RAJASTHAN STATE MINES & MINERALS LTD., JAIPUR v. PCIT-2, JAIPUR

ITA 33/JPR/2021 | 2016-2017
Pronouncement Date: 31-08-2021 | Result: Allowed

Appeal Details

RSA Number 3323114 RSA 2021
Assessee PAN AAACR7857H
Bench Jaipur
Appeal Number ITA 33/JPR/2021
Duration Of Justice 3 month(s) 2 day(s)
Appellant RAJASTHAN STATE MINES & MINERALS LTD., JAIPUR
Respondent PCIT-2, JAIPUR
Appeal Type Income Tax Appeal
Pronouncement Date 31-08-2021
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 31-08-2021
Last Hearing Date 12-07-2021
First Hearing Date 12-07-2021
Assessment Year 2016-2017
Appeal Filed On 28-05-2021
Judgment Text
VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENC HES A JAIPUR JH LAANHI XKSLKBZ] U;KF;D LNL; OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI SANDEEP GOSAIN JM & SHRI VIKRAM SING H YADAV AM VK;DJ VIHY LA- @ ITA NO. 33/JP/2021 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR :2016-17 RAJASTHAN STATE MINES & MINERALS LTD. C-89-90 LAL KOTHI JANPATH JAIPUR CUKE VS. PRINCIPAL COMMISSIONER OF INCOME TAX JAIPUR-2 LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AAACR7857H VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SH. P. C. PARWAL (CA) JKTLO DH VKSJ LS @ REVENUE BY : SH. B. K. GUPTA (PR.CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 04/08/2021 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 31/08/2021 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. PCIT- JAIPUR-2 DATED 31.03.2021 WHEREIN THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE ORDER PASSED BY THE LD. PCIT U/S 263 IS ILLEGAL & BAD IN LAW. HE HAS FURTHER ERRED IN PASSING THE ORDER WITHOUT CONSIDERING THE COMPLETE REPLY FILED BY THE ASSESSEE. 2. THE LD. PCIT HAS ERRED ON FACTS AND IN LAW IN HO LDING THAT THE ORDER PASSED BY THE AO U/S 143(3) DT. 28.12.2018 IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE IGNORING THA T ISSUE OF EXEMPTION CLAIMED ON ACCOUNT OF CER AND EXPENDITURE CLAIMED ON ITA NO. 33/JP/2021 RAJASTHAN STATE MINES & MINERALS LTD. VS. PR. CIT JAIPUR-2 2 ACCOUNT OF PAYMENT MADE FOR RESURGENT RAJASTHAN 20 15 SUMMIT HAS BEEN EXAMINED BY THE AO IN DETAIL VIDE NOTICE I SSUED U/S 142(1) DT. 30.07.2018 AND 28.09.2018 AND THE ISSUE OF EXEM PTION OF CER IS ALSO DECIDED BY HONBLE RAJASTHAN HIGH COURT IN FAV OUR OF ASSESSEE. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSE SSMENT FOR THE IMPUGNED ASSESSMENT YEAR WAS COMPLETED U/S 143(3) V IDE ORDER DATED 28.12.2018 AND THEREAFTER THE LD PCIT ISSUED A SHO W-CAUSE AND PASSED THE ORDER U/S 263 DATED 31.03.2021 SETTING ASIDE TH E ASSESSMENT ORDER SO PASSED BY THE AO WITH A DIRECTION TO PASS A FRESH A SSESSMENT ORDER AFTER CONSIDERING THE ISSUED RAISED IN THE IMPUGNED ORDER . AGAINST THE SAID ORDER AND FINDINGS OF THE LD PCIT THE ASSESSEE IS IN APPEAL BEFORE US. 3. DURING THE COURSE OF HEARING THE LD. AR SUBMITT ED THAT THE ASSESSEE IS A STATE GOVERNMENT UNDERTAKING ENGAGED IN THE BU SINESS OF MINING. IT FILED ITS RETURN OF INCOME DECLARING INCOME OF RS.1 84.20 CRORES ON 14.10.2016 WHICH WAS SELECTED FOR SCRUTINY BY THE A O. THE AO VIDE NOTICE U/S 142(1) DT. 30.07.2018 IN Q. NO.10(X) REQUIRED THE ASSESSEE TO PROVIDE DETAILS OF ANY CARBON EMISSION RECEIPTS REC EIVED DURING THE YEAR & WHETHER THE SAME HAS BEEN SHOWN AS INCOME AND IN Q. NO.15(II) REQUIRED THE ASSESSEE TO JUSTIFY THE CLAIM OF EXPEN SES ON ACCOUNT OF PAYMENT TO RESURGENT RAJASTHAN OF RS.20 