M/s Rashtriya Ispat Nigam Ltd.,, Visakhapatnam v. THE ADDL.CIT, RANGE - 3,, Visakhapatnam

ITA 15/VIZ/2013 | 2010-2011
Pronouncement Date: 29-04-2015 | Result: Partly Allowed

Appeal Details

RSA Number 1525314 RSA 2013
Assessee PAN AABCR0435L
Bench Visakhapatnam
Appeal Number ITA 15/VIZ/2013
Duration Of Justice 2 year(s) 3 month(s) 11 day(s)
Appellant M/s Rashtriya Ispat Nigam Ltd.,, Visakhapatnam
Respondent THE ADDL.CIT, RANGE - 3,, Visakhapatnam
Appeal Type Income Tax Appeal
Pronouncement Date 29-04-2015
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 29-04-2015
Assessment Year 2010-2011
Appeal Filed On 17-01-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH : VISAKHAPATNAM BEFORE SHRI J. SUDHAKAR REDDY ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY JUDICIAL MEMBER ITA NO.09 AND 16/VIZAG/2013 ASSESSMENT YEARS 2009-2010 & 2010-11 ADDL. CIT RANGE-3 VISAKHAPATNAM. VS. M/S. RASHTRIYA ISPAT NIGAM LTD. VISAKHAPATNAM STEEL PLANT VISAKHAPATNAM. PAN AABCR0435L (APPELLANT) (RESPONDENT) ITA NO.14 & 15/VIZAG/2013 ASSESSMENT YEARS 2009-2010 & 2010-2011 M/S. RASHTRIYA ISPAT NIGAM LTD. VISAKHAPATNAM STEEL PLANT VISAKHAPATNAM. PAN AABCR0435L VS. ADDL. CIT RANGE-3 VISAKHAPATNAM. (APPELLANT) (RESPONDENT) FOR REVENUE : MR. CH. OMKARESWARA RAO FOR ASSESSEE : MR. G.V.N. HARI DATE OF HEARING : 27.02.2015 DATE OF PRONOUNCEMENT : 29.04.2015 ORDER PER J. SUDHAKAR REDDY A.M. OUT OF THE ABOVE MENTIONED FOUR APPEALS ITA NOS.9/VIZAG/2013 AND ITA NO.14/VIZAG/2013 ARE CROSS -APPEALS FILED BY REVENUE AND ASSESSEE FOR THE ASSESSMENT YE AR 2009- 2010 AGAINST THE ORDER OF THE LD. CIT(A) VISAKHAPA TNAM DATED 19.11.2012. ITA.NO.15 & 16/VIZAG/2013 ARE CROSS APP EALS FILED BY ASSESSEE AND THE REVENUE AGAINST THE ORDER OF LD . CIT(A) VISAKHAPATNAM DATED 27.12.2012 FOR THE ASSESSMENT Y EAR 2010- 2011. SINCE COMMON ISSUES ARE INVOLVED IN ALL THES E APPEALS 2 ITA.NO.9 14 15 & 16/VIZAG/2013 M/S. RASHTRIYA ISPAT NIGAM LIMITED VISAKHAPATNAM. THESE APPEALS ARE HEARD TOGETHER AND ARE BEING DISP OSED OF BY THIS SINGLE CONSOLIDATED ORDER FOR THE SAKE OF CONV ENIENCE. ITA NO.9/VIZAG/2013 A.Y.2009-10 (REVENUE APPEAL) : 1. GROUNDS RAISED BY THE REVENUE FOR ASSESSMENT YEAR 2 009 2010 IN ITA.NO.09/VIZAG/2013 AS UNDER : 1. THE ORDER OF THE LD. D.R. IS BAD IN LAW AND ON FACTS OF THE CASE. 2. THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE O F EXPENDITURE CLAIMED UNDER THE HEAD AFFORESTATION AN D HORTICULTURE IN THE LIGHT OF THE FACT THE RECEIPTS ON SALE OF TREES WAS BOOKED AS CAPITAL RECEIPT. 3. THE LD. CIT(A) HAS ALSO ERRED IN DELETING THE DISALLOWANCE OF EXPENDITURE CLAIMED UNDER THE HEAD PERIPHERAL DEVELOPMENT EXPENSES BY OBSERVING THAT T HE ASSESSING OFFICER SIMPLY DOUBTED THE EXPENDITURE WITHOUT CALLING FOR THE EVIDENCES SINCE THE ASSESS ING OFFICER HAS MADE THE ADDITION ONLY AFTER EXAMINING THE INFORMATION FURNISHED BY THE ASSESSEE COMPANY DURIN G THE SCRUTINY PROCEEDINGS. 4. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF PROCEEDINGS. 2. BRIEFLY STATED THE ASSESSEE IS A COMPANY IN WHI CH PUBLIC ARE SUBSTANTIALLY INTERESTED AND IS ENGAGED IN MANUFACTURE AND SALE OF IRON AND STEEL PRODUCTS. FO R THE ASSESSMENT YEAR 2009-2010 THE ASSESSEE COMPANY FILE D ITS RETURN OF INCOME ON 29.09.2009 DECLARING TOTAL INCO ME OF RS.21 60 53 59 035. THE SAME WAS PROCESSED UNDER SE CTION 143(1) OF THE I.T. ACT 1961 ACCEPTING THE RETURN O F INCOME. THEREAFTER THE CASE WAS TAKEN-UP FOR SCRUTINY AND THE 3 ITA.NO.9 14 15 & 16/VIZAG/2013 M/S. RASHTRIYA ISPAT NIGAM LIMITED VISAKHAPATNAM. ASSESSMENT WAS COMPLETED BY MAKING THE FOLLOWING ADDITIONS/DISALLOWANCES: (I) CAPITAL EXPENDITURE ON AFFORESTATION AND HORTICULTURE RS.6 94 40 897 (II) DEPRECIATION ON THE ASSETS RS.18 586 (III) PROVISION FOR POST RETIREMENT BEN. SCHEME RS.16 27 50 344 (IV) PROVISION FOR EMPLOYEES BENEFIT SCHEME RS.7 42 74 720 (V) PROVISION FOR FUTURE LEAVE ENCASHMENT RS.66 31 68 389 (VI) PROVISIONS FOR LONG TERM SERVICE AWARD RS.69 92 138 (VII) PROVISION FOR MINES CLOSURE RS.48 14 204 (VIII) DISALLOWANCE OF TECHNICAL CONSULTANCY FEES RS.2 96 011 (IX) PERIPHERAL DEVELOPMENT EXPENSES RS.4 96 58 91 2 (X) OTHER MISC. EXPENSES RS.27 35 753 2.1. AGAINST THE AFORE CITED DISALLOWANCES/ADDITIO NS ASSESSEE COMPANY FILED APPEAL BEFORE THE LD. CIT(A) AND THE LD. CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE IN RESPECT OF EXPENDITURE INCURRED ON AFFORESTATION AND HORTICULTURE AND PERI PHERAL DEVELOPMENT EXPENSES. AGGRIEVED REVENUE HAS FILED THE PRESENT APPEAL AND RAISED THE GROUNDS STATED ABOVE. ASSESSE E ALSO FILED CROSS APPEAL ITA.NO.14/VIZAG/2013 FOR THE IMPUGNED ASSESSMENT YEAR 2009-2010 CONTESTING THE DISALLOWANCES/ADDITIONS UPHELD BY THE LEARNED CIT(A ). WE WOULD LIKE TO TAKE-UP THE GROUNDS AS UNDER: 2.2. GROUND NOS. 1 AND 4 RAISED BY THE REVENUE ARE GENERAL IN NATURE AND THEREFORE THEY NEED NOT BE A DJUDICATED. 