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TMI Blog2024 (6) TMI 316X X X X Extracts X X X X X X X X Extracts X X X X ..... quently, so, their decision cannot be held as erroneous. However, since now the position of on the issue is squarely covered by the order of Hon ble Delhi High Court, we cannot subscribe to the decisions of the revenue authorities, thus, respectful following the judgment of Hon ble Delhi Court having similar facts, are of the considered view that the provision of Rs. 17.65 crore made by the assessee company was required to effect the pay revision from Jan 17 to March 17 for executives salaries and fringe benefits as the tenure of executive s salary and fringe benefits are determined and finalized by the department of public sector enterprises has come to in an end on 31.12.2016. Although the intimation regarding such pay revision was communicated by the Coal India Limited vide communication letter no. CIL/C-3A/31075/200 dated 18.04.2017 but the liability was already under negotiation and has been ascertained - Merely because the communication w.r.t. implementation of pay revision has took time, the same could not be construed as there was no basis for making provision. Accordingly, the provision made by the assessee is allowed in terms of our aforesaid observations. Resultantly, gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner of Income-tax (Appeals) has erred in confirming the addition of Rs. 20,70,76,674/- made on the ground of alleged short credit of interest. 2. In the facts and circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) has erred in confirming the entire disallowance of Rs. 308,24,00,000/- incurred on Land Compensation and Rehabilitation Expenses without granting / allowing amortization of expenses in the form of depreciation as allowed by the jurisdictional bench of Hon'ble Income-tax Appellate Tribunal in appellant's own case. 3. On the fact and circumstances of the case and in law, the additional ground taken up before the learned CIT (A) on 28.11.2019 has not been taken up for adjudication. 4. In the facts and circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) has erred in confirming the disallowance of Rs. 1,24,81,924/- relating to Liquidated Damages which in fact is a capital receipt. 5. In the facts and circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) has erred in confirming the disallowance of Rs. 115,81,27,600/- made on account of Provision for Mine Closure E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000/-. 14. In the facts and circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) has erred in inflating the income in computation of Rs. 1,36,00,000/- against which rectification u/ s 154 is filed separately. 15. The impugned order is bad in law and on facts. 16. The Appellant reserves right to add, alter, amend, omit, and withdraw any of the grounds of appeal. ADDITIONAL GROUNDS OF APPEAL : ITA No.12/RPR/2020 (Assessee s Appeal for A.Y.2017-2018) Ground No. 5a Without prejudice to Ground No.5, if Ground No. 5 is decided against the appellant, then the Honourable ITAT may be pleased to direct the AO to allow the deduction of mine closure expenses in the year of its actual payment Ground No. 7a Without prejudice to Ground No. 7, if Ground No. 7 is decided against the appellant, then the Honourable ITAT may be pleased to direct the AO to grant consequential relief of 30% standard deduction from Income from House Property from Apollo Hospital Building. Ground No. 10a Without prejudice to Ground No. 10, if Ground No. 10 is decided against the appellant, then the Honourable ITA T may be pleased to direct the AO to grant consequential relief of 30% stand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above heads endure a permanent benefit to the assessee? 4. Whether the Ld. CIT(A) was justified in deleting the addition of Rs. 1,00,000/- made by the A.O. on account Land Crop compensation ? 5. Whether on the facts and circumstance of the case and on the points of the law, the Ld. CIT(A) was justified in restricting the addition of Rs. 187,00,72,955/- to Rs. 93,50,36,478/- made by the AO on account of expenditure incurred on coal transportation without properly appreciating the facts of the case that the assessee company could not justify the rate at which transportation expenses are claimed by the companies run by the Ex-service men vis- -vis the prevalent market rate of such services and also accordingly could not establish the commercial expediency of such expenditure ? 6. Whether on the facts and circumstance of the case and on the points of the law, the Ld. CIT(A) was justified in allowing credit of TDS of Rs. 32,82,188/- to the assessee. 