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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 ..... 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. represented on behalf of the assessee. ITA No.2200/Mds/2016 for the AY 2012-13 - Assessee's appeal: 6.0 In the assessee's appeal the assessee has raised two issues. In regard to Ground Nos.1 & 2, the assessee has challenged the disallowance of other income from the computation of profits and gains for the purpose of deduction u/s.80IA of the Act. It was a submission that the assessee is in the business of operating mines for extraction of lignite and also in the business of generation and selling of power/electricity. It was a submission that during the relevant AY, the assessee had included the interest received from the employees, the interest received from others, miscellaneous income in the form of income from sale of tenders, income from sale of unserviceable parts, income from penalty in fines, discounts, unclaimed expenses, etc., as profits and gai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 other income could be estimated as the expenses relatable to the earning of the said income and directed the AO to exclude 10% of the other income as expenses while computing the deduction u/s.80IA of the Act. In the year under appeal, the other income includes interest on arrears from Electricity Board and interest from others. Applying the ratio of 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, the disallowance as made by the AO and as confirmed by the Ld.CIT(A) stands sustained. However, considering the alternate prayer of the assessee and also following decision of the Co-ordinate Bench of this Tribunal, the expenses in relation to the earning of the other income is estimated at 10% and the AO is directed to exclude 10% of the other income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pectfully 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 challenged the action of the Ld.CIT(A) in allowing the additional depreciation in respect of the plant & machinery. It was submitted by the Ld.DR that in the course of the assessment, the AO had denied the assessee's claim for additional depreciation on the ground that the assessee is only engaged in the business of coal mining and power generation only, which is not a manufacturing activity. It was a submission that on appeal, the Ld.CIT(A) had following the decision of the Hon'ble Supreme Court in the case of CIT v. Tara Agencies 162 Taxman 377 (SC) held that "the word 'produce' would also include securing certain produce from natural elements, including operation of lignite mines". It was a submission that order of the Ld.CIT(A) was liable to be reversed. 7.1 We have considered the rival submissions. On perusal of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, 2009-10 & 2010-11 referred to supra held that the other income is not eligible for deduction u/s.80IA of the Act except to the extent of 10% of the estimated expenditure, on identical findings, the order of the Ld.CIT(A) stands reversed and the Order of the AO is restored. However, the assessee would be entitled to claim 10% of the estimated expenditure in respect of the handling charges. In these circumstances, Ground Nos.4.1 to 4.3 of the Revenue's appeal stands partly allowed. 7.7 In regard to Ground No.5, it was submitted by the Ld.DR that the issue was against the action of the Ld.CIT(A) in allowing the depreciation on UPS at 60% as against 15% allowed by the AO. It was submitted that the Ld.CIT(A) had allowed the same following decision of the Hon'ble Supreme Court in the case of CIT vs. BSES ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 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 excavation, transmission of mining activities required to be considered as a plant as per the decisions relied upon by the assessee. Whereas, the electrical installations installed in the administrative buildings, bus stations, etc., perform the functions of normal transmission of electricity cannot be held as a plant. The assessee also relied on the decision of Kutti Spinners Pvt Ltd 34 ITR 0470. The Coordinate Bench of ITAT, Chennai held in the cited case that the electrical cables, fittings and other electrical works connected with the wind mill considered as a single capacity unit and eligible for depreciation @80%. Our view is supported by the Co-ordinate Bench decision cited supra. Therefore, the issue is remitted the matter back to the file of the AO and to examine the elec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 the rival submissions and perused the material placed before us. In this case there is provision for levy of surcharge in delayed payments and the assessee has not reckoned the surcharge as income. The assessing officer has assessed the surcharge on the basis of the accounting system followed by the assessee. The tariff in respect of NLC which is central generating station is governed by the Central Electricity Regulation Commission (in short 'CERC') which is generally notifies once in three years. Accordingly, CERC has notified tariff regulations 2001 for the period 2001-04, Tariff regulations-2004 for the period 2004-09 and tariff regulations 2009 for the period of 2009- 14 and presently tariff regulations 2014 is valid till 31.03.2019. In all the above notification