TMI Blog2002 (2) TMI 344X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 21/Nag./2001 1995-96 10-11-2000 143(3) 27-3-1998 22/Nag./2001 1996-97 10-11-2000 143(3) 15/31-3-1999 --------------------------------------------------------------------------------- 2. Before we take up the various issues raised in these appeals for consideration and decision, it would be appropriate to narrate the facts of the case giving rise to these appeals. The assessee company is a wholly owned subsidiary of M/s. Coal India Ltd. which is a Government of India Undertaking. It is engaged in the business of extracting coal from the coal fields located in M.P. It is regularly assessed to income-tax and its assessments for assessment years 1989-90 and 1990-91 were initially completed by the Dy. C.I.T., Special Range, Raipur under section 143(3). Subsequently, the same were reopened by the Assessing Officer for the reason recorded in writing and the reassessments under section 147/143(3) were completed making substantial additions to the income returned by the assessee company. The assessments for the assessment years 1994-95, 1995-96 and 1996-97 of the assessee company were also completed making substantial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment years 1989-90 and 1990-91 were reopened by the Assessing Officer under section 147 and the reason for reopening the impugned assessment as stated in the notice issued under section 148 was that the appellant had failed to disclose fully and truly all the material facts necessary for the assessment insofar as it relates to the contribution to Coal Price Regulation Account (CPRA). He further submitted that no addition was made in the reassessment order with respect to CPRA. His contention was that once the ground for reopening the assessment did not survive, the Assessing Officer had no jurisdiction to continue with the reassessment proceedings. He contended that since the very basis on which jurisdiction was assumed by the Assessing Officer did not survive, the entire reassessment proceedings were without having valid jurisdiction and therefore the reassessment orders passed by the Assessing Officer under section 147 are liable to be quashed. In support of this contention, he relied on the decision of Hon'ble Punjab Haryana High Court in the case of CIT v. Atlas Cycle Industries [1989] 180 ITR 319 and emphasized that ratio of the said decision applies with equal force t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt has decided a similar issue holding that the ground on which reassessment initiated was found to be not surviving later on in the reassessment proceedings, the reassessment could still be completed in respect of other items of escapement of income found subsequently during the course of proceedings under section 147. She, therefore, contended that the assessments were rightly reopened by the Assessing Officer and the Assessing Officer did have power to exercise jurisdiction and to complete the reassessments. 4.4 We have considered the rival submissions in the light of material available on record and the various case laws cited at the bar. It is observed that the assessments for assessment years 1989-90 and 1990-91 were reopened by the Assessing Officer for the reason that the deduction in respect of contribution made by the assessee to CPRA was wrongly allowed in the original assessment without the assessee filing any particulars or other details in respect of the same and there is no dispute about the fact that this was the reason given by the Assessing Officer for reopening. There is also no dispute about the fact that no addition in respect of contribution to CPRA was mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -matter of assessment under section 147(b) of the Act. In other words, the ITAT held that the reopening of the assessment was not valid since the sole ground on which the notice under section 147(b)) of the Act was issued did not survive due to directions of the I.A.C. not to add back purchase tax liability. Held by Hon'ble High Court : We are of the view that the appellate Tribunal was in error in holding that the assessing authority cannot bring to charge items of income which had escaped assessment other than or in addition to that item which led to the issue of the notice. Once a reassessment proceeding was initiated under the prevailing law, the reassessment need not be confined to that particular item of income, which alerted ITO to reopen the assessment. H.A. Nanji Co.'s case At the time of issue of the notice it is not incumbent on the ITO to come to a finding that income has escaped assessment by reason of failure or omission of the assessee to disclose fully or truly all material facts necessary for assessment. The belief which ITO entertains at that stage is tentative belief on the materials before him which have to be examined and scrutinized on such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nformation to entertain a reasonable belief that the income had escaped assessment and held that initiation of the reassessment proceedings was valid and proper. The Hon'ble Gujarat High Court further held that when initiation of the reassessment proceedings was valid and proper, the Assessing Officer also had the power to include in reassessment proceedings the other items of income, which had escaped assessment. In the case of Atlas Cycles Industries on which heavy reliance has been placed by the learned counsel for the assessee before us, the Hon'ble Punjab Haryana High Court considered these contradictory views expressed by the Hon'ble Rajasthan High Court and Hon'ble Gujarat High Court and keeping in view the decisions of Hon'ble Supreme Court in A. Raman Co.'s case and Bankipur Club Ltd.'s case proceeded to dissent from the view taken by the Hon'ble Gujarat High Court and concurred with the view taken by the Hon'ble Rajasthan High Court. 4.7 It is thus clear that even in the context of pre-amended provisions of section 147, contradictory views were expressed by the different High Courts regarding the jurisdiction of the Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... escaped assessment during the course of original assessment. In the case of CWT v. D.R. Vadera [2000] 113 Taxman 627, the Hon'ble Delhi High Court has held that once valid proceedings are started for reassessment, the Assessing Officer has the jurisdiction to tax the entire wealth which had escaped assessment without making any distinction between those items in respect of which reassessment proceedings are initiated and other items which formed part of wealth but had escaped assessment. In the case of late R.B. Seth Ramrattan v. CIT [1985] 156 ITR 612 the Hon'ble Delhi High Court observed that the distinction between the jurisdiction to reopen the assessment and the reassessment being sustained on merits should be understood and proceeded to hold that the jurisdiction to reopen does not necessarily lead to the inference that there has been an escapement of income. 4.9 A resume of all the case laws discussed above relating to the preamended provisions of section 147 goes to show that the information was the basis for forming belief about the escapement of income as per the pre-amended provisions and the Assessing Officer was required to have such information in his poss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty bound to levy tax on the entire income which had escaped assessment during the course of original assessment. In that view of the matter, we uphold the impugned order of the learned CIT (Appeals) holding initiation of proceedings by the Assessing Officer under section 147 to be legal and valid. 5. The next issue relating to validity of reopening of assessment for assessment year 1989-90 being barred by limitation is raised by the assessee in ground No. 3 of its appeal being ITA No. 18/Nag./2001. 5.1 The learned counsel for the assessee submitted before us that the original assessment for assessment year 1989-90 was completed under section 143(3) on 31-1-1991 and the four years time limit laid down in section 147 for the reopening the assessment had expired on 31st March, 1994. He also submitted that the notice for reopening the assessment was, however, issued by the Assessing Officer on 14-9-1994 and the same was served on the assessee only on 17-10-1994. Referring to the provisions of section 147, the learned counsel for the assessee pointed out that an assessment can be reopened beyond a period of four years from the end of the concerned assessment year if and only if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;ble Supreme Court in the case of ITO v. Mewalal Dwarkaprasad [1989] 176 ITR 529. 5.2 Departmental Representative submitted that the assessment for assessment year 1989-90 was reopened by the Assessing Officer because the assessee had not submitted all the required details of contribution to Coal Price Regulation Account. She pointed out that the full scheme relating to CPRA, its operation etc. were riot available before the Assessing Officer and, therefore, there was a failure of the assessee to disclose fully and truly all material facts necessary for the assessment. According to her, mere writing of a small note regarding the contribution to CPRA cannot be regarded as full and true disclosure on the part of the assessee and the Assessing Officer was fully justified in reopening the assessment as per the proviso to section 147. In support of her contention, she cited the cases of Phool Chand Bajrang Lal v. ITO [1993] 203 ITR 456 (SC) and Shri Krishna P. Ltd. v. ITO [1996] 221 ITR 538 (SC). 5.3 We have considered the rival submissions and also perused the relevant material on record. We have also carefully gone through the case laws cited by the learned representatives of b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recomputed the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year) Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, from that assessment year. From the perusal of the above, it is evident that as per the proviso to section 147 substituted with effect from 1-4-1989 where an assessment is made unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g. Considering these facts and circumstances of the case, the Hon'ble Supreme Court found no fault in the action of the Assessing Officer to reopen the case since the assessee had failed to disclose fully and truly all the material facts necessary for assessment of that year. In the case of Shrikrishna (P.) Ltd. the Hon'ble Supreme Court emphasized that the obligation on the assessee to disclose the material facts is not a mere disclosure but a disclosure which should be full and true. To elaborate the concept of true and full disclosure, their lordships reproduced the following observations recorded by its constitution Bench in the case of Calcutta Discount Co. Ltd. v. ITO [1961] 41 ITR 191 (SC): The words used 'are omission or failure to disclose fully and truly all material facts necessary for his assessment for that year.' It postulates a duty of every assessee to disclose fully and truly all material facts necessary for assessment will differ from case to case. In every assessment proceedings, the assessing authority will, for the purpose of computing or determining the proper tax due from an assessee, require to know all the facts which help in coming to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iod prescribed in section 147 and the same being barred by limitation is liable to be quashed. 