3. GROUND NO.2 IN REVENUE APPEAL PERTAINS TO EXPENDITURE OF RS.6 94 40 897 ON AFFORESTATION AND HORTICULTURE. 4 ITA.NO.9 14 15 & 16/VIZAG/2013 M/S. RASHTRIYA ISPAT NIGAM LIMITED VISAKHAPATNAM. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASSESS EE COMPANY FURNISHED A DETAILED EXPLANATION STATING THAT THE A BOVE EXPENDITURE IS REVENUE IN NATURE SINCE IT HAS INCUR RED SUBSTANTIAL EXPENDITURE FOR MAINTAINING THE ENVIRON MENT AND ALSO AS A POLLUTION CONTROL MEASURE AND SOUGHT FOR ALLOWANCE OF ABOVE EXPENSES. THE ASSESSEE COMPANY FURTHER CONTEN DED THAT THE EXPENDITURE INCURRED DURING THE YEAR WAS ON ACC OUNT OF POLLUTION CONTROL AND MAINTAINING THE ECOLOGICAL BA LANCE WHICH IS A DUTY CAST UPON THE ASSESSEE COMPANY BOTH MORALLY AND LEGALLY. THUS THE EXPENDITURE WAS INCURRED WHOLLY AND EXCLUS IVELY IN CONNECTION WITH THE BUSINESS OF THE ASSESSEE COMPAN Y AND DID NOT GIVE ANY ENDURING BENEFIT. THE ASSESSING OFFICE R OBSERVED THAT THE ASSESSEE COMPANY WHILE CLAIMING THE ABOVE EXPE NDITURE AS REVENUE IN NATURE CONTENDED THAT THE SALE PROCEEDS OF THE TREES SOLD WAS CAPITAL IN NATURE. SIMILAR CLAIM MADE BY T HE ASSESSEE COMPANY FOR THE EARLIER YEAR WAS REJECTED BY THE PR EDECESSOR ASSESSING OFFICER AND ADDITION WAS MADE. IN CASE T HE VIEW TAKEN BY THE ASSESSING OFFICER THAT THE SALE PROCEEDS OF THE TREES ARE REVENUE RECEIPTS IS UPHELD BY THE APPELLATE AUTHORI TIES FOR THE EARLIER YEAR THEN THE ABOVE DISALLOWANCE WILL NOT STAND AND THE ADDITION WILL HAVE TO BE RESTRICTED TO THE EXTENT O F RS.70 07 440 BEING THE SALE PROCEEDS OF TREES FOR THE IMPUGNED A SSESSMENT YEAR. 3.1. ON APPEAL BY THE ASSESSEE COMPANY BEFORE THE LD. CIT(A) THE LD. CIT(A) OBSERVED THAT THE EXPENDITUR E ON AFFORESTATION AND HORTICULTURE INCURRED FOR THE PUR POSE OF MAINTAINING THE ENVIRONMENTAL AND AS POLLUTION CONT ROL MEASURE WAS INCURRED FOR THE PURPOSE OF BUSINESS AND IS THE REFORE ALLOWANCE UNDER SECTION 37(1) OF THE I.T. ACT AND D IRECTED THE ASSESSING OFFICER TO ALLOW THE SAME. FURTHER THE A SSESSING 5 ITA.NO.9 14 15 & 16/VIZAG/2013 M/S. RASHTRIYA ISPAT NIGAM LIMITED VISAKHAPATNAM. OFFICERS ACTION IN TREATING THE RECEIPT FROM SALE OF TREES AS REVENUE RECEIPT IS UPHELD. 4. DURING THE COURSE OF HEARING LEARNED C OUNSEL FOR ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE REVENUE AUTHORITIES AND REQUESTED THAT THE EXPENDITURE INCU RRED IS FOR THE PURPOSE OF BUSINESS AND IS THEREFORE ALLOWABLE UND ER SECTION 37(1) OF THE ACT. 5. THE LEARNED D.R. ON THE OTHER HAND RELIED ON T HE ORDER OF THE ASSESSING OFFICER. 6. RIVAL CONTENTIONS WERE HEARD. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND PERUSAL OF THE PAPERS ON RECORD AND THE ORDERS OF T HE AUTHORITIES BELOW WE FIND THAT ASSESSING OFFICER HIMSELF NOTED IN HIS ORDER THAT THE RECEIPT ON SALE OF TREES WAS CONSIDERED AS REVENUE RECEIPT FOR THE ASSESSMENT YEARS 2007-08 AND 2008-09 BY THE REVENUE. THIS VIEW TAKEN BY THE ASSESSING OFFICER HAS BEEN U PHELD BY THE LD. CIT(A) ALSO. THE VIEW TAKEN BY THE LEARNED CIT( A) WAS CONTESTED BY THE APPELLANT BEFORE THIS BENCH AND VI DE ORDER DT.8 TH JANUARY 2015 IN ITA NOS.94 95 AND 97/VIZ/2012 THE COORDINATE BENCH HAS TAKEN THE VIEW THAT THE SALE PROCEEDS OF THE TREES IS REVENUE IN NATURE. WHEN THE RECEIPT FROM SALE OF T REES IS ASSESSED AS REVENUE RECEIPT THE EXPENDITURE INCURR ED ON MAINTENANCE OF THE TREES IS ALSO TO BE ALLOWED AS R EVENUE EXPENDITURE. FURTHER THE EXPENDITURE WAS INCURRED VERY MUCH DURING THE COURSE OF THE BUSINESS OF THE ASSESSEE A ND NO ENDURING BENEFIT IS OBTAINED ON ACCOUNT OF THE EXPE NDITURE INCURRED. THEREFORE WE FIND NO INFIRMITY IN THE O RDER OF THE LD. CIT(A) ON THIS ISSUE AND WE CONFIRM THE ORDER OF TH E LD. CIT(A). ACCORDINGLY GROUND NO.2 OF THE REVENUE IS DISMISSE D. 6 ITA.NO.9 14 15 & 16/VIZAG/2013 M/S. RASHTRIYA ISPAT NIGAM LIMITED VISAKHAPATNAM. 7. GROUND NO.3 RAISED BY THE REVENUE IS DISALLOW ANCE OF EXPENDITURE OF RS.4 96 58 912 TOWARDS PERIPHERAL DEVELOPMENT INCURRED BY ASSESSEE COMPANY THAT WAS ALLOWED BY LD . CIT(A). 