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TMI Blog2020 (9) TMI 1050X X X X Extracts X X X X X X X X Extracts X X X X ..... which gave all the required particulars before the authorities below. Since we are remanding the issue back to the AO, we direct the assessee to once again produce all the details as required by the AO in support of its claim for deduction of additional depreciation. It is to be kept in mind by the AO that the assessee is a Public Sector Undertaking and its accounts are audited by the Comptroller of Auditor General of India (CAG) and such audited statements have its own strength and has survived the scrutiny of the premier constitutional body. Needless to say that additional depreciation needs to be granted on such plant and machinery if it has been used for production of coal. Addition on stowing subsidy difference - HELD THAT:- CIT(A) has rightly noted that the total subsidy due for the year under consideration (AY 2009-10) was ₹ 50,70,29,057/- which has been shown in the P L Account under the head other receipts . CIT(A) has rightly noted that ₹ 2647.52 lacs is not the subsidy received. Subsidy due at the beginning of the year was ₹ 29,89,97,877/- out of which ₹ 28,91,19,093/- was received. Hence, the balance was to be received on account of loa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nies Act, 2013. We note that the amendment in section 37(1) of the Act has been introduced w.e.f. 1st April, 2015 and does not apply on the facts of the case and the disabling provision as stated in Explanation 2 to section 37(1) refers only to such corporate social responsibility expenditure as u/s. 135 of the Companies Act, 2013 and as such it cannot have any application for the period not covered by the statutory provision which itself came into existence in the year 2013. And any way this disabling provision cannot be held to be retrospective in operation As relying on SOUTH EASTERN COALFIELDS LTD. VERSUS JOINT COMMISSIONER OF INCOME-TAX [ 2002 (2) TMI 344 - ITAT NAGPUR] direct the AO to allow the claim of expenditure of assessee on account of CSR expenses. - ITA Nos. 890 And 891/Kol/2019 And ITA Nos. 985 & 986/Kol/2019 - - - Dated:- 24-9-2020 - Shri J.Sudhakar Reddy, AM And Hon ble Shri A. T. Varkey, JM For the Assessee : Shri Arvind Agarwal, AR For the Revenue : Shri Imokaba Jamir, CIT Smt. Ranu Biswas, Addl. CIT ORDER SHRI A. T. VARKEY, JM These are cross appeals of the revenue and assessee respectively against the separate orders of the Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee for AY 2009-10 are against the action of the Ld. CIT(A) in allowing 80% of the additional depreciation claimed u/s. 32(1)(iia) of the Income-tax Act, 1961 (hereinafter referred to as the Act ). At the outset, the Ld. Counsel for the assessee submitted that the AO did not allow the full claim of additional depreciation u/s. 32(1)(iia) of the Act of ₹ 26,46,80,400/- and allowed only 50% thereof at ₹ 13,23,40,200/-. Aggrieved, both the revenue and the assessee preferred appeals before the Ld. CIT(A) who has discussed this issue at page 6 para 4 and allowed 80% of the claim of additional depreciation. Aggrieved by the action of the Ld. CIT(A), both the revenue as well as assessee is before us. Before us, the Ld. DR submitted that on this issue assessee failed to give full details and break up before the AO and he also objected to the action of the Ld. CIT(A) allowing 80% of the claim of additional depreciation. Assessee is also in appeal before us against the action of the Ld. CIT(A) in not allowing the full claim of additional depreciation. 7. During the hearing the Ld. AR drew our attention to the fact that on the very same issue the Tribunal has set aside thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal and revenue s appeal are allowed for statistical purposes. 8. Ground no. 5 of the revenue for AY 2009-10 is against the action of the Ld. CIT(A) in deleting the addition made by the AO on stowing subsidy difference of ₹ 98.79 lacs. We note that the AO has made the addition by noting as under: 5. Addition of less showing of stowing subsidy. It is seen from the available records that during the relevant assessment year the amount of stowing subsidy was considered less in computing total income. The amount of stowing subsidy during the relevant assessment year worked out as under: Subsidy received for the first six months ₹ 2521.56 Lakhs (para 12.3 of Notes of account refers) Subsidy receivable ₹ 2647.52 lakhs (Schedule K of Balance Sheet refers) Less Stowing subsidy received amount shown less ₹ 5070.29 Lakhs (Schedule 5 of P L a/c refer ) Total ₹ 98.79 lakhs 5.1. From the above statement it is quite clear that the amount of ₹ 98.79 lakhs was to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceived and the balance to be received or due is ₹ 2548 lakhs for the current year. Thus the amount due of ₹ 98.79 lakhs in respect of the earlier year and the amount of ₹ 2548 lakhs due for the current year aggregating to ₹ 2647 lakhs, is the balance receivable which has been shown in the balance sheet. Hence, the amount of ₹ 98.79 lakhs added by the AO is the amount due in respect of the last year s subsidy receivable. Thus the AO has erred in treating this amount as the concealed income of the appellant. Hence, the addition is deleted and the appeal is allowed. Aggrieved by the aforesaid decision of the Ld. CIT(A), the revenue is in appeal before us. 10. We have heard rival submissions and gone through the facts and circumstances of the case. We note that the AO has made the addition on the basis of note no. 12.3 of the notes on account found placed in page no. 173 of the Audited Annual Reports of Accounts. It was brought to our notice that receipt on account of stowing subsidy are accounted for on the same basis from the inception of assessee and there has been no change in the practice adopted by the assessee while accounting on this issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A) has rightly deleted the addition of ₹ 98.79 lacs since its last year s subsidy receivable and not pertaining to this year. Therefore, this ground of appeal of the revenue is dismissed. 