6. The next issue relating to the validity of enhancement jurisdiction assumed by the learned CIT (Appeals) is raised by the assessee in the following grounds: ---------------------------------------------------------- ITA No. Asstt. Year Ground No. ---------------------------------------------------------- 18/Nag./2001 1989-90 5 19/Nag./2001 1990-91 5 20/Nag./2001 1994-95 10 21/Nag./2001 1995-96 15 22/Nag./2001 1996-97 18 ---------------------------------------------------------- 6.1 The learned counsel for the assessee submitted that the learned CIT(Appeals) enhanced the assessment made by the Assessing Officer with regard to the matters which in fact were not considered in the original assessment by the Assessing Officer at all. He contended that the first appellate authority has no power of enhancement with regard to the matters, which are not dealt with or considered b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;ble Supreme Court in those cases was whether the first appellate authority is competent to enhance the assessment taking an income which was not mentioned by the assessee in his return nor considered by the ITO in the order appealed against and their lordships proceeded to hold therein that the first appellate authority is not competent to enhance the assessment in appeal by discovering new source of income, which was neither mentioned in the return by the assessee nor considered by the Assessing Officer in the assessment. In the present case, we find that learned CIT(Appeals) has not made any attempt to discover any such new source of income and the enhancement made by him on different counts appears to have been made on the issues which were either appearing in the return of income or were considered by the Assessing Officer expressly or by necessary implication in his assessment order. It is a settled position that the learned CIT(Appeals) has the power to make an order enhancing the assessment while deciding the appeal filed by the assessee if he is satisfied that the Assessing Officer has granted excessive relief or the assessment of income is in any way erroneous. In the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quire major repair/overhauling to keep the same operational at its optimum capacity. It was also explained by the assessee that the expenditure incurred on such repairs/overhauling is termed as rehabilitation expenditure which is treated as deferred revenue expenditure in the books of account as per the policy guidelines issued by its holding company M/s. Coal India Limited and the same is written off over a period of extended life of the assets which does not exceed four years including the year in which such expenditure is incurred. To ascertain the exact nature of the said expenditure, the Assessing Officer obtained details of the same from the assessee and it was found by him from the said details that the expenditure claimed under this head includes replacement of major components and parts of the HEMM. It was also explained on behalf of the assessee before the Assessing Officer that the HEMM is required to be given a break down after its use to the extent of 5096 of the rated life and the same is dismantled and the rehabilitation work is carried out by the experts who are normally called from the suppliers of the said machinery. It was also explained by the assessee that duri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT v. Chowgule Co. (P.)Ltd. [1995] 214 ITR 523 (Bom.), CIT v. Jafarbhai Akbarali Bros. [1995] 211 ITR 496 (Bom.), CIT v. Polyolefins Industries Ltd. [1988] 169 ITR 538 (Bom.), CIT v. Khalsa Mirbhai Transport Co. (P.) Ltd. [1971] 82 ITR 741 (Punj. Har.), Hanuman Motor Service v. CIT [1967] 66 ITR 88 (Mys.), Nathmal Bankatlal Parikh Co. v. CIT [1980] 122 ITR 168 (AP). 7.2 The learned CIT(Appeals), however, found that the assessee-company itself has treated the expenditure in question in its books of account as deferred revenue expenditure i.e. capital expenditure whereas the same has been claimed as revenue expenditure for the income-tax purpose. Relying on the decision of Hon'ble Supreme Court in the case of State Bank of Travancore v. CIT [1986] 158 ITR 102 and that of Hon'ble Calcutta High court in the case of CIT v. UCO Bank [1993] 200 ITR 68 the learned CIT(Appeals) observed that if a particular method of accounting is followed by the assessee in its books of account maintained as per Company Law, the same has to be followed for the purposes of income-tax. He, therefore, was of the opinion that the impugned expenditure having been treated as capital in nature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ife of the asset. According to him, it merely facilitated working of the machinery at the efficient level and irrespective of the quantum of such expenditure it has to be allowed as revenue expenditure. He submitted that as a result of the rehabilitation work undertaken by the assessee, no new machine has emerged or came into existence and merely the whole machine was dismantled and the worn out parts were replaced. Relying on the decision of Hon'ble Supreme Court in the case of Empire Jute Co. Ltd. he emphasized that the test of enduring benefit is neither certain nor conclusive to determine the nature of the concerned expenditure and the same cannot be applied blindly or mechanically with regard to the particular facts and circumstances of the case. In this regard his contention was that the accounting treatment given by the assessee to the said expenditure as deferred revenue expenditure did not detract the company's claim that the said expenditure is a revenue expenditure. Further, relying on the decision of Hon'ble Gujarat High Court in the case of Gujarat Mineral Development Corpn. and that of Hon'ble Supreme Court in the case of Kedarnath Jute Mfg., he subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncy does not constitute current repairs. Reliance was also placed by her on the decision of Hon'ble Rajasthan High Court in the case of CIT v. S. Zoraster Co. [1982] 133 ITR 559 wherein it has been held that expenditure on extensive repairs cannot be treated as current repairs. She further contended that the deferred revenue expenditure cannot be treated as current repairs. In this regard, she submitted that the term deferred revenue expenditure has not been defined in the Income-tax Act. According to her, the definition of the said term quoted by the learned counsel for the assessee from the guidance note issued by ICAI, however, states that the deferred revenue expenditure is an expenditure in respect of which payment has been made or a liability has been incurred but the same is carried forward on the presumption that it will be of a benefit over the subsequent period/years also. Further, referring to the definition of the said term given by the ICMA, she pointed out that it connotes the expenditure incurred during the accounting period but not fully charged against the income in that year and the balance is carried forward and charged in the non-stop subsequent period. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntage to the assessee of enduring nature. Before we consider the relevance of the test of enduring benefits for ascertaining the nature of expenditure, it would be appropriate to find out the meaning and nature of the term deferred revenue expenditure . The Institute of Chartered Accountants of India in its guidance-note issued on the terms used in financial statements , has defined the term deferred revenue expenditure as the expenditure for which payment has been made or liability has been incurred in a particular year, but which is carried forward on the presumption that it will be benefited over a subsequent period or periods. The Institute of Cost and Management Accountant has defined the said term in its publication as an expenditure incurred during an accounting period but not fully charged against income in that period, the balance being carried forward and charged in the next or a subsequent period. From the perusal of these definitions, it is abundantly clear that there is nothing to indicate that the concerned expenditure has to be of capital nature for the purpose of treating the same as deferred revenue expenditure. On the contrary, although the said expenditure re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome-tax purpose. 7.7 As regards the relevance of enduring benefits for ascertaining the nature of expenditure is concerned, we find that this issue has already been considered by the Hon'ble Supreme Court in the case of Empire Jute Co. Ltd wherein their Lordships have observed as under: There may be cases where expenditure, even if incurred for obtaining advantage of enduring benefit, may, nonetheless, be on revenue account and test of enduring benefit may break down. It is not every advantage of enduring nature acquired by an assessee that brings the case within the principle laid down in this test. What is material to consider is the nature of the advantage in a commercial sense and it is only where the advantage is in the capital field that the expenditure would be disallowable on an application of this test. If the advantage consists merely in facilitating the assessee's trading operation or enabling the management and conduct of the assessee's business to be carried oil more efficiently or more profitably while leaving the fixed capital untouched, the expenditure would be on revenue account, even though the advantage may endure for an indefinite future. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid expenditure does not result into increase in the life of the assets but it merely facilitates its optimum use for the balance period of its life. It is also clear that no new asset comes into existence by incurring such expenditure nor any new advantage accrues to the assessee in the capital field. It merely facilitates the assessee to continue with its operation at optimum level and such rehabilitation is normally done after use of the concerned machine for more than 50% of its rated life when the machine is in working condition. It is pertinent to note here that there is nothing on record to suggest or indicate that such rehabilitation is carried out after the machine comes to a stand still. As a matter of fact, by carrying out such rehabilitation work, the machinery is brought to the original form in terms of capacity and efficiency and the Revenue has not made out a case to show that by incurring the expenditure in question, either the machinery is structurally altered or there is any improvement in its capacity, purpose or other features. On the other hand, the assessee has claimed to have incurred this expenditure on rehabilitation of HEMM and the expression 'rehabili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsider a similar issue in the case of Chowgule Co. (P.) Ltd. wherein their lordships summarised the position that emerges for grant of deduction under section 31 as follows: (i) The amount should be paid on account of current repairs, (ii) Current repairs means repairs undertaken in the normal course of user for the purpose of preservation, maintenance or proper utilization or for restoring it to its original condition. (iii) Current repairs do not mean only petty repairs or repairs necessitated by wear and tear during the particular year. (iv) Such repairs should not bring into existence nor obtain a new or different advantage. (v) Neither the quantum of expenditure nor the fact that on the process of repairs, there was substantial replacement of the parts of machine or ship, is decisive of the true nature of the expenditure. (vi) The original cost of the asset is not at all relevant for ascertainment of the true nature of the expenditure on repairs. (vii) The replacement cost of the asset may, however, at times be used as indicator of the character of the expenditure. If the expenditure on repairs added to the written down value or disposal value exceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee on rehabilitation of HEMM was revenue expenditure in the nature of current repairs allowable under section 31 and the learned CIT(Appeals), therefore, was not justified in confirming the action of the Assessing Officer treating the same as capital expenditure. In that view of the matter, we reverse the impugned orders of the learned CIT(Appeals) on this issue and direct the Assessing Officer to allow the deduction in respect of the same. 8. The next issue relating to the disallowance of expenditure claimed by the assessee on account of contribution to Coal Price Regulation Account (CPRA) is raised by the assessee in the following appeals ------------------------------------------------------------------------------ ITA No. Asstt. Year Ground No. Disallowance (Rs. in lacs) ------------------------------------------------------------------------------ 18/Nag./2001 1989-90 6 to 9 20737.50 19/Nag./2001 1990-91 6 to 9 32711.80 20/Nag./2001 1994-95 11 to 14 257 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw any fund from CPRA on behalf of its subsidiary as per sections 7 and 8 of the said Act. He, therefore, came to the conclusion that the amount paid to the CPRA was the sum to be received back by the assessee