9911796707
TMI Blog2020 (6) TMI 176X X X X Extracts X X X X X X X X Extracts X X X X ..... n of stock centre on the first disputed issue. Therefore, we remit this disputed issue to the file of the Assessing Officer for appropriate adjudication afresh and the ground of appeal of the assessee is allowed for statistical purposes. CMPDIL Expenses - HELD THAT:- We find that the CIT(A) has granted relief with regard to addition made by the AO on account of CMPDIL expenses, which has been approved by the Tribunal by holding as above. In the instant case, the CIT(A) has confirmed addition made by the AO. In our opinion, when the Tribunal has upheld the findings of the CIT(A) thereby deleting the addition made on account of CMPDIL expenses in the assessee s own case for the immediately previous assessment year as cited above, therefore, respectfully following the decision of the Tribunal, we direct the AO to delete the addition made under the head CMPDIL expenses. This ground of appeal of the assessee is allowed. Addition made u/s.14A - HELD THAT:- AO was required to work out the average of such investment, the income from which did not form part of the total income instead of total value of investment. For this view, our stand is fortified by the decision of Special Bench in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. Valuation of closing stock of coal (due to impact of overburden removal expenditure) 11840.00 3. CSR Expenses 6130.00 4. CMPDIL Expenses 2029.00 5. Addition u/s.14A 576.90 6. Interest on Income tax refund 1692.00 TOTAL 49758.90 4. That the Ld. Authorities below has further erred in allowing short credit of TDS. 5. That the Learned Authorities below would have provided sufficient opportunity to the assessee to explain its case with proper evidences. 6. That the authorities below would not have made addition/disallowances on different heads of accounts as mentioned above and would have allowed all claims. 7. That the Authorities below would have allowed the total credit of TDS. 8. That the authorities below would have accepted the returned income. 9. That the appellant craves leave to add, amend or alter the aforesaid grounds of appeal before or at the time of hearing of the appeal. 2. In addition to the above grounds of appeal, the assessee has also filed additional grounds of appeal, which read as under :- 1. That the assessment order U/s.l43(3) passed by the Learned Assessing Officer as well as the appellate order passed by the Learned CIT(Appeals), Cuttack, to the extent preju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income. 9. That the appellant craves leave to add, amend or alter the aforesaid grounds of appeal before or at the time of hearing of the appeal. 3. During the course of hearing, ld. AR of the assessee filed a letter dated 14.01.2020 stating therein that he is withdrawing the additional grounds of appeal and requested for deciding the issue on the basis of grounds of appeal taken in form 36 at the time of filing of the appeal, therefore, on the basis of this letter, we are going to decide the issue as stated in the grounds of appeal taken in Form No.36. Further the ld. AR of the assessee during the course of hearing submitted that he does not want to press the ground of appeal No.3.3 regarding CSR Expenses, accordingly, this ground is dismissed as not pressed. 4. Brief facts of the case are that the assessee is a mini-ratna company engaged in the extraction and sale of coal and filed its return of income on 27.11.2015 declaring net profit at ₹ 5095,39,40,710/- derived from extraction (mining) of coal and sale thereof. The case was selected for scrutiny and statutory notices were issued and served on the assessee. Later on other statutory notices were issued to the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stock of Coal. And since then the Assessee is consistently following the same method of valuation of closing stock. There is no change in the method of valuation of closing stock in comparison to the method applied during the immediate preceding year. In support of our contention we would like to draw your kind attention towards clause 13 14 of the Form 3CD of Tax Audit Report, duly certified by the Tax Auditor. Under the facts circumstances it does not warrant any interfere with the method of valuation as adopted by the Assessee. However, as required by Your Honor, please find herewith enclosed statement showing valuation of closing stock including cost of OBR [Annexure-1]. Further, without prejudice to the afore submission, during the course of Asst. proceedings u/s 143(3) of the Income Tax Act The Ld. Assessing Officer had enhanced the valuation of closing stock and correspondingly increased the total income by ₹ 159.12 Cr. In view of the settled law and particularly in the case of the Assessee itself, relevant to AY 2010-11 2012-13 the Ld AO had enhanced the valuation of closing stock. But no adjustment was made in opening stock of the immediate next year. On appeal the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res as exempt income received and tax free bond and mutual bond. In this regard, the assessee was asked to provide the details of expenditure incurred against this income