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TMI Blog2018 (12) TMI 1460X X X X Extracts X X X X X X X X Extracts X X X X ..... he CIT(A) placed reliance in the case of Gwalior Rayon Silk Manufacturing Co. Ltd. [1992 (4) TMI 3 - SUPREME COURT] which held that roads constructed by the assessee in factory premises forms of part of building. The CIT(A) further placed reliance in the case of HMT Ltd. [1992 (7) TMI 58 - KARNATAKA HIGH COURT] which held that roads, walls and fences are regarded as part of building. Therefore, taking into consideration the law laid down we find no infirmity in the order of the CIT(A) in holding that the assessee is entitled to claim depreciation on land and site development expenditure. Therefore, we find no infirmity in the order of CIT(A) in remanding the issue to the file of AO for its verification. MAT - addition made on account of expenditure in earning exempt income u/s 115JB - Held that:- As decided in assessee's own case admittedly, there was no income earned during the year under consideration from the aforesaid investment. It is a settled law that no disallowance shall be warranted under the provision of Sec. 14A r.w. Rule 8D if there is under the year consideration. - decided in favour of assessee Expenses incurred on club entrance fees and subscriptions - allowa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -10) 3. Heard both parties and perused the material available on record. The brief facts of the case are that the assessee is a company and engaged in the business of extraction of minerals and other mining activities. The assessee claimed additional depreciation on mining equipment. The AO disallowed on the ground that extraction of mining is not manufacturing activity and thereby disallowed the claim of the assessee to the extent of ₹ 70,01,271/-. The CIT(A) held that the assessee has mines in the states of Jharkhand Orissa and the equipment on which the assessee claimed depreciation help in the extraction process conducted during the process of extraction of iron ore and manganese ore. The CIT(A) also placed reliance in the case of Sesa Goa Ltd. of Hon ble Supreme Court, in the case of G.S. Atwal Co. of Hon ble High Court of Calcutta and in the case of Integrated Coal Mining Ltd. of Co-ordinate Bench of the Kolkata, ITAT and allowed the additional depreciation. The relevant portion of which is reproduced hereunder below:- 5. Appeal on Ground No. 2 is against making addition on account of additional depreciation of ₹ 70,01,271/- on mining equipments acq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of CIT v Is G.S. Atwal Co. in [2003] 67 Taxman 520 (Supra) the Hon'ble High Court at Calcu ta held that if assessee owns machinery and such machinery is used for production in the mines, then section 32A applies. Further in the case of Integrated Coal Mining Ltd. vs DCIT in [2016] 67 taxmann.com 260, the Honble Kolkata ITAT held as under. Mining of coal is production of coal and assessee engaged in mining of coal would be entitled to additional depreciation Oil survey instrument acquired during year Section 32 of the Income Tax Act, 1961. Depreciation - Additional depreciation - Assessment year 2008-09 - Whether coal mining is production of coal and, therefore , assessee engaged in mining of coal, would be entitled to additional depreciation on survey instrument acquired by it during relevant year - Held, yes [Para 6.3.] [In favour of assessee] 7. I find that in the instant case the assessee is engaged in the business of mining of Manganese ore Iron ore and mining is constructed as a manufacturing activity. I respectfully following the decision of the Hon ble Supreme Court in the case of CIT v. Sesa Goa Ltd(Supra), Hon'ble jurisdictional High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Some mines are also located at Sanpothli, Tentuldih and Kusumdih. The main business of the company is exploration, development, mining and processing of mineral assets. It includes extraction of iron ore and manganese ore and its sale in the open market. The Company has its land taken on lease where the mines are located and conduct the mining activities there only. He further submitted that for the purpose of mining, first the land has to be prepared so that the mining activities can be conducted there. The assessee company incurred the expenses for building roads and boundary walls around the land taken on lease and capitalized the same under the head Land Site development Expenses. Construction of roads were important to facilitate the business activity of the assessee i.e. mining. Construction of Roads and boundary walls included various components like excavation of land, Leveling of land, Laying of R.C.C Hume pipes, Boulder Soiling and Morum Filing etc. For all these, the assessee incurs certain expenditure which were duly capitalized by the assessee and it claimed depreciation on the same. He also explained that the nature of the expenses incurred are ancillary to the