as and when the situation changes and the assessee company thus retained its right to receive back this sum standing to the credit of the CPRA. Keeping in view this position, the learned CIT (Appeals) proceeded to hold that the contribution made to CPRA cannot be considered as an expenditure of the assessee company and consequently enhanced its income by disallowing the same. Aggrieved by the same, the assessee is in appeal before us. 8.2 The learned counsel for the assessee submitted that the primary business of the assessee company, which is a Government of India Undertaking, is to extract and sell coal. He submitted that coal is an essential commodity and is covered by the Essential Commodities Act, 1955. He submitted that in exercise of the powers conferred on it by the Defence of India Rules, the Central Government has passed the Coal Colliery Control Order, 1945 which regulates all dealings in coal. Referring to clauses 4, 4A and 4B of the said order, the learned cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company was entitled only for the retention price and any excess amount realised over the retention price was to be statutorily handed over to CPRA. His contention, therefore, was that the said excess amount was diverted to the Central Government in the form of contribution to CPRA by an overriding title and as held by Hon'ble Supreme Court in the case of CIT v. Shitaldas Tirathdas [1961] 41 ITR 367, the same never assumed a character of trading receipt in the hands of the assessee company. He also contended that even if such excess amount is treated as trading receipt of the assessee for the sake of argument, there was a statutory obligation embedded in the receipt itself to pay over the same to a duly constituted statutory authority and deduction on account of the same ought to have been allowed in computing the income of the assessee company. 8.3 The learned counsel for the assessee submitted that the learned CIT (Appeals) disallowed the contribution to CPRA on the basis of authority given to Coal India Ltd. to draw any fund due from CPRA on behalf of its subsidiary concluding wrongly that the assessee had a right to receive back this amount standing to the credit of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . He also pointed out that the Department has not preferred a reference application against the said order of the Tribunal. Reliance was also placed by him on the decision of Hon'ble Supreme Court in the case of Poona Electric Supply Co. Ltd. to contend that the excess amount payable to the Government by the assessee in the form of contribution to CPRA cannot be considered as income of the assessee. He also submitted that the proceedings initiated under section 263 by the. CIT in assessee's own case for assessment year 1992-93 on a similar issue has been dropped on the basis of the aforesaid letter issued by the CBDT. He further submitted that the addition made on the similar issue by the Assessing Officer in assessee's own case for assessment year 1993-94 has been deleted by the learned CIT (Appeals)-I, Raipur vide his order dated 14-10-1996. In view of this detailed submission made before us on this issue, the learned counsel for the assessee contended that the learned CIT (Appeals) was not justified in disallowing the expenditure claimed by the assessee on account of contribution to CPRA and urged that his impugned order on this issue be set aside. 8.5 The learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion on account of contribution to CPRA mainly because he was of the opinion that the Coal India Ltd. being entitled to withdraw any fund from CPRA only on behalf of its subsidiaries, the assessee had a right to receive back the amount standing to the credit of CPRA in the case of change in situation i.e. the retention price becoming higher than the corresponding sale price. On this basis, he came to a conclusion that the amount contributed by the assessee to CPRA did not go irretrievably from the assessee's hands and relying on the decision of Hon'ble Supreme Court in the case of Indian Molasses Co. (P) Ltd. he declined to treat the same as expenditure in computing the income of the assessee. To arrive at this conclusion, he also derived support from the fact that nothing was specifically prescribed in the relevant Act authorizing the CIL to appropriate the amount standing to the credit of CPRA on behalf of the Central Government. In this context, it is relevant to find out the exact nature and purpose of maintaining the CPRA and the procedure laid down by the Central Government for operation of the same. It is observed that the scheme of CPRA has been laid down in clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e retention price and the copies of such notifications issued during the relevant period are placed in assessee's paper book at page Nos. 6.25 to 6.31. 8.8 From a perusal of clause No. 4B of the CCO reproduced above, it is evident that any colliery owner charging/collecting higher sale price than the retention price fixed by the Central Government was required to pay into the CPRA an amount equivalent to the difference between the retention price and the sale price in respect of each tonne of coal or coke sold by him as per sub-clause (2) of the said clause. On the other hand, the colliery owner charging/collecting lower sale price than the retention price fixed by the Central Government was entitled for a payment from the money standing to the credit of CPRA of an amount equivalent to difference between the retention price and the sale price in respect of each tonne of coal or coke sold by him as per sub-clause (3) of the said clause. It is thus clear that the colliery owner in the eventuality specified in sub-clause (3) of clause 4B was entitled to receive the amount from consolidated CPRA fund even in the absence of having made any contribution to CPRA earlier. As a matte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... draw any fund from the CPRA only on behalf of the subsidiaries and the assessee company being a subsidiary of CIL, had retained its right to receive contribution amount back the CPRA. To appreciate the exact factual position in this regard, a useful reference may be made to the scheme formulated by the Central Government for the maintenance and operation of the CPRA and especially clauses 7 and 8 of the said scheme which are extracted below from the relevant document placed in assessee's paper book at pages 6.33 to 6.35 : Immediately after submission of the Statement referred to in Para-6, in any case within 60 days of the close of the month to which it pertains, the Companies who will be required to contribute to the Account will remit the amount as per the statement referred to in Para-6 by a Demand Draft or Cheque payable at Calcutta draws in favour of CPRAU CIL. The Coal India may pay the amount due to CPRAU on behalf of the Subsidiary. On realization of the amount due from the Company, CPRAU will arrange payment to the Companies which it is due, in any case within 90 days from the close of the month to which the payment is due as per the Statement referred to in Par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he reassessment proceedings had been initiated under section 148 for assessment years 1989-90 and 1990-91 on the basis of this issue, no additions in respect of the same were made by the Assessing Officer while completing the reassessment under section 147. As such, considering all the facts and circumstances of the case and in view of the reasons given hereinabove, we are of the considered opinion that the contribution paid by the assessee-company to CPRA was a statutory liability incidental to its business and the deduction in respect of the same was allowable in computing its total income. In that view of the matter, we set aside the impugned orders of the learned CIT(Appeals) on this issue and direct the Assessing Officer to allow the said deduction to the assessee. 8.11 Before we part with this issue, we may as well consider the other contention raised by the learned counsel for the assessee before us relying on the decision of Hon'ble Supreme Court in the case of Shitaldas Tirathdas, that the difference between the selling price and the retention price was collected by the assessee company merely as an agent of Central Government and the said difference, in truth, havi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee and only after it reached to the assessee, the same was paid over to CPRA as per the requirement to discharge the statutory liability. In the case of CIT v. Imperial Chemical Industries (India) (P.) Ltd. [1969] 74 ITR 17, the Hon'ble Supreme Court has held that an obligation to apply income which has accrued or arised or has been received, amounts merely to the application of income. In the case of Tuticorin Alkali Chemicals Fertilizers Ltd., the Hon'ble Supreme Court has observed that the tax is attracted at the point when the income is earned and the taxability of income is not dependent upon its destination or manner of its utilization. As such, considering the facts of the case and keeping in view the aforesaid decisions of Hon'ble Supreme Court, we are of the opinion that the payment of contribution by the assessee company to CPRA does not amount to diversion of income by overriding title and the same was merely an application of the income earned by the assessee. 9. The next issue relating to the disallowance of provision made by the assessee on account of deterioration of closing stock, rehandling charges and slow moving items etc. has been raised by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plained by the A.R. vide order sheet entry dated 30-3-1994 that the pension fund has been created by the company by way of the deduction from the gross emoluments of the employees @ 2 per cent in terms of the agreement with National Wage Board and CIL, the holding company of the assessee. The purpose of the same was given to be setting up of a scheme for that purpose. However, no copy of agreement or for that matter the minutes of the meeting giving out the modalities of the said scheme placed on record. But it has been informed that no scheme has yet been set up till date and this deduction in the name of the pension fund is continued to be collected as aforesaid. Under such circumstances the fate of such money, which is in the hands of the company and is used by it is quite uncertain. Since no scheme for pension has yet been formulated and otherwise also for the present it is not known whether in absence of the scheme the money would be refunded to the respective employees with or without interest. It is quite likely that out of the huge strength of employees, a substantial number might have left the organization and deduction made from their emoluments is therefore not capable o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 refunds from the collections so made from the employees were given to employees who had left the organization. However, the fact remains that the provisions of section 2(24)(x) are applicable and in view of the express provisions of the said section mentioned above in detail the appellant would not be entitled to relief'. The addition of ₹ 4,50,00,000 is thus confirmed. 