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TMI Blog2021 (9) TMI 283X X X X Extracts X X X X X X X X Extracts X X X X ..... tions. The Ground of appeal No. (i) is accordingly dismissed. Disallowance of Land Acquisition Expenses - revenue or capital expenditure - HELD THAT:- As the facts and the issue involved qua the disallowance of land acquisition expenses during the year under consideration, remains the same, as were there before the Tribunal in the assessee s own for A.Y. 2012-13 [ 2019 (1) TMI 1918 - ITAT MUMBAI] , therefore, we respectfully follow the same, and therein, uphold the order of the CIT(A) who had rightly vacated the disallowance of the land acquisition expenses. Disallowance of the provision for enhanced compensation on land acquisition - HELD THAT:- As decided in own case [ 2019 (1) TMI 1918 - ITAT MUMBAI] , the expenditure incurred by the assessee was in the nature of a revenue expenditure that was allowable as a deduction while computing its income, the Tribunal had upheld the view taken by the CIT(A) and had vacated the said disallowance - thus uphold the order of the CIT(A) who had rightly vacated the disallowance made by the A.O as regards the provision for enhanced compensation on land acquisition for the year under consideration. Disallowance of School Expenses - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s justified in deleting the enhanced compensation towards land acquisition expenses of ₹ 2,00,821/- on account of land acquisition failing to appreciate that the expenditure is directly related to the acquisition of land and is therefore, in the nature of capital expenditure. 4. Whether, on the facts and in the circumstances of the case and in law, the Hon ble Tribunal was right in deleting the disallowance of ₹ 1,32,19,675/- on account of Corporate Social Responsibility (CSR) and failing to appreciate that as per the Companies Act, Corporate Social Responsibility (CSR) is an appropriation of profits below the line and hence is not an allowable expenditure under the Income Tax Act. 5. Whether, on the facts and in the circumstances of the case and in law, the Hon ble Tribunal was right in deleting the disallowance of ₹ 1,32,19,675/- on account of Corporate Social Responsibility (CSR) and failing to appreciate that the expenditure incurred by the assessee under the head Corporate Social Responsibility (CSR) does not qualify within the ambit of Section 37(1) as the amount is not expended wholly exclusively for the purpose of business. 2. Briefly s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Expenses that were incurred by the assessee at the instance or direction of the Hon ble High Court of Kerala/State Government Auhtorities i.e supply of drinking water to residents of Eloor by way of payment of 1/4th share of KSPCB, contribution of Mining Area Welfare Board etc. were concerned, the same being in the nature of expenses/contributions that the assessee was constrained to incur/make in the interest of its business, the same, were thus to be allowed as a deduction on the ground of business expediency. Accordingly, the CIT(A) restored the issue to the file of the A.O, with a direction, that if the assessee was able to adduce evidence to show that the aforesaid expenditure was incurred at the directions of the Government Authorities, whether State or Central, for which approval of its competent authority was obtained during the year under consideration, then, the A.O would allow the consequential relief to the assessee. 4. The revenue being aggrieved with the order passed by the CIT(A) has carried the matter in appeal before us. The ld. Authorized Representative (for short A.R ) for the assessee, at the very outset, submitted, that the issue involved in the presen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23,033 23,033 Contribution to Mining Welfare Board 55,55,145 55,55,145 Contribution to fishermen Welfare Fund 14,00,000 14,00,000 Providing Uniform, Books, Computers, Furniture to Nearby School 2,99,542 72,548 3,72,090 Providing Medical Facility, Policies to Fishermen Villages/peripherial Villages 4,33,087 4,15,784 8,48,871 Total 17,50,901 1,11,29,852 18,57,087 8,37,881 1,55,75,721 As observed by the CIT(A), the expenditure that was incurred by the assessee insofar the same was in the nature of donations, was to be disallowed, for the reason, that the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion while computing its income. Accordingly, concurring with the view taken by the CIT(A), we are not persuaded to accept the claim of the revenue that the CIT(A) had erred in allowing the assessee s claim for deduction with respect to CSR contributions. The Ground of appeal No. (i) is accordingly dismissed. 8. We shall now take up the claim of the revenue that the CIT(A) had erred in allowing the assessee s claim for deduction of Land Acquisition Expenses of ₹ 60,70,699/-, failing to appreciate that the expenditure in question was in the nature of a capital expenditure. As is discernible from the orders of the lower authorities, we find that the land acquisition expenses of ₹ 60,70,699/- were incurred by the assessee at the direction of the Government of Kerala, towards establishment cost, salary, pension etc. of certain posts sanctioned to look after the land acquisition issues of the assessee company. Before the lower authorities, it was categorically submitted by the assessee that the expenditure in question was nothing but reimbursement of salary, rent, electricity and other office maintenance expenditure of the Land Acquisition office of the Government of Ke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harges to advocate ₹ 24,500/- 4. Sweeping Charges ₹ 11,000/- 5. Building Evaluation Charges etc. ₹ 14,000/- 6. Miscellaneous expenses ₹ 4,145/- 7. Establishment charges ₹ 52,05,491/- Total ₹ 53,09,116/- We find that the major portion of the expenditure of ₹ 52,05,491/- (out of total expenditure of ₹ 53,09,116/-) was incurred by the assessee towards maintenance of the office of the land acquisition unit of the Government of India. On a perusal of the facts, it emerges that the said expenditure was incurred by the assessee pursuant to an understanding between the Government of Kerala and the assessee, as per which the assessee was to bear the expenditure of the land acquisition unit set up by the State Government at the site of the assesses business. The aforesaid expenditure comprised of viz. (i) reim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the considered view that as the aforementioned expenditure incurred by the assessee pursuant to an understanding with the State government of Kerala was in the course of its business of mining, hence the same being clearly in the nature of a revenue expenditure was to be allowed as a deduction while computing its income for the year under consideration. Apart therefrom, we find that the issue under consideration as regards the allowability of the aforesaid expenditure is squarely covered by the order passed in the assesses own case by a coordinate bench of the ITAT A Bench, Mumbai in M/s Indian Rare Earth Ltd. Vs. JCIT (Sr.