7.1. BRIEFLY STATED ASSESSEE COMPANY CLAIMED A SU M OF RS.4 96 58 912 TOWARDS PERIPHERAL DEVELOPMENT EXPE NSES. THE ASSESSEE COMPANY HAS INCURRED THE EXPENSES ON REPAI RS OF ROADS SUPPLY OF DRINKING WATER TO VILLAGES RENOVATION/CO NSTRUCTION OF COMMUNITY CENTRE LITERACY PROGRAMS HEALTHCARE DE VELOPMENTAL WORK FOR DEVELOPMENT OF PERIPHERAL VILLAGES WHERE T HE DISPLACED PERSONS WHO HAD BEEN DISPLACED WHEN THE PLANT WAS CONSTRUCTED ARE PRESENTLY STAYING. THE ASSESSEE CO MPANY CONTENDED THAT THE AMOUNT WAS LAID OUT TOWARDS COR PORATE SOCIAL RESPONSIBILITY. THE ASSESSING OFFICER WAS OF THE V IEW THAT THE GENUINENESS OF THE ABOVE EXPENSES WERE NOT SUBSTANT IATED BEFORE HIM AND THEREFORE ADDED BACK TO THE TOTAL INCOME O F THE ASSESSEE COMPANY. AGGRIEVED ASSESSEE FILED APPEAL BEFORE TH E LD. CIT(A) AND FURNISHED DETAILS OF THE CIVIL CONSTRUCTION AND OTHER WORKS CARRIED OUT BY THE ASSESSEE COMPANY. ASSESSEE COMPA NY FURTHER CONTENDED THAT MOST OF CIVIL WORKS ARE CARRIED OUT BY THE CPWD AND FURNISHED ACCOUNT COPY OF THE CPWD AS APPEARING IN ITS BOOKS. THE LD. CIT(A) DELETED THE ADDITION OBSERVI NG THAT MOST OF THE WORKS WERE CARRIED OUT BY THE CPWD A GOVERNMEN T OF INDIA DEPARTMENT AND DOUBTING THE ABOVE EXPENDITURE WITH OUT CALLING FOR THE EVIDENCE IS CLEARLY NOT CORRECT AND DIRECTE D THE ASSESSING OFFICER TO DELETE THE ADDITION. AGGRIEVED REVENUE FILED APPEAL BEFORE THE TRIBUNAL. 7.2. LEARNED D.R. CONTENDED THAT MOST OF THE EXPEN DITURE WAS DEBITED IN THE BOOKS OF ACCOUNT ON THE LAST DAY OF THE ACCOUNTING YEAR AND THEREFORE THE EXPENDITURE CLAI MED IS VERY 7 ITA.NO.9 14 15 & 16/VIZAG/2013 M/S. RASHTRIYA ISPAT NIGAM LIMITED VISAKHAPATNAM. MUCH IN DOUBT. FURTHER THE LEARNED CIT(A) OBSERVED THAT THE ASSESSING OFFICER DOUBTED THE EXPENDITURE WITHOUT C ALLING FOR EVIDENCE AND THIS OBSERVATION IS CONTRARY TO THE FA CT THAT THE ASSESSING OFFICER EXAMINED THE ENTIRE EVIDENCE IN T HIS REGARD. 7.3. DURING THE COURSE OF HEARING THE LEARNED COU NSEL FOR THE ASSESSEE CONTENDED THAT THESE ARE THE EXPEN DITURES INCURRED BY THE ASSESSEE COMPANY IN THE SURROUNDING VILLAGES OF THE PLANT WHERE THE DISPLACED PEOPLE ARE RELOCATED. THE ABOVE SAID EXPENDITURE WAS INCURRED ON REPAIRS OF ROADS SUPPLY OF DRINKING WATER TO VILLAGES LITERACY PROGRAMMES HE ALTH CARE AND DEVELOPMENT OF PERIPHERAL AREAS AND THE EXPENDITURE HAS BEEN INCURRED IN ACCORDANCE WITH THE POLICIES OF THE GOV ERNMENT OF INDIA AND THERE ARE JUDICIAL PRECEDENTS ON THE ISSU E THAT SUCH MONIES SPENT TO BE TREATED AS BUSINESS EXPENDITURE ELIGIBLE FOR DEDUCTION UNDER SECTION 37(1) OF THE ACT. AS PER T HE ACCOUNTING SYSTEM OF THE ASSESSEE THE AMOUNTS PAID TO THE CPW D ARE KEPT IN ADVANCE ACCOUNT AND AT THE END OF THE YEAR THIS WAS TRANSFERRED TO EXPENDITURE ACCOUNT BY WAY OF A JOUR NAL ENTRY. THE ASSESSING OFFICER ERRED IN DOUBTING THE EXPENDI TURE ON THE GROUND THAT THE ENTIRE EXPENDITURE WAS ACCOUNTED AT THE END OF THE YEAR. 8. RIVAL CONTENTIONS WERE HEARD. THE CONTENTION OF THE REVENUE IS THAT THE LEARNED CIT(A) GRANTED RELIEF B Y OBSERVING THAT THE ASSESSING OFFICER MADE THE ADDITION ONLY B Y DOUBTING THE ENTRIES CONTRARY TO THE FACT THAT THE ASSESSING OFF ICER EXAMINED THE ENTIRE EVIDENCE ON RECORD BEFORE MAKING THE DIS ALLOWANCE. WE DO NOT FIND MUCH FORCE IN THE CONTENTION OF THE REVENUE. THE LEARNED CIT(A) APPRAISED THE ENTIRE EVIDENCE ON REC ORD AND CAME TO THE CONCLUSION THAT THE EXPENDITURE INCURRED BY THE APPELLANT AS A PART OF THE CORPORATE SOCIAL RESPONSIBILITY IS TO BE ALLOWED AS 8 ITA.NO.9 14 15 & 16/VIZAG/2013 M/S. RASHTRIYA ISPAT NIGAM LIMITED VISAKHAPATNAM. EXPENDITURE AND THAT THE ASSESSING OFFICER IS NOT J USTIFIED IN DOUBTING THE EXPENDITURE MERELY ON THE GROUND THAT THE EXPENDITURE WAS ACCOUNTED ON THE BASIS OF A JOURNAL ENTRY AT THE END OF THE YEAR. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND PERUSAL OF THE PAPERS ON RECORD AND THE ORDERS OF THE AUTHORITIES BELOW WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) AND ACCORDINGLY WE CONF IRM THE SAME. 9. IN THE RESULT ITA.NO.9/VIZAG/2013 OF THE REVE NUE IS DISMISSED. ITA.NO.14/VIZAG/2013 A.Y. 2009-2010 (ASSESSEE APP EAL): 10. IN THIS APPEAL ASSESSEE HAS RAISED 9 GROUNDS. GROUND NO.1 IS THE ADDITION MADE TOWARDS INCOME BY WAY OF SALE OF TREES AMOUNTING TO RS.70 07 440. THE FACTS ARE I DENTICAL TO THAT OF THE GROUND NO.2 RAISED BY THE REVENUE IN TH E CROSS APPEAL ADJUDICATED BY US HEREINABOVE. CONSISTENT WITH THE VIEW TAKEN BY US FOR THE EARLIER YEAR WE UPHOLD THE ORDER OF LD. CIT(A) IN TREATING THE RECEIPT FROM SALE OF TREES AS REVENUE RECEIPT. THIS GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 11. GROUND NO.2 IS DISALLOWANCE OF DEPRECIATION OF AN AMOUNT OF RS.18 586 ON RAILWAY LINES & SIDINGS. IT WAS THE CONTENTION OF LEARNED COUNSEL FOR THE ASSESSEE THAT THE ASSESSEE COMPANY INVESTED THE