Income Tax Appellate Tribunal - Kolkata
M/S Bengal Emta Coal Mines Ltd., Kolkata vs Dcit, Cc-Xvi, Kolkata, Kolkata on 16 October, 2018
1
IT(SS)A No. 16-17/Kol/2014
M/s. Bengal Emta Coal Mines Ltd., AY 2008-09&2009-10
आयकर अपील य अधीकरण, यायपीठ - "A" कोलकाता,
IN THE INCOME TAX APPELLATE TRIBUNAL "A" BENCH: KOLKATA
(सम )Before ी ऐ. ट . वक , यायीक सद य एवं/and ी एम .बालागणेश, लेखा सद य)
[Before Shri A. T. Varkey, JM & Shri M. Balaganesh, AM]
I.T(SS).A. Nos. 16 & 17/Kol/2014
Assessment Years: 2008-09 & 2009-10
M/s. Bengal Emta Coal Mines Ltd. Vs. Deputy Commissioner of Income-tax,
(PAN: AABCB2949R) Central Circle-XVI, Kolkata.
Appellant Respondent
Date of Hearing 14.08.2018
Date of Pronouncement 16.10.2018
For the Appellant S/Shri Manish Malik & Satish Khosla,
Advocates
For the Respondent Shri P. K. Srihari, CIT, DR
ORDER
Per Shri A.T.Varkey, JM
Both these appeals preferred by the assessee are against the separate orders of the Ld. CIT(A), Central-II, Kolkata dated 18.11.2013 for AYs 2008-09 and 2009-10. Since grounds are identical, except variance in amount, and facts are common we dispose of both the appeals by this consolidated order for the sake of convenience by taking the appeal for AY 2008-09 as the lead case.
2. The sole ground of appeal is against the action of the Ld. CIT(A) in confirming the action of the AO in disallowing the development expenditure amounting to Rs.27,66,182/-.
3. Brief facts of the case as noted by the AO are that the assessee company has claimed Development Expenses of Rs.30,73,535/- in its original return of income by merging it with the amount eligible for deduction u/s. 35E of the Act. However, at the time of filing the 2 IT(SS)A No. 16-17/Kol/2014 M/s. Bengal Emta Coal Mines Ltd., AY 2008-09&2009-10 return in response to notice u/s. 153A of the Act, the assessee company has treated the said sum as revenue expenditure on the reasoning that it was incurred after the commencement of commercial production. According to AO, this aspect of allowbility of development expenses incurred after the commercial production was examined and analysed by the Ld. CIT(A), Central-II, Kolkata in his order in assessee's own case for AY 2002-03 and observed that "....... In any case, to meet the justice and to be consistent with the fact that appellant cannot make a fresh claim of deduction on reopened assessment proceedings, I estimate 10% of the Development Expenses, i.e. Rs.2,66,233/- as revenue expenditure for the purpose of business and direct the Assessing Officer to allow this deduction from the total income of the appellant." According to AO, in the present case the fact is similar to the situation analysed by the Ld. CIT(A) in assessee's own case for AY 2002-03. In such a situation by following the ratio as decided by the Ld. CIT(A) for AY 2002-03 in assessee's case, only 10% of such expenditure was treated as revenue expenditure and the remaining 90% i.e. Rs.27,66,182/- was added back by the AO to the total income of the assessee. Aggrieved, assessee preferred an appeal before the Ld. CIT(A), who confirmed the action of AO by observing as under:
"6. I have considered the submission of the appellant and perused the assessment order. I have also gone through the order of the CIT(A) on this issue for AY 2002-03. It is observed that the CIT(A) that the assessee company had incurred expenses for development beyond the earmarked area. Under the circumstances, the CIT(A) allowed 10% of development expenses as deduction. In the appeal for the year under consideration, the appellant has not explained as to how the facts of the case in this year are different than AY 2002-03. In view of above, I am not inclined to interfere with the decision taken by the AO. His action of allowing deduction @ 10% of the development expenses is upheld. The ground no.2 is dismissed."