-6), Mumbai [ITA No. 1664/Mum/2003; dated 06.07.2007]. We thus finding ourselves to be in agreement with the view taken by the Tribunal, thus are of the considered view that the amount of ₹ 53,09,116/- incurred by the assessee was rightly claimed as a revenue expenditure. We thus not finding any infirmity in the order of the CIT(A) wherein the latter had ordered deletion of the addition of ₹ 53,09,116/- made by the A.O, uphold his order in context of the issue under consideration. The Ground of appeal No. 2 raised by the revenue is dismissed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; (ii) interest on Kerala State General Tax (₹ 92,637/-); and (iii) Interest on leasehold land acquisition payments (₹ 3,08,047/-). Apart therefrom, it was observed by the CIT(A) that during the year under consideration the liability to pay service tax to the transporters was to be borne by the service availer. It was noticed by him that the assessee as a service availer had paid service tax in respect of the amount paid to the transporters for movement of raw materials to its factory premises. However, as there were certain errors while computing the service tax liability on the part of the assessee, thus pursuant to the audit conducted by the service tax authorities certain additional payment became payable by the assessee. The principal amount that was paid by the assessee towards the additional liability of service tax was added to the material cost while for the interest of ₹ 12,40,970/- was debited as interest-others in the profit and loss account. The assessee in order to fortify its aforesaid claim had placed on record the copy of the orders of the service tax department, proof of challan for making the payment and the internal note prepared for the paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 1 raised by the revenue is dismissed. Before us, the ld. D.R had failed to point out any such material fact on the basis of which the view taken by the Tribunal in the case of the assessee for the immediately preceding year i.e A.Y 2012-13 could be held to be distinguishable qua the aforesaid issue, as against that for the year under consideration, viz. A.Y. 2013-14. Accordingly, finding no reason to take a different view, we herein respectfully follow the order passed by the coordinate bench of the Tribunal in the assessee s own case for A.Y. 2012-13 in ITA No.4526/Mum/2017, and therein, uphold the order of the CIT(A) who had rightly vacated the disallowance made by the A.O as regards the provision for enhanced compensation on land acquisition for the year under consideration. The Ground of appeal No. (iii) is dismissed. 12. We shall now take up the claim of the revenue that the CIT(A) had erred in vacating the disallowance of the assessee s claim for deduction of expenditure incurred on school amounting to ₹ 1,32,19,675/-. As is discernible from the records, the assessee had incurred expenses pertaining to running of Atomic Energy Central School, Oscom (Orissa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee s own case for the immediately preceding year i.e A.Y. 2012-13 in ITA No.4526/Mum/2017, dated 30.01.2019, wherein it was observed as under: 10. We shall now advert to the disallowance of the expenditure incurred by the assessee on running and maintenance of Atomic Energy Central School Oscom, (Orissa Sand Complex) amounting to ₹ 1,20,61,377/-, which had been deleted by the CIT(A). We find from a perusal of the orders of the lower authorities that the assessee had incurred expenses pertaining to running of Atomic Energy Central School Oscom (Orissa Sand Complex). It was the claim of the assessee before the A.O that they were providing funds for running of the school in the area where they were carrying out the mining operations. Apart therefrom, it was submitted by the assessee that the aforesaid school catered to the wards of all the residents of that area as well as those of the adjoining areas and was not restricted to only the children of the employees. However, the A.O not finding favour with the said claim of the assessee disallowed the said expenses by observing that as the employees of the assessee were drawing educational allowance from the assessee as per t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the nature of a revenue expenditure that was to be allowed as a deduction while computing the income of the assessee. Our aforesaid view that a PSU is required to comply with the government directive is fortified by the judgment of the Hon ble High Court of Madras in the case of CIT Vs. Madras Refineries Ltd. (2004) 266 ITR 176 (Mad) and an order of a coordinate bench of a Tribunal in Hindustan Petroleum Corporation Vs. DCIT (2005) 96 ITD 186 (Mum). We have given a thoughtful consideration to the issue before us and are of the considered view that the aforesaid expense which had strictly been incurred by the assessee pursuant to government directive since 1990 onwards, as rightly observed by the CIT(A) was in the nature of a revenue expenditure which was to be allowed while computing the income of the assessee for the year under consideration. We thus finding ourselves to be in agreement with the view taken by the CIT(A) in context of the issue under consideration, uphold the his order. The Ground of appeal No. 3 raised by the revenue is dismissed. As the facts and the issue qua the assessee s claim for deduction of the expenditure incurred on running the Atomic Energy Centr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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