26 50 000/- DETAILING THE BUSINESS PURPOSE AND WHY THE SAME IS NOT APPLICATIO N OF INCOME AND NOT AN EXPENSE. THE SAME WAS REPLIED BY THE ASSESSEE VI DE LETTER DT. 27.08.2018. AT POINT NO.10(X) ASSESSEE SUBMITTED TH AT DURING THE YEAR IT HAS RECEIVED RS.2 58 48 598/- ON ACCOUNT OF SALE OF CER CERTIFICATES AND RENEWAL ENERGY CERTIFICATES AND AFTER REDUCING EXPE NSES OF RS.65 494/- INCURRED ON EARNING THESE CER IT HAS CLAIMED EXEMP TION OF ITA NO. 33/JP/2021 RAJASTHAN STATE MINES & MINERALS LTD. VS. PR. CIT JAIPUR-2 3 RS.2 57 83 104/-. THEREAFTER THE ASSESSEE EXPLAINE D THE TERM CER IN DETAIL AND SUBMITTED THAT IT IS A CAPITAL RECEIPT N OT LIABLE FOR TAX FOR WHICH IT PLACED RELIANCE ON THE DECISION OF HONBLE ITAT IN ITS OWN CASE FOR A.Y 2007-08 APPROVED BY HONBLE RAJASTHAN HIGH COURT. A T POINT NO.15(II) ASSESSEE EXPLAINED THE PURPOSE FOR PAYMENT OF SPONS ORSHIP FEES OF RS.20 26 50 000/- TO RESURGENT RAJASTHAN SUMMIT 201 5 AND THUS SUBMITTED THAT THE SAME IS ALLOWABLE U/S 37(1) BEIN G INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. 4. IT WAS SUBMITTED THAT THE AO AGAIN VIDE NOTICE U /S 142(1) DT. 28.09.2018 AT POINT NO.2 REQUIRED THE ASSESSEE TO PROVIDE PROO F AS TO HOW THE PAYMENT OF RS. 20 26 50 000/- TO RESURGENT RAJASTHAN IS RELATED TO AND HAS BEEN SPENT WHOLLY AND EXCLUSIVELY FOR TH E PURPOSE OF BUSINESS AND AT POINT NO.5 REQUIRED THE ASSESSEE TO EXPLAIN HOW AND UNDER WHAT STATUTORY PROVISIONS CER OF RS.2 58 48 598/- HAS B EEN CLAIMED AS EXEMPT INCOME WHEN THE SAME ARE IN THE NATURE OF RE VENUE RECEIPTS. IN RESPONSE TO SAID NOTICE THE ASSESSEE VIDE LETTER D T. 11.10.2018 FURNISHED THE DETAILED EXPLANATION AT POINT NO.1 & 4. THE AO AFTER EXAMINING ALL THE DETAILS/ EXPLANATION ACCEPTED THE CLAIM OF ASSESSEE . 5. THE LD. AR SUBMITTED THAT THEREAFTER LD. CIT VI DE SHOW CAUSE NOTICE DT. 16.03.2021 ISSUED U/S 263 REQUIRED THE A SSESSEE TO SHOW CAUSE AS TO WHY THE ORDER PASSED U/S 143(3) ON 28.12.2018 MAY NOT BE REVISED AS THE SAID ORDER IS ERRONEOUS IN SO FAR AS IT IS P REJUDICIAL TO THE INTEREST OF THE REVENUE ON ACCOUNT OF THE FOLLOWING:- (A) THE ASSESSEE HAD CLAIMED AND WAS ALLOWED AN EXEMPTI ON OF RS.2 58 48 598/- ON ACCOUNT OF SALE OF CARBON/ VOLU NTARY EMISSION REDUCTION (CER/ VER) CERTIFICATES AND RENEWABLE ENE RGY CERTIFICATES (REC) ITA NO. 33/JP/2021 RAJASTHAN STATE MINES & MINERALS LTD. VS. PR. CIT JAIPUR-2 4 (ITEM A(5) OF SCHEDULE BP OF ITR) WHICH WAS CREDITE D TO PROFIT AND LOSS ACCOUNT. THIS EXEMPTION WAS NOT ALLOWABLE UNDER ANY PROVISIONS OF THE IT ACT AND THUS TO BE TAXED ACCORDINGLY. (B) THE AMOUNT PAID BY THE ASSESSEE TO ORGANIZE THE EVE NT RESURGENT RAJASTHAN WAS IN THE NATURE OF ASSISTANCE/ CONTRIB UTION AND NO DETAILS/ NATURE OF EXPENDITURE/ UTILIZATION BY THE NODEL AGE NCY WAS AVAILABLE. THUS EXPENDITURE OF RS.20 26 50 000/- INCURRED AS ASSIS TANCE/ CONTRIBUTION TO ORGANIZE AN EVENT CANNOT BE SAID TO BE LAID OUT OR EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE BUSINESS OR PROF ESSION OF YOUR COMPANY WAS TO BE DISALLOWED. 