Mining Lease Stamp Duty Is Revenue Expenditure: ITAT Panaji

JCIT Vs Chowgule & Company Private Limited (ITAT Panaji)

Stamp duty incurred in connection with the execution of documents for renewal of the mining lease, claimed as revenue expenditure.

Summary: The ITAT Panaji Bench adjudicated Revenue appeals and assessee cross-objections for AYs 2009-10 to 2014-15 and 2016-17 in the second round of litigation after the Bombay High Court at Goa remanded the matters for decision on merits. The Tribunal followed earlier orders in the assessee’s own case and applicable judicial precedents on several recurring issues. It upheld depreciation on the Todou plant because the dry plant was used and the relevant assets formed part of the block of assets. On Section 14A, it accepted that sufficient interest-free funds covered the investments and upheld the CIT(A)’s directions for recomputation of indirect expenditure, including exclusions and restriction to exempt income. Demurrage on FOB exports was treated as an adjustment to sale consideration, so no TDS obligation arose. Business advances written off, contributions to public-road development, higher education and training expenditure for genuine employees, compensatory afforestation charges, obsolete stock write-off and ship dry-docking expenses were allowed on the facts and precedents recorded. For temple and community-structure expenditure, the Tribunal sustained a 15% disallowance on account of social-responsibility/personal elements. It also deleted an alleged unaccounted cash addition after noting the denial of cross-examination. Stamp duty paid for renewal of the mining lease was held revenue in nature because it was a statutory duty for execution of renewal documents, not a premium for acquiring the lease itself. Depreciation on goodwill and interest under Section 36(1)(iii) were also allowed on the recorded facts. The Revenue’s appeals were partly allowed for AYs 2010-11 to 2014-15 and 2016-17 and dismissed for AY 2009-10; the assessee’s cross-objections/appeal were dismissed for AYs 2009-10 and 2016-17, partly allowed for AYs 2011-12 to 2014-15 and allowed for AY 2010-11.

Facts:

• The Assessee, Chowgule & Company Private Limited, is a company engaged in Mining, Manufacture and sale of Iron Ore Pellets, Export of Ore, Operation of Tippers, Transhipper and Machinery hire, trading in cranes and ship building.
• The present appeals and cross-objections for Assessment Years 2009-10 to 2014-15 and 2016-17 arise from the orders of the Ld. Commissioner of Income Tax (Appeals) [CIT(A)], Panaji-1, who had granted substantial relief to the Assessee against additions made by the Assessing Officer (AO) under Section 143(3) of the Income Tax Act, 1961.
• This is the second round of litigation before the Tribunal. The matter was remanded back by the Hon’ble High Court of Bombay at Goa vide its judgment dated 11.03.2026, directing the Tribunal to adjudicate the appeals on merits, setting aside the Tribunal’s earlier order dated 24.08.2023 which had dismissed the appeals on a technical issue related to Document Identification Number (DIN).

Issues:

• Disallowance of depreciation on Todou Plant (A.Y. 2009-10 to 2014-15)
• Disallowance under Section 14A read with Rule 8D (A.Y. 2009-10 to 2014-15)
• Disallowance of Demurrage Expenses u/s 40(a)(ia) (A.Y. 2009-10 to 2014-15)
• Disallowance of Bad Debts Written Off (A.Y. 2009-10 & 2011-12)
• Disallowance of Contribution to GIDC (A.Y. 2010-11 to 2012-13)
• Disallowance of Higher Education Expenditure on Directors’ Family Members (A.Y. 2010-11 to 2014-15)
• Disallowance of Contribution for Construction/Repair of Temples (A.Y. 2010-11 to 2014-15)
• Disallowance of Compensatory Afforestation Charges (A.Y. 2010-11)
• Disallowance u/s 40(a) for Non-Deduction of TDS on Foreign Payments (A.Y. 2010-11)
• Disallowance of Obsolete Stock Written Off (A.Y. 2010-11)
• Disallowance of Ship Dry Docking Expenses (A.Y. 2010-11)
• Addition on Account of Alleged Unaccounted Cash Receipts (A.Y. 2010-11 – Assessee’s Appeal)
• Disallowance of Higher Depreciation on Commercial Vehicles (A.Y. 2010-11 to 2014-15 – Assessee’s Cross Objections)
• Disallowance of Higher Depreciation on Energy Saving Devices (A.Y. 2012-13 to 2014-15)
• Disallowance of Stamp Duty on Renewal of Mining Lease (A.Y. 2013-14)
• Disallowance of Dumping Conversion Charges (A.Y. 2014-15)
• Disallowance of Depreciation on Goodwill (A.Y. 2016-17)
• Disallowance of Interest u/s 36(1)(iii) (A.Y. 2016-17)
• Disallowance of Foreign Travel Expenses (FTE) (A.Y. 2016-17)

Observations:

• As to Issue No.1:

The Tribunal noted that this issue was decided in favour of the Assessee in its own case for A.Y. 2006-07 (ITA No. 27/PNJ/2014) and A.Y. 2008-09. The Tribunal in the earlier order had found that the dry plant was indeed put to use. Following the rule of consistency and the earlier orders, the Tribunal upheld the Ld. CIT(A)’s decision to delete the disallowance. The Revenue’s grounds were dismissed.

• As to Issue No.2:

On Interest Disallowance (Rule 8D(2)(ii)): The Tribunal affirmed the Ld. CIT(A)’s finding that the Assessee possessed sufficient interest-free funds, far exceeding the investments. Relying on the Hon’ble Jurisdictional High Court’s decision in HDFC Bank Vs. DCIT (383 ITR 529) and the Hon’ble Supreme Court’s decision in South Indian Bank Ltd. Vs. CIT (2021) 130 taxmann.com 178 (SC), the Tribunal held that no interest disallowance was warranted.

On Indirect Expense Disallowance (Rule 8D(2)(iii)): The Tribunal upheld the detailed directions of the Ld. CIT(A) to the AO for re-computation, which included: (a) considering only fresh investments for disallowance, (b) excluding investments in foreign companies and growth schemes of mutual funds, (c) reducing the provision for diminution in value, (d) considering only investments that actually yielded exempt income during the year, and (e) restricting the total disallowance to the amount of exempt income earned. The Revenue’s grounds were dismissed.

• As to Issue No.3:

The Tribunal found that there was no contractual agreement between the Assessee and the ship owners. The arrangement was solely between the Assessee and the buyer. Demurrage was merely an adjustment to the sale price. Relying on the Hon’ble Jurisdictional High Court’s judgment in V.S. Dempo and Co. (P) Ltd (380 ITR 303 (Bombay)) and the decision in the Assessee’s own case for A.Y. 2008-09, the Tribunal held that there was no obligation to deduct TDS. The disallowance was rightly deleted by the Ld. CIT(A). The Revenue’s grounds were dismissed.

• As to Issue No.4:

The Tribunal upheld the Ld. CIT(A)’s finding that the AO had wrongly invoked Section 36(1)(vii) as the amounts did not arise from the sale of goods by the Assessee. The advances were for revenue purposes (spares and services) and not for capital goods. The write-off was an allowable business loss. The Tribunal noted that a similar claim was allowed in the Assessee’s own case for A.Y. 2008-09 and 2010-11, which was not challenged by the Revenue. The Revenue’s grounds were dismissed.

• As to Issue No.5:

The Tribunal followed its own decisions in the Assessee’s case for A.Y. 2002-03 and A.Y. 2008-09, where it was held that such contributions for the repair of public roads used for business are revenue expenditure. Since the Assessee did not acquire any asset, the expenditure was allowable. The Revenue’s grounds were dismissed.

• As to Issue No.6:

The Tribunal observed that the payments were made directly to universities for training connected with the Assessee’s business. The individuals were genuine employees who continued to serve the company. The expenditure was incurred out of commercial expediency. Relying on Jalani Holding Pvt. Ltd. vs. ITO (1992) 142 TTJ 116 (Delhi), the Tribunal upheld the deletion of the disallowance. The Revenue’s grounds were dismissed.

• As to Issue No.7:

The Tribunal acknowledged the commercial expediency of maintaining cordial relations. However, it also noted that an element of personal or social obligation, akin to Corporate Social Responsibility (CSR), could not be ruled out. While the disallowance of CSR expenses under Section 37(1) was introduced later, the Tribunal, on a holistic view, held that 15% of the claimed expenditure deserved to be disallowed. The Revenue’s grounds were partly allowed.

• As to Issue No.8:

The Tribunal followed the Hon’ble Bombay High Court’s judgment in Prafulla R. Hegde vs. CIT and its own decision in the Assessee’s case for A.Y. 2008-09, holding that such expenditure is incurred for commercial expediency and is not capital in nature. The Revenue’s ground was dismissed.