10.3 The learned counsel for the assessee submitted before us that the amount collected from employees towards pension funds from financial year 1989-90 was treated as income of the assessee-company under section 2(24)(x) since the same could not be deposited in the pension fund, which was pending finalisation, by the Government of India. In this regard, he contended that a significant and turning event was taken place in the financial year 1997-98 when the Coal Mines Pension Scheme, 1998 was formulated vide Notification No. GSR 123(E) dated 5-3-1998 in exercise of the powers conferred under section 3E of the Coal Mines Provident Fund and Miscellaneous Provision Act, 1948. He submitted that the said scheme came into force from 31st March, 1998 vide Notification No. S.O. 233(E) dated 20-3-1998. He dre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee in order to spread over their burden and kept such collections to the credit of each employee. He also contended that the employees who retired during the intervening period i.e., from the date of collection up to the date of formal setting up of the fund, were paid the amount collected from them towards pension fund together with interest thereon. He contended that a fiction has been created under section 2(24)(x) to treat certain amounts as income and such legal fiction according to accepted principles of Jurisprudence has to be carried to its logical conclusion. In this regard, his contention was that the collection from the workers cannot be treated as a sum received by the assessee from his employees as contribution to a fund for welfare of such employees in the absence of any formal pension fund and, therefore, the same cannot be classified as income under section 2(24)(x). He submitted that till the time the pension fund scheme came into force and implemented, the assessee company collected the contributions from its employees and the same was retained in the capacity of a custodian of the said funds. According to him, the disallowance on this count was even not warranted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alternative plea that no disallowance is warranted even under section 43B as the amount collected from employees was finally deposited with the pension fund within the prescribed period is also not relevant in the context of years under consideration because the pension fund was not in existence at the relevant time and the question of its payment within due date does not arise at all. 10.7 We have considered the rival submissions and also perused the relevant material on record. It is observed that the assessee company collected by way of deduction from the salary of the employees a contribution at the rate of 296 of the gross emoluments towards pension fund in terms of the agreement with National Wage Board and CIL, the holding company of the assessee. The purpose of the same was stated to be for setting up a scheme of pension fund. The assessee company continued to collect such contribution from financial years 1989-90 to 1997-98 but the fund was finally and formally set up only on 31-3-1998. In the absence of the formal fund, the assessee retained the amount of contribution collected from the workers towards the said fund with it. The revenue authorities treated this amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the 31st day of March, 1996 and 2% of the notional salary of the employees from first day of April, 1996 or the date of joining whichever is later, which was to be transferred by the employer from the salary of the respective employees. As regards the payment of the said amount mentioned in section 3(c), it was provided in section 7(3) of the said scheme that the said amount which had already been deducted in part or in full but not remitted to the authorized officer on or before the appointed day, shall be remitted to the authorized officer within a period of 120 days from the appointed day and an interest of 12% per annum accrued on such amount as on the appointed day shall have also to be remitted by the employer to the authorized officer. As per the clause 1(2) of the said scheme, the said scheme was to come into force from such date as the Central Government may by Notification in the official gazette appoint and vide Notification No. S.O. 233(E), dated 20-3-1998, the Central Government appointed the March 31, 1998 as the date on which the said scheme came into force. It is thus clear that the due date by which the assessee company was required to credit the amount received fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s contended before us that the decision of the learned CIT(Appeals) for assessment year 1991-92 on which reliance was placed by the learned CIT(Appeals) while deciding this issue for the years under consideration had become abrogated and lost its binding nature. In this regard, we may observe that the principle of abrogated decision is applicable only, where a decision ceases to be binding by the process of law itself with contrary enactment brought into the relevant statute having the effect of nullifying the said decision. In the present case, there was merely a significant change in the material and relevant facts concerning the issue rendering the earlier decision given by the learned CIT(Appeals) in assessment year 1991-92 inapplicable to the years under consideration. 10.12 It is true that the said significant change came into existence only after a lapse of a period of about 9 years and in the absence of the same, the Revenue authorities had no option but to continue to treat the amount collected by the assessee company towards contribution to pension fund as income under section 2(24)(x). However, at this juncture, when the facts have become clear and are available on re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral no excuse for not performing an obligation which a party has expressly undertaken by contract, yet when the obligation is one employed by law, impossibility of performance is a good excuse. The same principle has been explained in Craies on statute law as follows : Under certain circumstances compliance with the provisions of statute which prescribes how something is to be done will be excused. Thus in accordance with the maxim of laws the lex non cogit ad impossivilia, if it appears that the performance of the formalities prescribed by a statute has been rendered impossible by circumstances over which the persons interested had no control, like the act of the God or the King's enemies, these circumstances will be taken as valid excuse. 10.14 Keeping in view the above legal position as well as taking a circumspect view of the matter on hand, we are of the opinion that the provisions of section 2(24)(x) read with section 36(1)(va) should be interpreted liberally keeping in view the principle of equity as well as the legislative intention behind enacting such prohibitory provisions. In that view of the matter as well as for the reasons given hereinabove, we hold that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f computing income under the Income-tax Act, the same was claimed as revenue expenditure. When the assessee-company was called upon by the Assessing Officer to explain the position, it was submitted on behalf of the assessee company that the said expenditure has been incurred towards amount payable to State Government and for rehabilitation of people in the course of obtaining use of land for mining purposes for limited period. The nature of the said expenditure was explained as akin to fees for use of land for mining and the amount paid for relocation of the residents occupying/owning the land was stated to be for getting the said land for the purpose of mining. Reliance was also placed on the decision of Hon'ble Supreme Court in the case of Empire Jute Co. Ltd. to contend that the said amount paid for enabling mining activities is revenue in nature since no asset of enduring benefit was brought into existence. Reliance was also placed on the decision of Hon'ble Supreme Court in the case of Alembic Chemical Works Co. Ltd. v. CIT [1989] 177 ITR 377 while contending that the rehabilitation expenditure having been incurred in the course of expansion of existing business is re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... model form of lease deed furnished at page Nos. 14.8 to 14.16 of his paper book. He further submitted that with a view to enable the assessee company to build office complex, health centres for employees etc., payment was made to the State Government for obtaining the surface right for the balance period of lease with regard to the leasehold land. He further submitted that to enjoy the surface right so acquired in respect of the leasehold land for the unexpired period of the lease, the assessee company incurred expenditure to rehabilitate the villages existing on the said land and for this purpose, new villages were set up in order to relocate the occupants. He submitted that the assessee-company has not acquired any ownership rights in respect of the villages newly set up and, therefore, no new asset of enduring nature belonging to the assessee has come into existence as a result of such expenditure. He submitted that these amounts were spent by the assessee for enabling the extraction of coal and the same being the end product of the assessee's business, the expenditure incurred for obtaining the coal should be allowed as revenue expenditure. He submitted that the Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R.J. Trivedi is directly applicable. Relying on the decision of Hon'ble Supreme Court in the cases of Kedarnath Jute Mfg. Co. Ltd. and Tuticorin Alkali Chemicals Fertilizers Ltd., the learned counsel for the assessee contended that the entries in the books of account made by the assessee are not conclusive to decide the nature of expenditure for the purpose of Income-tax Act. He submitted that the impugned expenditure was incurred by the assessee to facilitate its mining operations and although the advantage procured as a result of the same was of enduring nature, the same being in the revenue field, the same ought to have been allowed by the revenue authorities while computing the income of the assessee. In support of this contention, he placed reliance on the decision of Hon'ble Kerala High Court in the case of Plantation Corpn. of Kerala Ltd. v. CAIT[1994] 205 ITR 364 and that of Hon'ble Supreme Court in the case of Empire Jute Co. Ltd. Reliance was also placed by him on the decision of Hon'ble Supreme Court in the case of CIT v. Madras Auto Service (P.) Ltd. [1998] 233 ITR 468 to contend that the expenditure incurred by the assessee was only to obtain the busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and and, therefore, the decision of Hon'ble Supreme Court in the case of Madras Auto Services (P.) Ltd. involving the advantage of lower or concessional rate cannot be extended to the instant case. She contended that in the case Empire Jute Co. Ltd. the advantage was acquired merely for facilitating the assessee's trading operations leaving the fixed capital untouched and, therefore, the same is also distinguishable from the present case wherein the surface rights have been acquired for the purpose of construction of utility building. She, therefore, submitted that all the cases relied upon by the assessee are distinguishable and considering that the expenditure in the present case was incurred by the assessee for acquiring the surface rights in the land for long term, the authorities below were right in treating the same as capital expenditure. 11.5 We have considered the rival submissions and also perused the relevant material on record. We have also deliberated upon the precedents relied upon by the learned representatives of both the sides in support of their plea. It is observed that the expenditure incurred by the assessee company for acquiring surface rights in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and privileges to be exercised and enjoyed in respect of the lease-hold land for a period not exceeding 30 years as specified in Part II of the said model form. As per clause 2 of Part III of the said lease agreement, the assessee was under an obligation to obtain a permission from the appropriate authority for using the lease-hold land for surface operations from time to time on payment of surface rent as specified in clause 4 of Part V of the said lease agreement. Accordingly, the assessee acquired the surface rights from the Government in terms of the said lease agreement for using the said land for its surface operations for the balance period of lease which itself was a long-term period. The purpose for acquiring the said surface rights in the leasehold land as mentioned by the assessee company itself was for the purpose of constructing the utility buildings such as office complex, health centres for workers etc. After acquiring such surface rights in respect of the leasehold land, the assessee company acquired the right to possession of the said land from the villagers who were occupying the said land. For this purpose, the assessee company spent certain amount for relocatin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the assessee, and accordingly treated the same as revenue expenditure. The facts in the present case, however, are different inasmuch as the impugned expenditure has been incurred by the assessee company to acquire the surface rights as well as the right to possession in respect of the leasehold land for enduring benefits and the same being not in the revenue field, the decision in the case of Gotan Lime Syndicate has no application to the facts of the present case. As regards the reliance placed by the learned counsel for the assessee on the decision of Hon'ble Supreme Court in the case of Madras Auto Service (P.) Ltd., it is observed that the assessee in that case had made substantial savings in monthly rent for the entire lease period by spending the amount on construction of a new building on the land taken on long lease and as the said expenditure resulted in a saving of rent which was a revenue expenditure, the Hon'ble Apex Court allowed the said expenditure as revenue expenditure. Similarly, in the case of CIT v. Associated Cement Co. Ltd. [1988] 172 ITR 257 (SC), the assessee by bearing the cost of laying pipelines as per the agreement entered into with the Gov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the rights or interest in the relocated villages notwithstanding. 