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TMI Blog2017 (8) TMI 1628X X X X Extracts X X X X X X X X Extracts X X X X ..... the AYs 2007-08, 2008-09, 2009-10 2010-11 [[ 2017 (4) TMI 1530 - ITAT CHENNAI ] Rule 8D which came with effect from 24 th March, 2008, will be applicable only after the period 2008-09. Nevertheless, their Lordship has clearly noted that even prior to that year, A.O. was duty bound to compute disallowance under Section 14A by applying a reasonable method having regard to the facts and circumstances of the case. Therefore, despite the argument of learned A.R. that electricity bonds were taken under compulsion and there was no expenses incurred for earning the interest income, we are inclined to remit the issue back to the file of A.O. for consideration afresh. We, therefore, set aside the orders of the authorities below and remit on this aspect back to A.O. for consideration afresh in accordance with law. Additional depreciation in respect of the plant machinery - HELD THAT:- On perusal of the decision of the Hon ble Supreme Court in the case of MP State Electricity Board [ 1968 (11) TMI 85 - SUPREME COURT ] and also the subsequent decision in the case of NTPC. [ 2002 (4) TMI 694 - SUPREME COURT ], it has been held that electricity is goods. The Hon ble Orissa High Court in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 50.00 lakhs as Revenue expenditure instead of a capital. Surcharge recoverable from the State Electricity Board - assessee had not offered the surcharge recoverable by the assessee from the Electricity Board during the relevant AY on the belated settlement of power bill as such income - CIT(A) had allowed the same by following his predecessors orders - HELD THAT:- As it is noticed that this issue was squarely covered by the decision of the Co-ordinate Bench of this Tribunal, respectfully following the decision of the Co-ordinate Bench of this Tribunal in the assessee s own case, the findings of the Ld.CIT(A) on this issue stands reversed. However, as it has been submitted by the Ld.AR that the assessee has offered the said surcharge during the subsequent period to tax, the AO shall examine the assessee s claim as to whether the said surcharge has been offered to tax for the subsequent years and if it is found to have been offered to tax, the same is to be excluded from the income declared for these relevant Assessment Years. Revenue s appeal stands partly allowed for statistical purposes. Reopening of assessment - advance over burden removal expenditure and deduction u/s.80IA of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MATHAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER For the Assessee : Mr.Raghavan Ramabadran, Adv. For the Department : Mrs.Ruby George, CIT ORDER PER GEORGE MATHAN, JUDICIAL MEMBER: ITA No.2161/Mds/2016 is an appeal filed by the Revenue and ITA No.2199/Mds/2016 is an appeal filed by the assessee against the Order of Commissioner of Income Tax (Appeals)-17 , Chennai, in ITA No.21/15-16, 78 77/14-15/CIT(A)-17 dated 30.03.2016 for the AY 2009-10. 2.0 ITA No.2162/Mds/2016 is an appeal filed by the Revenue against the Order of Commissioner of Income Tax (Appeals)-17 , Chennai, in ITA No.21/15-16, 78 77/14-15/CIT(A)-17 dated 30.03.2016 for the AY 2010-11. 3.0 ITA No.2163/Mds/2016 is an appeal filed by the Revenue and ITA No.2200/Mds/2016 is an appeal filed by the assessee against the Order of Commissioner of Income Tax (Appeals)-17 , Chennai, in ITA No.21/15-16, 78 77/14-15/CIT(A)-17 dated 30.03.2016 for the AY 2012-13. 4.0 As the issues in all these cases are inter-connected, common and relates to the same assessee, all these issues are disposed of by this common order. 5.0 Mrs.Ruby George, CIT represented on behalf of the Revenue and Mr.Raghavan Ramabadran, Adv. r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from employees, and miscellaneous income and held against the assessee by following the decision of the Hon ble Supreme Court in the case of M/s.Liberty India Ltd. Vs. CIT referred to supra. It was a submission that the alternate prayer of the assessee that the expenditure relating to the earning of the other income was liable to be excluded, had been considered and estimated at 10% of the other income had been allowed as expenditure. 