2019 (10) TMI 1612 - HC - Income Tax

Characterization of receipts - interest receipt - capital receipts OR income from other sources - ITAT justification in reversing the order of CIT (A) holding the interest income on FDRs to be income from other sources - disallowance made on account of mandatory CSR expenses - HELD THAT - Aforementioned question no. 1 2 and 3 stand already decided by this Court in Barmer Lignite Mining Co. Ltd 2018 (7) TMI 2369 - RAJASTHAN HIGH COURT whereby the appeal filed by the assessee in the present was allowed. Mines Closure Plan as admissible expenditure - whether the said amount set apart by the assessee was in the nature of provision and thus not allowable as expenditure? - As aforementioned question as also been decided by this Court in M/s. Barmer Lignite Mining Corp. Ltd. 2018 (4) TMI 2012 - RAJASTHAN HIGH COURT whereby the appeal filed by the appellant-revenue was dismissed.

Summary

The Rajasthan High Court dismissed the revenue's appeal challenging the Income Tax Appellate Tribunal's (ITAT) judgment dated 14.02.2019. The appeal raised four substantial questions of law concerning (1) classification of interest receipt of Rs. 7,34,00,000 as capital receipt versus income from other sources, referencing Supreme Court precedents in Bokaro Steel Ltd. (236 ITR 3152) and Toticorin Alkali Chemicals & Fertilizers Ltd. (227 ITR 172); (2) ITAT's reversal of CIT(A)'s order treating interest income on FDRs as income from other sources; (3) deletion of disallowance of Rs. 2,00,00,000 mandatory CSR expenses linked to environmental clearance conditions; and (4) admissibility of Rs. 5,56,27,993 claimed for Mines Closure Plan expenditure versus characterization as a non-allowable provision.The Court held that questions (1) to (3) were already conclusively decided by its prior judgment in Barmer Lignite Mining Co. Ltd. v. DCIT (D.B. Income Tax Appeal No. 54/2018), which favored the assessee, and question (4) was settled by another prior judgment in Principal Commissioner of Income Tax v. Barmer Lignite Mining Corp. Ltd. (D.B. Income Tax Appeal No. 84/2018), dismissing the revenue's appeal. Consequently, the present appeal was dismissed relying on these precedents, affirming the ITAT's treatment of the interest receipts as capital receipts, allowance of CSR expenses, and recognition of Mines Closure Plan expenditure as admissible.