Kariganur Mineral Mining Industry Vs JCIT (ITAT Bangalore)
Summary: The Income Tax Appellate Tribunal, Bangalore Bench, disposed of ITA Nos. 1025 & 1026/Bang/2024 filed by Kariganur Mineral Mining Industry (100% EOU) concerning assessment years 2011-12 and 2013-14. The order deals with disallowances relating to flood-relief expenditure, vehicle and other expenses, transportation charges, TDS compliance, interest income, repairs to rented premises, customs duty, infrastructure-sharing charges and alleged cessation of liabilities.
The assessee is a partnership firm engaged in iron-ore manufacturing/trading and operates two units, including a 100% Export Oriented Unit claiming deduction under section 10B. For AY 2011-12, the Assessing Officer made, among other additions, a disallowance of Rs.3,79,79,550 towards construction of houses for flood victims, Rs.43,96,173 towards various expenses on an estimated 10% basis, 20% disallowance of transportation expenditure of about Rs.68.33 lakh, and disallowances under section 40(a)(ia) relating to transportation payments.
On the flood-relief expenditure, the assessee relied upon its MoU with the Deputy Commissioner, Bellary and decisions concerning construction of houses for flood victims. The Tribunal followed the jurisdictional Karnataka High Court decisions in Kanhaiyalal Dudheria and Zeenath Transport Company. It directed fresh consideration of the Rs.3,79,79,550 disallowance in the regular unit in accordance with the High Court’s directions. The corresponding Rs.84,93,150 EOU disallowance was also directed to be reconsidered. The Tribunal additionally noted CBDT Circular No.37/2016 and observed that the principle concerning enhanced deductions on increased profits could apply to section 10B.