Aggrieved, the assessee is in appeal before us.
4. We have heard rival submissions and gone through the facts and circumstances of the case. We note that the assessee has claimed Development expenditure of Rs.30,73,535/- in its original return of income by merging with the deduction claimed u/s. 35E of the Act. However, pursuant to the search, a return in response to notice u/s. 153A of the Act was filed by the assessee wherein the entire expenditure pertaining to development expenses and 3 IT(SS)A No. 16-17/Kol/2014 M/s. Bengal Emta Coal Mines Ltd., AY 2008-09&2009-10 those falling within the ken of deduction u/s. 35E of the Act were clubbed together and claimed as revenue expenditure, being the expenditure incurred in the years under appeal. The AO in the assessment observed that since the assessee had shifted its stand of claim of expenditure from the original return to the return filed in response to 153A of the Act, the fresh claim made in sec. 153A return cannot be entertained. This in our considered opinion is not tenable as per law in view of the specific provisions mentioned in sec. 153A of the Act that once an assessment gets abated on the date of search, no assessment needs to be framed on the original returns filed by the assessee. Hence, the only assessment that can be framed in this scenario would be the assessment u/s. 153A of the Act which also mentions determination of total income of the assessee. Needless to mention that the total income of the assessee is to be determined after taking into account all the legitimate claims of expenditure made by the assessee in the return filed thereon. We find that both the AO as well as the Ld. CIT(A) had merely proceeded on the decision taken in assessee's own case by the Ld. CIT(A) for AY 2002-03 in respect of subject mentioned expenditure. In the assessment year 2002-03, the Ld. CIT(A) allowed 10% as revenue expenditure and treated the remaining 90% as deferred revenue expenditure. The appeal preferred by the assessee against such order was quashed by this Tribunal holding the reopening of assessment bad in law. We also find that for the AY 2006-07, the Ld. CIT(A) had allowed development expenditure as per para 6.5 of his order page 18 as revenue expenditure barring Rs. 1 crore donated to West Bengal State Health & Family. An appeal preferred by the revenue against the aforesaid order of Ld. CIT(A) by such order before this Tribunal was dismissed due to low tax effect. Thus Ld. CIT(A)/AO erred in following the order of Ld. CIT(A) for AY 2002-03 which order has been quashed by this Tribunal and is non-est in the eyes of law. Hence, we find that both the lower authorities for the years under appeal ought to have adjudicated the claim of expenditure incurred during the years under appeal afresh uninfluenced by the earlier decision taken for the earlier years. Since this matter requires factual examination by the AO, we deem it fit and appropriate in the interest of justice and fair-play to remand this issue to the file of the AO for de novo adjudication. Needless to 4 IT(SS)A No. 16-17/Kol/2014 M/s. Bengal Emta Coal Mines Ltd., AY 2008-09&2009-10 mention here that the assessee be given reasonable opportunity of being heard. Accordingly, the grounds of appeal of assessee for both the years are allowed for statistical purposes.
5. In the result, all the appeals of assessee are allowed for statistical purposes.
Order is pronounced in the open court on 16/10/2018
Sd/- Sd/-
(M. Balaganesh) (A. T. Varkey)
Accountant Member Judicial Member
Dated: 16th October, 2018
Jd.(Sr.P.S.)
Copy of the order forwarded to:
1 Appellant - M/s. Bengal Emta Coal Mines Ltd., 5B, Nandlal Basu Sarani, Kolkata-700
071. 2 Respondent - DCIT, Central Circle-XVI, Kolkata.
3 CIT(A)-Central-II, Kolkata. (sent through e-mail)
4 CIT , Kolkata
5 DR, Kolkata Benches, Kolkata (sent through e-mail)
/True Copy, By order,
Sr. Pvt. Secretary