along with supporting evidences. In response to which the assessee submitted that he has not made any investment out of borrowed funds to earn income which does not form part of the total income. The investment in the alleged funds are made only out of accumulate profit and he relied on many case laws. 9. Further on scrutiny of accounts, it was noticed by the AO that the assessee has been paid ₹ 16,92,76,788/- as interest by the Income Tax Department on refund amounting to ₹ 694,03,47,830/- for the assessment year 2011-2012. But the same did not find place in the annual report for F.Y.2014-2015 relevant to A.Y.2015-2016. In this regard, the assessee was show caused against this written reply which reads as under :- 10.2 In reply to which the assessee has submitted a written submission dated 19.12.2017 that- In the matter it is to be submitted that alleged amount of ₹ 694.03 Cr; including interest u/s 244A. ₹ 16.93 Cr; relevant to AY 2011-12, has been credited to the Income Tax paid under pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st which the assessee is in appeal before your honour, details of which is given below: SI. No. Particulars Amount (Rs. In Lakhs) Grounds of Appeal No. Page No. of Asst. order Page No. of CIT(A) order Page No. of this Written Submission 1. Insufficient opportunity ~ 2 - 3 2. Depreciation on Lease hold land 27491.00 3(1) Addl. ground of Appeal No.1,2,3 2-4 3-5 4-14 3. Valuation of closing stock of coal (due to impact of overburden removal expenditure) 11840.00 3(2) 4-6 5-13 15-25 4. CSR Expenses 6130.00 3(3) 5 17-21 26-27 5. CMPDIL Expenses 2029.00 3(4) 6 21-23 28-29 6. Disallowance u/s 14A 576.90 3(5) 21-24 32-36 30-38 7. Interest on Income tax refund 1692.00 3(6) 25 36-37 39 Before we commence our submission on the merits of individual matters, we wish to submit that the assessee Company is a Public Sector Undertaking (PSU), a wholly owned subsidiary of Coal India Limited (CIL), which is a Government of India enterprise. The assessee company was formed on 03-04-1992 by taking over all the assets and liabilities of Southern Eastern Coalfields Limited in the state of Orissa. As the assessee is a public sector undertaking (PSU), its accounts are subject to audit and scrutiny by Statu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ohibits the transfer of land by lessee by way of sale, sub lease or any other means and not to use the land for any other purposes other than for which the lease is granted. 2.4 That to obtain such land on lease the lessee is required to pay one time premium to the State Govt. and certain other expenditure are also incurred in the process of acquiring such leasehold land, like registration expenses etc. These expenditure are appearing in the Schedule of Fixed Assets in the Balance Sheet as Leasehold Land . The leasehold land is to be handed over back to the Government after expiry of the lease period in its original status by filling the void and changing the top soil to make it suitable for plantation/ vegetation. 2.5 From the aforesaid facts it certainly becomes very clear that the Company has acquired Commercial Asset i.e. minerals beneath the land for a fixed period on payment of onetime premium and lease rental annually. As the onetime premium is paid towards acquiring exploration rights of commercial assets for a fixed period; the same is charge.to Profit Loss Account. 2.6 In this regard we invite your honour's kind attention towards the provisions of section 32 according ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 02.01.2008, for the AYs 2004-05 to 2007-08 dt. 12.09.2011 and in their very recent order dated 20.03.2018 for the Ays 2010-11 to 2014-15 confirming the action of the AD to disallow depreciation claim on lease hold land. Respectfully following the decision of the Hon'ble ITAT for the above assessment years, the disallowance of ₹ 2741.91 crares is hereby confirmed . In this regard it is respectfully submitted as under: 2.9 That the addition has been sustained by CIT (Appeals) relying on the order dt.20.03.2018 of this Hon' ble Tribunal for the AYs 2010-11 to 2014- 15. The Hon'ble Tribunal confirmed the addition vide order dt.20.03.2018 by referring to its own decision vide order dated 03.01.2018 in the case of assessee for the assessment year 2008-09. Photocopies of order dated 20/03/2018 03/01/2018 are placed at Page No.l0l to 165 186- 199 of P IB-VOL-I. 2.10 The decisions in the case of CIT Vs. Techno Shares Ltd., 225 CTR 337 (Bom) Dabur India Ltd. Vs. ACIT, 159 TTJ 563 (Mumbai) as cited by the Ld. DR and relied by your honour for earlier years were discussed in the order dated 03.01.2018. 