6. THE LD. AR SUBMITTED THAT AGAINST THIS NOTICE AS SESSEE FILED DETAILED REPLY VIDE LETTER DT. 22.03.2021. THE LD. CIT HOWE VER HELD THAT THE ORDER PASSED BY AO U/S 143(3) IS ERRONEOUS IN SO FA R AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE AS THE SAID ORDER HAS BEEN PASSED IN A ROUTINE AND PERFUNCTORY MANNER WITHOUT PROPERLY EXAMINING T HE VERACITY AND ALLOWABILITY OF CLAIM OF EXEMPTION OF RS.2 58 48 59 8/- CREDITED IN THE P&L A/C AND NOT EXAMINING THE VERACITY OF THE EXPENSES OF RS.20 26 50 000/- DEBITED BY THE ASSESSEE COMPANY IN THE P&L A/C. THE AO FAILED TO EXAMINE THE EXEMPTION OF INCOME CLAIMED AND THE EXP ENSES INCURRED. THE ORDER OF AO IS THEREFORE LIABLE TO REVISION UN DER CLAUSE (A) & (B) OF EXPLANATION 2 TO SECTION 263 OF IT ACT. ACCORDINGLY ORDER PASSED BY THE AO WAS SET ASIDE TO BE REDONE DE-NOVO. 7. THE LD. AR SUBMITTED THAT FROM THE FACTS STATED ABOVE IT CAN BE NOTED THAT AO VIDE NOTICE U/S 142(1) DT. 30.07.2018 AND DT. 28.09.2018 SPECIFICALLY REQUIRED THE ASSESSEE TO PROVIDE PROOF/ EXPLANATION AS TO HOW THE PAYMENT OF RS.20 26 50 000/- TO RESURGENT RAJAS THAN IS WHOLLY AND ITA NO. 33/JP/2021 RAJASTHAN STATE MINES & MINERALS LTD. VS. PR. CIT JAIPUR-2 5 EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AND UNDER W HAT STATUTORY PROVISIONS CER OF RS.2 58 48 598/- HAS BEEN CLAIMED AS EXEMPT INCOME. IN RESPONSE TO SAME ASSESSEE FILED THE DETAILED REP LY VIDE LETTER DT. 27.08.2018 AND 11.10.2018 SUPPORTED BY VARIOUS JUDICIAL DECISI ONS AS TO HOW THE PAYMENT TO RESURGENT RAJASTHAN IS WHOLLY AN D EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AND HOW THE CER IS A CAPITA L RECEIPT. THE AO AFTER CONSIDERING ALL THE DETAILS/ EXPLANATION/ CAS E LAWS ACCEPTED THE CLAIM OF ASSESSEE. THUS WHEN THE AO HAS MADE NECESSARY I NQUIRY/ VERIFICATION WHICH HE SHOULD HAVE MADE AS ALSO INQUIRED INTO THE CLAIM OF CER BEING CAPITAL RECEIPT AND HAS APPLIED HIS MIND ON BOTH TH E ISSUES HIS ORDER CANNOT BE SAID TO BE ERRONEOUS SO FAR AS IT IS PREJ UDICIAL TO THE INTEREST OF REVENUE ONLY FOR THE REASON THAT THE LD. PCIT HOLDS A DIFFERENT VIEW. FOR THIS PURPOSE RELIANCE IS PLACED ON THE FOLLOWING C ASES:- SIR DORABJI TATA TRUST VS. DCIT(E) 188 ITD 38 (MUM) CIT VS. VIJAY KUMAR KOGANTI (2020) 275 TAXMAN 394 ( MAD) CIT VS. GREEN FIELDS COMMERCIAL PVT. LTD (2015) 119 DTR 303 (J&K) 8. THE LD. AR SUBMITTED THAT THE PRINCIPLES LAID DO WN IN THESE DECISIONS WHEN APPLIED TO THE FACTS OF ASSESSEES CASE IT IS EVIDENT THAT IN THE ASSESSEES CASE THE AO HAS MADE ALL THE NECESSARY ENQUIRY AND VERIFICATION AS CAN BE EXPECTED OF A PRUDENT JUDIC IOUS AND RESPONSIBLE AO IN NORMAL COURSE OF HIS ASSESSMENT WORK. THE LD. CI T HAS NOT SPECIFIED AS TO WHAT TYPE OF ENQUIRY OUGHT TO HAVE BEEN MADE BY AO WHICH WOULD HAVE RESULTED INTO INCOME OR DISALLOWANCE OR ANY OT HER ADVERSE ACTION. THUS NONE OF THE CONDITIONS OF CLAUSE (A) & (B) OF EXPLANATION 2 TO SECTION 263 IS ATTRACTED. HENCE THE ORDER PASSED B Y AO CANT BE BRANDED AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REV ENUE. ITA NO. 33/JP/2021 RAJASTHAN STATE MINES & MINERALS LTD. VS. PR. CIT JAIPUR-2 6 9. IT WAS FURTHER SUBMITTED THAT THE SALE OF CER IS A CAPITAL RECEIPT HAS BEEN DECIDED IN FAVOUR OF ASSESSEE BY THE ITAT VIDE ORDER DT. 30.05.2017 IN ASSESSEES OWN CASE FOR AY 2007-08 IN ITA NO.253 & 295/JP/2015. THIS ORDER IS APPROVED BY THE HONBLE RAJASTHAN HIGH COURT IN DBITA NO.313/2017 DT. 28.11.2017. THE PAYMENT OF SPONSORSHIP FEES OF RS. 20 26 50 000/- TO RESURGENT RAJASTHAN SUMMIT 2015 IS WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS IN AS MUCH AS THE PARTICIPATION IS SUCH SUMMIT HELPS THE ASSESSEE IN FINDING JOINT VEN TURE PARTNERS IN PPP MODE OR OTHERWISE TOWARDS MINERAL DEVELOPMENT IN RA JASTHAN WHICH IS STEP FORWARD FOR THE OBJECTIVES OF THE ASSESSEE. HE NCE IT IS AN