• As to Issue No.9:

The Tribunal agreed with the Ld. CIT(A) that the Assessee could not be faulted for not deducting tax based on a retrospective amendment made after the payment. Relying on the Hon’ble Bombay High Court’s decision in ACIT vs. Sociedade De Fomento Industrial (P) Ltd. (2024) 164 taxmann.com 139 (Bombay), the Tribunal held that retrospective amendments cannot create a withholding tax default for past transactions. The Revenue’s ground was dismissed.

• As to Issue No.10:

The Tribunal held that writing off commercially obsolete and unusable inventory is an allowable business expenditure. Relying on the Hon’ble Jurisdictional High Court’s decisions in CIT Vs. Gigabyte Technology (India) Ltd. (421 ITR 21 (Bom.)) and CIT Vs. Heredialla Chemicals Pvt. Ltd. (216 ITR 742 (Bom.)), the Tribunal affirmed that deduction cannot be denied merely because physical disposal has not taken place. The Revenue’s ground was dismissed.

• As to Issue No.11:

The Tribunal followed the binding judgment of the Hon’ble Bombay High Court in the Assessee’s own case for A.Y. 1974-75, CIT Vs. Chowgule & Co. (P) Ltd. (1995) 214 ITR 523 (Bom.), where it was held that such expenses are in the nature of “current repairs” allowable under Section 31, even if old parts are replaced with new ones. The Revenue’s ground was dismissed.

• As to Issue No.12:

The Tribunal noted that the very same addition had been deleted in the case of M/s. Trimurti Exports by the Tribunal. Further, the denial of cross-examination was a gross violation of the principles of natural justice, rendering the order a nullity, as held by the Hon’ble Supreme Court in Andaman Timber Industries v. CCE (2015) 281 CTR 241 (SC). The Revenue failed to establish any unaccounted transaction. The addition was deleted, and the Assessee’s ground was allowed.

• As to Issue No.13:

The Tribunal, following the decisions of the Coordinate Benches in Cholamandam MS General Insurance Co. Ltd. Vs. DCIT and Gera Developments (P) Ltd Vs. JCIT, held that LMVs fall under the category of commercial vehicles. Since the vehicles were purchased within the period specified in the relevant CBDT Notifications, the Assessee was eligible for 50% depreciation. The Assessee’s grounds were allowed.

• As to Issue No.14:

The Tribunal noted that the Department had accepted the 80% rate on the same block of assets in prior years. Relying on the Hon’ble Rajasthan High Court’s decision in CIT vs. Agarwal Transformers (P) Ltd. (2002) 258 ITR 251 (Raj), the Tribunal held that the items fall under the eligible category. The principle of consistency dictates that the rate cannot be disturbed in subsequent years. The Revenue’s grounds were dismissed.

• As to Issue No.15:

The Tribunal found that the expenditure was a statutory duty for the execution of renewal documents, not a premium for acquiring the lease itself. The Tribunal distinguished the decision in Bandekar Brothers (P.) Ltd. as it was rendered without considering the binding judgment of the Hon’ble Jurisdictional High Court in CIT vs. Reliance Industrial Infrastructure Ltd. (2015) 61 taxmann.com 407 (Bombay) and the Hon’ble Andhra Pradesh High Court in CIT Vs. Panyam Cements & Mineral Industries Ltd. (1997) 228 ITR 212 (AP), both of which held such stamp duty to be revenue expenditure. Following the binding precedents and the CBDT Circular, the Tribunal held the expenditure to be revenue in nature. The Revenue’s ground was dismissed.

• As to Issue No.16:

The Tribunal examined the Government Notification and found that the levy was termed a “fee” or “charge” for regularization, not a “penalty” for an offence. Therefore, Explanation 1 to Section 37(1) was not applicable. The payment was made to remove an obstruction in the existing business and did not create any new capital asset. Following its own decision in Salitho Ores Pvt. Ltd. Vs. ACIT and the Supreme Court’s ratio in Bikaner Gypsums Ltd. Vs. CIT, the Tribunal held the expenditure to be revenue in nature. The Revenue’s ground was dismissed.

• As to Issue No.17:

The Tribunal noted that the issue was squarely covered in favour of the Assessee by the judgment of the Hon’ble Bombay High Court in its own case for A.Y. 2005-06 (Tax Appeal No.28/2012), which followed the Hon’ble Supreme Court’s decision in CIT v. Smifs Securities Ltd. (2012) 348 ITR 302 (SC). The claim was on the WDV of an existing block, and following the principle of consistency, the disallowance was not sustainable. The Revenue’s ground was dismissed.

• As to Issue No.18:

The Tribunal, following the Hon’ble Supreme Court’s decisions in S.A. Builders Ltd. VS. CIT (288 ITR 1) and CIT Vs. Reliance Industries Ltd. (2019) 102 taxmann.com 52 (SC), held that where sufficient interest-free funds are available, it is presumed that investments are made from such funds. Further, advancing funds to a subsidiary for business purposes constitutes commercial expediency. The disallowance was deleted. The Revenue’s ground was dismissed.

• As to Issue No.19:

The Tribunal noted that while the mining business was halted, other businesses were operational. The AO did not dispute the genuineness of the expenditure but made an ad-hoc disallowance. Considering the facts, the Tribunal found it appropriate to restrict the disallowance to 10% of the FTE, thereby partly allowing the Revenue’s ground.

Based on the above findings, the Revenue’s Appeals are Partly allowed for A.Y. 2010-11 to 2014-15 and 2016-17 and dismissed for A.Y. 2009-10. The Assessee’s Cross Objections/Appeal are Dismissed for A.Y. 2009-10 and 2016-17, partly allowed for A.Y. 2011-12 to 2014-15 and allowed for A.Y. 2010-11.

List of Cases Discussed / Relied Upon

• HDFC Bank Ltd. Vs. DCIT (383 ITR 529 (Bom.))
• South Indian Bank Ltd. Vs. CIT (2021, 130 taxmann.com 178 (SC))
• V.S. Dempo and Co. (P) Ltd. (380 ITR 303 (Bom.))
• Jalani Holding Pvt. Ltd. vs. ITO (142 TTJ 116 (Delhi))
• Prafulla R. Hegde vs. CIT (ITA No. 15/2012, order dated 06.02.2012)
• ACIT vs. Sociedade De Fomento Industrial (P) Ltd. (2024, 164 taxmann.com 139 (Bom.))
• CIT Vs. Gigabyte Technology (India) Ltd. (421 ITR 21 (Bom.))
• CIT Vs. Heredialla Chemicals Pvt. Ltd. (216 ITR 742 (Bom.))
• CIT Vs. Chowgule & Co. (P) Ltd. (1995, 214 ITR 523 (Bom.))
• Andaman Timber Industries v. CCE (2015, 281 CTR 241 (SC))
• Cholamandalam MS General Insurance Co. Ltd. Vs. DCIT
• Gera Developments (P) Ltd. Vs. JCIT
• CIT vs. Agarwal Transformers (P) Ltd. (2002, 258 ITR 251 (Raj.))
• Smifs Securities Ltd. (2012, 348 ITR 302 (SC))
• S.A. Builders Ltd. Vs. CIT (288 ITR 1 (SC))
• CIT Vs. Reliance Industries Ltd. (2019, 102 taxmann.com 52 (SC))
• Bikaner Gypsums Ltd. Vs. CIT (187 ITR 39 (SC))

FULL TEXT OF THE ORDER OF ITAT PANAJI

The captioned appeals at the instance of Rev enue pertaining to 2009-10, 2010-11 to 2014-15, and 2016- 17 are directed against the separate orders framed by ld.CIT(A), Panaji-1 arising out of respective Assessment Orders passed u/s.143(3) of the Income Tax Act, 1961 (in short ‘the Act’).

2. This is s econd round of litigation before this Tribunal in as much as the Tribunal vide consolidated order dated 24.08.2023 dismissed the appeals of the Revenue on legal issue but did not dealt on merits. Assessee approached the Hon’ble High Court and the Hon’ble High Court of Bombay at Goa in Misc. Civil Application No.133 of 2026 in Tax Appeal No.23/2024 judgment dated 11.03.2026 has remanded the matter to the ITAT, Panaji Bench with a direction to adjudicate the matters on merits. Relevant observation of the Hon’ble High Court reads as under:

“1. The appeals filed by the Revenue, having been admitted, are listed for hearing. The respective counsel representing the respondents/Assessee submit that they are ready to be relegated to the ITAT and are agreeable to the fact that the appeals can be decided by the Tribunal on its merits.

2. Ms Amira Razaq, appearing for the Revenue, expresses her consent for remanding the matter but would submit that the appeals shall be decided on merits by keeping the rights and contentions of the respective parties open.

3. The respective counsel representing the Assessee are, however, agreeable to have the appeals heard on merits as the Tribunal had merely pronounced upon the technical aspect of the matter.