2.11 That both the decision relied upon by the Ld. DR are not applicable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever either with a right to manufacture or actual manufacture of the products or their sale carrying brand name or logo etc. Tenancy rights simply provide a place at which manufacturing or administrative activity is perused. It is crystal clear that this decision is in respect of Tenancy Right only and can not be applied to present case as the assessee company has acquired Commercial Asset i.e. minerals beneath the land for a fixed period on payment of onetime premium and lease rental annually. A photocopy of the Judgment is enclosed at Page No.170-172 of the P/B- VOL-II. 2.12 The assessee company do here by place reliance on the following judgments which are squarely applicable to the case: 2.13.1. The Hon'ble High Court of Delhi in case of Areva T D India Ltd vs. DCIT (2012) 345 ITR 421 held that- Applying the principle of ejusdem generis, as specified the interpreting the expression business or commercial rights of similar nature specified in s 32(1)(ii) of the Act, it is seen that such rights need not answer the description of 'knowhow, patents, trademarks, licenses. of franchises' but must be of similar nature as the specified assets. On a perusal of the meaning of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on behalf of the assessee that goodwill per se is eligible for depreciation under s32(1) (ii) of the Act. The substantial question of law is decided in the affirmative and this appeal is allowed in favour of the assessee and the against the Revenue and the impugned order is set aside. A photocopy of the Judgment is enclosed at Page No.179-209 of the P/B- VOl-II. 2.13.2 CIT Vs. Ingersoll Rand International Ltd. (2014) 227 Taxman 176 (Kar.) (HC) (Magz.). In this case the payment of non compete fees was held to be an Intangible Asset for depreciation. 2.13.3 The Hon'ble ITAT, Delhi in the case of ONGC Videsh, vide Order dated 30.10.2009 held as under: 14. So far as claim of depreciation in case of intangible assets falling in the category of any other business or commercial rights of similar nature are concerned, as per our considered view, all the business or commercial rights are not by themselves assets eligible for depreciation, and that only those rights which are similar in nature with the know- how, patents, copyrights trademarks, licences etc. are eligible for claim of depreciation. In view of principle of ejusdem generis, the expression any other business or commercial ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion Page 8 ITA No. 5054/Del/2010 - A. Y. 2004-05 ITA No. 1140/Del/2011 - A. Y. 2005-06 CO. No. 104/Del/2011 (In ITA 1140/Del/ll) A.Y. 2005-06 O.N.G.C Videsh iid., New Delhi and. development of mineral oil. Accordingly, as per our considered view such an asset fall within the category of asset falling u/s. 32(1)(ii) of the Act. Accordingly, we are inclined to agree with the learned senior counsel that the assessee had 15 acquired business and commercial right and license by making payment of ₹ 1559.10 crores, which is in the nature of intangible assets entitled to claim of depreciation u/e 32(1)(ii) of the IT Act. A photocopy of the Judgment is enclosed at Page No.ll0-119 of the P/B- VOl-I1I. 2.13.4 CIT v. Hindustan Coca Cola Beverages (P) Ltd., 331 ITR 192 (Del) where it is held that GOODWILL is an intangible asset. A photocopy of 'the judgment is enclosed at Page No.210-232 of the P/B-VOl-I1. 2.13.5 CIT Vs. MIS Bharti Teletech Ltd. (2015) 119 DTR 139 (Del.) (HC) ITA No.534 510/JP/2017. In this case the amount paid to acquire network and the facilities was held to be Intangible Asset. A photocopy of the judgment is enclosed at Page No.161-169 of the P/B-VOl-I1. 2.13.6 The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd being a intangible asset. It is nobody's case that the land either belonged to the lessee or to the Government. This simply indicates that a depletion of the land against the payment of premium it was eased has to be claimed after capitalization thereof by the assessee which is for the purpose of its main business. All expenses are incurred for the purpose of business and are incidental to the holding of rights were claimed u/s.32(1)(ii) being the license to carry out the mining therefore could not be denied insofar as the Government and the lessee are in control of the asset. The definition of depreciation therefore has been misconstrued for the purpose of allowing deduction by the Assessing Officer and the learned CIT(A) in holding a view on the promulgation of Section 32(1)(ii) with effect from the year 1998-99 which has been further amended w.e.f. Assessment Year 2003-04. In this view of the mater, we are inclined to hold that the assessee is entitled to depreciation as charged to the P L account in accordance with its business exigencies. A photocopy of the Judgment is enclosed at Page No.173-178 of the P/B- VOl-II. 2.15 That the aforesaid order dated 25/06/2012 of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e demand of different., sector of the economy. Accordingly, the company is engaged in the mining of coal as per the guidelines/directions policies formulated by the ministry and In compliance with different applicable Laws. ii. That the ownership of the coal bearing land vest with the Government of India and only mining right is secured for a limited period upon payment of one time premium yearly lease rentals. The ownership of land is never transferred and as a matter of fact the land has to be returned back after the expiry of lease period. The Terms of notification is attached herewith at Page No. 14 to 18 which clearly spells otherwise at para (4) as The Government Company shall have no power to transfer the lands to any other persons without the prior approval of the Central Government .That the company can do the mining activities/business if and only such premium is paid to the Government of India. Hence, it is crystal clear that the payment of premium is wholly exclusively for the purpose of business and qualifies for deduction U/s.37(1) of the Income Tax Act, 1961. iii. Therefore, it is prayed that the amount claimed as depreciation on the cost of leasehold land shall be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year in which it is received. '. 