7. Whether on the facts and circumstance of the case and on the points of the law, the Ld. CIT(A) has erred by giving a finding which is contrary to the evidence on the record, as the Ld. CIT(A) has accepted the submission of the assessee wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iers CIT(A)'s Order Para 3, Page 2 3 2 Land Compensation Rehabilitation Expenses Para 5 to Para 11, Page5 to Page 19 of Hon'ble ITAT's Order dated 10 May 2019 Para 24, Page 15 to Page 21 of Hon'ble ITAT's order dated 06 November 2019 and Para 5.10 to Para 5.12, Page 9 to Page 14 of Hon'ble ITAT's order dated 30 October 2023 Amt (Rs.) 308,24,00,000 Ground No. 2 AO's Order Para 6, Page 3 to 8 CIT(A)'s Order Para 4, Page 4to 6 3 Amortization of Land Rehabilitation Para 12 to Para 14,Page 19 to Page 21 of Hon'ble ITAT's Order dated 10 May 2019 Para 27 to Para 29, Page 22 to Page 24 of Hon'ble ITAT's order dated 06 November 2019 and Para 5.5 to Para 5.9,Page 5 to Page 9 of Hon'ble ITAT's order dated 30 October 2023 Amt (Rs.) - 106,90,00,000 Ground No. 3 11 AO's Order - Para14, Page 43 44 CIT(A)'s Order Para 4.6 to 4.8, Page 6 to 8 Page 51 52 4 Accumulated Liquidated Damages Penalty Para 7.34 to Para 7.36,Page 76 to Page 78 of Hon'ble ITAT's Order dated 30 October 2023 Amt (Rs.) 1,24,81,924 Ground No. 4 AO's Order Para 7, Page 8 to 10 CIT(A)'s Order Para 5, Page 8to 10 5 Provision made for Mine Closure Pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra 14, Page 30 31 Page 48 49 11 Actuarial Valuation of Employee Compensation Para 7.3 to Para 7.12,Page 45 to 56 of Hon'ble ITAT's Order dated 30 October 2023 Amt (Rs.) 66,00,000 13,16,00,000 Ground No. 12 9 AO's Order Para 18, Page 52 53 Para 12, Page 34 35 CIT(A)'s Order Para 16, Page 35 36 Page 49 50 12 Disallowance of Guest House Expenses Para 38 to Para 41, Page 26 to Page 27 of Hon'ble ITAT's Order dated 06 November 2019 and Para 5.13 to Para 5.15,Page 14 to Page 16 of Hon'ble ITAT's order dated 30 October 2023 Amt (Rs.) 1,61,50,000 Ground No. 14 AO's Order Para 17, Page 47 CIT(A)'sOrder Page 55 56 13 Grants to Schools and Institutions Para 63 to Para 67,Page 40 to Page 43 of Hon'ble ITAT's Order dated 06 November2019 Para 13.1 to Para 13.3 of Hon'ble ITAT's order dated 28 February 2002 and Para 6.14 to Para 6.16,Page 35 to Page 38 of Hon'ble ITAT's order dated 30 October 2023 Amt (Rs.) 45,25,95,201 44,06,36,179 Ground No. 1 4 AO's Order Para 11, Page 27 to 34 Para 7, Page 15 to 21 CIT(A)'s Order Para 9, Page 18 to 20 Page 40 to 42 14 Disallowance of Environmental Expense Para 77 to Para 81, Page 47 to Pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tional Ground 12(a) 9(a) 5 Difference of actual funding of gratuity and actuarial valuation of gratuity Amt (Rs.) 51,09,00,000 Additional Ground 13(a) 6 Impact of pay revision of executives Amt (Rs.) 17,65,00,000 Additional Ground 11(a) 18 5. The aforesaid chart is deliberated upon and found that certain ground are squarely covered by the Tribunal earlier order. When this fact is confronted to Ld. CIT DR, representing the revenue, he have not objected to it, if the decision on issues covered is adopted in the present appeals. 6. After giving a thoughtful consideration on the aforesaid submission of the Ld. AR, we are of the view that ground no. 1, 2,3,4,5,6,7,8,9,10 12 of the ITA 12/RPR/2020 of the assessee and ground no. 1,2,3,4, 5 of the ITA 51/RPR/2020 of the department are squarely covered by the decision in ITA No. 201/BIL/2012 Ors. Dated 30.10.2023, thus, the observations / decision recorded in the said order are mutatis mutandis applicable on the grounds as specified hereinabove. Additional ground no. 5a, 7a, 10a 12a of the ITA 12/RPR/2020 of the assessee raised are alternate prayers which are also covered by our observations in the order relied upon by the Ld. AR in ITA No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year NCWA IX which was in force since 01.07.2016 and whose term ended on 30th June 2016. Negotiations were going on for NCWA X, between the representative of various Trade Unions and representatives. Therefore, in the current assessment year there were nine months i.e. July 2016 to March 2017 wherein the company was required to pay increased salaries and wages to these employees. Accordingly, taking into consideration the bare minimum increase in salaries and wages in all earlier NCWAs, the company has provided the aforesaid amount of Rs. 417.69 crores as determined liability for the year but accounted for under the head Provision . For all purpose this was ascertained liability to be discharged at a later period. The Executive salary and fringe benefits are determined and finalized by the Department of Public Sector Enterprises and the tenure of the Executive salaries and fringe benefits came to an end on 31.12.2016. Therefore, in the current accounting period the company was required to pay three months revised and increased salary commencing from January 2017 to March 2017. Accordingly, and considering minimum rise of the scale, a sum of Rs. 17,65 crores had been pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s carrying on the negotiations with the representing trade unions intimated the assessee company that amicable settlement between the parties has been arrived at according to which Rs 100/- per month of interim relief to the employees governed by the national coal wage Agreement is payable with effect from 1-7-91. It is thus clear that the negotiations between the concerned parties had reached a stage in the accounting year itself and it was possible for the assessee company to anticipate the liability payable to the workers on account of interim relief for the period from 1-7-91 to 31-3-94. That being the position, we are of the view that the liability to that extent had definitely arisen in the accounting year and the deduction was admissible to the assessee in respect of the said liability. 