ALLOWABLE EXPENDITURE WHICH IS ALSO COVERED BY THE PRINCIPLE LAID DOWN IN VARIOUS DECISIONS OF SUPREME COURT HIGH COURT AND TRIBUNAL RELIED BY THE ASSESSEE IN REPLY DT. 11.10.2018. THE AO AFTER CONS IDERING THE REPLY AND THE CASE LAWS RELIED BY THE ASSESSEE ALLOWED THE CL AIM. IT IS A SETTLED LAW THAT WHERE TWO VIEWS ARE POSSIBLE (THOUGH IN THE PR ESENT CASE THERE ARE NO TWO VIEWS) AND THE AO HAS TAKEN ONE VIEW ASSESS MENT ORDER CANNOT BE TREATED AS ERRONEOUS OR PREJUDICIAL TO THE INTER EST OF REVENUE. FOR THIS RELIANCE IS PLACED ON THE FOLLOWING CASES:- CIT VS. KWALITY STEEL SUPPLIERS COMPLEX (2017) 395 ITR 1 (SC) CIT VS. MAX INDIA 295 ITR 282 (SC) MALABAR INDUSTRIAL CO. LTD. VS. CIT 243 ITR 83 (SC) IN VIEW OF ABOVE ORDER PASSED BY LD. CIT U/S 263 I S ILLEGAL & BAD IN LAW AND THE SAME BE QUASHED. 10. PER CONTRA THE LD PCIT/DR RELIED ON THE ORDER PASSED BY THE LD PCIT AND OUR REFERENCE WAS DRAWN TO THE RELEVANT FINDING S WHICH READ AS UNDER: ITA NO. 33/JP/2021 RAJASTHAN STATE MINES & MINERALS LTD. VS. PR. CIT JAIPUR-2 7 5. I HAVE CONSIDERED THE FACTS OF THE CASE WRITTE N SUBMISSION FILED BY THE ASSESSEE COMPANY AND THE MATERIAL AVAI LABLE ON RECORD. THE CONTENTIONS OF ASSESSEE ARE NOT TENABLE. THE AO HAS ALLOWED AN EXEMPTION OF RS. 2 58 48 598/- ON ACCOUNT OF SALE O F CARBON/VOLUNTARY EMISSION REDUCTION (CER/VER) CERTI FICATES AND RENEWABLE ENERGY CERTIFICATES (REC) WITHOUT PROPERL Y EXAMINING ITS VERACITY AND ALLOWABILITY. FURTHER THE A/R OF THE ASSESSEE HAS SUBMITTED THAT THE EXPENSES ON RESURGENT RAJASTHAN OF RS. 20 26 50 000/- WAS DEBITED IN THE P & L ACCOUNT. TH IS CLAIM OF THE ASSESSEE COMPANY WAS NOT JUSTIFIED. IN ANY CASE TH E AO HAS FAILED TO EXAMINE THE VERACITY OF THE EXPENDITURE MADE BY THE ASSESSEE COMPANY AND EXPENSES WHICH WERE DEBITED BY THE ASSE SSEE COMPANY IN THE YEAR UNDER CONSIDERATION WAS ALSO NO T EXAMINED BY THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 6. FROM THE ABOVE FACTS AND CIRCUMSTANCES OF THE CA SE AND HAVING REGARD TO THE MATERIAL AVAILABLE ON RECORD THE ASSESSING OFFICER FAILED TO CONSIDER/ APPLY HIS MIND WHILE FR AMING/PASSING ASSESSMENT ORDER OF THE ABOVE NAMED ASSESSEE COMPAN Y. THUS THE ORDER PASSED ON 28.12.2018 IS WITHOUT MAKING NECESS ARY VERIFICATION CUM EXAMINATION OF THE EXEMPTION OF IN COME CLAIMED BY THE ASSESSEE COMPANY AND THE EXPENSES INCURRED B Y THE ASSESSEE COMPANY DEBITED IN THE PROFIT & LOSS ACCOU NT AND AS SUCH THE ASSESSMENT WAS MADE WITHOUT APPLICATION OF MIND ON THE GIVEN FACTS ON RECORD. THIS IN TURN HAS RESULTE D IN PASSING OF AN ERRONEOUS ORDER BY THE ASSESSING OFFICER IN THE CASE DUE TO NON APPLICATION OF MIND TO RELEVANT MATERIAL AN INC ORRECT ASSUMPTION OF FACTS AND AN INCORRECT APPLICATION OF MIND TO LAW WHICH IS PREJUDICIAL TO THE INTEREST OF THE REVENUE . IN THIS CASE ITA NO. 33/JP/2021 RAJASTHAN STATE MINES & MINERALS LTD. VS. PR. CIT JAIPUR-2 8 THE ASSESSING OFFICER FAILED TO EXAMINE THE EXEMPTI ON OF INCOME CLAIMED BY THE ASSESSEE COMPANY AND THE EXPENSES WH ICH WERE INCURRED BY THE ASSESSEE COMPANY DEBITED TO THE PR OFIT & LOSS ACCOUNT. THUS THE ORDER PASSED U/S 143(3) OF THE I NCOME-TAX ACT 1961 ON 28.12.2018 IS ERRONEOUS AND PREJUDICIA L TO THE INTEREST OF REVENUE. 