11.9 In the case of Assam Bengal Cement Co. Ltd. relied upon by the revenue, the Hon'ble Apex Court observed that the aim and object of the expenditure would determine the character of expenditure whether it is a capital or revenue and the source or the manner of payment would then be of no consequence. In the present case, the expenditure was incurred by the assessee-company with aim and object to acquire the surface rights as well as the right to possession in respect of the leasehold land for a long period and, therefore, the nature of such expenditure was certainly of capital nature. The revenue has also relied on the decision of Hon'ble Mysore High Court in the case of N. Peer Sahib in respect of which the learned counsel for the assessee has contended that the lease amounts having been paid to the surface owners by the assessee therein for extracting iron coal at the beginning of the mining operation, it was considered as capital in nature whereas in the present case the assessee has made the relevant payments during the currency of the lease period. After carefully perusing the said decision of Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the expenditure in question was incurred to acquire the right to possession in respect of the leasehold land to facilitate the enjoyment of surface rights. Moreover, as the said acquisition resulted into accrual of enduring benefits to the assessee-company for the balance period of lease, the same has to be treated as capital expenditure, as held by the Hon'ble Supreme Court in the case of Assam Bengal Cement Co. Ltd. As such, considering all the facts of the case and legal position enumerating from the judicial pronouncements discussed hereinabove, we are of the considered opinion that the impugned expenditure incurred by the assessee for acquiring surface rights as well as the right to possession in respect of leasehold land for enduring period was a capital expenditure and the learned CIT(Appeals) was fully justified in upholding the action of the Assessing Officer in treating the same as capital expenditure and thereby disallowing the deduction claimed by the assessee in respect of the same. 12. The next issue relating to the disallowance of payments made under section 40A(3) amounting to ₹ 13,20,261 raised by the assessee in ground No. 3 of ITA No. 20/Nag./200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s there are institutions already in existence and the assessee as an employer pays contributions to such institutions for the purposes of running the same as the employees of the assessee gets preference over the others in matters of admission. The assessee-company is a Government company and as discussed above is audited not only by the Chartered Accountants but also by the Auditor and Comptroller General of India. Section 40A(9) also does not talk about contribution to the institution run by the assessee. It may be made to any institution which provides certain facilities to the employees. 13.2 It is observed that the aforesaid decision was also followed by the Tribunal in assessee's own case for assessment year 1987-88 while deleting the disallowance made by the Revenue on this count in its consolidated order dated 20-9-1996 in ITA Nos. 740 to 742/Nag./95. The learned CIT(Appeals), however, declined to follow the same observing that the important aspect of absence of direct nexus as well as intimate connection of the said expenditure to the business of the assessee was riot examined by the ITAT and proceeded to confirm the disallowance made by the Assessing Officer on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gned expenditure on account of contribution to various schools was not incurred by the assessee-company voluntarily but the same was incurred to discharge its obligation terms of a National Coal Wage Agreement entered with the employees and as the said agreement was enforceable in law under the Indian Contract Act as well as the Industrial Dispute Act, the assessee company was under a statutory obligation to incur the said expenditure. As such, considering all the facts of the case and keeping in view the aforesaid decisions including the decision of this bench in assessee's own case, we hold that the expenditure incurred by the assessee company on account of grants made to various schools was an admissible business expenditure and the learned CIT(Appeals) was not justified in confirming the disallowance made by the Assessing Officer on this count. His impugned order on this issue is, therefore, reversed and the Assessing Officer is directed to allow the said expenditure. 14. The next issue relating to the alternative plea of the assessee regarding the addition of interest on pension fund not relating of the concerned year is raised in ground No. 7 of ITA No. 20/Nag./2001 fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o assessment year 1990-91. The said equipment Commissioned in the assessment year 1990-91 itself and depreciation claimed on the same by the assessee company was also allowed by the Department. Similarly tile depreciation claimed in assessment years 1991-92 and 1992-93 claimed by the assessee was also allowed by the Department. Meanwhile in the previous year relevant to assessment year 1991-92, the said equipment suffered damage and could not be used by the assessee company thereafter. No depreciation on the said equipment was claimed by the assessee in assessment year 1993-94 and even in its return for assessment year 1994-95 the assessee did not claim any depreciation on the said equipment. However, during the assessment proceedings, the assessee preferred a claim of depreciation on the said equipment by filing a revised chart of depreciation. It was submitted on behalf of the assessee before the Assessing Officer that as per the concept of block of asset , the individual item of machinery looses its identity and its use in a later year is not relevant for the purpose of allowing depreciation on the same. The Assessing Officer, however, found no merits in this contention of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evant previous year. She contended that the basic requirement of use of all the assets falling under the relevant block for the purpose of claiming depreciation is still there even after the introduction of the concept of block of assets, as provided in section 32(1) read with section 43(6)(e). Her contention, therefore, was that the PSLE having not used by the assessee during the relevant previous years, the authorities below were fully justified in disallowing the depreciation claimed by the assessee on the said equipment. 15.4 We have considered the rival submissions and also perused the relevant material on record. It is observed that the PSL equipment was purchased and put to use by the assessee during the previous year relevant to assessment year 1990-91 and depreciation on the same as claimed by the assessee was also allowed by the Assessing Officer for assessment years 1990-91 to 1992-93. Although the assessee did not claim any depreciation on the said equipment for assessment year 1993-94 under a mistaken belief that no depreciation can be claimed thereon because of non-use of the same for the use for the purpose of business, it claimed the depreciation for assessment y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 32 in respect of depreciation of any block of assets shall be calculated at the percentages specified in the second column of the Table in Appendix I to these rules on the written down value of such block of assets as are used for the purposes of the business or profession of the assessee at any time during the previous year. 15.5 From the perusal of the aforesaid provisions, it is evident that a reference has been made particularly to the block of assets as such and there is nothing in the said provisions to interpret that the use of individual asset is a requirement of law for claiming the depreciation. As a matter of fact, the new scheme of block of assets has been introduced in the statute from 1st April, 1988 to simplify the position regarding depreciation allowance and in the case of Nathan Steels Ltd. v. Dy. CIT[1996] 56 TTJ 240 the Bombay Bench of ITAT has summarized the effects of the said new scheme after reviewing the relevant amendments brought out in the Act as under-: The effect of all these amendments is that in case of a running concern, which has expanded or installed new plant and machinery, there is no need of separate computation of depreciation allowa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een discarded or not put to use by the assessee for business consideration, on that ground alone partial depreciation cannot be disallowed. 15.7 In the present case, the PSL equipment was purchased and put to use by the assessee in the previous year relevant to assessment year 1990-91 and the same had entered the block assets in that year itself. This being the position, the same had lost its individual identity and for the purpose of allowing depreciation on the same, the requirement of law was to establish the use of the concerned block of asset as such and not the use of the said equipment individually. As such, considering all the facts of the case and keeping in view the scheme of block of assets effective from 1-4-1988 as elaborately explained in the aforesaid decisions of the Tribunal, we are of the opinion that the assessee company was entitled to claim the depreciation allowance on PSL equipment for the year under consideration. In that view of the matter, we find no justification in the impugned orders of the learned CIT (Appeals) upholding the action of the Assessing Officer in not allowing the assessee's claim for depreciation on the said equipment. We, therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e its memorandum dated 3-5-1994 further intimated to the assessee that the executives of the company, pending sanction of the executive pay scale, are also eligible to draw interim relief of ₹ 100 per month with effect from 1-1- 1992 which was further revised to ₹ 225 per month with effect from 1-7-1992 vide its memorandum dated 28-7-1994. He submitted that the accounts of the assessee company for the year ended 31-3-1994 were finalised on 30-7-1994 and since the above instructions of M/s. CIL, the holding company, were available before the finalisation of the accounts, the assessee company was well aware of its financial liability prior to closing of its account. He, therefore, contended that the effect for the same was given in the books of account for the assessment year 1994-95 as per the Accounting Standard (AS) 4 prescribed by the Institute of Chartered Accountants of India according to which the adjustments in respect of events occurring after the balance sheet date affecting materially the determination of the amounts relating to conditions existing at the balance sheet date ought to have been provided for. He contended that looking to the materiality of the amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as payable to the workman pending negotiations was allowed by the Hon'ble High Court. The learned counsel for the assessee, therefore, contended that as the assessee company very much aware of the pending liability at the time of finalisation of its account, the provision made in respect of the same was clearly