TMI Blog2019 (1) TMI 1974X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Assessing Officer should keep in mind that the assessee is a public sector undertaking and its accounts are audited by the Comptroller Auditor General of India and such audited statements have evidentiary value. Allowability of provision of NCWA-VIII and executives ad hoc payments - CIT-A deleted the addition - HELD THAT:- As the nomenclature used was provision , the Assessing Officer was of the view that the liability in question is not crystallized. The assessee produced wage agreement arrived at with the unions in support of the claim that the liability in question is a crystallized liability. The issue in question is covered by the decision of the Nagpur Bench of the Tribunal in the case of Western Coalfield Ltd. [ 2009 (6) TMI 630 - ITAT NAGPUR] Interim relief @15% of the basic wage affected from 1st July 2008 had been made from the month of April, 2008. The communication of this effect was received from Coal India Ltd. on 16.04.2008. The interim relief to employees is covered under National Coal Wage Agreement. Thus, we find no infirmity in the order of the ld. CIT(A). Excluding from the total income of the assessee, exempt income by way of interest on a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - HELD THAT:- As in the assessee s own case while adjudicating on identical issues for the Assessment Year 2003-04 to 2007-08 have taken a view that the claim in question is allowable expenditure. The ld. DR could not controvert these submissions of the assessee that the orders in question cover this issue in favour of the assessee. - I.T.A. No. 1010/KOL/2015 & I.T.A. No. 1015/KOL/2015 And I.T.A. No. 916/KOL/2017 & I.T.A. No. 999/KOL/2017 - - - Dated:- 16-1-2019 - Sri J. Sudhakar Reddy, Accountant Member Sri A.T. Varkey, Judicial Member Shri Arvind Agarwal, Advocate, appeared on behalf of the Assessee. Shri P. K. Srihari, CIT(DR), appeared on behalf of the Revenue. ORDER Per J. Sudhakar Reddy, Accountant Member :- These are cross-appeals directed against separate orders of the Learned Commissioner of Income Tax (Appeals), Asansol [ld. CIT(A)] dated 09.03.2017 for the Assessment Year 2008-09 and dated 20.05.2015 for the Assessment Year 2009-10. As both these appeals have common issues, for the sake of convenience, they are heard together and disposed off by way of this common order. 2. The assessee is public sector company engaged i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... depreciation is allowable only on the assets used in the manufacturing of production of any article or things. The assessee is entitled to claim depreciation only on the assets used directly in the extraction/production of coal. It is evident from the above list furnished by the assessee that additional depreciation is claimed on many items that are not used directly in the production process. No detailed breakup of the addition to Plant Machinery on which additional depreciation have been claimed to have been furnished by the assessee and also the assessee could not furnish the value of item wise details. In absence of quantitative value of each item of the asset, 50% additional depreciation is disallowed. Therefore, the additional depreciation claimed by the assessee and as such a sum of Rs.13,23,40,200/- is added to the total income. From the above, it is clear that the Assessing Officer has disallowed 50% of additional depreciation claimed only on the ground that lack of details being filed. The issue whether production/extraction of coal is manufactured or not, was not in dispute and the claim of the assessee was accepted by the Assessing Officer. 4.2 On appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sallowance to Rs.5,29,36,080/-. The ground 3 is partly allowed. Hence an ad hoc decision was taken to disallow 20% of the claim for the assessee for the reasons mentioned. 4.3 The ld. Counsel for the assessee relies on a number of case laws and submits that raising/extraction of coal amounts to production. (i) CIT vs. G.S. Atwal and Co. 254 ITR 592 (Cal) (ii) Bla Industries Pvt. Ltd. vs. Pr. CIT in ITA No.779/Kol/2016 order dated 28.02.2018. The ld. Counsel further submitted that ad hoc disallowance is bad in law and has to be deleted. The ld. Departmental Representatives submitted the disallowance was made as the assessee has not furnished the required particulars before the Assessing Officer. He challenged the disallowance sustained by the ld. CIT(A) at 20% of the claim. He did not dispute the claim of the assessee that extraction/raising of coal from the mines is production of an article or thing. 