CERC ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xperience 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, stipulations and strict guidelines to the Electricity Boards in Para No.8.3 to 8.6 from the tripartite agreement in the Assessment Order which is extracted as under: 8.3 However, the tripartite agreement also stipulates strict guidelines to the Electricity Boards for making payment of current dues, i.e., dues payable on or after 1st October 2001. For ready reference, list of such conditions and guidelines given in the tripartite agreement dated 17.04.2002 are given below. * "12. All CPSUs ( viz., assessee company and other power suppliers) will continue to raise and collect their current bills against the SEBs or their successor entities in accordance with the existing practice or such other arrangement as may be mutually determ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. * 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 that interest (or surcharge) becomes payable from Electricity Boards if payments due to the assessee company are not made within 60 days from the date of billing or within 45 days of receipt of bill, whichever is later. It is also provided in Para 17 of the agreement that payments that remain outstanding after 90 days from the date of billing shall be recovered, on behalf of the assessee company, 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. This tripartite agreement would be in force till 31.10.2006 and hence, the year under consideration is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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-partite agreement, as if, in the case of the assessee to ensure recovery by Ministry of Finance through adjustment in the case of Godhra Electricity Co. Ltd.. Therefore, the case law relied upon by the assessee cannot come to help of the assessee. The tripartite agreement entered in to with the Government of India, Reserve Bank of India and the state Governments has to be given due credence and simply cannot be brushed aside. Considering all the facts and merits of the case we hold that there was no uncertainty in realizing the tariff or surcharge by the assessee company and accordingly we hold that the income is accrued and the assessing officer has rightly brought to tax. Therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion 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 Act in respect of the other incomes is the consequence of the decision of the Hon'ble Supreme Court in the case of Liberty India Ltd. and consequently, we find no error in the re-opening. Consequently, Ground No.1(a & b) stands dismissed. 8.3 In regard to Ground Nos.2 & 3, it was submitted that the issue was against the claim of deduction u/s.80IA of the Act in respect of the other incomes. This issue is identical to Ground Nos.1 & 2 of the assessee's appeal in ITA No.2200/Mds/2016 for the AY 2012-13, wherein we have upheld the findings of the Ld.CIT(A) on this issue following the decision of the Hon'ble Supreme Court in the case of Liberty India Ltd. referred to supra. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 amortized over the period of life of the Mines at the rate arrived on the basis of estimated reserve of lignite (Refer page 52 of annual report). This amount will be qualified for deduction under section 35E from the year of commercial commissioning of the project subject to the provisions of section 35E. Overburden removal expenditure: The above expenditure incurred after commissioning of Mines is called Overburden removal expenditure and the same has been claimed as revenue. Sometimes, the connected thermal project is not ready to take lignite, due to delay in commissioning of the project. At that time, the overburden removal activities are c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tc. 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 Ground Nos.3.1 to 3.3, it was submitted by the Ld.DR that the issue was in respect of the additional depreciation. It was fairly agreed by both the sides that the issue was identical to Ground Nos.2.1 to 2.3 of the Revenue's appeal in ITA No.2163/Mds/2016 for the AY 2012-13. 9.4 We have considered the rival submissions. In regard to Ground Nos.3.1 to 3.3 of the Revenue's appeal in ITA No.2163/Mds/2016, the order of the Ld.CIT(A) has been upheld on this issue of additional depreciation on identical grounds. The findings of the Ld.CIT(A) stands confirmed. Consequently, Ground Nos.3.1 to 3.3 of the Revenue's appeal stands dismi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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 executed amongst the mining company, the Coal Controller and the concerned bank in order to give effect to this. The agreement shall be executed before the grant of permission by the Coal Controller to open the mine, 9.8 It was a further submission that during the subsequent Assessment Years the assessee has written back this expenditure and also offered the same to tax. It was a submission that the findings of the Ld.CIT(A) may be sustained. 9.9 We have considered the rival submissions. On perusal of the guidelines more specifically in Para No.7 which has been extracted above clearly shows that for financial a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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