allowable as held by the Hon'ble Bombay High Court in the case of United Motors India Ltd. 16.4 The learned counsel for the assessee submitted that the claim of the assessee was disallowed by the learned CIT(Appeals) for the reason that the MOU with the employees union was arrived at after the balance sheet date and hence there was no liability cast on the assessee company to make such payment during the relevant previous year. In this regard, he contended that the liability in fact had crystallized before the finalisation of accounts and the same being evident from the letters received from CIL, the liability was correctly and completely ascertained and quantified prior to the date of finalisation of accounts. He also cited the decision of Hon'ble Bombay High Court in the case of CIT v. Mahindra Ugine Steel Co. Ltd. [2001] 250 ITR 84 and that of Hon'bl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty in those cases had crystallised before the end of the relevant previous year whereas in the present case, the liability has crystallised only after the end of the previous year. In support of the Revenue's case, she cited the case of Indian Molasses Co. Ltd. wherein the Hon'ble Supreme Court has held that the expenditure which is deductible for income-tax purposes is one which is towards a liability actually existing at the time, but the putting aside of money which may become expenditure on the happening of an event is not an allowable expenditure. Reliance was also placed by her on the decision of Hon'ble Rajasthan High Court in the case of Rajasthan State Mines Minerals Ltd v. CIT[1994] 208 ITR 1010 wherein it is held that the Income-tax Law makes a distinction between an actual liability in presenti and a liability de futtiro which for the time being is only contingent. Former is deductible but not the latter The learned Departmental Representative contended that in the present case there was no actual liability in presenti during the relevant previous year and as the same was crystallized only after the end of the relevant previous year, the learned CIT (Appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly existing at the time, but the putting aside of money which may become expenditure on the happening of an event is not an allowable expenditure. In the case of Rajasthan State Mines Minerals Ltd., the Hon'ble Rajasthan High Court has held that Income Tax Law makes a distinction between an actual liability in presenti and liability de futuro which for the time being is only contingent. Former is deductible but not the latter. 16.8 Further, we find that the following case laws on the point in issue are also worth consideration. In Swadeshi Cotton Mill Co. Ltd v. CIT[1980] 125 ITR 33, the Hon'ble Allahabad High Court held that if the liability was based on contractual obligation, it arose only when it was ascertained in the case of an assessee following mercantile system of accounting. In the case of Laxmi Devi Sugar Mills v. CIT [1 993] 200 ITR 603, the Hon'ble Supreme Court held that liability to pay bonus arising under a Government Notification issued after the closing of a relevant accounting year cannot be allowed as deduction merely because the assessee has made a provision for meeting such a contingent liability. In the case of National News Print Paper Mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -2-1994, a date falling in the previous year relevant to assessment year 1994-95. By this letter, the Coal India Ltd., which was 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 ₹ 100 per month of interim relief to the employees governed by the National Coal Wage Agreement is payable with effect from 1-7-1991. 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 1-7-1991 to 31-3-1994. 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. 16.11 So far as the provision of ₹ 62.49 lacs made in respect of employees covered by executive rules for the period from 1-1-1992 to 31-3-1994 on account of interim relief is concerned, the position however, appears to be entirely different inasmuch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use the final MOU to this effect was signed by the concerned parties only after the end of the relevant accounting year. Keeping in view the proposition laid down in the various judicial pronouncements discussed above and considering the fact that the interim relief amount was agreed upon between the parties as per the settlement reached during the concerned accounting year itself, we are of the opinion that the conclusion drawn by the learned CIT (Appeals) on this issue was not well-founded and as already observed, the assessee company was entitled for deduction in respect of the said liability ascertained and fastened during the previous year relevant to assessment year 1994-95. As such, considering all the facts of the case and keeping in view the legal position emerging from the various judicial pronouncements discussed above, we hold that a deduction in respect of provision made for interim relief payable to the employees governed by NCWA to the extent of ₹ 3266 lacs was allowable to the assessee in assessment year 1994-95, but the same payable to the employees governed by executive rules to the extent of ₹ 62.49 lacs was not allowable in the said year. We order ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,964.47 lacs and there being nothing on record brought by the assessee to show any additional borrowing from CIL for the purpose of business, interest @ 15% p.m. attributable to the said amount which works out to ₹ 2291.42 lacs and ₹ 1654 lacs only for assessment years 1994-95 and 1995-96 alone could be allowed to the assessee company as business expenditure. He, therefore, allowed the same to that extent and disallowed the balance amount of ₹ 10,992.83 lacs and ₹ 9021.00 lacs for assessment years 1994-95 and 1995-96 respectively considering that the factum of borrowing and utilization of the same for the purpose of business to that extent has not been established by the assessee company as specifically required by section 36(1)(iii). In support of this conclusion, he placed reliance on the decision of Hon'ble Supreme Court in the case of CIT v Calcutta Agency Ltd. [1995] 19 ITR 191 and in the case of Madhav Prasad Jatia v. CIT[1979] 118 ITR 200. 17.2 As regards the decision of this Bench in the case of Western Coalfields Ltd cited by the learned counsel for the assessee before him, it is observed that the learned CIT (Appeals) has not made any attemp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d further explained in the book Craies on Statute law 5th edition page 205 is that whenever there is a particular enactment and a general enactment in the same statute, and the latter, taken in its most comprehensive sense, would overrule the former, the particular enactment must be operative and the general enactment must be taken to affect only the other parts of the statute to which it may properly apply. In the case of Calcutta Agency Ltd. relied upon by the learned CIT (Appeals), the Hon'ble Supreme Court has held that when a claim is made for deduction, the onus lies on the assessee to prove that all the conditions for allowing such a deduction are satisfied. The learned CIT (Appeals) has relied on the case of Madhav Prasad Jatia wherein the Hon'ble Apex Court has held that for allowance of a claim for deduction of interest, it is necessary that the capital must have been borrowed by the assessee and the same must have been borrowed for the purpose of business. Keeping in view this position propounded by the Hon'ble Apex Court and taking into consideration the aforesaid rule of construction, we are inclined to concur with the view of the learned CIT (Appeals) th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ------------------------ ITA No. Asst. Year Ground No. Amount of disallowance (Rs. in lacs) --------------------------------------------------------------------- 21/Nag./2001 1995-96 5 43.40 22/Nag./2001 1996-97 5 605.00 --------------------------------------------------------------------- 18.1 In the computation of its total income, the assessee company claimed expenditure incurred on community development relating to road widening, street lighting, improving drinking water facilities and other welfare measures primarily for its employees. It was claimed that by incurring this expenditure, the employees of the company are benefited at large and the company also discharged its social obligation to the community in and around its area of operation. Considering that the said expenditure has been incurred by the assessee company mainly to fulfil its social obligation, the Assessing Officer was of the opinion that the same could not be treated as wholly and exclusively incurred for the purpose of its business. He, therefore, disallo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers from the point of business expediency. According to him, the Department has tried to stretch the decision of Hon'ble Supreme Court in the case of Amalgamations (P.) Ltd. too far which in face has no application in the present case. He submitted that the Assessing Officer has disallowed this expenditure mainly on the basis of assessee's submission that the same was incurred to discharge a social obligation. He contended that the Assessing Officer, however, overlooked the important fact that such obligation was being discharged by the assessee company for the purpose of community which was mainly comprising of its own workers and their families. He, therefore, contended that the said expenditure was incurred by the assessee mainly for the welfare of its employees and the same being in the nature of business expenditure, was an allowable expenditure. In support of his contention, he cited CIT v. Premier Cotton Spg. Mills Ltd. [1997] 223 ITR 440 (Ker.), Empire Jute Co. Ltd.'s case, Sarabhai M. Chemicals (P.) Ltd. v. CIT [1981] 127 ITR 74 (Guj.), CIT v. Rupsa Rice Mill [1976] 104 ITR 249 (Ori.), CIT v. T V Sundaram 186 ITR 276, CIT v. Panbari Tea Co. Ltd. [1985] 151 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the workers of the assessee company and their families. He also appears to have overlooked the fact that such basic amenities could not have been provided to the assessee's employees in isolation as the said expenditure in any case had to be incurred for the entire area as a whole. Before us, the learned counsel for the assessee has contended that over 90% of the population residing in that area constituted assessee's own workers and their families and it appears from the record that this fact has not been disputed by the Revenue at any stage. Moreover, in the absence of such facilities in that area, it would not have been possible for the assessee company to get the pro per work force for its operation without which it was not possible to carry on its business effectively and efficiently. The labour by itself is an important input for any type of business, more particularly for the business of the assessee company of mining operation and therefore, the expenditure incurred mainly for the welfare of the labour force has to be treated as incurred wholly and exclusively for the purpose of its business. 