mai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arties and perused the material available on record. During the course of first appellant proceedings, the assessee submitted a detailed chart showing depreciation claimed. According to CIT(A) that the assessee has claimed excess depreciation on land site expenses and requires further verification by the AO. Accordingly, he directed the AO to verify the claim of the assessee. It is noted that the assessee has incurred expenses for building, roads and boundary walls around the mines which were taken on lease. According to CIT(A), the assessee is entitled to depreciation @ 10% by holding the building as contemplated in Appendix I of Income Tax Rules including roads, bridges, culverts, wells and tubewells. The CIT(A) placed reliance in the case of Gwalior Rayon Silk Manufacturing Co. Ltd. reported in 196 ITR 149(SC) which held that roads constructed by the assessee in factory premises forms of part of building. The CIT(A) further placed reliance in the case of HMT Ltd. 199 ITR 235 (Karnataka) of Hon ble High Court of Karnataka which held that roads, walls and fences are regarded as part of building. Therefore, taking into consideration the law laid down by the Hon ble Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, Ground No.3 raised by Revenue is dismissed. 17. Ground No.4 raised by the Revenue is relating to deletion of expenses incurred on club entrance fees and subscriptions. 18. Heard both parties and perused the material available on record. The contention of the Ld. AR is that the assessee incurred club expenses in respect of partnership of Directors in various clubs to entertain the customers and also to meet various people to make them prospective customers of the business. But, however, it is observed from the impugned order that the CIT(A) did not make any reference to evidence produced by the assessee in respect of incurring such expenses for the development of assessee s business. In the absence of which, we cannot support the finding given by the CIT(A). For ready-reference, we reproduced the relevant portion herein below:- 12. Appeal on Ground No. 4 is against disallowance of ₹ 28,81,900/ - on account of Club Entrance Fees and subscription of ₹ 12,902/- on account of cost for club service and facilities on the alleged ground that the said expenses are personal in nature. On this issue, the A/R has submitted that assessee has incurred expenditure on mem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rule 8D. In the assessment order the AO has made this disallowance on the basis of his calculation under rule 8D read with section 14A of the I T Act, 1961. During the appellate proceedings the AR has filed a written submission and case laws on this issue. I have considered the finding of the AO and the written submission filed by the AR during the appellate proceedings. The AR has brought it on record that during the AY 2013-14 the assessee had not earned any exempted income. The AR also has brought on record the jurisdictional Kolkata bench of ITAT order in the case of REI Agro Ltd (supra) in which the Hon'ble Kolkata bench of ITAT has held that in the absence of any tax free income earned by the assessee, disallowance u/s 14A could not be made. The AR has further brought on record the case law of CIT vs Cheminvest Ltd (supra) in which the Hon'ble Delhi High has categorically held that there should be an actual receipt of income which is not includable in total income for the calculation and its applicability u/s 14A. It has been further held that section 14A will not apply where no exempt income is received or receivable during the relevant previous year. I have co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied that the employee s contribution was relating to PF ESI was deposited before due date of filing of return of income. Therefore, we find no infirmity in the order of CIT(A) and it is justified. Thus, Ground No.7 raised by the Revenue is dismissed. 24. In the result, the appeal filed by the Revenue is partly allowed. ITA No.2154/Kol/2017 (AY 2014-15) 25. Ground Nos. 1, 2, 3 4 are similar and identical to the Ground No.7 raised by the Revenue in ITA No.2153/Kol/2017 relating to delayed payment of employees contribution towards PF ESI. Thus, the view taken by us in Ground No.7 in ITA No.2153/Kol/2017 is applicable to these grounds also. Therefore, Ground Nos. 1, 2, 3 4 raised by Revenue are dismissed. 26. Ground Nos. 5, 6 7 are similar and identical to the Ground No.2 raised in ITA No.2152/Kol/2017 relating to depreciation of lease hold land. Thus, the view taken by us in Ground No.2 raised by the Revenue in ITA No.2152/Kol/2017 is applicable to these grounds also. Thus, Ground Nos. 5, 6 7 raised by the Revenue are dismissed. 27. Ground No.8 raised by the Revenue in this appeal is similar and identical to the Ground Nos. 5 6 raised by the Revenue i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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