4. In the wake of the aforesaid statement, the respective ITAT appeals are remanded back to the Panaji Bench with a direction to the Tribunal to adjudicate the matters on merits without looking into the technical objections of the issue of Document Identification Number (DIN).”

3. Pursuant to the direction of Hon’ble High Court, the cases have been heard on merits and we therefore proceed to adjudicate the appeals.

4. Identical grounds have been taken by the Revenue in some of the appeals and therefore these appeals were heard together and are being disposed off by this consolidated order.

5. Facts of the case are that the assessee is a company engaged in the business of Mining, Manufacture and sale of  Iron Ore Pellets, Export of Ore, Operation of Tippers, Transhipper and Mach inery hire, trading in cranes and ship building. Assessee filed the return of income for A.Y. 2009 -10 declaring income of Rs.652,45,32,370/-. Assessments for the impugned assessment years were completed wherein additions were made under various heads which were assailed by the assessee before ld.CIT(A) who has given substantial relief and now the Revenue is in appeal for all the assessment years under appeal whereas the assssee has filed Cross appeal for A.Y. 2010-11 and Cross Objections against all the appeals filed by the Revenue.

6. We first proceed to dispose of the common issues raised in the captioned appeals of the Revenue and cross objections of the assessee:

7. The first common issue raised by the Revenue is against the disallowance of depreciation on Todou plant.

8. Facts apropos this issue are that ld. Assessing Officer has made the above disallowance for A.Y rs. 2009-10, 2010 -11, 2011-12, 2012-13, 2013-14 and 2014- 15 on the ground that the Todou plant remained inoperative from December 2003 onwards and was not put to use for the purpose of business as per the orders passed by the Forest Laws.

Further, the assessee contended that though the wet processes referred to as tailings was prohibited by the Forest Department but the plant is in operation for the dry process and hence the block of assets is put to use for the assessment years under appeal.

9. After hearing both the sides and perusing the record placed before us, we find in assessee’s own case for A.Y. 2006-07 this issue came up for a djudication and the Tribunal in ITA No.27/PNJ/2014 order dated 09.06.2015 has allowed the depreciation on Todou plant observing as follows:

“7. We have considered the rival submissions. Admittedly, after the concept of block of assets for the purpose of depreciation, if any part of the plant and machinery falling within the block is put to use during the relevant assessment year, then, the depreciation becomes eligible for the said block of assets. Admittedly, the dry plant of Tudou division has been put to use during the relevant assessment year. It is only the wet process which had been temporarily shut down in view of the order of the Forest Department. The dry plant having been used during the relevant assessment year and as the plant and machinery falls within the block of assets, the Assessee would be entitled to depreciation in respect of the said block of assets. In these circumstances, the AO is directed to grant the Assessee depreciation in respect of the Tudou plant as claimed. In the result, gro und nos. 3.1 to 3.4 of the Assessee”s appeal stands allowed.”

10. Ld.CIT(A) has deleted the said disallowance following the order of Tribunal. We also find that in assessee’s case for A.Y. 2008- 09, ld.CIT(A) has decided this issue in favour of assessee. We therefore following the rule of consistency affirm the finding of ld.CIT(A) on the present issue dismiss this common ground raised by the Revenue for A.Yrs. 2009 -10, 2010-11, 2011-12, 2012-13, 2013-14 and 2014-15.

11. The next common issue raised by th e Revenue relates to disallowance u/s.14A of the Act read with Rule 8d(2) of the Act.

12. Before adjudication this common issue, we proceed to discuss section 14A of the Act which provides that while computing the total income no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income and further the Assessing Officer is required to determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed (which is provided under Rule 8D of the Income Tax Rules, 1962) if the Assessing Officer after having examined the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such  expenditure in relation to income which does not form part of the total income.

13. The assessee in the instant case has made investments which consists of investments fetching dividend/e xempt income, inter corporate investments etc. Ld. Assessing Officer after having examined the details filed by the assessee for computing the disallowance u/s.14A of the Act vis-à-vis the audited financial statements came to the conclusion that method provided under Rule 8D(2) is required to be applied on the facts of the assessee. For better understanding, Rule 8D(2) of the Income Tax Rules, 1962 as applicable reads as under:

“10. Substituted by the IT (Fourteenth Amdt.) Rules, 2016, w.e.f. 2-6-2016. Prior to its substitution, sub-rule (2) read as under:

“(2) The expenditure in relation to income which does not form part of the total income shall be the aggregate of following amounts, namely:-

(i) the amount of expenditure directly relating to income which does not form part of total

(ii) in a case where the assessee has incurred expenditure by way of interest during the previous year which is not directly attributable to any particular income or receipt, an amount computed in accordance with the following formula, namely:-

AX B
C

A= amount of expenditure by way of interest other than the amount of interest included in clause (1) incurred during the previous year;

B= the average of value of investment, income from which does not or shall not form part of the total income, as appearing in the balance sheet of the assessee, on the first day and the last day of the previous year:

C= the average of total assets as appearing in the balance sheet of the assessee, on the first day and the last day of the pr evious year,

(iii) an amount equal to one- half per cent of the average of the value of investment, income from which does not or shall not form part of the total income, as appearing in the balance sheet of the assessee, on the first day and the last day of the previous year?”

14. As per the above rules, ld. Assessing Officer has calculated the disallowance mainly for the interest expenditure under Ruyle 8D(2)(ii) and indirect expenses incurred for earning the exempt income under Rule 8D(2)(iii) of the Act.

15. So far as the interest disallowance u/s.14A r.w.Rule 8D(2)(ii) is concerned, the assessee has commonly contended that interest expenditure was incurred for borrowings taken for specific business purposes such as acquisition of ships, mines and creation of stock in trade/work-in- progress and that the assessee had sufficient interest free funds in the form of share capital, reserves and surplus to explain the source of investments made. Reliance placed on the judgment of Hon’ble Jurisdictional High Court in the case of HDFC Bank Vs. DCIT reported n 383 ITR 529 where the Hon’ble Court has held that where sufficient interest free funds are available to cover up the investments made, no disallowance u/s.14A on account of interest is warranted.

16. So far as indirect expenditure is concerned, it has been contended that no expenditure was incurred in relation to investments and only fresh investments made during the year in group companies and other entities are not required to be considered for disal lowance since no recurring effort is involved. It is also claimed that investment under foreign companies were directed to be excluded as they generate taxable capital gains on redemption and there is no exempt divided income. In totality, it has been contended consistently that disallowance under Rule 8D(2)(iii) should be computed only with regard to the dividend yielding investments and further disallowance should not exceed the exempt income.

17. Assessee got substantial relief from ld.CIT(A). Before us, ld. DR relied on the orders of the Assessing Officer and ld. Counsel for the assessee relied on the finding of ld.CIT(A).

18. We have heard the rival contentions and perused the record placed before us. We find that ld.CIT(A) has dealt with this issue of section 14A of the Act as follows:

“ 6. The Assessing Officer has disallowed expenditure u/s 14A. The disallowance is in respect of interest and other expenses by invoking Rule 8D. However as rightly pointed out by the Appellant the interest incurred is for specific business activity like acquisition of ship or creating stock in trade and work-in- progress in various divisions. Therefore such interest cannot considered for disallowance under Rule 8D(ii). Further the appellant is having sufficient interest- free funds to cover the investment made. The Bombay High court in HDFC Bank vs DCIT 383 ITR 529 (BOM) has already laid down the law that where sufficient interest free funds are available, no disallowance u/s 14A is warranted on account of interest. This being a jurisdictional High Court Decision I am inclined to follow the same. The AO is accordingly directed to re- compute the disallowance by not making any addition on account of interest on borrowed funds.

7. The next ground of appeal relates to disallowance of expenditure u/s 14A. The Assessing Officer has disallowed the expenditure @ 0.5% of average cost of investments which works out to Rs. 3,65,53,397/- . According to the appellant they have not incurred any expenditure on making or selling inves tments. It is not possible to accept that there will be no cost involved in relation to the investments and accordingly some expenditure has to be attributed to the income which does or will not form part of the total income. However since Rule 8D(iii) directs the disallowance at 0.5% of average value of investments, such average value has to be determined in a scientific method considering all facts and circumstances of the case.

8. It is argued by the appellant that some of the investments are made in Gr oup Companies and other companies where once the investments are made there is no further effort to be put in by the appellant and hence these will invite no expenditure whatsoever and whereas every year there will be disallowance of 0.5% of the value of such investment whether there is income or not. I see merit in this factual position. I therefore direct that only the fresh investments in the Group or other companies during the year be recognized for disallowing the expenditure.

9. The appellant also points out that there is investment in foreign companies the dividend from which when declared/received is liable for tax in India. Therefore the value of such investments cannot be considered to work out the average investments. I agree with the appellant on this count and direct the Assessing Officer to delete the value of all foreign investments in working out average investments value.

