By Sri. Y v. Raviraj, Advocate

- 1 - NC: 2024:KHC-D:2833-DB ITA No. 100037 of 2022 IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH DATED THIS THE 8 DAY OF FEBRUARY, 2024 PRESENT THE HON'BLE MR JUSTICE S G PANDIT AND THE HON'BLE MR JUSTICE K V ARAVIND INCOME TAX APPEAL NO. 100037 OF 2022 BETWEEN: 1. THE PR COMMISSIONER OF INCOME TAX, NAVANAGAR, HUBLI-580026. NAVANAGAR, HUBLI-580026. 2. DEPUTY COMMISSIONER, INCOME TAX, CIRCLE-1, BELAGAVI-590001.BELAGAVI-590001. (BY SRI. Y. V. RAVIRAJ, ADVOCATE) …APPELLANTS AND: M/S. GOGTE MINERALS, NASCO ISHANYA, KHANAPUR ROAD, TILAKWADI, BELAGAVI-590001 PAN: AABFG 3663N. …RESPONDENT Digitally signed by…RESPONDENT CHANDRASHEKARLAXMANCHANDRASHEKARLAXMANKATTIMANITHIS INCOME TAX APPEAL IS FILED U/S.260A OF THE INCOME Date: 2024.02.17Date: 2024.02.1711:07:43 +0530TAX ACT, 1961, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTION OF LAW STATED ABOVE AND ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, PANAJI NENCH, PANAJI IN ITA NO.186/PAN/2018, DATED 05.04.2022 FOR THE AY 2014-15 MARKED AS ANNEXURE-A AND CONFIRM THE ORDER DTD 23.12.2016 PASSED BY THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1, BELAGAVI FOR THE A.Y 2014-15 AS ENCLOSED AND MARKED AS ANNEXURE C. QUESTION OF LAW STATED ABOVE AND ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, PANAJI NENCH, PANAJI IN ITA NO.186/PAN/2018, DATED 05.04.2022 FOR THE AY 2014-15 MARKED AS ANNEXURE-A AND CONFIRM THE ORDER DTD 23.12.2016 PASSED BY THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1, BELAGAVI FOR THE A.Y 2014-15 AS ENCLOSED AND MARKED AS ANNEXURE C. THIS APPEAL, COMING ON FOR ADMISSION, THIS DAY, K V ARAVIND, J., THE FOLLOWING: - 2 - JUDGMENT The above appeal is under Section 260A of the Income Tax Act, 1961 (for short ‘Act’), by the Revenue aggrieved against the order passed by the Income Tax Appellate Tribunal (for short ‘ITAT’) in ITA No.186/PAN/2018 for the assessment year 2014-15 dated 05.04.2022. 2.The revenue has raised following substantial questions of law for consideration of this Court: i.Whether on the facts and in the circumstances of the case and in law, the Tribunal is justified in remanding the matter back to the assessing authority without giving any findings on the detailed speaking order of assessment passed by the assessing authority u/s 143(3) of the Act, in conformity with the Judgment of this Hon'ble Court in ITRC No.138 to 141 of 1993 on the issue of allowance of 'pit filling' expenses in the case of the Respondent for the earlier years? circumstances of the case and in law, the Tribunal is justified in remanding the matter back to the assessing authority without giving any findings on the detailed speaking order of assessment passed by the assessing authority u/s 143(3) of the Act, in conformity with the Judgment of this Hon'ble Court in ITRC No.138 to 141 of 1993 on the issue of allowance of 'pit filling' expenses in the case of the Respondent for the earlier years? ii.Whether on the facts and in the circumstances of the case and in law, the circumstances of the case and in law, the - 3 - Tribunal is justified in holding that the unascertained and un-estimated 'provisions' of mine closure expenses not incurred during the year are allowable expenses when the mining activities are under progress and the liability to close the mine has not arisen? ii.Whether on the facts and in the circumstances of the case and in law, the circumstances of the case and in law, the - 3 - Tribunal is justified in holding that the unascertained and un-estimated 'provisions' of mine closure expenses not incurred during the year are allowable expenses when the mining activities are under progress and the liability to close the mine has not arisen? iii.Whether on the facts and in the circumstances of the case and in law, the Tribunal is justified in holding that the 'pit filling' expenses not actually incurred, are allowable expenses without referring to and which is not in conformity with the Supreme Court Judgment in the case of M/s New India Mining Corporation (P) Ltd (2000) 111 Taxman 632(SC)? circumstances of the case and in law, the Tribunal is justified in holding that the 'pit filling' expenses not actually incurred, are allowable expenses without referring to and which is not in conformity with the Supreme Court Judgment in the case of M/s New India Mining Corporation (P) Ltd (2000) 111 Taxman 632(SC)? 