3.4. Plain reading of section 145A stipulates two conditions i.e. the valuation of inventory should be in accordance with the method of accounting regularly employed by the assessee; and the valuation should be further adjusted to include the amount of any tax, duty, cess or fee (by whatever name called) actually paid or incurred by the assessee to bring the goods to the place of its location and condition as on the date of valuation. 3.5. In the instant case the assessee has complied with both the conditions i.e. it has valued the inventory in accordance with the method of accounting regularly employed as because there is no change in the method' of accounting during the year. Further, the second condition has also been satisfied by including any tax, duty cess or fee to bring the goods to the place of its location. And the ld. AO has not brought anything on record to establish that the assessee has violated the provision of section 145A. 3.6. It may be noted here that the addition was made by the ld. AO on this account in AY 2010-11 when there was a change in respect of valuation of inventories to the extent of expenditure relating to OBR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation. Conversion costs include all fixed and variable costs directly linked to production of finished goods. A portion of the OBR cost (OBR Adjustment Account) included in the closing inventory of coal violates the principles stipulated in the AS2 issued by ICAI. 3.12. That it will be pertinent to analyse the purpose, objective and other important requisites for valuation of stock. a) General: There is nothing in the Income Tax Law which indicates that' in computation of Profit and Gains of commercial concern the stock in trade at the start of the accounting period should be taken in and that amount of the stock in trade at the end of the period should be 'taken in. It would be utterly impossible to assess profit and gains mainly on statement of receipt and payment or on the basis of turnover. It is long been recognised that the right method of assessing profit and gains is to be taken into account the value of the stock in trade at the beginning, value of the stock in trade at the end, and put all the item in the computation. Thus, for the purpose of ascertaining profit and gains the ordinary principle of commercial accounting should be applied, so long as they did not c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... underlying this is to provide result for the loss which the assessee is likely to incur during the period by giving option to adopt lower of the two value. The trader is protected from being taxed in respect of profit which he did not actually earned. The consistent practice over a number of years by the assessee can be changed if it does not accord with the principle of Income Tax Law; but not if it fairly and reasonably reflect profit of assessee's business. Such a practice as ruled by Supreme Court in the case of Chain Rup Sampatram Vs. CIT. valuing stock at cost or market price whichever is lower is a sound principle to be followed in arriving at profit for the income tax purpose. f) Assessee's option to change the method of accounting: The assessee is at liberty to alter regular method which he has once employed. It was clearly held in the case of Ram Kumar Kedarnath Vs. CIT. Further, it is clearly held in CIT Vs Eastern Bengal Jute Trading Co. Ltd. IR 223 that there was no malafide in changing the method. Further, the new method was regularly followed. Thus, this change should not be casual for temporary gains for temporary purposes. It must be a bonafide change modif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by adopting the new method for valuing the closing stock which will, in its turn, become the value of the opening stock of the next year. If instead, a procedure is adopted for changing the value of the opening stock, it will lead to a chain reaction of changes in the sense that the closing value of the stock of the year preceding will also have to change; and correspondingly the value of the opening stock of that year and so 'On. Whenever there is a change in the method of valuation, there is bound to be some distortion in the calculation of profit in the year in which the change take place. But if the change is brought about bona fide and is in accordance with the normally accepted accounting practice, there is no reason why such a change should not be permitted. [Melmould Corporation Vs. CIT (1993) 111 CTR (Bom) 357: (1993) 202 ITR 789 (Bom): TC2PS.8] 3.13. It is settled law that change in method of valuation of stock (which is a part of the method of