Commissioner Of Income Tax, (Large Taxpayer Units), Kolkata v. M/S Hindustan Copper Limited

Form No.(J2) IN THE HIGH COURT AT CALCUTTASPECIAL JURISDICTION (INCOME TAX)ORIGINAL SIDE Present : THE HON’BLE JUSTICE T.S. SIVAGNANAM A N D THE HON’BLE JUSTICE HIRANMAY BHATTACHARYYA IA NO.GA/1/2017(Old GA/2346/2017) ITAT/268/2017 COMMISSIONER OF INCOME TAX, (LARGE TAXPAYER UNITS), KOLKATAVsM/S HINDUSTAN COPPER LIMITED For the Appellant: MR. Smarajit Roy Chowdhury, Adv. Mr. Manabendranath Bandopadhyay, Adv. Mr. Sushil Kuamr Mishra, Adv.For the Respondent: Mr. J. P. Khiatan, Sr. Adv. Mr. Sourav Chunder, Adv. Mr. Biman Kumar Saha, Adv. Mr. Jayanta Datta, Adv. Mr. Atanu Mondal, Adv. Heard on : 10.12.2021 Judgment on : 10.12.2021 T. S. SIVAGANANAM, J. : This appeal by the revenue filedunder Section 260A of the Income Tax Act, 1961 (the ‘Act’ forbrevity) is directed against the order dated 9[th] December, 2016 passed by the Income Tax Appellate Tribunal, Kolkata “C” Bench(the ‘Tribunal’ in short) in ITA No.2583/Kol/2013 for theassessment year 2007-08. The revenue has raised the followingsubstantial questions of law for consideration: (a)Whether on the facts and in the circumstances of the case theLearned Income Tax Appellate tribunal, “c” Bench Kolkataerred in law by deleting the excess disallowance ofexpenditure of Rs.19,00,87,300/- shown under the head “MineDevelopment Expenditure” without considering theapplicability of Section 35E of the Income Tax Act, 1961 ?Learned Income Tax Appellate tribunal, “c” Bench Kolkataerred in law by deleting the excess disallowance ofexpenditure of Rs.19,00,87,300/- shown under the head “MineDevelopment Expenditure” without considering theapplicability of Section 35E of the Income Tax Act, 1961 ? (b)Whether on the facts and in the circumstances of the case theLearned Income Tax Appellate Tribunal, “C” Bench Kolkataerred in law by holding that the Expenditure aggregating toRs.62,46,60,000/- shown under “Mine Development Expenditure”as allowable expenditure under Section 37(1) of the IncomeAct, 1961?Learned Income Tax Appellate Tribunal, “C” Bench Kolkataerred in law by holding that the Expenditure aggregating toRs.62,46,60,000/- shown under “Mine Development Expenditure”as allowable expenditure under Section 37(1) of the IncomeAct, 1961? (c)Whether on the facts and in the circumstances of the case theLearned Income Tax Appellate Tribunal, “c” Bench Kolkataerred in law in applying Accounting Standard-12 for theparticular nature of case without considering the fact thatmachinery is only restricted to utilized portion of receipt?Learned Income Tax Appellate Tribunal, “c” Bench Kolkataerred in law in applying Accounting Standard-12 for theparticular nature of case without considering the fact thatmachinery is only restricted to utilized portion of receipt? (d)Whether on the facts and in the circumstances of the case theLearned Income Tax Appellate Tribunal, “C” Bench Kolkataerred in law in holding that the disbursement of the VRScompensation as revenue expenditure and thus they are shouldnot any applicability of in Section 35DDA of the Income TaxAct, 1961?”Learned Income Tax Appellate Tribunal, “C” Bench Kolkataerred in law in holding that the disbursement of the VRScompensation as revenue expenditure and thus they are shouldnot any applicability of in Section 35DDA of the Income TaxAct, 1961?” We have heard Mr. Smarajit Roy Chowdhury, learned standingCounsel for the appellant/revenue and Mr. J. P. Khaitan, learnedsenior Counsel for the respondent/assessee. (d)Whether on the facts and in the circumstances of the case theLearned Income Tax Appellate Tribunal, “C” Bench Kolkataerred in law in holding that the disbursement of the VRScompensation as revenue expenditure and thus they are shouldnot any applicability of in Section 35DDA of the Income TaxAct, 1961?”Learned Income Tax Appellate Tribunal, “C” Bench Kolkataerred in law in holding that the disbursement of the VRScompensation as revenue expenditure and thus they are shouldnot any applicability of in Section 35DDA of the Income TaxAct, 1961?” We have heard Mr. Smarajit Roy Chowdhury, learned standingCounsel for the appellant/revenue and Mr. J. P. Khaitan, learnedsenior Counsel for the respondent/assessee. The two major issues which have been raised as substantialquestions of law with regard to disallowance as expenditure shownunder the head “Mine Development Expenditure”. This disallowancewas made by the Assessing Officer which has been reversed by theCIT(Appeal)[CIT(A)] and such order has been upheld by theTribunal. Dissatisfied with the order passed by the CIT(A) revenueis before us by way of this appeal.On reading of the impugned order passed by the Tribunal,we find that the issue with regard to Mine Development charges hadcome out of the earlier assessment years, that is, 2004-05 and2008-09 and relief was granted to the assessee in their own caseby the CIT(A) and such order attained finality since the Committeeof Disputes (COD) had not permitted the department to file anappeal against the said order. The Tribunal had taken note of theearlier orders which were noted by the CIT(A) and held that suchexpenditure was clearly covered under Section 37(1) of the Act.We find no reasons to interfere with the finding of theTribunal which in fact had followed the decision in the assessee’sown case for the earlier years which had attained finality.The second issue is with regard to the disallowance of theVRS expenses in terms of Section 35DDA of the Act. The Tribunal noted that the assessee had claimed VRS expenses in the earlieryear which was also adjusted with the amount of grant-in-aidreceive from Central Government and no disallowance was warranted.This finding of the Tribunal also does not call for anyinterference. In the result, the appeal filed by the revenue isdismissed and the substantial questions of law are answeredagainst the revenue. With the dismissal of the appeal, the connectedapplication is also dismissed. A typographical mistake crept in our order dated 25[th]November, 2021 in recording the name of the Advocate for therespondent. The names of Mr. J. P. Khiatan, Sr. Adv, Mr. SouravChunder, Adv, Mr. Biman Kumar Saha, Adv, Mr. Jayanta Datta, Adv,Mr. Atanu Mondal, Adv. be recordeddeleting the name of “Mr.Subash Agarwal, Adv. Let such incorporation be made in our earlierorder dated 25[th] November, 2021. (T.S. SIVAGNANAM, J.) I agree. (HIRANMAY BHATTACHARYYA, J.) SNN//S.De