11. Now coming to AY 2012-13. Ground nos. 1 and 2 of the revenue are against the action of the Ld. CIT(A) deleting the addition of ₹ 4,71,00,000/- under the head hire charges of bus, ambulance etc. and ₹ 38,00,000/- being grant to sports and recreation clubs. At the outset, the Ld. AR drew our attention to the fact that the ld. CIT(A) has given relief to the assessee by relying on the decision of the Tribunal for AYs 2003-04 to 2007-08. We note that the Ld. CIT(A) has discussed about this issue at page 4 and has given relief to the assessee by following the decision of the Tribunal in assessee s own case for AYs 2005-06 to 2006-07 in ITA No.1636/Kol/2014 and 1654/Kol/2014 dated 26.07.2017 found placed at pages 13 to 213 (page 16 para 9 to 11). This decision was followed in assessee s own case for Ay 2007-08 in ITA No. 2130/Kol/2014 and ITA No. 2199/Kol/2014 dated 18.10.2017 copy of the order is found placed at pages 24 to 32 (page 27 para 8 to 10). We also note that the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction of the aforesaid expenditure, we also set aside the order of the Ld. CIT(A) and remand the matter back to the file of AO to be decided afresh as ordered in AY 2003-04 to 2005-06. This ground of appeal of revenue is allowed for statistical purposes. 13. Ground No. 3 of the revenue appeal for AY 2012-13 as well as ground no.2 of the assessee s appeal for AY 2012-13 is against the action of the Ld. CIT(A) in allowing 50% of the donation of ₹ 17 lacs claimed by the assessee. According to revenue the AO has disallowed the donation mainly on the ground that the assessee failed to furnish any proof in support of its claim of deduction as recorded in the assessment order. We note that the AO on perusal of note 31 of Annual Report of Accounts observed that the assessee company incurred an amount of ₹ 17 lacs towards donation and subscription. So, when asked by the AO as to whether the expenditure under this head qualify for deduction, the assessee company replied that ₹ 17 lacs has been spent on donation and subscription for AY 2012-13 and had furnished the area/service unit wise details of such expenses as annexure 13 for AO s reference. The assessee replied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he donee societies have 80G certification, then deduction in accordance to law should be given to the assessee in respect of the donation given to it. So, we remand this issue back to the file of the AO for factual verification and to pass orders in accordance to law. Therefore, the assessee s ground no. 2 and revenue s ground nos. 3 4 are set aside back to the AO. Thus, these grounds are allowed for statistical purposes. 15. Ground no. 1 of the assessee s appeal is against the action of the AO in sustaining the ad hoc disallowance of ₹ 4,55,50,000/- made by the AO on account of CSR expenses. 16. We have heard rival submissions and gone through the facts and circumstances of the case. It is noted that the assessee is a Public Sector Undertaking and its accounts are audited by the CAG. It has been brought to our notice that the expenditure were made after approval of the competent authority and expenditure is towards the contribution to school and development of infrastructure for the welfare of the employees and workmen of the company. It is brought to our notice that in assesse s own case no such disallowance on CSR expenditure was made in the earlier and subsequent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mployees as well as to the local persons residing nearby the company. It was also pointed out that this expenditure is also for maintenance of good health on the part of the employees as well as for the general development of the locality and for facilities for medical etc. which in turn contributes to the growth of the assessee s business. We note that the expenditure claimed by the assessee is also necessary in view of the National Coal Wage Agreement entered into between the management and employees union and also as per the Companies Act, 1956 as well as Companies Act, 2013. We note that the amendment in section 37(1) of the Act has been introduced w.e.f. 1st April, 2015 and does not apply on the facts of the case and the disabling provision as stated in Explanation 2 to section 37(1) refers only to such corporate social responsibility expenditure as u/s. 135 of the Companies Act, 2013 and as such it cannot have any application for the period not covered by the statutory provision which itself came into existence in the year 2013. And any way this disabling provision cannot be held to be retrospective in operation. Therefore, taking note of the decision of the Tribunal Nagpur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and the business of the assessee, relying heavily on the decision of the Supreme Court in the case of CIT vs. Amalgamations (P) Ltd. [1997] 226 ITR 188. A perusal of the said judgement, however, reveals that the expenditure in that case was incurred by the assesseecompany on payment of managerial remuneration to the directors of the subsidiary companies and considering that the assessee-company was entitled only to the dividend from the subsidiary company as and when declared even without incurring such expenditure, the apex court held that such expenditure cannot be said to have a direct and immediate connection with the business of the assessee-company and proceeded to disallow the same. In the present case, the assessee-company has incurred the expenditure mainly for the purpose of welfare of its employees and in our opinion the same cannot be equated with the expenditure in question before the Supreme Court in the case of Amalgamations (P.) Ltd. [1997] 226 ITR 188 which was -incurred entirely in the different circumstances mentioned above. On the other hand, in the case of CIT v. Premier Cotton Spinning Mills Ltd. (1997) 223 ITR 440 (Ker), the expenditure was incurred by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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