AMOUNT IN THE RAILWAY LINES AN D WAS THE BENEFICIAL OWNER. EXPENDITURE INCURRED BY THE ASSES SEE COMPANY FOR LAYING THE RAILWAY LINES SIDINGS IS UNDISPUTEDL Y FOR FURTHERANCE OF BUSINESS INTEREST OF THE ASSESSEE CO MPANY AND HENCE PART OF THIS EXPENDITURE THAT IS WRITTEN OFF IS TO BE ALLOWED AS EXPENDITURE EITHER UNDER SECTION 32 OR UNDER SEC TION 37 OF THE 9 ITA.NO.9 14 15 & 16/VIZAG/2013 M/S. RASHTRIYA ISPAT NIGAM LIMITED VISAKHAPATNAM. ACT. IT WAS FURTHER CONTENDED THAT DISALLOWANCE OF THIS EXPENDITURE TANTAMOUNT TO BENEFIT TO NONE WHICH IS NOT THE LEGISLATIVE INTENT. FURTHER DECLINING PERMISSION B Y COD DOES NOT MAKE THE ISSUE FINAL WHERE THE ASSESSEES CLAIM IS GENUINE. 12. THE LEARNED D.R. ON THE OTHER HAND CONTENDED THAT SIMILAR DISALLOWANCE MADE IN THE EARLIER YEARS AND CONFIRMED BY THE LD. CIT(A) COULD NOT BE TAKEN UP FURTHER BY THE ASSESSEE COMPANY BEFORE THE ITAT AS THE PERMISSION OF COD WA S NOT GRANTED AND THEREFORE THE ISSUE HAS BECOME FINAL A ND IN VIEW OF CONSISTENT WITH THE POSITION IN THE EARLIER YEARS THE DISALLOWANCES NEEDS TO BE SUSTAINED. 13. WE HAVE HEARD THE SUBMISSIONS OF THE PARTIES ORDERS OF THE REVENUE AUTHORITIES AND PERUSED THE MATERIAL S AVAILABLE ON RECORD. WE FIND THAT AN IDENTICAL ISSUE WAS DECIDED BY THIS BENCH VIDE ORDER DT.8 TH JANUARY 2015 (SUPRA) WHEREIN IT WAS HELD THAT THE CLAIM OF THE ASSESSEE CANNOT BE ALLOWED EITHER U/S 32 AS DEPRECIATION OR AS REVENUE EXPENDITURE U/S 37 OF TH E ACT. RESPECTFULLY FOLLOWING THIS DECISION WE UPHOLD THE ORDERS OF THE LOWER AUTHORITIES. ACCORDINGLY GROUND NO.2 OF THE ASSESSEE IS DISMISSED. 14. GROUND NO.3 PERTAINS TO ADMISSIBILITY OF DEDUC TION CLAIMED TOWARDS PROVISION OF POST RETIREMENT BENEFI TS. IT WAS SUBMITTED BY THE LEARNED COUNSEL FOR THE ASSESSEE T HAT THE EXPENDITURE INCURRED IS IN PURSUANCE OF CONTRACTUAL OBLIGATION BETWEEN THE ASSESSEE COMPANY AND ITS EMPLOYEES. THE ASSESSEE FOLLOWS ACCRUAL SYSTEM OF ACCOUNTING AND HENCE EXP ENSES ARE TO BE ALLOWED AS DEDUCTION ON THE BASIS OF ACCRUAL AND NOT ON THE BASIS OF ACTUAL PAYMENT. IT WAS FURTHER CONTENDED T HAT THE 10 ITA.NO.9 14 15 & 16/VIZAG/2013 M/S. RASHTRIYA ISPAT NIGAM LIMITED VISAKHAPATNAM. EXPENDITURE THOUGH PAYABLE AT THE TIME OF RETIREME NT ACCRUED FROM YEAR TO YEAR COMMENSURATE WITH THE NUMBER OF Y EARS OF SERVICE PUT UP BY AN EMPLOYEE BEFORE RETIREMENT. IT WAS SUBMITTED BY THE LEARNED COUNSEL FOR THE ASSESSEE T HAT THE QUANTIFICATION OF THE LIABILITY ACCRUING EACH YEAR IS MADE IN A SCIENTIFIC MANNER BY ACTUARIES AND THE PROVISION IS MADE IN THE ACCOUNTS ON THE BASIS OF THIS ACTUARIAL VALUATION C ERTIFICATE ISSUED BY THE ACTUARY APPOINTED BY THE ASSESSEE COMPANY. A S THIS IS NOT IN THE NATURE OF ANY CONTRIBUTION TO ANY FUND TRUS T ETC. BUT IS IN THE NATURE OF GENUINE BUSINESS EXPENDITURE INCURRED EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AND TO FULFILL THE OBLI GATIONS UNDER THE CONTRACT OF EMPLOYMENT THE PROVISIONS OF SECTI ON 40(A)(9) ARE NOT APPLICABLE. THE LEARNED COUNSEL FOR THE ASSESSE E RELIED ON THE ORDER OF THE ITAT VISAKHAPATNAM BENCH IN ASSESS EES OWN CASE FOR THE ASSESSMENT YEAR 2006-07 2007-08 AND 2 008-09 IN ITA.NOS. 94 95 & 97/VIZ/2012; WHEREIN THE TRIBUNAL HAS ALLOWED THE CLAIM OF THE ASSESSEE AND THEREFORE REQ UESTED FOR SIMILAR DIRECTION IN THIS ASSESSMENT YEAR ALSO. 15. THE LEARNED D.R. ON THE OTHER HAND CONTENDED THAT THE ASSESSEE COMPANY DID NOT CREATE ANY FUND OR TRU ST FOR THIS PURPOSE AND THE PROVISION IS CREATED ON THE BASIS O F ACTUARIAL VALUATION. THE AMOUNT REPRESENTED BY THE PROVISION IS NOT KEPT IN A SEPARATE BANK ACCOUNT AND IS RATHER SPENT BY THE ASSESSEE COMPANY FOR ITS BUSINESS PURPOSES AND THE ACTUAL EX PENDITURE INCURRED IS A SMALL PORTION OF THE TOTAL PROVISION. HE FURTHER SUBMITTED THAT THE ENTIRE OBJECTIVE OF SECTION 40(A )(9) IS TO PREVENT THE EMPLOYER HAVING THE BENEFIT OF DEDUCTIO N IN THE NAME OF STAFF WELFARE WHILE HAVING THE USE OF FUNDS INDI RECTLY BY CONTROLLING THE SAME. THE LEARNED D.R. DREW OUR ATT ENTION TO THE CIRCULARS ISSUED BY CBDT WHICH EXPLAIN THE INTENTIO N OF THE 11 ITA.NO.9 14 15 & 16/VIZAG/2013 M/S. RASHTRIYA ISPAT NIGAM LIMITED VISAKHAPATNAM. INCOME TAX LEGISLATION AS DISALLOWING ANY DEBITS ON ACTUARIAL BASIS AND ANY CONTRIBUTION TO ANY FUNDS WHICH ARE N OT ACTUALLY UTILIZED FOR THE PURPOSE OF EMPLOYEES. THE PHRASE FOR ANY PURPOSE USED IN SECTION 40(A)(9) COVERS EVEN PROVI SIONS MADE ON THE BASIS OF ACTUARIAL VALUATION. SECTION 40(A)(9) INTENDS TO DISALLOW ALL OTHER EXPENSES EXCEPT AS PROVIDED FOR IN SECTION 36(1)(IV) (V) OR (VA). THE INTERPRETATION