7. ACCORDINGLY BY VIRTUE OF POWERS CONFERRED ON THE UNDERSIGNED UNDER THE PROVISIONS OF SECTION 263 OF THE INCOME-T AX ACT 1961 I HOLD THAT THE ORDER U/S 143(3) OF THE I T ACT 1961 DATED 28.12.2018 FOR A Y 2016-17 PASSED BY THE ASSESSING OFFICER IS ERRONEOUS IN SO FAR IT IS PREJUDICIAL TO THE INTEREST OF REVENUE AS THE SAID ORDER HAS BEEN PASSED BY THE ASSESSING OFFICER IN A ROUTINE AND PE RFUNCTORY MANNER WITHOUT VERIFYING THE CLAIM OF EXEMPTION OF RS. 2 5 8 48 598/- CREDITED IN THE PROFIT AND LOSS ACCOUNT AND NOT VERIFYING TH E EXPENSES OF RS.20 26 50 000/- DEBITED BY THE ASSESSEE COMPANY I N THE PROFIT & LOSS ACCOUNT. THE ORDER OF THE ASSESSING OFFICER IS THEREFORE LIABLE TO REVISION UNDER THE EXPLANATION-2 CLAUSE (B) AND CLA USE (A) OF SECTION 263 OF THE INCOME-TAX ACT 1961. HENCE THE ASSESSM ENT ORDER IS SET ASIDE AND AS PER LAW TO BE REDONE DE-NOVO IN THE LI GHT OF THE OBSERVATION MADE IN THIS ORDER AND WITH DIRECTION T O THE ASSESSING OFFICER TO VERIFY AND EXAMINE AND FINALIZE THE ASSE SSMENT IN ACCORDANCE WITH THE PREVAILING LAW; QUANTIFY THE CO RRECT INCOME OF THE ASSESSEE LIABLE TO TAX FOR A Y 2016-17 AFTER ACCORD ING REASONABLE OPPORTUNITY TO THE ASSESSEE. 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. BROADLY TWO ISSUES HAVE BEEN RAISED BY THE LD. CIT(E) WHILE ISSUING THE SHOW CAUSE U/S 263 OF THE ACT. THE FIRST ISSUE ITA NO. 33/JP/2021 RAJASTHAN STATE MINES & MINERALS LTD. VS. PR. CIT JAIPUR-2 9 RELATES TO AMOUNT RECEIVED BY THE ASSESSEE COMPANY ON SALE OF CARBON/VOLUNTARY EMISSION REDUCTION (CER/VER) CERTI FICATES AND RENEWABLE ENERGY CERTIFICATES (REC) WHICH HAVE BEEN CLAIMED EXEMPT. AS PER THE LD. PR. CIT THE SAID EXEMPTION WAS NOT ALLOWABLE UNDER ANY PROVISIONS OF THE ACT AND THERE IS A COMPLETE FAILU RE ON THE PART OF THE ASSESSING OFFICER TO EXAMINE THE SAID EXEMPTION CLA IMED BY THE ASSESSEE COMPANY. 12. IN THIS REGARD IT IS NOTED THAT THE ASSESSEE C OMPANY IN ITS RETURN OF INCOME HAS CLAIMED AN AMOUNT OF RS.2 57 83 104/- TOWARDS SALE OF CER/VER/REC CERTIFICATES AS NOT TAXABLE HOLDING THE SAME BEING CAPITAL IN NATURE AND THERE IS ALSO A NOTE EXPLAINING SUCH CLAIM OF EXEMPTION WHICH WAS SUBMITTED AS PART OF ITS RETURN OF INCOME . THEREAFTER THE ASSESSING OFFICER AS PART OF NOTICE U/S 142(1) DATE D 30.07.2018 HAS ASKED THE ASSESSEE COMPANY TO PROVIDE DETAILS OF AN Y CARBON EMISSION RECEIPTS DURING THE YEAR AND WHETHER THE SAME HAS B EEN SHOWN AS INCOME. IN RESPONSE THE ASSESSEE COMPANY VIDE ITS SUBMISSION DATED 27.08.2018 HAS SUBMITTED THAT DURING THE YEAR IT H AS RECEIVED AN AMOUNT OF RS. 2 58 48 598/- ON ACCOUNT OF SALE OF C ER/REC CERTIFICATES AND AFTER REDUCING EXPENSES OF RS. 65 494/- IT HAS CLAIMED EXEMPTION OF RS. 2 57 83 104/- AS CAPITAL RECEIPT. IT WAS ALS O SUBMITTED THAT IN ASSESSEES OWN CASE FOR A.Y 2007-08 THE MATTER HAS BEEN DECIDED BY THE TRIBUNAL VIDE ITS ORDER DATED 03.05.2017 WHICH HAS SUBSEQUENTLY BEEN APPROVED BY THE HONBLE RAJASTHAN HIGH COURT V IDE ITS ORDER DATED 28.11.2017. WE FURTHER NOTE THAT THE ASSESSING OFFI CER HAS THEREAFTER ISSUED A SPECIFIC SHOW CAUSE NOTICE DATED 28.09.201 8 ASKING THE ASSESSEE COMPANY TO EXPLAIN THE CARBON EMISSION REC EIPTS OF RS. 2 58 48 598/- AS TO HOW AND UNDER WHAT STATUTORY PR OVISIONS THE SAME HAS BEEN CLAIMED AS EXEMPT INCOME WHEN THE SAME IS IN THE NATURE OF ITA NO. 33/JP/2021 RAJASTHAN STATE MINES & MINERALS LTD. VS. PR. CIT JAIPUR-2 10 REVENUE RECEIPT. IN RESPONSE THE ASSESSEE COMPANY VIDE ITS SUBMISSION DATED 11.10.2018 HAS AGAIN REITERATED ITS EARLIER S UBMISSIONS. IT WAS FURTHER SUBMITTED THAT THE MATTER IS ALSO COVERED B Y THE DECISION OF HYDERABAD