3.The respondent/assessee is engaged in the business of Mining of iron ore. The assessee filed return of income on 13.09.2014 declaring total income of Rs.21,82,77,410/-. The assessment was selected for scrutiny by issuance of notice under Section 143(2) of the Act. The assessee has claimed a sum of Rs.20,95,29,352/- as deduction towards pit filling expenses on estimation at the rate of Rs.106 per ton. The assessing officer by order of assessment dated 23.12.2016 disallowed the same, holding the expenses are unreasonable and not genuine in the absence of any reasonable, rational and scientific basis for estimation. 4.The assessee against order of assessment preferred appeal before the Commissioner of Income Tax (Appeals), Belagavi. The CIT(Appeals) by order dated 12.02.2018 allowed the appeal in part by estimating the pit filling expenses at Rs.104 per ton. 5.The revenue being aggrieved against the order of CIT(A) preferred appeal before the Tribunal. The Tribunal proceeded to hold that the estimation of pit filling expenses made by CIT(A) is without any basis. The Tribunal further recorded that the addition/disallowance made by the assessing officer is without proper calculation. The Tribunal directed the assessing officer to reconsider the calculation as per available records after granting opportunity to the assessee. The revenue is in appeal challenging the order of remand. - 5 - 6.Shri. Y.V. Raviraj, learned Senior Standing counsel appearing for the appellant/revenue submits that the assessing officer has recorded a detailed finding to disallow the pit filling expenses. The provision made towards pit filing expenses is without any basis. The provision made in the profit and loss account towards pit filling is regularly withdrawn by the partners, which would show that the provision was not towards pit filling expenses qualifying business expenditure. As the petitioner is in continuation of mining activity, the liability to fill the mining pits does not arise. In the circumstances, the order of the Tribunal remanding the matter to the assessing officer for reconsideration is without any purpose. 7.We have heard learned Senior Standing counsel for the appellant/revenue Shri. Y.V. Raviraj and perused the appeal papers. 8.The assessing officer has disallowed the entire claim of expenditure by way of provision towards pit filling expenses on the basis of the statements recorded from the - 6 - representatives of the assessee. The Appellate Commissioner has proceeded to estimate the expenses towards pit filling expenses. On appeal by the revenue, the Tribunal has arrived at a conclusion that the finding recorded by the CIT(A) in estimating the pit filling expenses is without any basis. The Tribunal further held that the pit filling expenses has to be reconsidered by the assessing officer after granting opportunity to the assessee. 7.We have heard learned Senior Standing counsel for the appellant/revenue Shri. Y.V. Raviraj and perused the appeal papers. 8.The assessing officer has disallowed the entire claim of expenditure by way of provision towards pit filling expenses on the basis of the statements recorded from the - 6 - representatives of the assessee. The Appellate Commissioner has proceeded to estimate the expenses towards pit filling expenses. On appeal by the revenue, the Tribunal has arrived at a conclusion that the finding recorded by the CIT(A) in estimating the pit filling expenses is without any basis. The Tribunal further held that the pit filling expenses has to be reconsidered by the assessing officer after granting opportunity to the assessee. 9.The revenue is in appeal contending that, in view of the detailed order of assessment, order of remand to the assessing officer is unnecessary. The revenue in this appeal has not alleged or pleaded that the finding recorded by the Tribunal is perverse. Further the order of the Tribunal remanding the matter to the assessing officer is without expressing any opinion on merits of the case. The order of remand would not prejudice the interest of the revenue or the assessee. No substantial question of law would arise for consideration of this Court from the order of Tribunal. - 7 - NC: 2024:KHC-D:2833-DBITA No. 100037 of 2022 10.In view of the above, we are of the considered opinion that no substantial question of law would arise from the order of remand passed by the Tribunal. Hence, the appeal is dismissed. Sd/- JUDGE Sd/- JUDGE RKM List No.: 1 Sl No.: 19