OF SECTI ON 40(A)(9) IN A MANNER TO RESTRICT ITS OPERATION TO CONTRIBUTION TO FUNDS REFERRED IN SECTION 36(1)(IV) (IVA) OR (V) WOULD LEAD TO AB SURD RESULTS AND WOULD DEFEAT THE PURPOSE FOR WHICH SECTION 40(A)(9) IS BROUGHT IN. 16. WE HAVE HEARD THE SUBMISSIONS OF THE PARTIES ORDERS OF THE REVENUE AUTHORITIES AND PERUSED THE MATERIAL S AVAILABLE ON RECORD. WE FIND THAT THE COORDINATE BENCH OF VISAKH APATNAM TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2006-07 TO 2008-09 BY ORDER DATED 08.01.2015 (SUPRA) HAS EXTEN SIVELY DISCUSSED THE ISSUE AND ALLOWED THE CLAIM OF THE AS SESSEE (WHEREIN ONE OF US IS THE AUTHOR OF THE ORDER). THE REFORE RESPECTFULLY FOLLOWING THE VIEW TAKEN BY US IN OUR ORDER DATED 08.01.2015 (SUPRA) IN ASSESSEES OWN CASE WE SET A SIDE THE ORDERS OF BOTH THE LOWER AUTHORITIES IN DISALLOWING THE CLAIM OF THE ASSESSEE COMPANY TOWARDS PROVISION FOR POST RET IREMENT BENEFIT SCHEME AND DIRECT THE ASSESSING OFFICER TO ALLOW THE CLAIM OF THE ASSESSEE COMPANY. GROUND NO.3 OF THE A SSESSEE IS ALLOWED. 17. GROUND NO.4 IS WITH REGARD TO CONFIRMING BY TH E LD. CIT(A) OF THE ADDITION TOWARDS PROVISION FOR EMPLOY EES FAMILY BENEFIT SCHEME AMOUNTING TO RS.7 42 74 720 MADE BY THE ASSESSING OFFICER UNDER THE PROVISIONS OF SECTION 4 0A(9) OF THE I.T. 12 ITA.NO.9 14 15 & 16/VIZAG/2013 M/S. RASHTRIYA ISPAT NIGAM LIMITED VISAKHAPATNAM. ACT THOUGH THE PROVISIONS OF SECTION 40A(9) ARE NO T ATTRACTED TO THE FACTS OF ASSESSEES CASE. 18. THE CONTENTIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE AND THE LEARNED D.R. ARE SIMILAR TO THE IS SUE OF DISALLOWANCE OF PROVISION TOWARDS POST RETIREMENT B ENEFIT SCHEME. THIS ISSUE IS IDENTICAL TO THE ONE RELATING TO POST RETIREMENT BENEFIT SCHEME CONSIDERED HEREINABOVE IN PARA 16. F URTHER SIMILAR ISSUE HAS BEEN DECIDED BY THE COORDINATE BE NCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2006-07 TO 2008-09 BY ORDER DATED 08.01.2015 IN ITA.NO.94 95 96 97 & 141/VIZ/2012 WHEREIN THIS ISSUE HAS BEEN EXTENSIVEL Y DISCUSSED AND THE CLAIM OF THE ASSESSEE WAS ALLOWED. THEREFOR E RESPECTFULLY FOLLOWING THE VIEW TAKEN BY THIS TRIBUNAL IN ITS OR DER DATED 08.01.2015 (SUPRA) IN ASSESSEES OWN CASE WE SET A SIDE THE ORDERS OF BOTH THE LOWER AUTHORITIES IN DISALLOWING THE CLAIM OF THE ASSESSEE COMPANY TOWARDS PROVISION FOR EMPLOYEE S FAMILY BENEFIT SCHEME AND DIRECT THE LOWER AUTHORITIES TO ALLOW THE CLAIM OF THE ASSESSEE COMPANY. GROUND NO.4 OF THE A SSESSEE IS ALLOWED. 19. GROUND NO.5 IS THAT THE LD. CIT(A) IS NOT JUST IFIED IN CONFIRMING THE ADDITION IN RESPECT OF PROVISION FOR FUTURE LEAVE ENCASHMENT AMOUNTING TO RS.66 31 68 389 FOLLOWING O RDER OF PREDECESSOR LD. CIT(A) FOR THE ASSESSMENT YEAR 2007 -08 ALTHOUGH THE SAME IS PROVIDED IN THE BOOKS BASED O N ACTUARIAL VALUATION AND ALSO SUPPORTED BY THE DECISION OF HON BLE SUPREME COURT AND OTHER HIGH COURTS. 20. THE ASSESSEE COMPANY HAS CREATED A PROVISION U NDER THE HEAD FUTURE LEAVE ENCASHMENT OF RS.66 31 68 3 89 DURING 13 ITA.NO.9 14 15 & 16/VIZAG/2013 M/S. RASHTRIYA ISPAT NIGAM LIMITED VISAKHAPATNAM. THE F.Y. 2008-09 RELEVANT TO THE A.Y. 2009-10 AS FO UND IN SCHEDULE NO.16 OF THE BALANCE SHEET. DURING THE COU RSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE COMPANY WAS AS KED TO EXPLAIN HOW THE AMOUNT DEBITED TOWARDS THE PROVISIO N FOR FUTURE LEAVE ENCASHMENT CAN BE ALLOWED AS DEDUCTION. IN RE SPONSE TO WHICH THE ASSESSEE COMPANY FILED ITS EXPLANATION V IDE LETTER DATED 25.10.2010 CONTENDING INTER ALIA THAT THE AS SESSEE COMPANY IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTIN G AND THE AMOUNT ON ACCOUNT OF LEAVE ENCASHMENT WAS PROVIDED IN THE ACCOUNTS ARE BASED ON THE ACTUARIAL VALUATION CERTI FICATE ISSUED BY CONSULTING ACTUARY. THEREFORE THE FACT IS IT I S THE LIABILITY TOWARDS ASCERTAINED EMPLOYEE COST FOR THE PRESENT S ERVICES DETERMINED BASED ON ACTUARIAL VALUATION I.E. ON A REALISTIC AND SCIENTIFIC BASIS. HOWEVER ASSESSING OFFICER WAS NO T CONVINCED WITH THE EXPLANATION FURNISHED BY THE ASSESSEE COMP ANY. THE ASSESSING OFFICER HELD THAT THE PROVISION IS IN THE NATURE OF CONTINGENT LIABILITY BUT NOT AN ASCERTAINED LIABILI TY. THE LIABILITY IS NEITHER ACCRUED NOR INCURRED UNLESS THE EMPLOYEES O F THE COMPANY ENCASHED THE LEAVE ACCRUED TO THEM. FURTHE R THE EMPLOYEES HAVE AN OPTION EITHER TO AVAIL THE LEAVE OR TO ENCASH THE SAME AND THEREFORE THERE IS HIGH ELEMENT OF UN CERTAINTY WHETHER THE SAID LEAVE WOULD BE ENCASHED OR AVAILED BY THE EMPLOYEES WHOSE EXACT NUMBER UNDER EITHER HEAD IS N OT ASCERTAINABLE. THE PROVISION THEREFORE IS CLEARLY I N THE NATURE OF CONTINGENT LIABILITY AND THE SAME IS NOT AN ALLOWAB LE EXPENDITURE. IN THIS CONTEXT ASSESSING OFFICER RELIED ON THE DE CISION OF KARNATAKA HIGH COURT IN THE CASE OF MYSORE LAMP WOR KS LTD. VS. CIT 185 ITR 96 AND ADDED THE AMOUNT RS.66 31 68 389 TO THE INCOME OF THE ASSESSEE. ON APPEAL THE LD. CIT(A) C ONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. AGGRIEVED ASSESSEE FILED APPEAL FILED BEFORE THE TRIBUNAL. 