17.3 In the present case of the assessee, letter no CIL/C-3(A)/31075/20 has been received by the assessee company from its holding company i.e. CIL which Clearly quantifies the amount of liability to be incurred and payable by the assessee company in case of non-executive employees. CIL has asked the assessee company to have an estimated lump sum provision @ Rs 8000/- per employee (non-execut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded in accordance with the relevant provisions of the Act and not in accordance with the accounting practice. Rs 62.49 lacs payable to the employees governed by executive rules was not allowable in the said year , 17.5 Following the order delivered by the honourable ITAT in the above- mentioned case of the assessee and considering that the facts and circumstances Q/ the issue in hand is same, Rs 17.65 crores Provision made by the assessee company for Executives: Pay-revision executives is being disallowed and added back to the total income of the assessee for the year under consideration. (Addition: Rs 17,65,00,000/-) 9. Ld. AR further drew our attention to the order of Ld. CIT(A) on the issue wherein the contentions of the assessee were not found convincing by the Ld. CIT(A) and, therefore, the issue is decided against the assessee. The relevant portion of the decision by Ld. CIT(A) is extracted here under for completeness of the fact: 15.3 I have considered the grounds of appeal and observations made by 'the AO and written submissions of the appellant. I am in agreement with the view of the AO who has comprehensively dealt with this issue in the assessment order by referring ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not brought on record cogent material with respect to the above claims. No detailed break up has been furnished with respect to the above claims. Following the order of the Hon'ble Tribunal in the above-mentioned case of the appellant and considering facts and circumstances of the case the addition of Rs. 17,65,00,000/- is confirmed and this ground of appeal is dismissed. 10. Aggrieved by the aforesaid decision of the Ld. CIT(A) the assessee had carried the matter before us. 11. While are doing on the issue, it is submitted by the Ld. AR that Ld. AO has applied the decision of Hon ble ITAT in ITA no. 20/NAG/2001 for AY 1994-95 in assessee s own case wherein the tribunal has deleted the addition made on interim relief payable to non-executives employees and has upheld the decision made on account of payable to executives employees. It is further submitted by the Ld. AR that the basis for sustaining the disallowance by Ld. Revenue authorities was that the tribunal has held that the letter regarding the crystallization of liability has been received in the relevant accounting year and therefore, the deduction was admissible to the assessee in respect of the said liability w.r.t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A. Y. 2010-11. Accordingly, the assessee could have claimed the expenditure on account of revision of pay in the A. Y. 2009-10 and the balance amount of expenditure w.e.f. 1-4-2008 to the implementation of Sixth Pay commission should have been claimed in A. Y. 2010-11. Even the Ld CIT-IV after careful consideration of the issue in question, has observed that the liability on account of revision of pay in consequence of report of Sixth Central Pay Commission has not accrued and crystallized during the F. Y. 2006-07 relevant to A. Y. 2007-08 because the implementation of the said report in respect of public sector undertaking and State Govt. Employees has been carried out only after September, 2008 beyond the close of the instant financial year relevant to A. Y. 2007-08 and accordingly, the provision of such revision of pay amounting to Rs. 1,60,00,000;- is unascertained liability which is not eligible for deduction for the year under consideration. Even from the documents filed during fresh proceedings along with its reply dated 30-11-2012 in the form of a note marked as annexure-III and further marked as ''Finance Wing; with the subject: Provision against pay revision of E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ministry of Heavy Industries and Public Enterprises, under the Chairmanship of Hon'ble (Retd.) Justice M. Jagannadha Rao, Supreme Court of India, vide resolution dated 30th November, 2006. The pay revision fell due during the Assessment Year 2007-08, with effect from 1st January, 2007. The committee held a total of 39 meetings out of which 4 meetings were held during the Assessment Year 2007-08, and it furnished its final report on 26th November, 2008. Pursuant to the recommendations of PRC, the appellant declared expenditure of Rs. 1.60 crores on account of provision for revision of pay in books of account from 1st January 2007, since the effective date of implementation was not known. The report of the PRC was implemented later in September, 2008; nevertheless, this would not render the expenditure