accounting of anassessee) is allowable in the eye of law if the change made is bonafide and the new method adopted is a recognized method. Reference is also drawn in this regard to the under noted Court decisions enunciating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this regard to the decision of the Calcutta High Court in Snow White Food Products Co. Ltd. vs. CIT (No.2) [141 ITR 861 (Cal.)]wherein the Calcutta High Court has held that a recognized method of accounting followed regularly would result necessarily in a proper computation of the assessee's real income. Even if one regular method of accounting is substituted by another regular method, the same result will follow. Only in a case where the assessee changes his regular method of accounting by another method and does not follow the change regularly thereafter, it might be possible for the assessee by introducing successive changes in his method of accounting to exclude items of his income in the computation of,his total income. Therefore, when an assessee changes his regular method of accounting by another regular method, the question of his bonafides have little relevance. Only in the year where a change in the method of accounting is introduced for the first time, it is to be examined by the Revenue Authorities whether the change introduced is meant to be regularly followed or not. Where it is found that an assessee has changed his regular method of accounting by another recogn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uent years, the question of going into the issue of bona fide by the Revenue Authorities has become irrelevant. 3.20. It has been held by the Supreme Court in Investment Ltd. vs. CIT [77 ITR 533, 537-538 (SC)] that a tax payer is free to employ, for the purpose of his trade, his own method of keeping accounts and for that purpose to value his stock-in-trade either at cost or at market price. A method of accounting adopted by the trader consistently and regularly employed may be discarded, only if in the opinion of the taxing authorities, income of the trade cannot be properly deduced there from. The valuation of stock at cost is one of the recognized methods. No inference may therefore, arise from the employment by the method of valuing stock at cost (or market value whichever is lower). 3.21. Reference is also drawn to the decision of the Supreme Court in the case of Distributors (8aroda) P. Ltd. vs. UOI [ 155 ITR 120, 140. (SC)] wherein the Supreme Court observed that where a decision rendered previously is found to be erroneous, such decision can be overruled subsequently. The doctrine of stare decisis should not deter the Court from overruling an earlier decision, if it is sati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been set-aside by this Hon'ble Tribunal in the case of the assessee for the assessment years 2010-11 to 2014-15 vide its order dated 20/03/2018 (Para No.21 at Page NO.115). A photocopy of such order is placed at Page No.l0l to 165 of P/B VOl-I. 3.27. In view of the aforesaid it is prayed before your honour to kindly delete the aforesaid addition and allow full relief to the assessee. 5. CMPDI Expenses ₹ 2029.00 Lakhs Grounds of Appeal No.3(4) Page ref.of Asst Order:6 Page ref. of CIT(A) order:21-23 5.1 The Ld. AO has disallowed this expenditure without any definite finding or reason. He has simply mentioned that- The Assessee company simply refers to Section 37 of the I. TAct which allows any claim relating to business not covered under Section 30 to 36. The assessee company further gave only a general description of services provided by CMPDI without giving the details of any specific services received in lieu of which professional charges were paid to CMPDI. Mere deduction of TDS will not justify the expenses. Furthermore, department is in appeal against the order of Ld CIT(A) on this issue, Hence the Claim is disallowed and added to the income. 5.2 In this regard it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the ledger copy of Dividends received on Mutual Fund is attached at Page 25, the details of exempted income is given hereunder: Particulars Amount (Rs.in lakhs) Interest on 8.5% tax free Bonds 338.00 Interest on IRFC tax free Bonds 7072.00 Dividend from Mutual Fund 5498.00 TOTAL 12908.00 In this regard it is respectfully submitted as under: a. That the assessee has not incurred any expenditure in respect to exempted income during the accounting year 2014-15. The total exempted income for the year was ₹ 129.08 crore out of which ₹ 74.10 crore was interest earned on Tax Free Bonds and ₹ 54.98 crore was dividend from Mutual Funds. In this regard it will be pertinent to take note of the following: i. That no investment was made during the year in Tax Free Bonds. Such investments were made long back and no expenditure was incurred on this account. The interest on such bonds are directly credited to the account of assessee through ECS. The details of investment in Tax Free Bonds are as under: (Rs. In Crore) SI. No. Particulars Amount of Investment as at 31/03/2015 Amount of Investment as at 31/03/2014 1. 7.55% Secured Non- Convertible IRFC Tax Free 200.00 200.00 2. 