6.3 We have considered the rival submissions. On perusal of the Assessment Order and also the order of the Co-ordinate Bench of this Tribunal in the assessee s own case referred to supra clearly shows that the issues in regard to the handling charges, interest received from employees and miscellaneous income has been held to be not interlinked with industrial activity of power generation and therefore in view of the decision of the Hon ble Supreme Court in the case of M/s.Liberty India Ltd. Vs. CIT referred to supra, as the same did not have a direct link with the business of power generation, the deduction u/s.80IA of the Act on the said incomes were excluded. However, in Para No.10 of the Order the Coordinate Bench has held that 10% of the said oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 th March, 2008, will be applicable only after the period 2008-09. Nevertheless, their Lordship has clearly noted that even prior to that year, A.O. was duty bound to compute disallowance under Section 14A by applying a reasonable method having regard to the facts and circumstances of the case. Therefore, despite the argument of learned A.R. that lectricity bonds were taken under compulsion and there was no expenses incurred for earning the interest income, we are inclined to remit the issue back to the file of A.O. for consideration afresh. We, therefore, set aside the orders of the authorities below and remit on this aspect back to A.O. for consideration afresh in accordance with law. Assessee can bring to the notice of the A.O. any case law relevant to the issue and A.O. shall proceed in accordance with law. 6.6 Respectfully following the said decision on identical directions, the issue is restored to the file of the AO for re-adjudication. 6.7 In the result, the appeal filed by the assessee is partly allowed for statistical purposes. ITA No.2163/Mds/2016 for the AY 2012-13 Revenue s appeal: 7.0 In the Revenue s appeal, in regard to Ground Nos. 2.1 to 2.3, the Revenue has chall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 015-16. It was a submission that the order of the Ld.CIT(A) was liable to be reversed on this issue. 7.3 In reply, Ld.AR vehemently supported the order of the Ld.CIT(A). 7.4 We have considered the rival submissions. On perusal of the provisions of Explanation-2 to Sec.37(i) clearly shows that the said Explanation has been introduced by the Finance Act, 2014 w.e.f. 01.04.2015 and consequently would be applicable from AY 2015-16 onwards. In these circumstances, we find no error in the findings of the Ld.CIT(A) on this issue, consequently finding of the Ld.CIT(A) on this issue stands confirmed. In the result, Ground Nos.3.1 to 3.3 of the Revenue s appeal stands dismissed. 7.5 In regard to Ground Nos.4.1 to 4.3, It was submitted that the issue was against the action of the Ld.CIT(A) in allowing relief to the assesse in respect of the claim of deduction u/s.80IA of the Act in respect of the handling charges. It was fairly agreed by both the sides that the issue was identical to Ground Nos.1 2 of the assessee s appeal in ITA No.2200/Mds/2016. 7.6 As we have already following the decision of the Co-ordinate Bench of this Tribunal in the assessee s own case for the AYs 2007-08, 2008-09, 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal in the assessee s own case, findings of the Ld.CIT(A) stands confirmed. In the result, Ground Nos.6.1 6.2 of the Revenue s appeal stands dismissed. 7.11 In regard to Ground No.7, it was submitted by the Ld.DR that the issue was against the action of the Ld.CIT(A) in allowing the depreciation at 15% on building and electrical installations instead of 10% as applicable to buildings. It was fairly agreed by both the sides that the issue was squarely covered by the decision of the Co-ordinate Bench of this Tribunal in the assessee s own case for the AYs 2007-08, 2008-09, 2009-10 2010-11 referred to supra wherein Para No.3.3, the issue has been restored to the file of the AO with the following directions: 3.3 We heard the rival submissions and perused the material placed before us. As per the Assessment Order and breakup of the block of assets, there are two types of electrical installations. Electrical installations installed in mines for the purpose of excavation, generation and transmission activities and the electrical installations installed in the building, godown, bus station, etc. We agree with the Ld.CIT(A) that the electrical installations installed for the purpose of ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd no reason to interfere in the findings of the Ld.CIT(A) on this issue, consequently, the findings of the Ld.CIT(A) on this issue stands confirmed. In the result, Ground No.8 of the Revenue s appeal stands dismissed. 