to become unascertained liability , making it ineligible for deduction for the year under consideration i.e. 2007-08. The appellant has placed on record a note of the Finance Wing relating to aforesaid provision which reads as under: Finance Wing with the subject: Provision against pay revision of Executives, clearly states that during discussions regarding Annual Account for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer, for both the relevant years, held that the provision could not be allowed and that the claim or deduction was allowable when actually the entire quantum of liability could be calculated. The order of the AO was upheld in appeal. The Tribunal relying the Supreme Court's decision in Bharat Earth Movers v. CIT [2000] 245 ITR 428/112 Taxman 61 allowed the assessee's claim. The Tribunal noticed as follows: - 13. In the assessee's case also, it is noticed that the provision for the wage revision is factored on the basis of past experience, interim pay commissions of govt. employees, available pay commission reports of public sector employees, union demands and other relevant factors required for a scientific computation. Obviously, when one wage agreement comes to an end and other is executed, there would be a passage of time, but the new wage agreement would come into effect from the end of the earlier wage agreement. This being so, the liability is certain in the assessee's case though the quantum of such liability is variable and it is further noticed that the assessee has categorically admitted that the provision as done is invariable short of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the case decided by Hon ble Delhi High Court, wherein it is categorically observed that merely because the making of report and implementation thereof took time, it could not be said there was no basis for making provision. The issue, therefore, is decided in favour of the assessee with direction to the revenue to accept the claim of the assessee. 14. Ld. CIT DR on this issue has vehemently supported the orders of Ld. AO and Ld. CIT(A). 15. We have considered the rival contentions, perused the material available on record and the judicial pronouncements placed before us. In the present case the AO and Ld. CIT(A) has relied upon the judgment of ITAT in assessee s own case wherein the issue in hand has been decided against the assessee. The assessment order in the present case was passed on 17.03.2019 the appellate order by Ld. CIT(A) have been completed on 05.12.2019. The order of the Hon ble Delhi High Court in the case of Housing and Urban Development Corporation Ltd. (supra) was passed on 06.02.2020, accordingly, both the revenue authorities at the time of deciding the issue were not having the availability of principle of law decided by Hon ble Delhi High Court on the identica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credit to the assessee vide order u/s 154 dtd. 05.04.2022, to support this contention copy of the same was furnished before us. On perusal of the order u/s 154, it is apparent that the issue pertaining to TDS credit which has been allowed by the Ld. CIT(A) and was also accepted by the assessing officer, therefore, there was no grievance remained as both the parties reached on a consensus. Ld. AR further submitted that once the issue regarding TDS credit has already accepted by the AO, the ground raised in this respect becomes infructuous and, therefore, no further adjudication is required. Ld. CIT DR also have fairly agreed to the contention of the Ld. AR, thus, the ground no. 6 of the revenue is dismissed. 20. Ground no. 7, 8 9 are general and academic in nature, therefore, in absence of any specific argument advanced by the revenue, no separate adjudication of the same is required. In the result, ITA No.51/RPR/2020 of the revenue is partly allowed for statistical purposed in terms of our aforesaid observations. 21. ITA No.58/RPR/2023 (Assessee s Appeal for A.Y.2018-2019) 1. That on the facts and in the circumstances of the case, the Learned Assessing Officer ('Ld. AO') e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n an ad-hoc basis without appreciating the fact that the said expenditure was allowed in the Appellant's own case in earlier years by the Ld. CIT(A) thereby not following the principle of consistency. 47,00,12,813 (b) That on the facts and in the circumstances of the case, the Ld. CIT(A), NFAC erred in confirming the disallowance without appreciating the fact that the said expenditure is incurred to fulfil its obligation under the National Coal Wage Agreement in this regard. (c) That on the facts and in the circumstances of the case, the Ld. CIT(A), NFAC erred in confirming the disallowance without appreciating the fact that major portion of the expenditure was incurred for common areas of township, hence, was incurred for the purposes of business and a very small percentage is incurred for the employees of the company which is subsequently recovered from them. (d) That on the facts and in the circumstances of the case, the Ld. CIT(A), NFAC failed in appreciating that even if such expenditure was to be treated as perquisite, it could be taxed in the hands of each recipient employee, but the entire expenditure is a business expenditure in the hands of the Appellant. 