4.4 On consideration of the fact and circumstances of the issue, we are of the considered opinion that the matter should be restored to the file of the Assessing Officer for fresh adjudication, after considering the details of plant and machinery us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n and it was to be recognized only when (i) the enterprise had a present obligation as a result of a past event; (ii) it was probable that an outflow of resource will be required to settle the obligation; (iii) reliable estimate could be made of the amount of obligation then such provision was definitely to be recognized in the books of account and if these conditions were not made, no provision could be recognized. In the present case, it is not in dispute that the concerned employees/labourers have rendered the services and the assessee has also earned income because of their efforts which has been recognized in the books of account, hence, such rendering of services is an obligating event and which is independent of the future conduct of the business of the enterprises. Further, the basis for estimation as per past history and directions issued by the holding company is also available. Hence, we hold that such provision need to be recognized in the year under consideration. It is also noted that making of such provision is also in consonance with the principle of matching of cost with the Revenue. Thus, taking into consideration the facts and applicable provisions, we hold that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by way of a ground of appeal is admitted by us by applying the proposition of law laid down by the Hon ble Supreme Court in the case of National Thermal Power Co. Ltd.(supra). The Assessing Officer is directed to dispose off this issue on merits in accordance with law. 7.2 In the result, this ground is allowed for statistical purposes. 7.3 Ground No.3 is on the issue of part disallowance of claim of addition depreciation. Consistent with the view taken by us while adjudicating the appeal for the Assessment Year 2008-09, we set aside the matter to the file of the Assessing Officer for fresh adjudication in accordance with law. 7.4 In the result, this ground is allowed for statistical purposes. 7.5 Ground No.4 is on the issue of carry forward of unabsorbed allowance for deduction u/s 35E of the Act. 7.6 This Bench of the ITAT in ITA No.05/Kol/2015 order dated 09.02.2018 in assessee s own case for the Assessment Year 2008-09, in the first ground of appellate proceedings, at Para 10 held as follows: 10.1. We find that the ld. CIT(A) at para 24 of his order held that the deduction cannot be granted beyond the profits made by the assessee and that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s much since we have the benefit of the decision of the Nagpur Bench of the Tribunal the case of South Eastern Coalfields Ltd. Vs. Jt. CIT reported in (2002) 260 ITR (AT) page 1 (Nagpur). The judgment in fact is a lengthy one and spans numerous pages of the report in question. In perusing the judgment we find that the facts are absolutely identical and the Nagpur Bench by a detailed discussion on facts as also the case law, allowed the entire claim, observing in the process, at page 66, as under :- As a matter of fact, the impugned 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 in 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 Disputes 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 the assessee's own case, we hold that the expenditure incurred by the assessee- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Tribunal, in its order in the first round of appellate proceedings. 7.15 In the result, these grounds of the assessee are allowed for statistical purposes. 8. Now, we adjudicate ITA No.1015/Kol/2015, Revenue s appeal for Assessment Year 2009-10. Ground No.1 is on the issue of ad hoc disallowance of claim of additional depreciation. 8.1 Consistent with the view taken by us while disposing of Ground No.3 of the assessee s appeal for the Assessment Year 2008-09, we set aside the issue to the file of the Assessing Officer for fresh adjudication in accordance with law. 8.2 In the result, this ground is allowed for statistical purposes. 8.3 Ground No.2 is against the order of the ld. CIT(A) allowing the claim of deduction on account of expenditure on environmental expenses of Rs.60,80,000/- and on account of land reclamation expenses of Rs.31,000/-. After hearing rival submissions, we find that the similar issue have arisen in the assessee s own case in ITA Nos.462 to 464/Kol/2009 Assessment Year 2003-04 to 2005-06 at Para 7 8 held as follows: 7. The second common ground in A.Y 2003-04 2005-06 except variance in amount raised by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... required by or under any other law for the time being in force. Now I am also reproducing the Clause-IV Clause-V of sub-sec.36 which is as under: (iv) any sum paid by the assessee as an employer by way of contribution towards a recognized provident fund or an approved superannuation fund, subject to such limits as may be prescribed for the purpose of recognizing the provident fund or approving the superannuation fund, as the case may be, and subject to such conditions as the Board any think fit to specify in cases where the contributions are not in the nature of annual contributions of fixed amounts or annual contributions fixed on some definite basis by reference to the income chargeable under the head salaries or to the contributions or to the number of members of the fund; (v) any sum paid by the assessee as an employer by way of contribution towards an approved gratuity fund created by him for the exclusive benefit of his employees under an irrecoverable trust. From the above referred reproduction of the provision of sec.40A(9) and sec.36(1)(iv) 36(1)(v) it is clear that the appellant has failed to prove that his case is outside the purvi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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