10. Yet another argument taken by the appellant is that there are some investments which are in the nature of growth sch emes of Mutual Funds from which there is no dividend income and upon redemption of such investments, there will be capital gains which are taxable. I direct the Assessing Officer to exclude the value of all growth Schemes of Mutual Funds for determining average value of investments.

11. The appellant also points out that there is a provision for diminution made in respect of some investments which have lost value whereas the Assessing Officer has taken the full value of investments ignoring the diminution provided in the annual accounts and the same is deducted from total value of investments. I direct the Assessing Officer to reduce the provision from diminution from the respective value of investments to determine the average value of investments.

12. The appellant points out that there is no income at all from many of the investments during the year as well as over the past several years and hence such investments must be excluded. The Section 14A read with rule 8D recognizes the investment the income wherefrom does or shall not form part of the total income. In order to avoid a situation where the amount of investment is repeatedly considered for disallowance year after year, I direct the Assessing Officer to include for the purpose of computation only those investments where there has been some dividend earned during the year during the year and the overall disallowance cannot exceed the dividend income.

13. The appellant points out that they have several divisions within the appellant company. Except t he Head Office of the appellant, other divisions are not involved in the transactions relating to investments. Therefore according to the appellant only the administrative expenses relating to administration department of the head office of the appellant should be the limit for disallowance. I see merit in this argument. The Assessing Officer is directed to restrict the disallowance to the administrative expenses at the head office of the appellant and also to the actual exempt income earned by the appellant.

14. The appellant has argued that overall disallowance cannot exceed the amount of dividend income. I agree to the contention of the appellant and direct the Assessing Officer to restrict the disallowance as worked out after taking into account the aforesaid directions to the dividend income earned during the relevant previous year.”

19. So far as disallowance u/s.14A read with Rule 8D(2)(ii) is concerned, we fail to find any inconsistency in the finding of ld.CIT(A) holding that since the assessee ha d sufficient interest free funds for all the years under consideration which are more than the alleged investments appearing in the balance sheet, therefore in light of settled judicial precents including that judgment of Hon’ble Bombay High Court in the case of HDFC Bank Vs. DCIT (supra) and also of the judgment of Hon’ble Apex Court in the case of South Indian Bank Ltd. Vs. CIT reported in (2021) 130 taxmann.com 178 (SC), no interest disallowance under Rule 8D(2)(ii) of the Act is called for.

20. As rega rds the disallowance u/s.14A read with Rule 8D(2)(iii) is concerned, ld. Assessing Officer took into consideration all the investments while computing the average value of the investments and applied 0.05% of the average value of the investments as appearing in the balance sheet of the assessee as on the first day and last day of the previous year. We find that ld.CIT(A) has rightly given the relief to the extent that only fresh investments made during the year in group companies and other entities were directed to be considered for disallowance, investments in growth schemes of mutual funds were directed to be excluded from the computation as they generate capital gains on redemption and not exempt dividend income. Further, ld.CIT(A) also rightly held the provision for diminution in the value of investments and investment in foreign companies fetching taxable dividend income are directed to be reduced from the value of investments and only those investments which yields dividend income of exempt needs to be considered and that disallowance should not exceed the exempt income earned by the assessee and lastly since the investments were handed at the head office of the assessee disallowance is to be restricted to Administrative expenses attributable to the head office only.

21. We note that the cross objections filed by the assessee on this issue of disallowance u/s.14A of the Act is mainly challenges the finding of ld.CIT(A) deciding against the assessee. We uphold the common finding of ld.CIT(A) on this issue of disallowance u/s.14A read with Rule 8D(2)(iii) of the Act directing the Assessing Officer to recompute the disallowance based on the directions given in the impugned orders. We also hold that ld.CITI(A) has rightly observed that ld. Assessing Officer has carried out proper satisfaction as required in section 14A of the Act prior to applying method under Rule 8D. Therefore, proper satisfaction is recorded by ld. Assessing Officer. The view taken by the ld.CIT(A) is further supported by the decisio n in the case of Tata Chemicals Ltd. v s. DCIT reported in (2026) 183 taxmann.com 164, Deputy Commissioner of Income-tax vs . SP Port Maintenance (P.) Ltd. (2024) 164 taxmann.com 752 (Mumbai – Trib.), Aker Powergas (P.) Ltd. vs . ACIT (2016) 70 taxmann.com 11. Thus, no interference is called for in the finding of ld.CIT(A) for the impugned assessment years.

Respective grounds of appeal raised by the Revenue and cross objection grounds raised by the assessee on this issue of disallowance u/s.14A of the Act for A.Yrs. 2009- 10 to A.Y. 2014-15 are dismissed.

22. Next common issue Raised by the Revenue is against the disallowance of Demurrage expenses u/s.40(a)(ia) of the Act.

23. Relevant facts concerning this issue are that t he assessee who is engaged in export of iron ore has entered into sale contracts with foreign buyers for the supply of iron ore on an FOB basis. Under the terms of said contracts, the a ssessee guarantees the buyers a specified loading rate per day/hour. In cases where the assessee loads the ore at a rate faster than the agreed loading rate, the assessee becomes entitled to a bonus, referred to in the contract as “dispatch money”. However, if the assessee loads a quantity lower than the minimum guaranteed rate, it becomes liable to pay charges commonly referred to as “demurrage”. The settlement of accounts comprises three stages. In the first stage, approximately 90% to 95% of the invoice value for the sale of iron ore is paid provisionally by the foreign buyer immediately upon departure of the ship. In the second stage, the buyer obtains a report from its sampler at the destination and, based on such report, advises the assessee regarding the preparation of the final invoice. Any difference between the provisional invoice and the final invoice is subsequently settled by way of additional remittance or payment by the concerned party. In the third stage, the buyer raises claims relating to delay charges or bonus for loading operations relying upon the statement issued by the Master of the ship co ntaining details such as the exact loading rate, number of days taken for loading, and other relevant particulars. Such statement is generally received by the buyer after 30- 45 days or even later, depending upon the movement of the vessel. Such data is forwarded to the assessee by the buyer. The assessee provides justification for the amount claimed. Once the parties mutually agreed upon the amount, the buyer issues a debit note towards the charges categorized as demurrage. Such debit notes are settled as and when demanded by the buyers after adjustment of dispatch money, wherever applicable. However, ld. Assessing Officer disallowed the demurrage expenses u/s.40(a)(ia) on the ground that it is giving enduring benefit to the beneficiaries in Japan, Hongkong, China and British Virginia Highland and therefore rigours of section 5(2) of the Act attracts and liable for taxation u/s.195(1) of the Act. Assessee carried the matter in appeal and the ld.CIT(A) deleted such disallowance relying on the decisions of Tribunal in the case of Sesa Goa Ltd. In ITA No.364/PNJ/2013 order dated 18.07.2014 and the judgment of Hon’ble Jurisdictional High Court in the case of V.S. Dempo and Co. (P) Ltd reported in 380 ITR 303 (Bombay). Now the Department is in appeal against the said finding of ldCIT(A).

24. After hearing both the sides and perusing the record placed before us, we find that assessee does not have any contractual agreement with the ship owners in respect of demurrage or dispatch money on Free on Board basis a nd that the contractual arrangement exists solely between the assessee and the buyer for the purchase and sale of iron ore on an FOB basis. The dispatch money and demurrage are merely adjustments to the agreed sale consideration between the parties. Since the transaction in question relates to ex port of iron ore and the payment towards demurrage effectively represents a reduction in the sale consideration, in our considered view, the assessee is not under any obligation to deduct tax at source on the amount remitted to the buyer towards demurrage. Further, the ship owner recovers freight directly from the buyer, who also independently settles any demurrage liability with the shipowner. The demurrage payable to the ship owner is not borne by the assessee but by the buyer and therefore there is no liability to deduct tax at source on the assessee which does not call for any disallowance u/a.40(a)(ia) of the Act.

25. We further find that in the preceding assessment year 2008-09 in assessee’s case, Coordinate Bench in ITA No153/PNJ/2017 order dated 13.11.2018 has decided this issue in favour of the assessee placing reliance on the judgment of Hon’ble Jurisdictional High Court in the case of V.S. Dempo and Co. (P) Ltd. (supra). Following the decision, we uphold the finding of ld.CIT(A). Accordingly, the grounds of appeal raised by the Revenue regarding the disallowance of demurrage expenses u/s.40(a)(ia) of the Act for A.Yrs. 2009-10 to 2014-15 are dismissed.

26. We now move on to the another common issue of disallowance which is against the bad debts written off in relation to the AY. 2009-10 and 2011-12 respectively.