BENCH OF THE TRIBUNAL IN CASE OF MY HOME POWER LTD. VS. DY. CIT CENTRAL CIRCLE-07 (ITA NO. 1114(HYD) OF 2009) AND IT WAS ALSO SUBMITTED THAT THERE HAS BEEN AN AMENDMENT WHICH HA S BEEN BROUGHT ABOUT BY THE FINANCE ACT 2017 WHEREIN SECTION 115B BG HAS BEEN INTRODUCED WITH EFFECT FROM 01.04.2018 WHEREIN INCO ME FROM SALE OF CERS IS TAXABLE AT SPECIAL RATE OF 10%. IT WAS SUBM ITTED THAT THE SAID AMENDMENT HAS BEEN BROUGHT ON THE STATUTE WITH PROS PECTIVE EFFECT AND IN THE INSTANT YEAR THE RECEIPT FROM SALE OF CERS IS NOT TAXABLE BEING CAPITAL RECEIPT. THE ASSESSING OFFICER AFTER CONSID ERING AND EXAMINING THE SUBMISSIONS OF THE ASSESSEE HAS NOT RECORDED AN Y ADVERSE FINDING WHILE PASSING THE ASSESSMENT ORDER. WE THEREFORE F IND THAT IN THE INSTANT CASE THE ASSESSING OFFICER HAS RAISED SPEC IFIC QUERIES NOT ONCE BUT TWICE FIRSTLY AS PART OF INITIAL NOTICE U/S 14 2(1) AND THEREAFTER BY WAY OF A SPECIFIC SHOW-CAUSE BEFORE PASSING THE ASS ESSMENT ORDER. THE ASSESSEE HAS ALSO SUBMITTED ITS RESPONSE EXPLAINING THE FACTUAL AS WELL AS THE LEGAL POSITION AND THE FACT THAT THE MATTER HAS BEEN EXAMINED EARLIER BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y 2007-08 AND WHICH HAS ALSO BEEN AFFIRMED BY THE HONBLE RAJASTH AN HIGH COURT. THEREFORE WHERE THE ASSESSING OFFICER HAS TAKEN IN TO CONSIDERATION THE DECISION OF THE TRIBUNAL AS WELL AS OF JURISDICTION AL HIGH COURT IN ASSESSEES OWN CASE AND FIND THAT IDENTICAL FACTS A ND CIRCUMSTANCES OF THE CASE ARE PREVAILING DURING THE YEAR UNDER CONSI DERATION THE OPINION FORMED BY THE ASSESSING OFFICER CANNOT BE HELD AS E RRONEOUS IN NATURE. IT IS THEREFORE NOT A CASE OF LACK OF INQUIRY AS HE LD BY THE LD. PR. CIT RATHER IT IS A CASE WHERE THE ASSESSING OFFICER HAS TAKEN INTO CONSIDERATION THE FACTUAL AND THE LEGAL POSITION T HE DECISION IN ITA NO. 33/JP/2021 RAJASTHAN STATE MINES & MINERALS LTD. VS. PR. CIT JAIPUR-2 11 ASSESSEES OWN CASE RENDERED BY THE TRIBUNAL AND AF FIRMED BY THE HONBLE HIGH COURT AND ALSO THE FACT THAT THERE IS PROSPECTIVE AMENDMENT IN THE STATUE WHICH IS NOT APPLICABLE IN THE INSTANT YEAR. THEREFORE THE FINDINGS OF THE LD. PR. CIT TO THE E FFECT THAT THERE IS A FAILURE ON THE PART BY THE ASSESSING OFFICER TO EXA MINE THE CLAIM OF EXEMPTION BY THE ASSESSEE AND THE ASSESSMENT ORDER HAS BEEN PASSED IN A ROUTINE AND PERFUNCTIONARY MANNER CANNOT BE SU STAINED AND IS HEREBY SET ASIDE. 13. THE SECOND ISSUE WHICH HAS BEEN RAISED BY THE L D. PR. CIT IN THE SHOW CAUSE NOTICE RELATES TO AMOUNT PAID BY ASSESSE E COMPANY TO ORGANIZE THE EVENT RESURGENT RAJASTHAN IN NATURE OF ASSISTANCE/CONTRIBUTION AND NO DETAILS/NATURE OF EX PENDITURE/UTILIZATION BY THE NODAL AGENCY WAS AVAILABLE ON RECORD. AS PE R LD. PCIT THE EXPENDITURE OF RS. 20 26 50 000/- INCURRED BY THE A SSESSEE COMPANY CANNOT SAID TO BE LAID OUT OR EXPENDED WHOLLY AND E XCLUSIVELY FOR THE PURPOSES OF ASSESSEES BUSINESS AND THE SAME DESERV ES TO BE DISALLOWED. HERE ALSO THE LD. PR. CIT HAS RECORDED A FINDING THAT EXPENDITURE SO CLAIMED BY THE ASSESSING OFFICER HAS NOT BEEN EXAMINED BY THE ASSESSING OFFICER AND HAS THEREFORE HELD TH AT THE ORDER HAS BEEN PASSED IN A ROUTINE AND PERFUNCTORY MANNER WHICH IS CLEARLY ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 14. IN THIS REGARD DURING THE COURSE OF HEARING O UR REFERENCE WAS DRAWN BY THE LD AR TO THE NOTICE U/S 142(1) DATED 0 7.07.2018 WHEREIN THE ASSESSING OFFICER HAS SPECIFICALLY