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2018 (12) TMI 904 - AT - Income TaxDisallowing contribution to State Renewal Fund - application of income and not expenditure incurred for business expediency - Held that:- There are no changes in the facts and circumstances of case. Following the decision of the Co-ordinate Bench in assessee’s own case and decision in case of Pr. CIT vs. Rajasthan State Seed Corporation Ltd [2016 (9) TMI 59 - RAJASTHAN HIGH COURT] we upheld the order of the ld. CIT(A). Hence, the ground so taken by the Revenue is dismissed. Allowance of deduction in respect of provision for Mines Closure Expenses - Held that:- Following the decision in assessee’s own case and decision of the Hon’ble Rajasthan High Court in case of Pr. CIT vs. Rajasthan State Seed Corporation Ltd [2016 (9) TMI 59 - RAJASTHAN HIGH COURT] we hereby affirm the order of CIT(A). Hence, the ground so taken by the Revenue is dismissed. Receipt from sale of Carbon Emission Certifications were held as capital in nature - Held that:- Following the decision of the Co-ordinate Bench in assessee’s own case and decision of the Hon’ble Rajasthan High Court in case of Pr. CIT vs. Rajasthan State Seed Corporation Ltd [2016 (9) TMI 59 - RAJASTHAN HIGH COURT] we hereby affirm the order of ld. CIT(A). Hence, the ground so taken by the Revenue is dismissed. Disallowance of rural development expenses - Held that:- In case of Ranbaxy Laboratories Ltd.(supra), where the assessee contributed towards construction of the school hospital, it was held that the hospital constructed by the school was engaged in the providing medical facilities to the school children and other people in the vicinity of the school and the business expediency or commercial expediency might require providing facilities like school, hospital etc. for the employees or their children and accordingly claim was held allowable. We are of the view that where the expenditure has been incurred by the assessee in vicinity of its mining areas and its workers and its employees are also benefited by incurrence of such expenditure, the assessee has established the necessary nexus of such expenditure for the purpose of smooth running of its business operation and such expenditure should be held as allowable deduction. In the result, we delete the addition made by the Assessing Officer under the head of Rural Development Expenses and ground so taken by the assessee is allowed. Disallowance of amortization of mining land - Held that:- Rights which are given to the assessee are of commerce rights which are akin to license for mining. In that view of the matter, the contention of the assessee regarding depreciation u/s 32(ii) is required to be accepted. AO is directed to allow depreciation under 32(1)(ii). The ground of assessee is thus allowed with said directions. Allowability of Leave encashment expenditure - Held that:- The assessee took a policy from LIC named as “Rajasthan State Mines & Minerals Limited – Employee Group Leave Encashment Scheme. The payment of leave encashment is a contractual liability, a charge on assessee's profit. To ensure timely payment of leave encashment to its employees, the scheme is devised by the LIC, which works out the leave encashment liability and fixation of premium as per valuation report. The liability is thus ascertained and crystallized on a scientific method by the LIC. Thus, the assessee's payment of ₹ 29.39 Crores during the year towards the same is within the framework of the leave encashment scheme and in our considered view, the same is an allowable business deduction and the AO is directed to allow the said claim of the assessee even though the same has not been made in the return of income but during the assessment proceedings and all the necessary facts are on record. In the result, assessee’s ground of appeal is allowed. Chargeability of interest u/s 234A - return filed on or before the date prescribed u/s 139(1) - Held that:- AO while working out the interest under section 234A amounting to ₹ 32,10,470 has not given credit of self-assessment tax paid by the assessee amounting to ₹ 17,00,00,000. Apparently, the reason for the same could be that the online functionality to determine the interest liability in the IT system of the department still doesn’t allow credit for self-assessment tax while working out the interest u/s 234A inspite of the CBDT Circular No. 2/2015 dated 10-2-2015 which clearly allows such credit. To our mind, the matter is squarely covered by the decision of the Hon’ble Supreme Court in favour of the assessee. In such a scenario, where the taxes deposited before filing the return of income were more than the taxes finally determined on regular assessment, the interest under section 234A is held not leviable. We therefore set-aside the matter to the file of the AO for limited purposes of verification of the tax deposit figures before filing of the return of income so submitted by the ld AR and where the same is found to be in order, allow the necessary relief to the assessee.
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