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso. Hence, it may be appreciated that no administrative expenditure is being incurred for investment in assets generating tax free income. 6.3. In this regard it is submitted that the Ld. AO has resorted to Rule 80 without appreciating the provisions of section and without recording any reasons for applying Rule 80. 6.4. Let us analyse the provisions of section 14A of the Income Tax Act, 1961 along with rules 80. The provision of section 14A read as under: Section 14A. (1) For the purpose of the computing the total income under this chapter no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under this Act. (2) The Assessing Officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if the Assessing Officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act.. (3) The provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to such income which does not form part of the total income under the Act in accordance with such method as may be prescribed. Sub-section (2) was inserted so as to provide a uniform method applicable where the Assessing Officer is not satisfied with the correctness of the claim of the assessee. Parliament has provided an adequate safeguard to the invocation of the power to determine the expenditure incurred in relation to the earning of non taxable income by adoption of the prescribed method. The invocation of the power is made conditional on the objective satisfaction of the Assessing Officer in regard to the correctness of the claim of the assessee, having regard to the accounts of the assessee. These safeguards which are implicit in the requirements of fairness and fair procedure under article 14 must be observed by the Assessing Officer when he arrives at his satisfaction under sub-section (2) of section 14A. 6.10. However in the instant case the Ld. AO has not recorded any reason for applying Rule 80 and mechanically applied the rule and computed the expenditure as per method prescribed in said rule. 6.11. For the sake of discussion, let us also analyse the Rule 80 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere should not be any disallowance u/s, 14A. This view is clearly uphold by Hon'ble High Court of Punjab Haryana in the case of. CIT Vs. Hero Cycles Limited ITA No. 331 of 2009 ( 0 M). Copy of the judgment is enclosed at Page No.33-3S. 6.16. That Hon'ble Bombay High Court in the case of COMMISSIONER OF INCOME TAX vs. HDFC BANK LTD. (2014) 366 ITR 505 (Bom) has held that Where assessee's capital, profit reserves, surplus and current account deposits were higher than the investment in tax-free securities, it would have to be presumed that investment made by the Assessee would be out of the interest-free funds available with Assessee and no disallowance was warranted u/s 14A . 6.17. That similar disallowance was made during the A.V. 2012-13 and AY 2013-14. On appeal Ld. CIT(A) Cuttack has deleted the total addition in this respect and allowed full relief to the appellant and subsequently while adjudicating the Departmental Appeal in the matter for the A Year 2012-13 and 2013-14 your honour has set-aside with a direction to the AO for verifying the borrowings and others as given in Para 129 at Page No. 155 of PB-Vol. I. 6.18 That the assesee company's Shareholder's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7] held that Where assessee had its surplus fund against which minor investment was made, no question of making any disallowance of expenditure in respect of interest and administrative expenses under section 14A would arise and therefore, the,question of any estimation of expenditure in respect of interest and administrative expenses under rule 8D would also not arise. A photocopy of the judgment is enclosed herewith at Page No.36-43.. That subsequently the Hon'ble Apex Court vide its order dated 29/03/2018 dismissed the special leave petition filed by the Income Tax Department against the above decision of Hon' ble High Court of Gujarat. A photocopy of the judgment is enclose herewith at Page No.44. 6.21. In view of the above submission and recent judgments of Hon'ble Supreme Court, it is prayed before your honour to kindly delete the addition made by Ld. AO. 7. Interest on Income Tax refund ₹ 1692.00 lakhs Grounds of Appeal No.3(6) 7.1 The Ld. AO has added the aforesaid sum on the ground that the assessee company could not offer any reasonable explanation for not including the said amount of Interest received in his total income. 