14 ITA.NO.9 14 15 & 16/VIZAG/2013 M/S. RASHTRIYA ISPAT NIGAM LIMITED VISAKHAPATNAM. 21. DURING THE COURSE OF HEARING THE LEARNED COUN SEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. WE FIND THAT AN IDENTICAL ISSUE WAS DE CIDED BY THE COORDINATE BENCH VIDE ORDER DT.8 TH JANUARY 2015 (SUPRA) WHEREIN IT WAS HELD THAT THE CLAIM OF THE ASSESSEE CANNOT B E ALLOWED IN VIEW OF THE SPECIFIC PROVISIONS OF S.43B(F) OF THE INCOME TAX ACT 1961 WHICH PROVIDES FOR ALLOWANCE OF SUCH CLAIM ONL Y IN THE YEAR OF PAYMENT. THE FINDINGS OF THE COORDINATE BENCH I N THIS REGARD ARE CONTAINED IN PARA 51 OF THE ORDER. RESPECTFULL Y FOLLOWING THE VIEW TAKEN BY THE COORDINATE BENCH WE UPHOLD THE O RDERS OF THE LOWER AUTHORITIES AND CONFIRM THE SAME. GROUND NO. 5 OF THE ASSESSEE IS DISMISSED. 22. GROUND NO.6 IS ON THE DISALLOWANCE OF RS.69 92 138 IN RESPECT OF PROVISION TOWARDS LONG SERVICE AWARD. THIS ISSUE HAS BEEN DECIDED BY THE COORDINATE BENCH OF THE VISAKHA PATNAM TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2006-07 2007-08 AND 2008-09 IN ITA.NOS.94 95 & 97/VIZ/2012 DATED 08.01.2015 WHEREIN IT HAS BEEN OBSERVED THAT THIS I SSUE IS IDENTICAL WITH THE ISSUE OF POST RETIREMENT BENEFIT SCHEME AND THE EXPENSES OF THIS NATURE ARE TO BE ALLOWED ON AC CRUAL BASIS. CONSISTENT WITH OUR VIEW TAKEN IN ASSESSEES OWN CA SE IN EARLIER YEARS WE HOLD THAT PROVISION MADE BY THE ASSESSEE COMPANY TOWARDS LONG SERVICE AWARD BASED ON ACTUARIAL VALUA TION IS TO BE ALLOWED AS EXPENDITURE. ACCORDINGLY WE ALLOW GROUN D NO.6 OF THE ASSESSEE. 23. GROUND NO.7 IS THAT THE LD. CIT(A) IS NOT JUST IFIED IN CONFIRMING THE ADDITION IN RESPECT OF PROVISION FOR CLOSURE OF 15 ITA.NO.9 14 15 & 16/VIZAG/2013 M/S. RASHTRIYA ISPAT NIGAM LIMITED VISAKHAPATNAM. MINES AMOUNTING TO RS.48 14 204 ALTHOUGH THE SAME IS PROVIDED IN THE BOOKS BASED ON STATUTORY OBLIGATIONS OF THE ASSESSEE. 24. BRIEFLY STATED THE FACTS ARE THAT THE APPELLAN T IS OPERATING SOME MINES. AS PER THE PROVISIONS OF THE STATUTE GOVERNING THE OPERATION OF THESE MINES THE APPELLA NT IS REQUIRED TO SET APART CERTAIN AMOUNT CALCULATED IN ACCORDAN CE WITH THE RULES PRESCRIBED IN THIS REGARD FOR PURPOSES OF ME ETING THE EXPENDITURE FOR CLOSURE OF THE MINES. THE APPELLAN T CLAIMED EXPENDITURE OF RS.48 14 204 TOWARDS THE PROVISION M ADE IN ACCORDANCE WITH THE ABOVE RULES. THE ASSESSING OFF ICER DISALLOWED THE AMOUNT HOLDING THAT THE EXPENDITURE IS OF CONTI NGENT NATURE. THE LEARNED CIT(A) SUSTAINED THE DISALLOWANCE AND A GGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 25.1. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMIT TED THAT THE APPELLANT IS STATUTORILY OBLIGED TO CLOSE THE M INES AFTER THE COMPLETION OF THE MINING OPERATIONS AND FOR THIS PU RPOSE THE APPELLANT HAS TO IMPLEMENT THE PROGRESSIVE MINE CL OSURE PLAN. AS THE APPELLANT IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING PROVISION MADE IN THE AFORESAID MANNER IS REQUIRED TO BE ALLOWED WHILE DETERMINING THE TOTAL INCOME FOR PURPOSES OF THE INCOME TAX ACT 1961. 25.2. PLACING RELIANCE IN THE ORDERS OF THE LOWER AUTHORITIES THE LEARNED DR ARGUED THE EXPENDITURE DID NOT EVEN ACCRUE DURING THE YEAR AND HENCE THE SAME CANNOT BE ALLOWE D. 26. WE HAVE CAREFULLY PERUSED THE MATERIALS ON REC ORD AND CONSIDERED THE RIVAL ARGUMENTS. WE ARE OF THE CONSIDERED VIEW THAT THE CLAIM OF THE EXPENDITURE IS QUITE PRE MATURE. 16 ITA.NO.9 14 15 & 16/VIZAG/2013 M/S. RASHTRIYA ISPAT NIGAM LIMITED VISAKHAPATNAM. DURING THE PREVIOUS YEAR RELEVANT TO THE IMPUGNED A SSESSMENT YEAR THE ASSESSEE DID NOT INCUR ANY EXPENDITURE IN THIS REGARD. THE PROVISION WAS MADE MERELY IN TERMS OF THE STATU TORY PROVISIONS RELATING TO THE OPERATION OF MINES. IT IS NOT A CASE WHERE THE EXPENDITURE ACCRUES IN PROPORTION TO THE PERIOD FOR WHICH THE MINES ARE OPERATED. THEREFORE WE ARE IN COMPLETE AGREEMENT WITH THE VIEW TAKEN BY THE ASSESSING OFFI CER AND THE LD. CIT(A) AND CONFIRM THE VIEW TAKEN BY THEM. GRO UND NO.7 IS DISMISSED. 