27. The facts concerning this issue are that the assessee for the assessment year 2009- 10 gave business advances to the four parties namely (i) Kone Cranes PTE Ltd; (ii) Ravin Industrial Corporation; (iii) Earth Movers; and (iv) Intelligroup Asia Pvt. Ltd. aggregating to Rs.16,23,932/- and Rs.40,00,000/- for A.Y. 2011-12. The assessee contended that these amounts are attributable to the advances paid for procurement of goods and services in the ordinary course of its business and despite its best efforts the amounts could not be recovered and therefore the said income are written off as bad debts. Ld. Assessing Officer disallowed the said expenditure stating that they are in the nature of acquisition of capital assets and not allowable as business expenditure u/s.36(1)(vii) of the Act. When the assessee preferred appeal against this disallowance, ld.CIT(A) on being satisfied with the detailed submissions of the assessee and based on the earlier order passed by the Tribunal for A.Y. 2008- 09 and on further observing that ld. Assessing officer has wrongly invoked section 36(1)(vii) treating them as bad debts but they are actually business advances, has deleted the said disallowance against which the Department has now approached this Tribunal.

28. We have considered the rival arguments made by both the sides and perused the record. We observe that regarding the disallowance of business advances written off, ld.CIT(A) has given relief to the assessee on observing that the amounts claimed as bad debts in the ship building division  are business advances given to suppliers and service providers and they were not related to acquisition of any capital asset but since they became irrecoverable they have been claimed as bad debts. Further, ld.CIT(A) has also held that ld. Assessing Officer has erred in invoking section 36(1)(vii) of the Act because the amount did not arise from sale of goods or rendering of services by the assessee and further ld. AO had presumed that the advances were for purchase of capital goods. However, the assesee successfully demonstrated that the parties involved were suppliers of spares and services and not suppliers of capital goods. We further find that finding of ld.CIT(A) is also supported by the fact that in assessee’s own case for A.Y. 2008- 09 ld.CIT(A) vide order dated 17.02.2017 has observed that advances have been given in the normal course of business and therefore a llowable as business loss. This finding of ld.CIT(A) has not been challenged by the Revenue authorities before this Tribunal. Similar was the case for A.Y. 2010- 11 where also similar type of disallowance of advances given to Shirish Steel supplier was also deleted by ld.CIT(A) observing that it is not a capital expenditure and is to be allowed as deduction and has not been challenged by the Department before this Tribunal. In view of the above, we fail to find any infirmity in the finding of ld.CIT(A) deleting the disallowance of business advances written off for A.Y. 2009-10 and A.Y. 2011-12. Respective grounds of appeal raised by the Revenue are dismissed.

29. The next common issue for our consideration is the disallowance of contribution to Goa Infrastructure Development Company Private Limited ( in short ‘GIDC’) for A.Yrs. 2010-11, 2011-12 and 2012-13.

30. Facts in brief are that the assessee has incurred expenditure towards contribution to GIDS for construction, widening and repair of public roads at Sanvordem. Due to severe dust pollution and traffic congestion on the Sanvordem- Curchorem roads, the District Magistrate, South Goa, had advised to mining companies operating in the region to undertake widening and repair of these public roads to mitigate dust pollution and ease traffic. The assessee gave contribution to GIDC which constructed the roads owned by the Government and not by the assessee and claimed the expenditure u/s. 37 r.w.s. 28 of the Act. Ld. Assessing Officer disallowed the said c laim treating as capital expenditure. Before this Tribunal, ld.CIT- DR supported the order of the Assessing Officer and the ld. Counsel for the assessee supported the order of ld.CIT(A).

31. We have heard the rival contentions and perused the record. We observe that the issue relating to contribution to GIDC is whether it is a Revenue or Capital expenditure has already been considered by this Tribunal in assessee’s own case in the past where also the Assessing Officer disallowed it as Capital expenditur e and the Tribunal has held that said expenditure is Revenue expenditure. Relevant finding of this Tribunal for A.Y.2002-03 in ITA No.162/PNJ/2006 dated 12.07.2007 reads as follows:

“3. The next ground raised by the Assessee is against the disallowance of Rs.4,33,026/- made by the assessing authority. The said expenditure was incurred by the assessee- company towards contribution to Goa Infrastructure Development Limited for the repair and maintenance of roads, frequently used by the assessee-company to transport its goods. The assessing authority has disallowed the expenditure on the ground that it could be a capital expenditure. But the fact is that the road is owned by public authority. It is a public property. It is not owned by the assessee- company. But that road is frequently used by the assessee- company for its business purposes inasmuch as the loads and loads of trucks coming and going out of the assessee’s business place are plying on the road. Therefore, the local authorities have approached the assessee- company to take a share in the repair and maintenance of the road, of which the assessee is one of the principal beneficiaries. Such a social obligation demanded by the local community cannot be overlooked by the assessee and such expenditure should be treated as expenditure incurred for the purpose of carrying on its business. The assessee is not owning an asset or property in that way. Therefore, the assessee cannot account the expenditure by way of capital expenditure in its books of account. We , therefore, direct the assessing authority to give deduction for the said amount of expenditure. This ground is, accordingly, allowed.”

32. The above finding of the Tribunal has not been challenged by the Department before the Hon’ble High Court. Similar view was taken up by this Tribunal for A.Y. 2008- 09 in assessee’s own case in ITA No.153/PNJ/2017 order dated 13.11.2018. We therefore in absence of any change in the facts and circumstances and taking consistent view we fail to find any inconsistency in the finding of ld.CIT(A) deleting the disallowance of contribution to GIDC. Grounds of appeal raised by the Revenue on this issue for A.Yrs. 2010-11, 2011-12 and 2012- 13 are dismissed.

33. The next common issue relates to disallowance of higher education and training expenditure incurred on family members of Directors of the company for A.Yrs. 2010-11 to 2014-15.

34. Facts in brief are that the payments were made by the assessee to Foreign universities through normal banking channel for the training a s well as learning managerial skills, business expertise and international business of the family members of the Directors of the company. Ld. Assessing Officer disallowed them as personal expenses.

However, ld.CIT(A) allowed the claim observing that the persons are employees of the company and the training undertaken by them is closely connected with the business activities of the assessee. Revenue is in appeal before this Tribunal relying on the order of the Assessing Officer and ld. Counsel for the assessee on the finding of ld.CIT(A).

35. We have heard the rival submissions and the perused the record. We observe that certain payments have been made by the assessee to Foreign universities on behalf of the employees of the assessee company. We notice that the alleged expenses does not include any personal expenses of the employees. It is not in dispute that payments are made to the Foreign universities and the concerned persons were getting necessary training, higher education, learning managerial skills, business expertise and other connected studies required for successfully running and expending the business. We also note that the alleged employees of the company continued with the business on completion of their studies and training programme and have been serving as Directors of the company and involved in day to day business activities. Mere relationship of the Directors cannot be a ground for disallowance of the expenditure incurred on such training when they are genuine employees serving the companies business. Therefore, the expenditure incurred indicates commercial expediency. Our view is further supported by the decision in the case of Jalani Holding Pvt. Ltd. vs. ITO (1992) 142 TTJ 116 (Delhi). We therefore find no infirmity in the finding of ld.CIT(A) deleting the disallowance of training expenditure incurred on family members of the Directors. Relevant grounds of appeal raised by the Revenue on this issue for A.Y rs. 2010- 11 to A.Y. 2014-15 are dismissed.

36. The next common issue is t he disallowance of contribution given to construction/repair of temples for A.Yrs. 2010-11 to A.Y. 2014-15.

37. Facts in brief are that the assessee incurred expenditure towards construction in local villages and the Institute of Maritime studies for maintaining cordial relations with villagers and ensuring smooth conduct of business operations. No capital asset came into existence in the hands of assessee and the temples/community structures were situated on public land not owned by the assessee. Ld. Assessing Officer held it to be a donation/contribution to the local public land and institutes not having any direct business and commercial expediency. However, ld.CIT(A) deleted the addition observing that the alleged expenditure have been incurred as part of s ocial responsibility and for maintaining cordial relation in areas surrounding the business establishment. Aggrieved Revenue is now in appeal before this Tribunal placing reliance on the order of the Assessing Officer and ld. Counsel for the assessee on the finding of ld.CIT(A).

38. We have considered the rival arguments made by both the sides and perused the record. We observe that the assessee has incurred expenditure for construction and repair of temples and contribution to Institute of Maritime studies where its business establishments are located. The expenditure incurred are towards welfare and the temples renovation/construction is social responsibility and no capital asset or ownership rights accrued to the assessee for incurring such expenditure. L d. Counsel for the assessee has claimed that the alleged expenditure have been incurred for maintaining cordial relations in the areas surrounding the business establishments so that people support the business activity and further the employees also effective work in the company. However, the personal element or the social obligation element cannot be ruled out to some extent. Also assessee as a corporate is required to carry out Corporate Social Responsibility (CSR). Necessary amendment s disallowing CSR expenses u/s.37(1) of the Act brought into effect by Finance ( No.2) Act, 2014. Therefore, in our considered view 15 % of the alleged sum deserves to be disallowed as part of the expenses in the nature of donation/social responsibility not directly incurred for business purpose which somehow is also covered under Corporate Social responsibility (CSR). Therefore, 15 % of the alleged expenses deserves to be sustained. Grounds of appeal raised by the Revenue for the A.Yrs. 2010- 11 to A.Y. 2014-15 are partly allowed.