7.2 In the aforesaid matter it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erburden should be considered while verifying the closing stock of goods because it is an integrated part of the expenses for obtaining coals which was remained unsold during the year. Further in respect of CMPDIL expenses, the ld. AR of the assessee should submit the details with specific details of expenses incurred towards professional charges as paid to the CMPDIL expenses. It is not clear from the submissions of the assessee as to whether it is relevant to the incidental expenditure of the assessee or not. Ld.DR further submitted that in respect of disallowance u/s.14A of the Act the assessee has received exempt income, therefore, Section 14A of the Act directly hits the issue. The AO has rightly calculated as per rule 8D of Income Tax Rules, 1962. The assessee could not establish that there was no any expenses have been incurred by the assessee towards earning of the exempt income. He further submitted in respect of interest on income tax refund, it is a nature of revenue income which must have been included while calculating the taxable income of the assessee. The interest on income tax refund is paid by the income tax department only when the assessee paid more than the tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bombay in the case of CIT vs. Techno Shares Stocks Ltd., 225 CTR 337 (Bom), wherein, it has been held that the depreciation under section 32 is restricted to the tangible/intangible assets which are specifically enumerated therein and depreciation is not allowable on all tangible/intangible assets. He also referred to the decision of ITAT Mumbai Benches in the case of Dabur India ltd. vs ACIT, 159 TTJ 563 (Mumbai), wherein also, it was held that the tenancy rights cannot be construed as intangible assets falling within meaning Explanation to section 32(1) and, therefore, there is no question of allowing depreciation on said rights. 46. We find that the assessee has raised these additional grounds as per the direction of Hon'ble High Court of Orissa, Cuttack in W.P (C) No.24 of 2013 and Misc. Case No.5716 of 2013 order dated 20.3.2013. In view of above, we admit these additional grounds for our consideration. 47. On merits also, we find force in the submission of ld D.R. that the depreciation is not allowable u/s.32(1)(iii) of the Act in respect of intangible assets, which is supported by judicial pronouncements cited above. In view of above, we dismiss these grounds filed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 dated 31.3.2010 issued to all subsidiaries. Therefore, the method of calculation of cost per ton followed in the earlier years has been changed and an improved method of valuation has been followed during the year under consideration. Ld A.R. referred to the objectives of stock valuation of inventories and method of valuation of inventories and judicial decisions to substantiate that the action of the Assessing officer in making the addition in respect of decrease in profit cannot be accepted. 20. Ld D.R. relied on the orders of lower authorities. 21. We have heard the rival submissions, perused the orders of lower authorities and materials available on record. This dispute is interconnected with the method of valuation of closing stock. Valuation of closing stock has been changed due to Uniform Accounting Policy of Coal India Limited. We found that a reference made by the Assessing Officer on the audited accounts that Reduction in value of stock is due to overall adjustment is as per the Uniform Accounting Policy adopted by the Coal India Limited. Ld A.R. demonstrated before us with a copy of letter of Uniform Accounting Committee recommendation and supported with paper book. Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in appeal before us for all the assessment years under consideration. 98. After hearing the rival submissions and perusing the orders of lower authorities, we find that the expenditure is incurred towards services rendered by CMPDIL as per MOU between the assessee and CMPDIL. We also find that similar addition was made in the case of Northern Coalfields Mah anad i Coa lf ield Lt yd., Limited and the Jabalpur Bench of this Tribunal vide order dated 5.5.2015 in ITA No.18/Jab/2014 and ITA No.55/Jab/2014 for the assessment year 2010-11 has deleted the addition by observing as under: 46. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. 47. We have noted that these expenses have been treated as capital expenses by the Assessing Officer only on the ground of the 'enduring benefit in nature' which by implication suggests that it's a preparatory work for mine development but then what such an approach overlooks is that all the mines are revenue mines and the extraction of coal, on commercial basis, has already started in these cases. Therefore, Assessing Officer's observ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earing in mind entirety of the case, we deem it fit and proper to direct the AO to delete this disallowance of ₹ 1973.98 lakhs as well. The assessee gets the relief accordingly. 99. Respectfully following the judicial precedence and decision of the Co- ordinate Bench of this Tribunal, we uphold the findings of the CIT(A) in deleting the addition made for all the assessment years under consideration. Thus, this ground of appeal is dismissed. On careful perusal of the above observations of the Tribunal, we find that the CIT(A) has granted relief with regard to addition made by the AO on account of CMPDIL expenses, which has been approved by the Tribunal by holding as above. In the instant case, the CIT(A) has confirmed addition made by the AO. In our opinion, when the Tribunal has upheld the findings of the CIT(A) thereby deleting the addition made on account of CMPDIL expenses in the assessee s own case for the immediately previous assessment year as cited above, therefore, respectfully following the decision of the Tribunal, we direct the AO to delete the addition made under the head CMPDIL expenses. This ground of appeal of the assessee is allowed. 