after disallowing the sum of capital expenses. Accordingly, Ground No.4 is treated as allowed for statistical purposes. X X X X Extracts X X X X X X X X Extracts X X X X ..... has been paid on the amount of ₹ 268.47 Crs which was still receivable at the end of the year and that based on the judgment of the Hon'ble Supreme Court, both the expenses i.e., contribution to SPV and compensation to Statutory Agencies are provided in its books which has already been withheld by Monitoring Committee appointed by the Apex Court and therefore, the disallowance again would amount to double taxation. It was also argued that the payment made by NMDC is 'compensatory' in nature and it cannot be construed as 'punitive' in nature and hence it is an allowable expenditure. 4. The A.O. however did not accept the assessee's explanation and held that the assessee, being a Category-B leaseholder, has been directed to make the payment for infringement of MMDR Act and other allied laws. Therefore, he observed that the payment of ₹ 405.79 Crs is punitive in nature and brought it to tax. 5. Further, A.O. also examined the allowability of the payment made by the assessee towards 'Mine Closure' and held it to be 'contingent' in nature and not a deductible expenditure u/s 37(1) of the Act. He observed that assessee-company has claimed depreciation on intangible assets. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without appreciating the fact that the said liability is not an ascertained liability. 2. The CIT(A) erred in ignoring the fact that Revenue's appeals on identical issue in assessee's own case for the AYs 2009-10 and 2010-11 are pending adjudication by the Hon'ble High Court. 3. The CIT(A) erred in allowing the depreciati9on on intangible assets of ₹ 13,85,98,142/-. 4. The CIT(A) erred in ignoring the fact that Revenue's appeals on identical issue is assessee's own case for AYs 2008-09, 2009- 10, 2010-11 & 2011-12 are pending adjudication by the Hon'ble High Court. 5. The CIT(A) erred in directing the A.O. to re-calculate and allow Corporate Social Responsibility expenses of ₹ 72,38,00,000/-. 6. The CIT(A) erred in ignoring the fact that the Revenue's appeals on identical issue in assessee's own case for AYs 2009-10, 2010-11 & 2011-12 are pending adjudication by the Hon'ble High Court." 8. As regards the assessee's appeal, Learned Counsel for the Assessee reiterated the submissions made before the authorities below, while the Learned Departmental Representative supported the orders of the lower authorities (A.O. and the CIT(A)). 9. Having regard to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same. Relevant paras from the judgement dated 18.04.2013 are reproduced hereunder for ready reference:- "5. We may now proceed to notice the relevant part of the two Reports of the CEC dated 3.2.2012 and 13.3.2012, as referred to hereinabove. "IV. CLASSIFICATION OF LEASES IN DIFFERENT CATEGORIES ON THE BASIS OF THE LEVEL OF ILLEGALITIES FOUND. 27. The CEC, based on the extent of illegal mining found by the Joint Team and as appropriately modified by the CEC in its Proceeding dated 25th January, 2012 and after considering the other relevant information has classified the mining leases into three categories namely "Category-A", "Category-B" and "Category-C". 28. The "Category-A" comprises of (a) working leases wherein no illegality/marginal illegality have been found and (b) non working leases wherein no marginal/illegalities have been found. The number of such leases comes to 21 & 24 respectively. 29. "Category-B" comprises of (a) mining leases wherein illegal mining by way of (i) mining pits outside the sanctioned lease areas have been found to be up to 10% of the lease areas and/ or (ii) over burden/waste dumps outside the sanctioned lease areas have been found t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... djoining States which have been using the iron ore from the mining leases located in these Districts. Exports, outside the country, should be permissible only in respect of the material which the steel plants and associated industries are not willing to purchase on or above the average price realized by the Monitoring Committee for the corresponding grades of fines/lumps during the sale of about 25 MMT of the existing stock of iron ore. Similarly, the iron ore produced by the beneficiation plants after Page 11 11 processing should also not be permitted to be exported outside the country; (E) the sale of the iron ore should continue to be through e-auction and the same should be conducted by the Monitoring Committee constituted by this Hon'ble Court. However, the quantity to be put up for e-auction, its grade, lot size, its base/floor price and the period of delivery will be decided/provided by the respective lease holders. The Monitoring Committee may permit the lease holders to put up for e-auction the quantities of the iron ore planned to be produced in subsequent months. The system of sale through the Monitoring Committee may be reviewed after say two year; (F) 90% of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed on the lessee. It is recommended that: a) For illegal mining by way of mining pits outside the leases area, as found by the Joint Team, the compensation/ penalty may be imposed at the rate of ₹ 5.00 crore (Rs. Five Crore only) for per ha. of the area found by the Joint Team to be under illegal mining pit; and b) For illegal mining by way of over burden dump(s) road, office, etc. outside the sanctioned lease area, the compensation/ penalty may be imposed @ ₹ 1.00 crores (Rs. One Crores