39. We now take up the remaining issues specifically raised by the Revenue for A.Y. 2010-11.

40. Ground No.5 has been raised by the Revenue against the deletion of disallowance on compensatory afforestation.

41. Relevant facts include that the assessee has incurred expenses of Rs.29,53,682/- under the provisions of Forest Conservation Act, 1980 and the said amount represents the Net Present Value charges paid. Ld. Assessing Officer treated it as capital expenditure whereas ld.C IT(A) following the decision of this Tribunal in the case of. Prafulla R. Hegde vs. CIT in ITA No.15/2012 dated 06.02.2012 has deleted the disallowance of compensatory afforestation expenditure.

Now the Revenue is in appeal before this Tribunal relying on the order of Assessing Officer and the assessee on the finding of ld.CIT(A).

42. We notice that the issue of disallowance of compensatory afforestation expenditure has come up before this Tribunal in assessee’s own case for A.Y. 2008- 09 and vide ITA No.1 53/PNJ/2017 dated 13.11.2018 the Tribunal has followed the judgment of Hon’ble Bombay High Court in the case of Prafulla R. Hegde vs. CIT (supra) and has held that the alleged expenditure is for commercial expediency and should not treated as capital in nature. Similarly in assessee’s own case for A.Y. 2009-10 and A.Y. 2011- 12 ld.CIT(A) has deleted similar type of disallowance and no further appeal has been filed by the Revenue before this Tribunal. In view of the above and taking consistent view, we affi rm the finding of ld.CIT(A). Ground No.5 raised by the Revenue for A.Y. 2010-11 is dismissed.

43. Ground No.8 raised by the Revenue for A.Y. 2010- 11 is against the deletion of disallowance u/s.40(a) of the Act at Rs.5,10,89,201/- incurred towards consultation and other charges paid without deduction of tax at source.

44. Facts relating to this issue are that the assessee paid alleged sum as consultation charges to parties located outside India contending that the services were rendered outside and that non- resident parties did not have Permanent Establishment (PE) in India therefore the income did not accrue or arise in India and no TDS was deductible u/s.195 of the Act. Further, during the course of assessment proceedings, assessee has relied upon the provisions of respective Double Taxation Avoidance Agreement (DTAA) claiming that consultancy/technical fees paid to non- resident is not chargeable to tax in India. However, ld. Assessing Officer observed that alleged sum paid is covered under the scope of fees for technical services u/s.9(1)(vii) of the Act and further amendment by the Finance Act, 2010 to section 9(1)(vii) is retrospective in nature. Ld. Assessing Officer further held that Article 12 of the applicable DTAA permits taxation of Royalty/Technical/Consultancy fees in the source country, i.e. India and accordingly disallowed the expenditure at Rs.5,10,89,201/-. When the assessee challenged the said disallowance before ld.CIT(A) he held in favour of the asesssee observing that under the appli cable DTAA provisions and the law prevailing at the time of payment such amounts were not chargeable to tax in India in the  hands of non- residents. Ld.CIT(A) further held that the amendment in section 9 introduced by Finance Act, 2010 were brought into force subsequently and the payment in question were made prior to such amendment becoming law and therefore there was no occasion for the assessee to deduct tax at source on the basis of subsequent retrospective amendment. Now the Revenue is in appeal befor e this Tribunal relying on the order of Assessing Officer. Ld. Counsel for the assessee has relied on the finding of ld.CIT(A).

45. We have heard the rival submissions and perused the record placed before us. The issue for our consideration is arising out of the amendment to section 9(1)(vii) of the Act with retrospective effect. It is not in dispute that at the time when the assessee made payment to the non- resident for consultation charges the assessee was not obliged to deduct tax at source on such payments as the services were rendered outside India to the non- resident who provided the service and had no Permanent Establishment of business connection in India. Hon’ble Bombay High Court in the case of ACIT vs.. Sociedade De Fomento Industrial (P) Ltd. (2024) 164 taxmann.com 139 (Bombay) has held that retrospective amendments cannot create a withholding tax  default for payments already made. Similar is the view taken by this Tribunal in the case of ACIT vs. Ajit Ramakant Phatarpekar in ITA Nos. 145 and 146/PNJ/2014 dated 16.03.2025. From the available record, it is also noticed that the payments made by the assessee are in the nature of contribution to International Ship Building Associations, licensing charges and incidental services which are claimed to be not qualifying for Fees for Technical services. Further, the DTAA protection is available to the assessee as the income from the payment made to non- resident parties was not chargeable to tax in India. Further, the observation of the Assessing Off icer that assessee should have obtained the certificate u/s.195(2) and 195(3) is not relevant since the assessee had no liability to deduct the tax at source on the law prevailing at the relevant point of time. Under these facts and circumstance and the judicial precedents referred supra and that the amendment being made retrospective and on the date of payment the assessee was not liable to deduct tax at source, we fail to find any infirmity in the finding of ld.CIT(A) and thus ground No.8 raised by the Revenue is dismissed.

46. Ground No.9 raised by the Revenue for A.Y. 2010- 11 is against the deletion of disallowance for obsolete stock written off.

47. Facts in brief are that the assessee is engaged in the Ship Building Division and a 100% Export Oriented Unit engaged in the manufacture of various materials such as steel plates, pipes and components are used in the manufacturing process. On account of regular wear and tear, damage and defective or unusable or obsolete items which are part and parcel of the business, the assessee reviews the inventory for such obsolete, damaged and unusable items as well as normal excess or shortages arising during consumption and writes them of f after management approval. Similar write- offs have been consistently allowed and followed in earlier years. The total inventory of the ship building division is around Rs.284 crores, whereas obsolete stock written off is only Rs. 1.14 crores. Assessee has been claiming it as an expenditure u/s. 37 of the Act which has been rejected by the Assessing Officer observing that such deduction could be allowed only when stock is actually sold out or disposed of. Ld. Assessing Officer thus denied the claim of writing off of the obsolete stock against which the assessee preferred appeal  before ld.CIT(A). On due consideration of submissions filed by the assessee, ld.CIT(A) has observed that detailed internal procedure was followed before declaring the inventory as obsolete and further the obsolete stock consisted of tailor made items/spares ordered for specific vessel construction projects which remained unused.

48. Aggrieved Revenue is in appeal before this Tribunal and relied on the order of the Assessing Officer. Per contra, ld. Counsel for the assessee relied on the finding of ld.CIT(A).

49. We have heard the submissions made by both the parties and perused the record. The issue for our consideration is whether ld.CIT(A) was justified in deleting the disallowance of obsolete stock written off made by the Assessing Officer. We obs erve that the assessee is in ship building division wherein inventory is around Rs.284 crores, has written off obsolete, damaged and unusable items. We note that in the regular course of manufacturing business carried out by the assessee several items such as steel plates, pipes and components which are procured for specific vessel construction projects becomes obsolete on account of variation in such specification, technological changes and also on account of damage and unusable. The assessee has also followed proper procedure for earmarking such obsolete stock. Ld. Assessing Officer has denied the claim merely on the ground that stock is not actually sold or disposed of. We note that the kind of business which the assessee is engaged into manufacture of vessels, v arious items of inventory are lying at various places and some time on physical verification many items are not found. We note that even though there is no specific observation by the Assessing Officer about the sale of the stock written off as scrap but then sale of scrap is a routine part of the company which is carried out on time to time basis. However, various items in the inventory which are obsolete and unusable are required to be removed out of the inventory for proper and fair accounting purposes. Such writing off of the inventory is purely revenue in nature. Hon’ble Jurisdictional High Court in the case of CIT Vs. Gigabyte Technology (India) Ltd. 421 ITR 21 (Bom.) has held that obsolete stock written off are allowable as business e xpenditure even though the stock was not actually sold or disposed of. Similarly, in the case of CIT Vs. Heredialla Chemicals Pvt. Ltd. 216 ITR 742 (Bom.) has held that once the inventory had become commercially obsolete and unusable, deduction could not be denied merely because physical disposal had not taken place.

50. Considering the judicial precedents and also observing that since the obsolete inventory had no practical utility and cannot be economically sold due to cumbersome customs and formaliti es applicable to goods lying in a 100% Export Oriented unit and the consistent method followed by the assessee, no interference is called for in the finding of ld.CIT(A. Ground No.9 raised by the assessee is dismissed.

51. Ground No.10 raised by the Revenue for A.Y. 2010- 11 is against the deletion of disallowance of Ship Dry Docking Expenses/Repair of transhipper amounting to Rs.2,70,69,219/-.