18.5 It is observed that the learned CIT (Appeals) has confirmed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of public at large, the Hon'ble Orissa High Court allowed the said expenditure as a business expenditure considering that the same was going to result in providing treatment to the ailing workmen of the assessee also and the assessee was under an obligation to provide such benefits. In the present case, although there is nothing on record to show that such an obligation was there on the assessee company, the incurring of such expenditure was very much warranted from the point of view of business expediency, as already mentioned. In the case of Sanghameshwar Coffee Estates Ltd. v. State of Karnataka [1986] 160 ITR 203 , the expenditure incurred by the assessee towards salary paid to the teachers of the school was held undoubtedly to be in the interest of the children of its employees and the same being a welfare measure was allowed as business expenditure. in the case of ITAT v. B. Hill Co. (P.) Ltd. [1983] 142 ITR 185 (All.), the expenditure incurred on donations made to the schools with a view to provide educational facilities to the labourers and their children was considered to be for the purpose of facilitating the smooth running of assessee's business and, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year 1996-97. As regards the other reason, it is observed that although the provision for writing off these bad debts was made by the assessee company in its books of account relevant to assessment year 1995-96, the Assessing Officer allowed this deduction in the subsequent year i.e. assessment year 1996-97 on the basis that the relevant board meeting taking a decision to write off these bad debts was held on 24-7-1995 and thus the fact of these debts becoming bad was established only in the previous year relevant to assessment year 1996-97. In this regard, we may observe that the position regarding deduction on account of bad debts has undergone a substantial change after the amendment made in the provisions of section 36(1)(vii) with effect from assessment year 1989-90. The object and purpose of this amendment made in 1987 have been explained by the CBDT in its Circular No. 551 dated 23-1-1990 and we find it relevant to reproduce para Nos. 6.6 and 6.7 of the said circular hereunder: 6.6 Amendments to sections 36(1)(vii) and 36(2) to rationalize provisions regarding allowability of bad debts. - The old provisions of clause (vii) of sub-section (1) read with sub-section (2) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffice for claiming it as a bad debt and the assessee can never be called upon to prove that the said debt has become bad. In the present case, the relevant debts have been written off by the assessee as bad in the books of account relevant to assessment year 1995-96 and this fact is not in dispute. As such, considering all the facts of the case and respectfully following the aforesaid decision of the Tribunal, we hold that the assessee was entitled for the deduction on account of bad debts for the assessment year 1995-96 and not in assessment year 1996-97 as allowed by the Revenue. We order accordingly. 20. The next issue relating to the disallowance of ₹ 27.58 lacs on account of additional expenditure on power and fuel is raised by the assessee in ground No. 7 of ITA No. 21/Nag./2001 for assessment year 1995-96. 20.1 After considering the rival submissions and perusing the relevant material on record, it is observed that the disallowance has been made by the Revenue on this count for the reason that the relevant liability according to them arose during the year relevant to assessment year 1996-97 and not in assessment year 1995-96 as claimed by the assessee. This issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 16.7 to 16.9 of this order before arriving at a conclusion that a liability which clearly exists and definitely arises in the accounting year can alone be allowed as deduction in computing the total income for income-tax purposes. As regards the liability on account of enhancement in power and fuel expenditure is concerned, the same had arisen only on the receipt of the concerned bill from the Electricity Board on 27-6-1995 and as the said date was falling in the accounting year relevant to assessment year 1996-97, we are of the view that the assessee was not entitled to claim deduction in respect of the same for assessment year 1995-96 merely because it arose before the date of finalisation of its accounts for that year. As such, considering all the facts of the case and the foregoing discussion about the legal proposition, we find no infirmity in the impugned order of the learned CIT (Appeals) confirming the disallowance made by the Assessing Officer on this count. 21. The next issue relating to the disallowance of ₹ 23.84 lacs under section43B is raised by the assessee in para no. 8 of ITA No. 21/Nag./2001 for assessment year 1995-96. 21.1 After considering the riv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we are of the opinion that the disallowance made by the Assessing Officer on this count under section 43B and confirmed by the learned CIT (Appeals) was not warranted. We, therefore, direct and Assessing Officer to delete the same. 22. The next issue relating to the disallowance of ₹ 110.86 lacs under section 43B is raised by the assessee in ground No. 9 of ITA No. 21 /Nag./ 2001 for assessment year 1995-96. 22.1 After considering the rival submissions and perusing the relevant material on record, it is observed that the disallowance of ₹ 110.86 lacs was made by the Assessing Officer as he found that the assessee company has actually paid a sum of ₹ 160.35 lacs only against the overall statutory dues of ₹ 271.21 lacs debited in the profit and loss account. This disallowance also appears to have been made by the Assessing Officer without giving any opportunity to the assessee to explain his stand as there contains no discussion whatsoever about the assessee's submission or Assessing Officer's findings regarding the same in his order. When the matter was carried before the learned CIT (Appeals), the assessee company made a detailed written submis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period of National Coal Wage Agreement IV on 30th June, 1991 Joint Bipartite Committee for the Coal Industry (JBCCI-V) was to be constituted. However, the same could not be constituted particularly in view of the fact that the Hon'ble High Court of Judicature, Calcutta had granted an interim stay order vide GR No. 16108(W) of 1992 restraining the constituting of such committee. The interim stay order was later on vacated by the Hon'ble High Court of Judicature, Calcutta on 10th November, 1994 and on 11th November, 1994. JBCCI-V was duly constituted consisting of the representatives of the management and Unions / Workers. The character of demand submitted by the different Unions were integrated and after prolonged negotiations the representing management and Union arrived at a Memorandum of Understanding (MOU) on 28th and 29th April, 1995. Based on this MOU the financial impact of the company after setting off interim relief paid as per the directions of Government of India worked out to be of ₹ 6213 lacs which has been exhibited in the Profit and Loss Account. It is to submit before your goodself that the assessee company for the year ended 31-3-1995 finalised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Raipur in assessee's own case for assessment year 1989-90 has been challenged by the Department by filing an appeal before the Tribunal. He also found that there are other aspects which militate against the assessee's claim for deduction on this count. According to him, the liability is allowable only in the year of accrual provided it is an ascertained liability and since the relevant MOU itself was arrived at on 28th and 29th April, 1995 in the assessee's case i.e., after the close of the relevant accounting year, there was no definite and ascertained liability fastened on the assessee during the accounting period relevant to assessment year 1995-96. He, therefore, came to the conclusion that the relevant liability had not definitely arisen in the relevant accounting year and considering that the deduction is admissible only in respect of an ascertained liability, proceeded to hold that the expenditure in respect of the liability arising out of MOU which was not available with the assessee prior to the close of the relevant accounting period cannot be allowed in computation of income for assessment year 1995-96. For arriving at this conclusion, he derived support fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tended that the case laws relied upon by the revenue authorities on this issue are distinguishable and as the impugned liability in the present case had crystallized before the finalisation of accounts for the relevant previous year, the assessee was entitled for deduction in respect of the same. He further contended that this issue is squarely covered in favour of the assessee by the order of this Bench in assessee's own case for assessment year 1988-89 wherein a similar provision made for fringe benefits @ 2096 of interim relief payable to non-executives of the company much after the close of the previous year has been allowed by the Tribunal. He also brought it to our notice that the reference application filed by the Department against the said order of the Tribunal has been rejected by this Bench and thus the matter has already achieved a finality. He, therefore, contended that the disallowance made by the Assessing Officer and confirmed by the CIT(Appeals) on this issue was not warranted and urged that the same may be deleted. 23.5 The learned Departmental Representative, on the other hand, mainly relied on the orders of the authorities below on this issue and further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the employees' union in the relevant accounting year and on the basis of the status of such negotiations, a provision for the corresponding liability was decided to be made in that accounting year itself. Considering these facts, the Hon'ble Bombay High Court observed that the event giving rise to the said liability was occurred in the relevant previous year itself and it was therefore held by their Lordships that the said liability having arisen during the relevant previous year, is deductible during the relevant year. The facts of the present case, however, appear to be different from that case inasmuch as the impugned liability has been provided by the assessee company on the basis of the Memorandum of Understanding reached only after the end of the relevant previous year. We, therefore, find it difficult to agree with the contentions of the learned counsel for the assessee that the same had definitely arisen and became an ascertained liability during the relevant previous year. It is also pertinent to note here that although certain terms and conditions regarding the wage structure were agreed upon between the parties in the form of interim relief in the meeting held o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Accounting Standard (AS)-4 issued by the Institute of Chartered Accountants of India, such treatment is not conclusive for deciding the issue relating to a deduction under the Income-tax Act which has to be allowed as per the relevant provisions contained in the Act itself as well as the position propounded by the various judicial forum. As regards the period of accrual of liability, we have already observed, after taking into consideration all the facts and circumstances of the case, that the impugned liability had arisen and became an ascertained liability during the previous year relevant to assessment year 1996-97 when the MOU was finally signed by the concerned parties and this being the position, we find no infirmity in the impugned order of the learned CIT (Appeals) in upholding the action of the Assessing Officer in not allowing the deduction in respect of the same for the assessment year 1995-96. The same is, therefore, upheld on this issue. 24. The next issue relating to the incorrect set off brought forward losses is raised by the assessee in the following appeals : ------------------------------------------------- ITA No. Asst. Year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Patna High Court in the case of Uday Mistanna Bhandar Complex v. CIT [1996] 222 ITR 44 and has particularly referred to the following observations of their Lordships contained in the said order: From the bare reading of section 156 it is clear that notice of demand claiming interest can be issued only when there is an order in the assessment levying interest. To use the expression charge interest if any or charge interest as per rules cannot be read to mean that the Assessing Officer has passed the orders charge interest under all the aforesaid sections the order to charge interest has to be specific and clear, as for that matter an order to charge any tax penalty or fine. A notice of demand is somewhat like a decree in a civil suit, which must follow the order. When a judgment does not specify any amount to be charged under any particular section, the decree cannot contain any such amount. Similarly when the assessment order is silent if any interest is leviable, the notice of demand under section 156 of the Act cannot go beyond the assessment order and the assessee cannot be served with any such notice demanding interest. Further, he has also cited the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 22/Nag./2001 for assessment year 1996-97. In this regard, we have already allowed deduction in respect of the said expenditure holding the same to be of revenue nature in para No. 7.12 of this order and consequently this ground relating to the alternative claim of the assessee for depreciation on such expenditure has become infructuous. Accordingly the same is dismissed. 