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2017 (5) TMI 1567 - AT - Income TaxReopening of assessment - disallowance of claim of amortization of mining land and leasehold land Held that:- In the original assessment, the Assessing Officer had not considered the issue of allowability of the Amortization of Mining Land and Leasehold Land. He had simply without making any enquiry allowed the claim of the assessee, which is not the mandate of the law. Therefore, we do not see any reason to interfere into the order of the CIT(A), same is hereby affirmed, this ground of the assessee’s appeal is dismissed. Disallowing the claim of Amortization of Mining Land and Leasehold Land - Held that:- As decided in assess's own case [2016 (2) TMI 1118 - ITAT JAIPUR] AO is directed to treat the expenditure as capital and grant relief if any available under the law - issue of allowability of expenditure is u/s 37(1) decided against assessee Apportionment of establishment and financial expenditure on the basis of turnover of the mining activity and wind power generation activity - Held that:- restore this issue to the file of the Assessing Officer to decide afresh after verifying the claim of the assessee that the entire expenditure related to operation and maintenance was borne by Suzlon Energies Ltd. So far the contention of Ld. Counsel for the assessee that this item was not subject matter of the reasons recorded for reopening. We do not see any merit as law is well settled that once reopening is valid the AO can also consider the other issues as cropped up the assessment proceedings. - Decided in favour of assessee for statistical purposes Disallowance of Rural Development Expenses by holding that same is not incurred wholly and exclusively for the purpose of business - Held that:- The issue of allowability of Rural Development Expenses was not the subject matter of reason recorded. It is settled position of law that once the assessment is validly reopened, the AO can also make assessment in respect of other issues which come to notice during the reopened assessment proceedings. Now, coming to the merit of disallowance, we find that the CIT(A) has given a finding on fact that the amount was not expended wholly and exclusively for the purpose of business. This finding on fact is not rebutted by the assessee. In the absence of material proving the expenses incurred for the business of the assessee same cannot be allowed u/s 37 - Decided against assessee Receipts from Sale of Carbon Emission Certificates - revenue v/s capital receipts - Held that:- Deduction u/s 80IA is not allowable on the proceeds of Carbon Credits since this income does not first degree nexus with the industrial undertaking in view of the decision of the Apex Court in the case of Liberty India [2009 (8) TMI 63 - SUPREME COURT]. Also sale of excess Carbon Credits is a capital receipt and cannot be business receipt or income - [See - My Home Power Ltd. casee [2014 (6) TMI 82 - ANDHRA PRADESH HIGH COURT] Claim of the assessee u/s 80IA - Held that:- Restore this issue to the file of the Assessing Officer to decide afresh after verifying the claim of the assessee that the entire expenses related to operation and maintenance were borne by Suzlon Energies Ltd Expenditure in respect of rural development and afforestation, plantation and environment expenses to be allowed u/s 37 Reducing the claim of deduction u/s 80IA - liquidated damages received on account of short fall in the minimum guaranteed generation of power units is not an income derived from power generation business of wind mills - Held that:- The absence of operation, the issue of payment of such damages would not arise. It is only when the wind mill becomes operational on short fall on the production such payment is made. Hon’ble Madhya Pradesh High Court in the case of CIT vs. Prakash Oils Ltd. [2011 (3) TMI 1623 - MADHYA PRADESH HIGH COURT] held that the payment made as an liquidated damages for not honouring the contract for sale of oil and deoiled cake, such income is directly derived from industrial undertaking, hence eligible deduction u/s 80IA. In our view, the Ld. CIT(A) erred in holding that such income is not derive from the business of the undertaking. Therefore, we direct the Assessing Officer to allow deduction u/s 80IA on this receipt. Addition of average investment on account of administrative expenses - no efforts and loan funds were utilized in making the investment - Held that:- Assessing Officer in the present case has accepted that there is not direct nexus between the investment and expenses so incurred. After considering the totality of the fact and keeping in view the sum of ₹ 1,138/- had been disallowed by invoking the provision of Rule 8D without being satisfied about the claim of the assessee that no administrative expenses were incurred for earning of the exempt income. We direct the Assessing Officer to delete the disallowance. This ground of the assessee’s appeal is allowed. Addition of unpaid land tax u/s 43B - Held that:- It is undisputed fact that the land tax was not paid before due date of filing by the return of income u/s 139(1) as required by the provisions of section 43B. In view of the mandate of clause (a) of section 43B of the Act, we do not see any reason to interfere into the order of the Ld. CIT(A), same is hereby affirmed, the ground of the assessee’s appeal is dismissed. Payment of MR Cess to the State Government is a liability of the assessee independent of its customers - Held that:- The provision of section 145A are not applicable because the cess has been levied with retrospective which could not be recovered from the customers. The factum of levy of MR Cess with retrospective effect is not controverted by the Revenue. Therefore, in our considered view, there is no infirmity into the order of the Ld. CIT(A) same is hereby affirmed. This ground of the Revenue is dismissed. Disallowance of mine closure expenses made in course of assessment proceedings - Held that:- Mines closure liability is a ascertained liability. As per matching principle as well as the mercantile system of accounting, the liability is allowable in principle under section 37 AO is directed to given benefit of deduction in respect of mine closure expenses - See BHARAT EARTH MOVERS VERSUS COMMISSIONER OF INCOME-TAX [2000 (8) TMI 4 - SUPREME COURT] - This ground of the assessee’s appeal is allowed. Disallowance as social welfare expenses - Held that:- The assessee has not furnished material suggesting that these expenses were made for the purpose of business of the assessee as the amount u/s 37(1) is allowable only when it is expended wholly and exclusively for the business of purpose. Therefore, we do not see any reason to interfere into the order of the Ld. CIT(A) same is hereby affirmed. This ground is dismissed. Reduce the excess amortization of mining/leasehold land written back in the year under consideration on account of change in method of amortization upon the finalization of appeal - Held that:- CIT(A) has accepted the change in method of amortization. He ought to have directed the Assessing Officer to reduce the same in computing total income. Therefore, we direct the AO to reduced the excess amortization of mining and leasehold land written back in the year under appeal. Thus, the ground of the assessee’s appeal is allowed.
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