6. (a) That ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat corresponding income has already been offered to tax in earlier years and it is contrary to the spirit and intention of the law as explained in the case of CIT v Bhooratnam Co (2013) 357 ITR 396 (AP). 7,29,333 11. That on the facts and in the circumstances of the case, the Ld. CIT(A), NFAC erred in confirming the disallowance on account of amortization of leased land compensation expenses without appreciating the fact that the Hon'ble ITAT in the Appellant's own case has allowed the said expenditure to be claimed in the form of amortization over the period of lease. 36,99,59,520 12. That on the facts and in the circumstances of the case, the Ld. CIT(A), NFAC erred in confirming the disallowance relating to amortization of deferred grant without appreciating the fact the Appellant already offered to tax the subsidy amount of INR 2.32 crores in the earlier year, and INR 0.47 crores pertained to amortization of the subsidy thus, the disallowance made by the learned AO has resulted into double taxation.16,26,576 13. That on the facts and in the circumstances of the case, the Ld. CIT(A), NFAC erred in confirming the disallowance of expenditure incurred on land crop compensat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al relief of 30% standard deduction from Income from House Property from Apollo Hospital Building. Ground No 18 Without prejudice to Grounds raised in A Y 2017-18, if Ground 11 of AY 2017-18 (ITA 12/RPR/2020) is decided against the appellant, then the Honourable ITAT may be pleased to direct the AO to allow the deduction of provision of the pay revision of executives, in the present year, on the basis of payment 22. In terms of our aforesaid observations in ITA no. 12/RPR/2020, wherein certain grounds were disposed-off as covered by order of ITAT Raipur, in assessee s own case vide ITA no. 201/BIL/2001 dated 30.10.2023, for which details are available in the chart submitted by the Ld. AR, which is extracted hereinabove (supra). Accordingly, ground no. 2,3,4,5,6,7, 8,9,10, 11,13,14 15 and additional ground no 8a, 9a 15a of ITA 58/RPR/2023 are covered (refer column 3 of the chart) having identical issues, thus, are disposed-off in terms of observations in ITA no. 201/BIL/2001 dated 30.10.2023. 23. Ground No 1 and 17 are general / academic in nature thus are not adjudicated separately. 24. Additional Ground No 18 is disposed-off in terms of our aforesaid observations in ITA 12/RPR/202 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.39 Crores has been received during the year and these are shown under other operating revenue under Subsidy for Sand Stowing Protective Works. [Refer Note 24 Revenue from Operations and point 5(a) of Note 38 Additional Notes to Financial Statements]. The same is the subsidy received from the Coal Controller for building of roads and other purposes against the stowing excise duty paid by SECL. There is no specific expenditure on assets not belonging to the company which are debited by the company as a separate line item in the Profit Loss Account. The said expenditure is in the nature of repairs carried out by the company in respect of existing State Government roads plying through the various coalfields of the company. The State Governments does not repair these roads in proper time causing damage to the roads and hence movement of coal traffic transportation of materials is seriously affected because of damaged roads. In this context, the expenditure is incurred by the company even though the roads are not belonging to the company. In connection with road development, the company makes a claim before the CCDA under section 9 of the Coal Mines (Conservation Development) Act, 1974 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee has requested to restore the issue back to the file of AO for reverification of facts and to re-adjudicate on merits, which is not objected by the LD. CIT DR. We, therefore, under such facts and circumstances in all fairness following the principle of natural justice are of the view that since there are other issues which are restored back for re-adjudication to the files of AO, the issue regarding amortization of deferred grant wherein the claim of he assessee was denied only on the basis of assumption that assessee have not submitted plausible explanations without pursuing with the assessee with further enquiries, should also be restored back to the files of AO to verify the fact and re-adjudicate the same. Needless to say, reasonable opportunity of being heard should be allowed to the assessee. In the result ground no. 12 of the assessee s appeal for AY 2018-19 is partly allowed for statistical purposes. 31. Ground no. 16: Leavy of interest u/s 234A of the Act The issues are with regard to levy of interest u/s. 234A of the Act is consequential in nature, which needs to be calculated and charged in accordance with the provisions of law. The AO is directed to work out ..... X X X X Extracts X X X X X X X X Extracts X X X X
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