ASKED THE AS SESSEE COMPANY TO JUSTIFY ITS CLAIM OF EXPENSES ON ACCOUNT OF PAYMENT TO RESURGENT RAJASTHAN AMOUNTING TO RS. 20 26 50 000/- DETAILING THE BUSINESS PURPOSES AND WHY THE SAME IS NOT APPLICATION OF INC OME AND NOT AN EXPENSE. IT WAS SUBMITTED THAT IN RESPONSE TO THE S AID NOTICE THE ITA NO. 33/JP/2021 RAJASTHAN STATE MINES & MINERALS LTD. VS. PR. CIT JAIPUR-2 12 ASSESSEE VIDE ITS SUBMISSION DATED 27.08.2018 HAS S UBMITTED THAT GOVERNMENT OF RAJASTHAN ALONG WITH CII HAS ORGANIZE D RESURGENT RAJASTHAN 2015 SUMMIT. IT WAS AN EVENT WITH STRATEG IC CONFERENCES SECTOR SPECIFICATION SECTORIAL DISCUSSIONS DELIBER ATIONS INVESTORS MEET INVESTORS DISCUSSIONS ETC. IT BROUGHT TOGETHER LEAD ING INVESTORS FROM ALL OVER THE WORLD. ASSESSEE BEING A LEADING MINING COM PANY OF THE STATE GOVERNMENT IN ORDER TO PROMOTE AND UNDERTAKE ACTIVI TIES OF INDUSTRIAL AND MINERAL DEVELOPMENT IN THE STATE OF RAJASTHAN A ND FOR THE FURTHERANCE OF ITS OBJECTIVE HAS PARTICIPATED IN TH E ORGANIZATION OF THE EVENT. THE PRIMARY OBJECTIVE OF THE COMPANY FOR PAR TICIPATION IN THE EVENT WAS TO FIND OUT JOINT VENTURES PARTNERS IN PP P MODE OR OTHERWISE TOWARDS MINERAL DEVELOPMENT IN RAJASTHAN. ACCORDING LY ASSESSEE HAS SPONSORED THE EVENT BY PAYING SPONSORSHIP FEES OF R S. 20 26 50 000/- SO THAT MORE AND MORE INVESTORS AROUND THE WORLD MU ST HAVE THE KNOWLEDGE ABOUT THE COMPANY ITS WORKING AND OBJECT IVE IN ORDER TO INVEST IN THE COMPANY. SINCE THE OBJECT OF THE EXPE NDITURE WAS TO EARN MORE AND MORE BUSINESS FOR THE COMPANY THE EXPENDI TURE IS ALLOWABLE U/S 37(1) OF INCOME TAX ACT BEING INCURRED WHOLLY AND EXCLUSIVELY FOR THE BUSINESS PURPOSE OF THE COMPANY. 15. IT WAS FURTHER SUBMITTED THAT THE ASSESSING OFF ICER AGAIN ISSUED A SHOW CAUSE DATED 18.09.2018 WHEREIN IT WAS STATED T HAT THE ASSESSEE HAS CLAIMED AN AMOUNT OF RS. 20 26 50 000/- AS EXPE NSES OF RESURGENT RAJASTHAN. HOWEVER NO PROOF OF HOW THE SAME IS REL ATED TO AND HAS BEEN SPENT WHOLLY AND EXCLUSIVELY FOR THE PURPOSE O F BUSINESS HAS BEEN SUBMITTED AND THE ASSESSEE WAS ACCORDINGLY ASKED TO JUSTIFY WITH CLEAR EVIDENCE AS TO WHY THE SAME SHOULD NOT BE DISALLOWE D AS NOT BEING A BUSINESS EXPENSE. IN RESPONSE THE ASSESSEE VIDE IT S SUBMISSION DATED 11.10.2018 HAS SUBMITTED THAT THE EXPENDITURE OF RS . 20 26 50 000/- ITA NO. 33/JP/2021 RAJASTHAN STATE MINES & MINERALS LTD. VS. PR. CIT JAIPUR-2 13 INCURRED BY THE ASSESSEE ON PAYMENT TO BUREAU OF IN VESTMENT PROMOTION THE NODAL AGENCY FOR ORGANIZING RESURGEN T RAJASTHAN 2015 SUMMIT IS WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS IN AS MUCH AS PARTICIPATION IN SUCH SUMMIT HELPS THE ASSESSEE IN FINDING JOINT VENTURE PARTNERS IN PPP MODE OR OTHERWISE TOWARDS M INERAL DEVELOPMENT IN RAJASTHAN WHICH IS A STEP FORWARD FO R THE OBJECTIVES OF THE ASSESSEE. THE EXPENDITURE WAS APPROVED BY THE B OARD OF DIRECTORS IN ITS 398 TH MEETING CONVENED ON 30.09.2015. IT WAS SUBMITTED T HAT BECAUSE OF THE PARTICIPATION IN THE SUMMIT A MOU W AS ENTERED BY THE SUBSIDIARY COMPANY OF THE ASSESSEE M/S RAJASTHAN ST ATE GAS LTD. FOR RS. 2700 CRORES WITH THE STATE GOVERNMENT FOR THE DEVEL OPMENT OF GAS AND PIPELINES INFRASTRUCTURES CNG AND CGD NETWORK. THI S WILL BRING MORE AND MORE PETROLEUM AND GAS COMPANIES IN THE STATE W HICH WILL FETCH HUGE REVENUE TO THE COMPANY AND PROFITS TO THE ASSE SSEE. BESIDES GOVERNMENT OF RAJASTHAN HAS ALSO ENTERED INTO VARIO US AGREEMENTS WITH