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TMI Blog2018 (12) TMI 456X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by allowing deduction under section 37(1), of the entire amount of Rs. 60,00,000/-, as claimed by the assessee company before the ld. AO, in the assessment proceedings and before ld. CIT(A), in the first appellate proceedings." Revenue's grounds of appeal (ITA No. 640/JP/2018) "(i) (a) whether in the facts and circumstances of the case and in law the Ld. CIT(A) is justified in holding that the sum of Rs. 60 lacs being payment to farmers is in the nature of compensation and hence admissible deduction u/s 37(1). (b) whether in the facts and circumstances of the case and in law the Ld. CIT(A) is justified in holding that the payment of Rs. 60 lacs pertaining to Khasara No. 42/63; 42/64 (total area of 15 Bigha) is in the nature of "compensation" even when the agreement clearly states "purchase of land". (c) whether in the facts and circumstances of the case and in law the Ld. CIT(A) is justified in overlooking that these land i.e. Khasara No. 42/63; 42/64 are different from the lands which are stated in the "Samarpan Patra" submitted to the Tehsildar. (ii) Whether in the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... truction Company 2003, 1SOT 587 (JP) and ITAT Jodhpur bench in ITO vs. New Mitherwal construction Co. 120 Taxman 83 (Jodhpur) for this proposition. In view of the above, ground of appeal is accordingly allowed." 4. During the course of hearing, the ld. AR submitted that under identical set of facts, for immediately preceding assessing year 2013-14, wherein the assessee had paid compensation of Rs. 35,00,000/- the claim of the assessee was allowed U/s 37(1) of the Act. It was accordingly submitted that ld. CIT(A) has rightly followed the decision of the Coordinate Bench and allowed the deduction U/s 37(1) of the Act. 5. At the same time, it was submitted that the finding of the ld. CIT(A) that the claim of the assessee company U/s 37(1) of the Act cannot be greater than the amount originally claim in the return is not correct and ld. CIT(A) has misplaced her reliance on the decision in case of ACIT vs. Subh Laxmi Construction Co. (2003) 1 SOT 587 and ITO vs. New Mitherwal Construction Co. (2002) 120 Taxman 82 as the facts in those two cases are total different from the present case. In both these cases, entire mechanism of determining the assessed income had undergone change durin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entertain new claims made before them, during the proceedings, even to the extent that the assessed income may go lower than the returned income. Both AO and CIT(A) are entrusted with the responsibility of assessing income/passing orders in accordance with the law and not to take any benefit of any mistake committed by the assessee. In the aforementioned judgments, relied by ld. CIT(A), no claims were made by the assessees before the lower authorities. However, in the present case, the assessee consistently made the claim before the AO and CIT(A) for allowability of entire amount of Rs. 60,00,000 under section 37(1) of the Act. 5.3 It was further submitted that it is a settled law that fresh claim can be made for the first time before the CIT(A). The ld. CIT(A) herself has accepted the said legal proposition. However, having accepted the said legal proposition, ld. CIT(A) gravely erred in coming to a conclusion that fresh claim should not lead to assessed income below returned income. Such a proposition would frustrate the established legal principle that fresh claim can be made before the CIT(A) even if the same is not claimed in the return of income. Reliance is placed on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at a figure higher than the returned loss, nor a further refund can be given except what was due on the basis of the returned income, and which would have already been allowed under the provisions of section 143(1)(a)(ii)." 5.7 It was submitted that the aforesaid CBDT circular created a confusion amongst the assessing officer and they were of the view that the assessing officers cannot assess the income lesser than returned income and cannot assess loss higher than returned loss while carrying out regular assessments under section 143(3). This matter came up Hon'ble Andhra Pradesh High Court in the case of Bakelite Hylam Ltd. [1999] 107 Taxman 429 (AP) wherein Hon'ble High Court considered the provisions of section 143 and the said CBDT Circular and held that AO has power to grant refund to the assessee in assessment proceedings. For example, if assessee claims depreciation at a rate lower than the rate prescribed in the Income Tax Rules, then in such case at the time of assessment AO will apply the correct rate as prescribed in the rules. This will result in a situation where assessed income would be lower than returned income. Therefore, even if returned income is higher, asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of Government of Rajasthan and mutated in the name of Government of Rajasthan in the revenue records. It was accordingly submitted that the assessee company didn't acquire the said piece of land by way of any new asset and the amount was spent merely for the purposes of removing the obstruction to facilitate the mining operations. In support of his contentions, the ld AR has submitted various documents such as undertaking for surrender of land by land owner, surrender Letter or Samarpan Patra executed by the Land owner, chain of events documented by Tehsildaar, letter written by Land Owner to Tehsildaar surrendering the land, report of Tehsildaar for verification of facts and evidence that the land surrendered by Mr. Ranga was mutated in the name of the Government of Rajasthan in the revenue records. It has been contended that all these documents were submitted before the ld CIT(A). In our view, these are relevant documents which have been brought on record by the assessee company to determine the exact nature of transaction and amount paid by the assessee company to the land owner. The ld CIT(A) has recorded a finding that during the previous year relevant to A.Y 2013-14, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l as expenditure incurred during the year under consideration on which depreciation has been claimed. In the earlier year i.e, AY 2013-14, the whole of the expenditure has been allowed as revenue expenditure and therefore, if we were to approve the approach of the Revenue, it will create an inconsistent position as far as this claim of expenditure is concerned. Once a claim is held to be legally allowed, there is thus no basis to restrict the quantum of such claim once other conditions for claiming such expenditure has been duly satisfied. Therefore, consistent with the position in the earlier year and following the decision of the Coordinate Bench referred supra, the whole of the expenditure of Rs. 60,00,000 incurred during the year is allowed as revenue expenditure u/s 37(1) of the Act. In the result, ground of assessee's appeal is allowed and the ground of Revenue's appeal is dismissed. 9. Regarding ground No. 2 and 3 of the Revenue's appeal, the Revenue has challenged the deletion of addition of Rs. 13,70,733/- towards contribution to PF and ESI. The ld. AR submitted that the assessee company has deposited employee's contribution to PF and ESI amounting to Rs. 13,70,733/- wit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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