28. The next issue relating to the disallowance of depreciation on assets used in a guest house and expenditure incurred on current repairs of guest house is raised by the assessee in ground Nos. 7 and 8 of ITA No. 22 Nag./2001 for assessment year 1996-97. 28.1 After considering the rival submissions and perusing the relevant material on record, it is observed that the assessee-company claimed a deduction of ₹ 7.38 lacs for expenditure on account of repairs to guest house and ₹ 13.70 lacs on account of depreciation on the assets used in the guest house. This claim of the assessee, however, was not allowed by the Assessing Officer in view of the specific and express provisions of section 37(4) and the learned CIT(Appeals) also confirmed the disallowance made by the Assessing Officer considering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment years 1971-72 and 1972-73. United Catalysts (India) Ltd. v. CIT[1998] 229 ITR 233 (Ker.) A reading of sub-section (4) of section 37, as more clarified by sub-section (5), would clearly show that any accomodation by whatever name called, maintained, hired, reserved or arranged by the assessee for providing boarding or lodging to any person on tour or visit to the place at which such accommodation is situated, will be treated as accommodation in the nature of a guest house and that no allowance shall be made in respect of any expenditure incurred by the assessee after 28-2-1970 on the maintenance of any such guest house. It cannot be contended that in spite of the above provisions specifically relating to guest house, the assessee can still put forward a claim under the general provisions of section 30. Learned counsel for the assessee relied on the decisions in Chase Bright Steel Ltd.'s case and CIT v. Ahmedabad Mfg. Calico Printing Co. Ltd. [1992] 197 ITR 538 (Guj.) in support of its contention. On examining these decisions, we find the first decision which is rendered by the Bombay High Court, considered a case prior to the introduction of sub-sections ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iberated upon the two different views expressed by the Division Benches of Hon'ble Bombay High Court which was the jurisdictional High Court and even though the rule of precedent warranted following of the latter judgment which was in favour of the Revenue, found itself with no alternative but to choose the view that was favourable to the assessee resorting to the Supreme Court decision in the case of CIT v. Vegetable Products Ltd. [1973] 88 ITR 192 considering that there was no Full Bench decision of the Hon'ble Bombay High Court over ruling the decision of Division Bench and that the relevant provisions were also not free from doubts. 28.4 In the present case, we find ourselves in a better position than the Bombay Bench of ITAT, to adopt the view which is favourable to the assessee on this issue as no decision of the Hon'ble Madhya Pradesh High Court, which is a jurisdictional High Court in this case, on this issue has been brought to our notice. As such, considering all the facts of the case and keeping in view the decision of the Hon'ble Supreme Court in the case of Vegetable Products Ltd. , we follow the view expressed by the Hon'ble Bombay High Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer is directed to allow the claim of the assessee on this count. 29. The next issue relating to the disallowance of provision made for deterioration of coal stock is raised by the assessee in ground Nos. 9 and 10 of ITA No. 22/Nag./2001 for assessment year 1996-97. 29.1 The stock of coal is valued by the assessee-company after providing for deterioration in its value due to fire, abnormal stacking etc. Upto assessment year 1995-96, such provision was made at the rate of 1.5 per cent of the value of entire production of the concerned year and the same was deducted from the value of the closing stock. During the year under consideration, the assessee company, however, changed this system and instead of making such provision at the rate of 1.5 per cent of the value of the production, the same was provided at the rate of 10 per cent of the value of closing stock. The Assessing Officer noticed that the Auditors of the company in their report had commented that the basis of creation of such provision for deterioration was not satisfactorily explained and justified by the management. The explanation offered by the assessee-company before him in this regard that the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , contended that the change in the method for valuing the stock being bona fide and the same having been followed by the assessee-company consistently in the subsequent years, there was no reason for the authorities below for not accepting the said change and in making disallowance on this count. In support of this contention, he cited the cases of Snow White Food Products Co. Ltd. v. CIT[1983] 141 ITR 861 (Cal.), Jaipur Taj Enterprises Ltd. v. ITO[1992] 42 TTJ (Delhi) 200, CIT v. Hollungooree Tea Co. [1991] 192 ITR 126 (Cal.) Siddheswari Cotton Mills (P.) Ltd. v. CIT [1979] 117 ITR 953 (Cal.) and Travancore Cochin Chemicals Ltd. 29.3 The learned Departmental Representative submitted that the creation of provision for deterioration in the stock of coal could not be satisfactorily explained and justified by the management to the Auditors also and considering the specific comments made by them in their report on this issue, the authorities below were fully justified in rejecting the assessee's claim on this count. She submitted that the said provision was made by the assessee for contingent reasons and considering that no such instance of fire or any loss has been pointed out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accounting year 1995-96. 29.6 From the perusal of the aforesaid approval, it is evident that the modification/change in the accounting policy relating to the making of a provision for deterioration in stock value was duly considered and deliberated upon by the Board of Directors of Coal India Ltd. and the said change was not only made applicable to the assessee-company but also to the other subsidiaries of Coal India Ltd. In these circumstances, the Assessing Officer in fact, had no reason to dispute such bona fide change made by the assessee-company as per the resolution passed by the Board of Directors of its holding company. As a matter of fact, the policy of making such provision in the earlier years was also being followed by the assessee-company as well as the other subsidiaries of M/s. Coal India Ltd. and the same was even accepted by the Tribunal, inter alia, in the case of M/s. Western Coal Fields Ltd. for assessment years 1978-79 to 1984-85 vide its order dated 20-5-1992. In the year under consideration, as already observed, the change was effected by the assessee-company only in the rate and basis for working out this provision and considering that the matter of prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time of hearing, was reported by the Assessing Officer due to some misunderstanding of factual position. It is thus clear that the change in the method has been consistently followed by the assessee-company in the subsequent years also and as the same has also been held to be bona fide by us, we find no justification in the impugned order of the learned CIT (Appeals) upholding the action of the Assessing Officer in rejecting the same and consequently in making the disallowance. We, therefore, delete the same. 30. The next issue relating to the alternate claim of the assessee for allowance of contribution from employees towards pension fund and interest thereon in the year of payment is raised in ground No. 13 of ITA No. 22/Nag./2001 for assessment year 1996-97. 30.1 At the time of hearing before us, the learned counsel for the assessee has submitted that if the main issue relating to the deduction on this count in the years of accrual as claimed by the assessee is decided in favour of the assessee, this ground may be treated as not pressed by the assessee. Accordingly, in view of our decision on the main issue rendered in the preceding paras of this order, this ground is trea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o assessment year 1996-97, we find it difficult to agree with the contention of the learned counsel for the assessee. As a matter of fact, the finding given by the Assessing Officer that the said liability accrued only in the month of January 1997 when the arrears of wages and salary were actually paid has neither been disputed nor controverted by the learned counsel for the assessee before us and this being so, we find no reason to disturb the orders of the authorities below holding that the impugned liability so accrued during the previous year relevant to assessment year 1997-98 was not deductible in assessment year 1996-97 as claimed by the assessee. We, therefore, uphold the impugned order of the learned CIT (Appeals) confirming the disallowance made by the Assessing Officer on this count. 31.2 As regards the assessee's alternative plea for allowing the said deduction in the assessment year 1997-98, we have already observed that the impugned liability on account of contribution to provident fund accrued during the previous year relevant to assessment year 1997-98. Further, we may also observe that the assessee, having made the payment against the same in the relevant fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eturn because the due date for revising the return had already expired. He contended that the returned income of the assessee, however, filed a revised computation of income on 19-1-1999 before the Assessing Officer showing a Nil income and since the assessee company had paid an amount of Rs. I crore as advance tax for the year under consideration, interest under section 234C which is levied on the short fall of tax payable on the returned income and the amount of advance tax paid, was not leviable in the case of the assessee. He also contended that the submission made on behalf of the assessee company before the CIT (Appeals) on this issue was not properly appreciated by him and he proceeded to decide this issue without giving any specific finding on the assessee's submission. He, therefore, urged that the impugned order of the learned CIT (Appeals) on this issue may be set aside and the Assessing Officer be directed to delete the interest charged under section 234C. 32.3 The learned Departmental Representative, on the other hand, contended that the assessee's submission on this issue is not acceptable because as per the last valid return filed by the assessee on 18-11- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee, therefore, filed a revised computation of income before the Assessing Officer showing Nil income and the plea of the assessee is that the same be construed as the returned income for the purpose of levying of interest under section 234C. After considering the facts of the case and keeping in view very clear, unambiguous and specific provisions contained in section 234C, we find it difficult to accept this plea of the assessee. It is trite law that a taxing statute has to be strictly construed. In a taxing statute, one has to look merely at what is clearly said. There is no room for any intendment. Nothing is to be read in and nothing is to be implied. In the case of State of Bombay v. Automobile Agricultural Industries Corpn. [1961] 12 STC 122, the Hon'ble Supreme Court has observed that the courts in interpreting a taxing statute will not be justified in adding words thereto so as to make out some presumed object of the Legislature. As such considering the facts of the present case in the light of this settled position of law and keeping in view the clear and specific provisions contained in section 234C, we are of the considered opinion that the income shown by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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