19. Ground No5: Addition m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... except very old for specific purposes. The CIT(A) in the order has also stated that the Assessing Officer has not verified whether the differential amount of the asset has come from any borrowing by the assessee or it is simply the investment from the reserve surplus. We are of the substantive view and deem it proper to restore the issue back to the file of the Assessing Officer to verify whether the assessee has Mah anad i Coa lf ield Lt yd., borrowed money or surplus from reserve surplus amount and redecide the issue afresh as per law and after giving opportunity of hearing to the assessee. This ground of appeal of the revenue is allowed for statistical purpose for the assessment year 2012-13 and 2013-14, respectively. 20. The coordinate bench of the Tribunal in the case of NALCO, ITA No.106/CTK/2018, for the A.Y.2014-2015, vide order dated 23.09.2019 while deciding the issue of addition made u/s.14A of the Act, has observed as under :- 13. We find that this issue has been decided by the Tribunal in assessee s own case for the assessment year 2010-2011 in ITA No.211/CTK/2016 along with other connected appeals, order dated 29.06.2018 for the assessment year 2013-2014, wherein the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t (P) Ltd., (2017) 82 Taxman.com 415 (Delhi Trib.)(SB). None of the parties before us, however, have laid any details to examine as to which of the investments have yielded such income which did not form part of the total income. We, therefore, restore the matter back to the file of the Assessing Officer for calculating the disallowance u/s. 14A read with Rule 8D afresh, in the light of observations made in the body of this order above. Accordingly, ground No.4 is allowed for statistical purposes. Respectfully following the above observations of the Tribunal, we restore this issue to the file of AO for fresh adjudication. This ground of appeal of the assessee is allowed for statistical purposes. 21. Ground No.6:Interest on Income Tax Refund : We find that the AO made addition on the ground that the assessee company failed to offer any reasonable explanation for not including the amount of interest received during the year on income tax refund. In appeal, the CIT(A) observed that interest on income tax refund is clearly taxable and confirmed the addition holding as under :- 12.3 I have considered the matter. It is a fact the assessee has received interest of ₹ 16.92 crores on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the hearing. It is, however, important to note that the expression ordinarily has been used in the said rule itself. This rule was inserted as a result of directions of Hon ble High Court in the case of Shivsagar Veg Restaurant vs ACIT (2009) 319 ITR 433 (Bom), wherein, it was, inter alia, observed as under: We, therefore, direct the President of the Appellate Tribunal to frame and lay down the guidelines in the similar lines as are laid down by the Apex Court in the case of Anil Rai (supra) and to issue appropriate administrative directions to all the benches of the Tribunal in that behalf. We hope and trust that suitable guidelines shall be framed and issued by the President of the Appellate Tribunal within shortest reasonable time and followed strictly by all the Benches of the Tribunal. In the meanwhile (emphasis, by underlining, supplied by us now),all the revisional and appellate authorities under the Income-tax Act are directed to decide matters heard by them within a period of three months from the date case is closed for judgment . In the rules so framed, as a result of these directions, the expression ordinarily has been inserted in the requirement to pronounce the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall continue further till 15th June2020 . It has been an unprecedented situation not only in India but all over the world. Government of India has, vide notification dated 19th February 2020, taken the stand that, the coronavirus should be considered a case of natural calamity and FMC (i.e. force majeure clause) maybe invoked, wherever considered appropriate, following the due procedure... . The term force majeure has been defined in Black s Law Dictionary, as an event or effect that can be neither anticipated nor controlled When such is the position, and it is officially so notified by the Government of India and the Covid-19 epidemic has been notified as a disaster under the National Disaster Management Act, 2005, and also in the light of the discussions above, the period during which lockdown was in force can be anything but an ordinary period. 10. In the light of the above discussions, we are of the considered view that rather than taking a pedantic view of the rule requiring pronouncement of orders within 90 days, disregarding the important fact that the entire country was in lockdown, we should compute the period of 90 days by excluding at least the period during which the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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