27. GROUND NO.8 IS REGARDING THE CLAIM OF THE ASSE SSEE THAT THE LD. CIT(A) OUGHT TO HAVE ALLOWED THE CLAIM OF THE ASSESSEE WITH REGARD TO OTHER MISCELLANEOUS EXPENSE S AMOUNTING TO RS.27 35 753 ON THE BASIS OF INFORMATION AVAILAB LE ON RECORD INSTEAD OF DIRECTING THE MATTER FOR VERIFICATION OF THE ASSESSING OFFICER. HENCE THE ASSESSEE PRAYS FOR RELIEF. 28. BRIEFLY STATED DURING THE COURSE OF ASSESSMEN T PROCEEDINGS ASSESSING OFFICER NOTED THAT THE ASSES SEE COMPANY CLAIMED A SUM OF RS.1 50 13 988 THAT WAS DEBITED UN DER THE HEAD OTHER MISCELLANEOUS EXPENSES. ASSESSING OFFI CER WHEN CALLED FOR THE DETAILS IT WAS SUBMITTED THAT THIS REPRESENTS ENTRY TAX PAID AT THE TIME OF GOODS (RAW MATERIAL) ENTERI NG IN THIS STATE. ON DETAILED VERIFICATION A SUM OF RS.27 35 753 REL ATES TO EARLIER YEARS. ASSESSING OFFICER THEREFORE TOOK THE VIEW T HAT THIS LIABILITY IS NOT RELATED TO PRESENT ASSESSMENT YEAR AND ACCOR DINGLY HE DISALLOWED RS.27 35 753. AGGRIEVED ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) OBSERVED AS UNDER : 13 1 3 ADMITTEDLY THE APPELLANT INCURRED THI S LIABILITY TOWARDS ENTRY TAX WHEN THE RAW MATERIALS WERE BROUG HT INTO THE STATE. I ALSO FIND THAT THE ASSESSING OFFICER A LLOWED 17 ITA.NO.9 14 15 & 16/VIZAG/2013 M/S. RASHTRIYA ISPAT NIGAM LIMITED VISAKHAPATNAM. RS.43 31 189 AS THE SAME IS FOUND TO BE RELATING TO THE PRESENT ASSESSMENT YEAR I.E. 2009-10. REGARDING TH E BALANCE AMOUNT OF RS.27 35 753 IT IS NOT CLEAR AS TO WHICH YEAR THIS LIABILITY RELATES. THEREFORE THE ASSESSI NG OFFICER IS DIRECTED TO EXAMINE THE SAME AND DECIDE ON MERIT I. E. ALLOW THIS AMOUNT IF IT RELATES THE ASSESSMENT YEAR 2009- 10. 29. DURING THE COURSE OF HEARING OF THE PRESENT AP PEAL BEFORE THE TRIBUNAL LEARNED COUNSEL FOR THE ASSESS EE RIGHTLY POINTED OUT THAT THE COMMISSIONER OF INCOME TAX HAS NO POWER TO SET ASIDE THE ISSUE TO THE FILE OF ASSESSING OFF ICER FOR FRESH ADJUDICATION AFTER AMENDMENT MADE BY FINANCE ACT 20 01 W.E.F. 01.06.2001. IN ANY EVENT WE ARE OF THE CONSIDERED OPINION THAT THE ISSUE SHOULD GO BACK TO THE FILE OF ASSESSING O FFICER FOR FRESH ADJUDICATION. HENCE USING OUR POWERS WE SET ASIDE THE MATTER TO THE FILE OF ASSESSING OFFICER FOR FRESH ADJUDICATIO N. GROUND NO.8 IS ALLOWED FOR STATISTICAL PURPOSES. 30. GROUND NO.9 IS REGARDING CHARGING OF INTEREST UNDER SECTION 234B OF THE ACT WHICH IS CONSEQUENTIAL IN N ATURE. THEREFORE IT NEED NOT BE ADJUDICATED. 31. IN THE RESULT ITA.NO.14/VIZ/2013 OF THE ASSES SEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA.NO.15/VIZAG/2013 A.Y. 2010-2011 (ASSESSEES A PPEAL) 32. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FO LLOWING GROUNDS: 1. APPELLANT SUBMITS THAT THE LD. CIT(A) IS NOT JUSTI FIED IN UPHOLDING DISALLOWANCE OF DEPRECIATION OF AN AMOUNT OF RS.15 798 CLAIMED ON RAILWAY LINES & SIDINGS. AS TH E EXPENDITURE HAS BEEN INCURRED BY THE COMPANY AS CAP ITAL EXPENDITURE IN THE EARLIER YEARS AND THE ASSET IS W HOLLY 18 ITA.NO.9 14 15 & 16/VIZAG/2013 M/S. RASHTRIYA ISPAT NIGAM LIMITED VISAKHAPATNAM. AND EXCLUSIVELY UTILIZED FOR THE PURPOSE OF BUSINES S AND THE COMPANY IS THE TRUE BENEFICIAL OWNER OF THE ASS ETS THE ASSESSEE PRAYS FOR RELIEF. 2. APPELLANT SUBMITS THAT THE LD. CIT(A) IS NOT JUSTIF IED IN CONFIRMING THE ADDITION TOWARDS PROVISION FOR POST RETIREMENT BENEFITS AMOUNTING TO RS.19 26 60 556 MA DE BY THE ASSESSING OFFICER UNDER THE PROVISIONS OF SE CTION 43B R.W.S.36(1) (IV) & (V) ON A DIFFERENT GROUND T HAT THE SAME IS NOT ALLOWABLE AS A DEDUCTION UNDER THE PROVISIONS OF SECTION 40A(9) OF THE I.T. ACT FOLLOW ING THE ORDER OF PREDECESSOR LD. CIT(A) FOR THE ASSESSMENT YEAR 2007-08 THOUGH THE PROVISIONS OF SECTION 40A(9) AR E NOT ATTRACTED TO THE FACTS IN THE ASSESSEES CASE. IN F ACT THIS IS A PROVISION TOWARDS ASCERTAINED LIABILITY OF THE ASSESSEE TOWARDS POST RETIREMENT BENEFITS COMMITTED UNDER THE CONTRACT OF EMPLOYMENT. 3. APPELLANT SUBMITS THAT THE LD. CIT(A) IS NOT JUSTIF IED IN CONFIRMING THE ADDITION TOWARDS PROVISION FOR EMPLO YEES FAMILY BENEFIT SCHEME AMOUNTING TO RS.10 42 33 727 MADE BY THE ASSESSING OFFICER UNDER THE PROVISIONS OF SECTION 43B R.W.S. 36(1)(IV) AND (V) ON A DIFFERENT GROUND THAT THE SAME IS NOT ALLOWABLE AS A DEDUCTION UNDER THE PROVISIONS OF SECTION 40A(9) OF THE I.T. ACT FOLLO WING THE ORDER OF PREDECESSOR CIT(A) FOR THE ASSESSMENT YEAR 2007-08 THOUGH THE PROVISIONS OF SECTION 40A(9) AR E NOT ATTRACTED TO THE FACTS IN THE APPELLANTS CASE. IN FACT THIS IS A PROVISION TOWARDS ASCERTAINED LIABILITY OF THE ASSESSEE TOWARDS BENEFIT UNDER EMPLOYEE FAMILY BENE FIT SCHEME OF THE COMPANY COMMITTED UNDER THE CONTRACT OF EMPLOYMENT. 