FERTILIZERS CEMENT AND STEEL INDUSTRIES TO SETUP N EW PLANTS OR EXPAND THEIR MANUFACTURING ACTIVITIES WHICH WILL DIRECTLY BENEFIT THE ASSESSEE IN INCREASING ITS TURNOVER AND PROFITS AS THE MAIN RAW MATERIAL IN FERTILIZER INDUSTRIES IS ROCK PHOSPHATE IN CEMENT INDUSTRY IS LIMESTONE AND GYPSUM. FURTHER STEEL INDUSTRY ALSO USES LIMESTONE FOR ITS VARIOUS MANUFACTURING ACTIVITIES. ALSO THESE INDUSTRIES WIL L BE HAVING HUGE POWER REQUIREMENT AND ASSESSEE IS A MAJOR SUPPLIER OF LIG NITE USED IN POWER PLANTS IN THE STATE OF RAJASTHAN. ACCORDINGLY THERE ARE SEVERAL DIRECT AND INDIRECT BENEFITS TO THE ASSESSEE BY INCURRING THIS EXPENDITURE. COPY OF THE PUBLICATION OF THE STATE GOVERNMENT SHOWING VAR IOUS PARTNERSHIPS/MOUS TAKING PLACE IN THE RESURGENT RAJ ASTHAN 2015 SUMMIT IS ENCLOSED AS ANNEXURE-II. THUS THE EXPENDI TURE IS INCURRED SOLELY FOR THE PURPOSE OF THE BUSINESS OF THE ASSES SEE. EVEN IF BY INCURRING THE EXPENDITURE THIRD PARTY IS ALSO BENE FITED THE SAME IS A ITA NO. 33/JP/2021 RAJASTHAN STATE MINES & MINERALS LTD. VS. PR. CIT JAIPUR-2 14 ALLOWABLE EXPENDITURE U/S 37(1) OF THE ACT. FURTHE R RELIANCE WAS PLACED ON VARIOUS HONBLE SUPREME COURT AND HIGH COURT DEC ISIONS. IT WAS ACCORDINGLY SUBMITTED THAT WHERE THE ASSESSING OFFI CER HAS MADE NECESSARY INQUIRY/VERIFICATION WHICH HE SHOULD HAVE MADE AND HAS APPLIED HIS MIND AND HAS ALLOWED THE CLAIM OF THE ASSESSEE THE ORDER CANNOT BE SAID TO BE ERRONEOUS IN SO FAR AS PREJUDICIAL TO TH E INTEREST OF THE REVENUE. 16. WE FIND THAT IN THIS SECOND MATTER AS WELL THE ASSESSING OFFICER HAS RAISED SPECIFIC QUERIES NOT ONCE BUT TWICE FIR STLY AS PART OF INITIAL NOTICE U/S 142(1) AND THEREAFTER BY WAY OF A SPECI FIC SHOW-CAUSE BEFORE PASSING THE ASSESSMENT ORDER. THE ASSESSEE HAS ALS O SUBMITTED ITS RESPONSE EXPLAINING THE FACTUAL POSITION AS TO HOW THE SPONSORSHIP PAYMENT TO BUREAU OF INVESTMENT PROMOTION THE NODA L AGENCY FOR ORGANIZING RESURGENT RAJASTHAN 2015 SUMMIT HAS BEEN INCURRED FOR THE PURPOSES OF ITS BUSINESS DULY APPROVED BY ITS BOARD OF DIRECTORS AND ITS CLAIM DULY SUPPORTED BY VARIOUS COURT DECISIONS TH E OPINION FORMED BY THE ASSESSING OFFICER CANNOT BE HELD AS ERRONEOUS I N NATURE. IT IS THEREFORE NOT A CASE OF LACK OF INQUIRY AS HELD BY THE LD. PR. CIT RATHER IT IS A CASE WHERE THE ASSESSING OFFICER HAS TAKEN INT O CONSIDERATION THE FACTUAL AND THE LEGAL POSITION AND THEN HAS DECIDED TO ACCEPT THE CLAIM OF THE EXPENDITURE SO CLAIMED BY THE ASSESSEE. THER EFORE THE FINDINGS OF THE LD. PR. CIT TO THE EFFECT THAT THERE IS A FA ILURE ON THE PART BY THE ASSESSING OFFICER TO EXAMINE THE CLAIM OF EXPENSES BY THE ASSESSEE AND THE ASSESSMENT ORDER HAS BEEN PASSED IN A ROUTINE A ND PERFUNCTIONARY MANNER CANNOT BE SUSTAINED AND IS HEREBY SET ASIDE. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWE D. ITA NO. 33/JP/2021 RAJASTHAN STATE MINES & MINERALS LTD. VS. PR. CIT JAIPUR-2 15 ORDER PRONOUNCED IN THE OPEN COURT ON 31/08/2021. SD/- SD/- LANHI XKSLKBZ FOE FLAG ;KNO ( SANDEEP GOSAIN ) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 31/08/2021 * GANESH KR. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- RAJASTHAN STATE MINES & MINERALS LTD . JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- PR. CIT JAIPUR-2 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR ITAT JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 33/JP/2021} VKNS'KKUQLKJ@ BY ORDER LGK;D IATHDKJ@ ASST. REGISTRAR