52. Facts in brief relating to this issue are that assessee has incurred expenditure of Rs.2,70,69,219/- towards repairs and dry docking of its transhipper vessel M.V. Maratha Deep. Ld. Assessing Officer during the course of assessment proceedings observed that dry docking expenses involved overhauling and reconditioning of machinery and therefore cannot be treated as current repairs. Further, ld. Assessing Officer relied on the explanation to section 31 inserted w.e.f. 01.04.2004 which excludes capital expenditure from the scope of current repairs. Further, he observes that the alleged expenditure has resulted in overhauling, renovation and restoration giving enduring benefit to the assessee and therefore is a capital expenditure. The action of the Assessing Officer has been challenged by the assessee before ld.CIT(A) who gave relief observing that dry docking and special survey of ocean going vessels are mandatory requirements under the Merchant Shipping Act and they are in the nature of current repairs necessary for maintaining operational fitness of the vessel and that the expenditure did not result in creation of any asset or enduring benefit. Aggrieved Revenue is now in appeal before this Tribunal.

53. We have heard the rival submissions and perused the record. The issue for our consideration is whether ld.CIT(A) erred in deleting the disallowance of ship dry docking expenses/repair of transhipper. We note that in assessee’s case for A.Y. 1974- 75 the very same issue came up before the Hon’ble Bombay High Court in CIT Vs. Chowgule & Co. (P) Ltd. (1995) 214 ITR 523 (Bom.) wherein the Hon’ble Court has held as under:

“11. In the present case, the Tribunal, on investigation of the nature of the repairs undertaken by the assessee, recorded a categorical finding of fact that it did not result in emergence of a new ship but amounted, in substance, to current repairs to the existing ship. These findings have not been challenged before us by the revenue. The fact that old parts of the ship were replaced by new parts, in our opinion, is not relevant for determining whether the expenditure was on ‘current repairs’ or not. The replacement of the old parts by new parts does not mean that a new asset was brought into existence in relation to the ship in question. The replacement of the parts was only in the process of current repairs of the ship. The expenditure claimed in this case, therefore, amounts to ‘current repairs’ which is allowable as a deduction under section 31.

12. In view of the above, we answer question No. 1 in the affirmative and in favour of the assessee.”

54. Since the very same issue has been examine d by the Hon’ble High Court in assessee’s own case, we therefore respectfully following the same fail to find any infirmity in the finding of ld.CIT(A). Ground No.10 raised by the Revenue is dismissed.

55. Now we move on to adjudicate cross appeal ITA No.36/PAN/2020 wherein the assessee has raised solitary issue in Ground No.1 and Additional Ground No.1 against the unaccounted cash receipts from Trimurti Exports on account of sale of ore.

56. Facts is brief at that during the course of assessment proceedings information received by the Assessing Officer from ACIT, Central Circle, Panaji vide letter dated 05.02.2013 stating that during the search and seizure  proceedings conducted in the case of M/s Trimurti Exports, Acquem Alto, Margao, Goa on 12.10.2010, certain documents were seized allegedly showing unaccounted cash payments amounting to Rs.1.43 crore for purchase of ore made partly through banking channel and partly through cash mode. During the course of assessment proceedings, the assessee was confronted with this information to which it was submitted that this information was factually incorrect since there is no purchase of iron ore by the assessee from M/s Trimurti Exports. On the contrary, assessee has sold the iron ore to M/s Trimurti Exports and that no such cash transaction took place with M/s Trimurti Exports and all payments against sale of iron ore have been received through banking channel duly reflected in the books of account. Further, during the course of assessment proceedings M/s Trimurti Exports categorically stated that no cash purchases have been made from the assessee and the said fact has already been explained before the Department during the search and subsequent proceedings. Without prejudice, M/s Trimurti Exports also clarified that documents seized from its premises mainly represented the estimated expenditure towards handling and transportation and that due to peculiar circumstances relating to transportation contractors and movement of iron ore mines some statements have been prepared for payments to Truck operators and that the cash sum referred in the alleged seized documents only represents the estimated amount calculated by the employee Mr. Thorve solely for making payments to transporters and did not represent any cash payment to the assessee. However, ld. Assessing Officer was not satisfied with these submissions and observed that out of the total amount of Rs.1.43 crore appearing on page 13 of the seized document, cash of Rs.30 lakhs has been stated to be adjusted against the purchase of iron ore from ONDA mine and the balance amount in interpreted as cash available with the assessee. Further, ld. Assessing Officer denied the opportunity to the assessee to cross examine M/s Trimurti Exports and also observed that no evidence with the seized document represent transportation expenses. The addition made by the Assessing Officer at Rs.1.43 crore and alleged cash payment made to M/s Trimurti Exports was subsequently challenged by the assessee before ld.CIT(A) but in abse nce of any evidence establishing that cash reflected in the seized papers represents funds kept for transportation expenses, ld.CIT(A) sustained the addition made by the Assessing Officer.

57. Aggrieved assessee is now in appeal before this Tribunal.

58. Ld. Counsel for the assessee submitted that Department has adopted incorrect factual premise. There is no purchase of iron ore by the assessee against the cash consideration. Since the assessee has not made any purchases in cash, the amount reflected in the seized document reflects transportation expenditure and the cash payments if any were made to the transporters and not to the assessee and therefore the addition cannot be made in the hands of assessee. Further, reliance made to the decision of Tribunal in the case of M/s. Trimurti Exports in ITA No. 5/PNJ/2015 order dated 10.08.2015 deleting the said addition after holding that explanation furnished by the assessee are supported by books of account and no contrary evidence has been brought on record by the Revenue. Further, ld. Counsel for the assessee submitted that there is clear violation of principles of natural justice as opportunity of cross examination was not provided to the assessee.

59. On the other hand, ld. DR supported the order of AO and the CIT(A).

60. We have heard the rival parties and perused the record placed before us. The issue for our consideration is the addition for alleged cash payment of Rs.1.43 crore by the assessee and the cash receipts from M/s. Trimurti Exports. We no te that in the initial stage of assessment proceedings, ld. Assessing Officer alleged that assessee had made purchases from M/s. Trimurti Exports and thereafter it was alleged that payment has been made from M/s. Trimurti Exports to the assessee towards purchase of iron ore and said payment have been made through banking channel as well as cash mode. M/s. Trimurti Exports have expressly denied to have carried out any cash transaction with the assessee. Even this Tribunal in the case of M/s. Trimurti Exports have also deleted the addition made in the hands of M/s. Trimurti Exports observing that the explanation furnished by the assessee are supported by books of account and there being no unaccounted transaction no addition deserves to be sustained. Ld. Counsel for the assessee also successfully explained with the seized documents and explanation by M/s. Trimurti Exports clearly establishing that amounts mentioned therein represented estimated cash requirement for transportation and handling expenses and therefore the cash payments if any were made to the transporters and not to the assessee.

Further both M/s. Trimurti Exports and the assessee were making similar submissions but ld. Assessing Officer rather than giving an opportunity of cross examination has made the impugned addition. Hon’ble Apex Court in the case of Andaman Timber Industries v. Commissioner of Central Excise reported in 2015 281 CTR 241 (SC)) held that denying an assessee the right to cross- examine witnesses whose statements are relied upon breaches natural justice and renders the order a nullity.

61. Therefore, considering the decision of Hon’ble Apex Court in the case of Andaman Timber Industries (supra) and also the decision of Tribunal in the case of M/s. Trimurti Exports deleting the addition in the hands of M/s. Trimurti Exports for the very same transaction, we find that since the Revenue has failed to establish any unaccounted transaction, therefore, the impugned addition deserves to be deleted. Additional ground No.1 and Ground No.1 raised by the assessee are allowed.

62. The next common issue raised by the assessee in the Cross Objections for A.Yrs. 2010-11 to 2014- 15 relates to disallowance of depreciation claimed on commercial vehicles.

63. Facts in brief are that assessee purchased motor cars during 01.04.2009 to 30.09.2009 and claimed depreciation at 50% on the Light Motor Vehicles claiming them to be covered under commercial vehicles. However, ld. Assessing observed that motor cars fall under a separate category other than commercial vehicles and that the assessee’s cars qualify as “Maxi-cab/Motor-cab” and therefore are excluded from the definition of “commercial vehicle.” Similar view has been taken by ld.CIT(A). Now the assessee has raised cross objections assailing the orders of ld.CIT(A).

