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2017 (2) TMI 272 - ITAT MUMBAI

2017 (2) TMI 272 - ITAT MUMBAI - TMI - Revision u/s 263 - contribution to CAF - revenue or capital receipt - deferred revenue expenditure - Held that:- No point of time could it be said that the assessee had incurred capital expenditure giving the assessee a benefit of enduring nature for the purpose of earning segmented income to render the same to income tax. In other words, the authorities below have not pointed out the income generated against the purported deferred revenue expenditure so pr .....

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ourt] - Interest u/s 234C - Held that:- Direct the A.O. to levy interest u/s 234C only on the basis of returned income of the assessee. - ITA No.1447/Mum/2012, ITA No.1412/Mum/2014 - Dated:- 3-2-2017 - Shri Rajendra, A.M. and Shri Pawan Singh,J.M. For The Revenue : Shri Santanu K. Saikia-CIT-DR For The Assessee : Shri Dinesh Vyas Per Rajendra, AM: Challenging the order, dated 16.12.2011,passed u/s.263 of the CIT-2 and the order dtd.29. 11.2013 of the CIT(A)-6,Mumbai,the assessee has filed th .....

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d u/s.263 of the Act, he set aside the original assessment order on three issues. He directed the AO to pass the assessment order afresh. The disputed issues on which the original assessment order was set aside were as follows: i) Allowability of the assessee s contribution to the Compensatory Afforestation Fund (CAF), amounting to ₹ 212.52 crores ii) Allowability of prior period expenses amounting to ₹ 9.54 crores iii) Allowability of processing charges amounting to ₹ 57.96 cr .....

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s under :- During the relevant assessment year the company had contributed ₹ 212.52 crores towards fund and capitalised in the books of account under the head Development of property , but in computing taxable income claimed such contribution as business expenditure u/s. 37(1) of the Income tax Act, 1961. Since the contribution is for mining lease rights, same should have been disallowed as capital expenditure. It is seen from records that ₹ 47,49,82,836/- on account of prior period .....

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long term loans and amortised ₹ 4,97,53,451/- in books of accounts. It is also noticed from the notes to cash flow statement that interest of ₹ 3.76 crores was capitalised. During the year purchase on fixed assets was ₹ 2245.85 crores. The assessee company in its computation of income under income tax claimed entire processing charges of ₹ 57,96,77,391/- as deduction while arriving at taxable income. As the company itself in books of account amortised the amount of ₹ .....

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ny scrutiny/ enquiry. He further observed as under :- Without pre-empting the individual satisfaction of the A.O., it cannot be ruled out that in case detailed scrutiny as above had been done and all the relevant facts collected, the result would have been different. It is now judicially accepted fact that the lack of scrutiny in framing an order renders the same as erroneous. Since the likely errors as pointed out above have huge tax implications,therefore, it is clearly a case where the assess .....

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diture, that the issue of contribution to CAF stood decided in favour of the assessee by the orders of the Tribunal before the CIT had passed order u/s.263 on 16.12.2011. He referred to cases of Ramgad Minerals & Minings Pvt. Ltd.(ITA/5021/ / 2009 dt.06/01/2012), P. Abubakar(ITA/725/bang/2009 dt.22/01/2010); Rungta Sons (P) Ltd. (ITA/933/Kol/2009 dt.05.08.2011); Freegrade & Co. Ltd. (ITA/934/Kol/2009 dt.05.08. 2011); Orissa Mining Corpn Ltd. (ITA/76,266 & 240/Ctk/2010 dt. 12.08.2011) .....

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ns, that the AO himself had not taken any action with regard to remaining two items,that CIT had failed to prove that original order was erroneous and prejudicial to the interest of revenue.The Departmental Represen - tative(DR)stated that mater could be decided on merits. 4. We have heard the rival submissions and perused the material before us. We find that the CIT had invoked the provisions of section 263 of the Act with regard to three issues, that after due verification the AO had dropped t .....

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The appellate Tribunal vide annexure-a has made the following observation. We find force in the submission of the learned counsel that pavements to the Government are to be paid once the mining lease is obtained and such payments are governed by various acts along with the Apex Court making a ruling for State Governments to participate in the granting of mining lease by recovering compensation when their forests are uprooted. Therefore, for this purpose, the funds are used for a natural regener .....

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e to be allowed in the year it has been incurred. 4. It is not in dispute that the said payment was made as contribution to compensatory afforestation as per the directions of the Supreme Court. It is not permissible for the assessee to make phase-wise payment. In that view, the order of the Appellate Tribunal is sound and proper. Appeal is dismissed. Considering the above we hold that the CIT-2 was not justified in invoking the provisions of section 263 of the Act with regard to any of the thre .....

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