only) for per ha. of the area found to be under illegal over burden dump etc. iii) Mining operation may be allowed to be undertaken after (a) the implementation of the R& R Plan is physically undertaken and is found to be satisfactory based on the predetermined parameters (b) penalty/ compensation as decided by this Hon'ble Page 14 14 Court is deposited and (c) the conditions as applicable in respect of "Category-A" leases are fulfilled/followed; iv) In respect of the seven mining leases located on/nearby the interstate boundary, the mining operation should presently remain suspended. The survey sketches of these leases should be finalized after the interstate boundary is d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0.32 0.37 2 Veerabhadrapha Sangappa and Company Ballary A 13.06.2011 2296 51.00 0.00 0.29 0.57 2.12 2.41 3 B. Kumara Gowda Ballary A 13.06.2011 2516 54.25 0.03 0.06 0.22 0.41 1.33 6.70 8.28 4 Sri Allum Prashanth Ballary A 02.07.2011 2352 69.64 0.00 0.21 0.30 12.17 12.38 5. Nadeem Minerals Ballary A 02.07.2011 2526 53.20 0.06 0.11 0.16 0.30 3.09 3.09 6 Tiffins Barytes Asbestos and Paints Ltd Ballary A 02.07.2011 2293 191.13 0.00 0.25 0.13 7.43 7.68 7 Mysore Minerals (Harishankar) Ballary A 28.07.2011 1754 6.07 0.00 0.00 0.07 0.07 8 Lakshmi Minerals Ballary A 28.07.2011 2551 22.26 0.00 0.10 0.45 1.80 1.90 9 National Mineral Development Corporation Ballary A 08.09.2011 1111 647.50 0.29 0.04 0.00 10.12 10.41 10 P. Balasubbasetty & Sons Ballary A 08.09.2011 2502 44.11 0.18 0.41 0.29 0.66 0.69 1.16 11 Mysore Minerals Ltd (Timmappanagudi) Ballary A 08.09.2011 2805 136.97 0.00 1.82 1.33 1.78 3.60 12 M. Srinivasulu Ballary A 08.09.2011 2552 134.00 0.00 0.00 0.99 0.99 13 Zeenath Transport Co Ballary A 08.09.2011 2547 50.00 0.22 0.44 0. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0.00 0.00 0.14 0.21 16 National Minieral Development Corporation Ballary A 08.09.2011 2396 608.00 1.19 0.20 1.65 0.27 49.49 52.33 17 Sandur Magenese & Iron Ores Ltd Ballary A 10.11.2011 2580 1,863.02 3.97 0.21 0.78 0.04 35.89 40.64 18 G J Kumar Chitra durga A 13.10.2011 2499 1.34 0.00 0.00 0.16 0.16 19 E. Ramamurthy ( R Praveen Chandra) Chitra durga A 13.10.2011 2294 42.60 0.00 0.32 0.75 2.53 2.85 20 Mineral Enterprises Ltd Chitra durga A 24.01.2012 2348 103.81 3.13 3.13 21 Karnataka Limpo Tumk ur A 10.11.2011 2028 16.19 0.17 1.05 0.12 0.74 1.02 1.31 Total (2 mining leases) 4,118.78 6.23 0.15 6.88 0.17 141.94 155.0 5 been marginal illegalities committed by the assessee and the compensation / penalty as directed by the Hon'ble Supreme Court is only to compensate the Government for the loss of revenue from such mining or marginal illegalities and not as a penalty. Though the nomenclature given is "penalty" it is not for infraction or violation of any law to hold it to be punitive in nature, as presumed by the Assessing Officer. Learned Counsel for the Assessee placed reliance on various case law, particularly the decision of the Coordinate Bench of the ITAT, Kolkata in the case of Es ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law, the context in which it is used is significant." 11. Applying this ratio to the facts of the case before us, we find from para 43 of the Hon'ble Supreme Court's order reproduced above that the condition of payment for resuming the mining activity by Categories 'A' & 'B' companies is to not to punish the companies for any violation of law but is to ensure scientific and planned exploitation of mineral resources in India. Further the Hon'ble Supreme Court had directed as under:- "(X) Out of the 20% of sale proceeds retained by the Monitoring Committee in respect of the cleared mining leases falling in "Category- A", 10% of the sale proceeds may be transferred to the SPV while the balance 10% of the sale proceeds may be reimbursed to the respective lessees. In respect of the mining leases falling in "Category-B", after deducting the penalty / compensation, the estimated cost of the implementation of the R & R Plan, and 10% of the sale proceeds to be retained for being transferred to the SPV, the balance amount, if any may be reimbursed to the respective lessees;" The fact that the compensation is proportionate to area of illegal mining outside the leased area and that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red by the decision of ITAT in the assessee's own case for the earlier assessment years and the Revenue is in appeal before the High Court on the said orders of the Tribunal. We find that the CIT(A) has followed the decision of the Tribunal for granting relief to the assessee and it has not been brought to our notice that the orders of the ITAT are suspended or set-aside by the Hon'ble High Court. In view of the same, we see no reason to interfere with the orders of the CIT(A) on the issues, who has followed the orders of the ITAT on the same issues. Accordingly, the Revenue's appeal for the A.Y. 2013-14 is dismissed. ITA No.1823/H/2017 (A.Y.: 2014-15) (By Assessee) 19. In this appeal, assessee has raised the following grounds of appeal:- "1. The order of the CIT(A) is erroneous both on facts and in law to the extent it is the prejudicial to the interest of the assessee. 2. The Ld. CIT(A) erred in confirming the addition made by A.O. of ₹ 285,46,00,000/- by treating the amounts paid by appellant on the order of Supreme Court as penal in nature ignoring that the amount paid is compensatory in nature and paid excessively for the purpose of business. 3. The Ld. CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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