7.15 In regard to Ground No.9, it was submitted against the action of the Ld.CIT(A) in allowing the assessee s claim of the surcharge recoverable from the State Electricity Board. It was a submission that the assessee had not offered the surcharge recoverable by the assessee from the Electricity Board during the relevant AY on the belated settlement of power bill as such income. The AO held that there was no uncertainty in the accrual of the surcharge to the assessee s company on the belated settlement of the power bills. Consequently, he had brought to tax to the surcharge receivable. It was a submission that the Ld.CIT(A) had allowed the same by following his predecessors orders. It was fairly agreed by both the sides that the issue was squarely covered by the decision of the Co-ordinate Bench of this Tribunal in the assessee s own case for the AYs 2007-08, 2008-09, 2009-10 2010-11 referred to supra, wherein Para No.4.3, it has been held as follows: 4.3 We heard th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er surcharge is levied under the statute as it is only broad guideline: CERC Tariff Regulations which is notified in exercise of the power given under the Electricity Act 2003 stipulate levy of late payment surcharge. From the above, it is seen that CERC is empowered to fix the tariff as per the Electricity Act and the regulations of the CERC has provided for late payment surcharge beyond the period of 60 days from the date of billing @ 1.5% per month. The regulations of the Central Electricity Regulatory Commission are binding on the Electricity Boards as well as the assessee s company. Accordingly, the assessee has raised the bills for surcharge but not accounted/offered for the purpose of income on the plea that the past experience shows the non-payment of electricity bills which is untenable. The assessee is following mercantile system of accounting and as per the system of accounting followed by the assessee, the income is accrued. Now the question is whether the recovery of surcharge levied or leviable by the assessee is uncertain or certain? Is there any uncertainty in accrual or collecting the surcharge? In this connection, the AO brought out the list of conditions, stipula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and shall not qualify for the measures stipulated in this scheme. Such payments would have to be recovered by the respective CPSUs entirely on their account and no intervention either from the Central Government or from the respective State Governments shall be sought for this purpose. 16. Suspension of APDRP: Defaults in making current payments shall attract suspension of Accelerated Power Development Reforms Programme (APDRP). As such, any CPSU facing a payment default beyond 90 days from the date of billing shall request the Ministry of Power to suspend APDRP disbursements to the defaulting State, whereupon the Central Government shall withhold any further releases until the default is cured. Recovery of overdues from the State Governments: Payments that remain outstanding after 90 days from the date of billing shall be recovered on behalf of the CPSUs by the Ministry of Finance through adjustment against releases due to the respective State Government on account of plan assistance. States share of Central taxes and any other grant or loan. 8.4 From the above guidelines and conditions as given in the tripartite agreement, particularly in Para 14 (highlighted) it is amply clear t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on behalf of the Electricity Boards. Therefore, there is no doubt regarding the payment of dues when there is binding tri-partite agreement. Some sanctity and credence has to be given to the tripartite agreement. Therefore, we are unable to accept the contention of the assessee that there is no certainty in accrual of surcharge to the assessee company. The assessee has not demonstrated with the facts that recovery through Ministry of Finance is unenforceable. The assessee relied on the judgment of the Hon ble Apex Court in the case of Godhra Electricity Co. Ltd. Vs. CIT 225 ITR 0746 cited supra. The facts of the case are clearly distinguished by the AO in his Assessment Order. In the cited case law as stated in the Assessment Order, the consumers have gone to the court and the Hon ble Court has decreed in favour of the consumers against the increase of Electricity Charges on account of Electricity dues. The tariff could not be realized either by Court orders or Government Orders, since there was a decree granted by the Trial Court which was affirmed by the Appellate Court and there was an uncertainty in releasing the dues in the case of Godhra Electricity Co. Ltd. There was no tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued on 08.01.2014 (within the 4 year period of limitation from the end of the relevant Assessment Year) on the ground that the deduction u/s.80IA of the Act was not allowable to the assessee in respect of the other income. It was a submission that when the original assessment was done, though the Assessment Order was non-speaking order, the issue of deduction u/s.80IA has been examined by the AO. It was a submission that the re-assessment was on a change of opinion. 