4. APPELLANT SUBMITS THAT THE LD. CIT(A) IS NOT JUSTIF IED IN CONFIRMING THE ADDITION IN RESPECT OF PROVISION FOR FUTURE LEAVE ENCASHMENT AMOUNTING TO RS.91 09 56 614 FOLLOWING ORDER OF PREDECESSOR LD. CIT(A) FOR THE ASSESSMENT YEAR 2007-08 ALTHOUGH THE SAME IS PROVI DED IN THE BOOKS BASED ON ACTUARIAL VALUATION AND ALSO SUPPORTED BY THE DECISION OF HONBLE SUPREME COURT AND OTHER HIGH COURTS. HENCE THE APPELLANT PRAYS FOR R ELIEF. 5. APPELLANT SUBMITS THAT THE LD. CIT(A) IS NOT JUSTIF IED IN CONFIRMING THE ADDITION IN RESPECT OF PROVISION FOR LONG TERM SERVICE AWARD AMOUNTING TO RS.1 89 90 390 FOLLOWING ORDER OF PREDECESSOR LD. CIT(A) FOR THE 19 ITA.NO.9 14 15 & 16/VIZAG/2013 M/S. RASHTRIYA ISPAT NIGAM LIMITED VISAKHAPATNAM. ASSESSMENT YEAR 2007-08 ALTHOUGH THE SAME IS PROVI DED IN THE BOOKS BASED ON ACTUARIAL VALUATION AND ALSO SUPPORTED BY THE DECISION OF HONBLE SUPREME COURT AND OTHER HIGH COURTS. HENCE THE APPELLANT PRAYS FOR R ELIEF. IN FACT THIS IS A PROVISION TOWARDS ASCERTAINED LI ABILITY OF THE ASSESSEE TOWARDS LONG TERM SERVICE AWARD COMMIT TED UNDER THE CONTRACT OF EMPLOYMENT. 6. APPELLANT SUBMITS THAT THE LD. CIT(A) IS NOT JUSTIF IED IN CONFIRMING THE ADDITION IN RESPECT OF PROVISION FOR CLOSURE OF MINES AMOUNTING TO RS.31 45 000 ALTHOUGH THE SA ME IS PROVIDED IN THE BOOKS BASED ON STATUTORY OBLIGAT IONS OF THE APPELLANT. HENCE THE APPELLANT PRAYS FOR RELIE F. 33. GROUND NO.1 IS WITH REGARD TO DEPRECIATION ON RAILWAY SIDINGS AND CONSISTENT WITH THE VIEW TAKEN BY US FOR THE EARLIER ASSESSMENT YEARS WE UPHOLD THE ORDERS OF T HE LOWER AUTHORITIES. GROUND NO.1 IS DISMISSED. 34. GROUND NO.2 IS WITH REGARD TO DISALLOWANCE OF THE CLAIM OF THE APPELLANT TOWARDS PROVISION FOR RETIR EMENT BENEFIT SCHEME. CONSISTENT WITH THE VIEW TAKEN BY US FOR THE EARLIER ASSESSMENT YEARS WE SET ASIDE THE ORDERS OF THE LO WER AUTHORITIES AND DIRECT THE ASSESSING OFFICER TO ALLOW THE ENTIR E AMOUNT OF PROVISION MADE DURING THE YEAR UNDER THIS SCHEME. GROUND NO.2 IS ALLOWED. 35. GROUND NO.3 IS WITH REGARD TO DISALLOWANCE OF THE CLAIM OF THE APPELLANT TOWARDS PROVISION FOR EMPLO YEE BENEFIT SCHEME. CONSISTENT WITH THE VIEW TAKEN BY US FOR THE EARLIER ASSESSMENT YEARS WE SET ASIDE THE ORDERS OF THE LO WER AUTHORITIES AND DIRECT THE ASSESSING OFFICER TO ALLOW THE ENTIR E AMOUNT OF PROVISION MADE DURING THE YEAR UNDER THIS SCHEME. GROUND NO.3 IS ALLOWED. 20 ITA.NO.9 14 15 & 16/VIZAG/2013 M/S. RASHTRIYA ISPAT NIGAM LIMITED VISAKHAPATNAM. 36. GROUND NO.4 IS WITH REGARD TO PROVISION FOR LE AVE ENCASHMENT AND CONSISTENT WITH THE VIEW TAKEN BY US FOR THE EARLIER ASSESSMENT YEARS WE UPHOLD THE ORDERS OF T HE LOWER AUTHORITIES. GROUND NO.4 IS DISMISSED. 37. GROUND NO.5 IS WITH REGARD TO DISALLOWANCE OF THE CLAIM OF THE APPELLANT TOWARDS PROVISION FOR LONG SERVICE AWARD. CONSISTENT WITH THE VIEW TAKEN BY US FOR THE EARLIE R ASSESSMENT YEARS WE SET ASIDE THE ORDERS OF THE LOWER AUTHORI TIES AND DIRECT THE ASSESSING OFFICER TO ALLOW THE ENTIRE AMOUNT OF PROVISION MADE DURING THE YEAR UNDER THIS SCHEME. GROUND NO.5 IS ALLOWED. 38. GROUND NO.6 IS WITH REGARD TO PROVISION FOR MI NE CLOSURE AND CONSISTENT WITH THE VIEW TAKEN BY US FO R THE A.Y.2009-10 WE UPHOLD THE ORDERS OF THE LOWER AUTH ORITIES. GROUND NO.6 IS DISMISSED. ITA.NO.16/VIZAG/2013 A.Y. 2010-2011 (REVENUE APPE AL) 39. IN THIS APPEAL REVENUE HAS RAISED FOUR GROUND S OUT OF WHICH GROUNDS NO.1 AND 4 ARE GENERAL IN NATURE AND THEREFORE THEY NEED NOT BE ADJUDICATED. GROUND NO. 2 IS WITH RESPECT TO TREATING THE EXPENDITURE ON AFFORESTATIO N AS REVENUE AND GROUND NO.3 IS PERIPHERAL DEVELOPMENT EXPENSES. 40. THESE TWO GROUNDS RAISED BY THE REVENUE ARE AL READY ADJUDICATED BY US IN REVENUES APPEAL ITA.NO.9/VIZA G/2013 FOR ASSESSMENT YEAR 2009-2010 WHEREIN WE HAVE DISMISSED THE GROUNDS OF THE REVENUE. CONSISTENT WITH THE VIEW TA KEN THEREIN WE DISMISS BOTH THESE GROUNDS. 21 ITA.NO.9 14 15 & 16/VIZAG/2013 M/S. RASHTRIYA ISPAT NIGAM LIMITED VISAKHAPATNAM. 41. IN THE RESULT ITA.NO.16/VIZAG/2013 OF THE REV ENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29. 04.2015. SD/- SD/- (SAKTIJIT DEY) (J. SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER VISAKHAPATNAM DATED 29 TH APRIL 2015. VBP/- COPY TO 1. THE ADDL. COMMISSIONER OF INCOME TAX RANGE-3 AAYAKAR BHAVAN DABAGARDENS VISAKHAPATNAM PIN 530 020. 2. M/S. RASHTRIYA ISPAT NIGAM LTD. VISAKHAPATNAM S TEEL PLANT F & A DEPARTMENT TAXATION CELL ADMINISTRAT IVE BUILDING VISAKHAPATNAM. 3. CIT(A) VISAKHAPATNAM 4. CIT-1 VISAKHAPATNAM 5. CHIEF COMMISSIONER OF INCOME TAX VISAKHAPATNAM 6. D.R. ITAT VISAKHAPATNAM BENCH VISAKHAPATNAM. 7. GUARD FILE //BY ORDER // ASST. REGISTRAR ITAT VISAKHAPATNAM.