8.1 In reply, Ld.DR submitted that the issue of deduction u/s.80IA had not been examined in its entirety and there was no opinion itself formed and therefore, there was no change of opinion. It was a submission that the re-opening was valid. 8.2 We have considered the rival submissions. On perusal of the reasons recorded shows that the re-opening is on two grounds. The first one in respect of the advance over burden removal expenditure and the second one in respect of the deduction u/s.80IA of the Act on the other incomes. The Ld.AR has not been able to show as to how both the issues had been examined by the AO in the course of the original Assessment Order. In any case, the denial of the deduction u/s.80IA of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure of ₹ 43,93,11,543/- in the memo of income towards advance OB removal - Rajasthan. Further, it is seen from Sch.12A to balance sheet- miscellaneous expenditure that such expenses were capitalized in the books. The AO asked the assessee to explain the nature of expenditure and the submitted the reply. The submissions made by the assessee in this regard are given below: 9. Disallowance of Advance Overburden removal of Rajasthan Mine: The assessee claimed expenditure of ₹ 43,93,11,543 in the memo of income towards advance OB removal - Rajasthan. Further, it is seen from Sch.12A to balance sheetmiscellaneous expenditure that such expenses were capitalized in the books. The assessee was asked to explain why part of such capitalized expenses is claimed in the memo of income and show cause why the claim should not be disallowed. The submissions made by the assessee in this regard are given below: Mine development Expenditure: Over Burden removal cost are classified under mine development account till achievement of quantity parameters as approved for each project, classified as Mine Development expenditure and capitalized in the books of accounts. The same will be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... removal stage- transferred to deferred expenditure (included in the expenditure capitalized -vide page no.57 of Annual report) 43,93,11,542.00 Expenditure incurred for barsingsar mine after 1-12-2009 6,18,27,485.00 Total 50,17,71,483.00 8.1 Aggrieved by the order of the AO, the assessee went on appeal before the Ld.CIT(A) and the Ld.CIT(A) allowed the appeal placing reliance on ITAT Order for the AY 2002-03 in ITA No.198/Mds/2008 in assessee s own case. The Hon ble ITAT held as under: Expenditure on removing overburden in the continuous process of mining lignite from an old open cast mine is not expenditure for prospecting, etc. of minerals within the meaning of s.35E and also not capital expenditure but same is allowable revenue expenditure under s.37(1) . 9.2 We have considered the rival submissions. As it is noticed that the issue is squarely covered by the decision of the Co-ordinate Bench of this Tribunal in the assessee s own case for the AYs 2007-08, 2008-09, 2009- 10 2010-11 referred to supra, on identical findings, the finding of the Ld.CIT(A) on this issue stands affirmed. In the result, Ground Nos.2.1 to 2.3 of the Revenue s appeal stands dismissed. 9.3 In regard to Grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he preparation of the final mine closure plan wherein at Para No.7, the financial assurance has been called for from the mine operators. 7. Financial Assurance i. All coal mine owners shall strictly adhere to the following: ii. For financial assurance the mining company shall open a Escrow Account with any Scheduled Bank, with the Coal Controller Organization (on behalf of the Central Government) as exclusive beneficiary. The mining company shall cause payments to be deposited in such Escrow Account at the rate computed as indicated at 6.3 above. The amount being deposited will be reviewed with such periodicity as deemed fit by the Coal Controller. iii. When implementation of the final mine closure scheme is undertaken by the mine owner starting five years before the scheduled closure of mining operations, the Coal Controller may permit withdrawals (four years before final mine closure date) from the Escrow Account proportionate to the quantum of work carried out, as reimbursement. The withdrawn amount each year shall not exceed 20% of the total amount deposited in the account. iv. An agreement, outlining detailed terms and conditions of operating the Escrow Account, shall be execu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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