64. We have heard the rival submissions and perused the record. We find that the issue for our consideration is the depreciation rate applicable for the commercial vehicles acquired between 01.01.2009 to 01.10.2009. The Notification No.10/2009 dated 19.01.2009 provides that new commercial vehicle acquired on or after 01.01.2009 but before 01.04.2009 and put to use before 01.04.2009 for the purpose of business or profession is eligible for depreciation @50%. Subsequently, vide Notification No.37/2009 dated 21.04.2009, date “01.10.2009” was substituted to “01.04.2009”. There is no dispute that the assessee has acquired the Light Motor Vehicles during the period 01.01.2009 to 01.10.2009 and more specifically 01.04.2009 to 01.10.2009 applicable to the year under consideration. The assessee has claimed depreciation @50% on the Light Motor Vehicles claimed them to be commercial vehicles. We note that Coordinate Bench, Chennai in the case of Cholamandam MS General Insurance Co. Ltd. Vs. DCIT (LTU) (2022) 142 taxmann.com 3 (Chennai-Trib) placing reliance on the judgment of Hon’ble Bombay High Court in the case of CIT Vs. Birla Global Asset Finance Co. Ltd. (2012) 76 DTR 342 has held that commercial vehicles include Light Motor Vehicles and directed the Assessing Officer to grant 50% depreciation. Similar view also taken by Coordinate Bench, Pune in the case of Gera Developments (P) Ltd Vs. JCIT (2015) 61 taxmann.com 88 (Pune-Trib.).

65. In light of the above judicial precedents, we are inclined to hold that since the Light Motor Vehicles comes under the category of commercial vehicles and the assessee has purchased the vehicles betwee n 01.01.2009 to 01.10.2009 as per the Notification issued by the Department, the assessee is eligible for depreciation @50%. Therefore, this common issued by the assessee in the Cross Objections for A.Yrs. 2010-11 to A.Y. 2014- 15 is hereby allowed.

66. The next common ground raised by the Revenue pertaining to A.Yrs. 2012-23, 2013-14 and 2014- 15 is regarding the deletion of disallowance of depreciation on Energy Saving devices.

67. Facts in brief are that during the year under consideration the assessee claimed depreciation on Energy Saving Devices @80%. Ld. Assessing Officer disallowed the same observing that Automatic Voltage Controllers are not specifically covered under the category of Energy Saving devices prescribed in the depreciation schedule and only normal depreciation @15% is applicable to plant to machinery. Assessee carried the matter before ld.CIT(A) who not only observed that once an asset is accepted and forms part of particular block of assets u/s.32, the block continues to retain its identity and since the depreciation at the rate of 80% has been granted to the assessee in earlier years, the depreciation rate applicable to that block cannot be disputed in subsequent years. Aggrieved revenue is in appeal before this Tribunal.

68. We have heard the rival submissions and perused the record. We find that assessee has claimed depreciation @80% for the energy saving devices as per the block of asset created in the preceeding years and the same has been accepted by the Department and for the year under consideration depreciation has been claimed at @80% on the written down value (WDV) of the block of assets falling in the category of 80% rate of depreciation. We take note of the definition of plant and machinery in the Direct Tax Ready Reckoner where the following assets are eligible for depreciation @80%:

“Plant and machinery – Energy saving devices, renewal energy devices, rollers in flour mills, sugar works, steel industry, wind mills, electric generators/pumps running on wind energy, ro llers in flour mills, sugar works and steel industry”

69. We note that ld. Assessing Officer has denied the claim observing that only the Electric Generators running on wind energy are eligible for higher depreciation. We note that in the above definition Electrical Generators is followed by hash and then pumps running on wind energy which means the pumps running on wind energy are separate from the Electric Generators. Even Hon’ble Rajasthan High Court in the case of CIT vs. Agarwal Transformers (P) Ltd . (2002) 258 ITR 251 (Raj) h as held that the condition “running on wind energy” is only attached to the word “pumps” and not to the electric generators. Therefore, under the given facts and circumstances and observing that the higher depreciation on the very same assets have been allowed by the Department in the earlier assessment years and the same assets continued to form the same block of assets and on further considering the fact that the items purchased by the assessee falls in the category of plant and machinery, we hold that assessee is eligible for higher depreciation on the electrical generators. We therefore fail to find any infirmity in the finding of ld.CIT(A) allowing the depreciation claimed by the assessee for A.Yrs. 2012-13, 2013-14 and 2014- 15 at Rs.5,43,746/-, Rs.4,16,197/- and Rs.2,28,624/- respectively. Thus, this common issue raised by Revenue in the grounds for A.Y. 2012-13 to A.Y. 2014-15 is dismissed.

70. Now we take up the remaining issue for A.Y. 2013- 14 regarding the disallowance of stamp duty paid towards execution of renewal of mining lease.

71. Facts anent to this issue are that the assessee paid stamp duty at Rs.35.03 crore towards execution of renewal of mining lease deeds in respect of mines situated at Sirigao and Onda of Bicholim Taluka. Assessee had been operating the said mining leases for several years under mining concessions granted by the Government of Goa, with the last renewal being valid upto 2007. Assessee applied for further renewal of the mining leases for a period of 20 years and pending renewal continued mining operations under the deeming provisions of the Mines and Minerals (Development and Regulation) Act, 1957. The Directorate of Mines, Government of Goa, vide notices dated 14.02.2013 and 25.02.2013 directed the assessee to pay stamp duty for execution of renewal of the mining lease deeds and produce such stamp papers or papers in which stamp duty is paid so as to facilitate this office in execution of lease deed without any further delay. Assessee paid the said sum and claimed it as revenue expenditure. However, during the course of assessment proceedings, ld. Assessing Officer while examining this issue observed that the mining leasehold rights constitute a capital asset within the meaning of section 2(14) of the Act and such mining lease include the rights to explore land, extract minerals, construct infrastructure and transfer leasehold rights. Thus, the claim of payment of stamp duty of Rs.35.03 crore as revenue expenditure was denied and ld. Asses sing Officer held the same to be capitalised.

72. Aggrieved assessee preferred appeal before ld.CIT(A) and filed detailed written submissions. Ld.CIT(A) referred to CBDT Instruction No.002 of 1943 providing that legal expenses incurred in connection with renewal of lease for a period of less than 50 years are allowable as revenue expenditure. Further, ld.CIT(A) noted the fact that payment was not made to the Government towards lease premium for mining rights but was paid as stamp duty on execution of documents under the Indian Stamp (Goa Amendment) Act, 2012. Ld. CIT(A) also observed that stamp duty is distinct from royalty, cess or lease premium and is in the nature of statutory duty covered u/s. 43B of the Act. Further, ld.CIT (A) also noted that there is no concept of deferred revenue expenditure under the Act as admitted by the Assessing Officer himself and since the expenditure incurred was not in connection with stamp duty paid for execution of documents for acquisition of any new asset and only in connection with renewal of existing mining lease and in continuation of existing business, same is allowable as revenue expenditure. CIT(A) placed reliance on the decision in CIT v. Panyam Cement & Mineral Industries Ltd. [1997] 228 ITR 212 and CIT v. Reliance Industrial Infrastructure Ltd. [2015] 234 Taxmann 256 (Bom.).

73. Aggrieved revenue is now in appeal before this Tribunal.

74. Ld. CIT- DR vehemently argued supporting the order of ld. Assessing Officer and placed reliance on the decision of Coordinate Bench in the case of Bandekar Brothers (P.) Ltd. vs. Assistant Commissioner of Income-tax [2026] 183 taxmann.com 675 (Panaji – Trib.), wherein it has been held that the stamp duty paid by the assessee towards renewal of mining lease substitution of payment of acquisition of mining lease rights is a capital asset.

75. On the other hand, ld. Counsel for the assessee apart from placing reliance on the decision of ld.CIT(A) further made to the following written submissions which reads as under:

“I. Stamp Duty Paid for Renewal of Existing Mining Lease is Allowable as Revenue

Expenditure u/s. 37(1):

The AO erred in treating the stamp duty paid for renewal of mining lease as capital expenditure despite the fact that the Assessee was already carrying on mining operations under the existing mining lease for several years.

The payment of stamp duty was incurred only for continuation and renewal of the existing mining lease and not for acquisition of any new mining area, new asset or new source of income.

The renewal of mining lease merely enabled continuation of the existing business operations of the Assessee and therefore the expenditure was incurred wholly and exclusively for the purposes of business and allowable u/s. 37(1) of the Act.

The AO failed to appreciate that no new capital asset came into existence pursuant to payment of stamp duty and therefore the expenditure could not be treated as capital expenditure.

Reliance is placed on CBDT Circular No. 22 dated 23.06.1943 (enclosed as page no. 9) , wherein it has been specifically clarified that legal expenses incurred in connection with renewal of lease for a period less than fifty years are allowable as revenue expenditure.

Stamp duty paid for execution of renewal deed forms integral part of legal expenses incurred for renewal of lease and therefore squarely falls within the ambit of the aforesaid Circular.

Reliance is placed on the decision of the Hon’ble Andhra Pradesh High Court in CIT v. Panyam Cements & Mineral Industries Ltd. [1997] 228 IT R 212 (AP) (enclosed as page nos. 10 to 11), wherein stamp duty paid for renewal of mining lease was held to be allowable

as revenue expenditure.

Reliance is further placed on the decision of the Hon’ble Hyderabad Tribunal in JCIT v. NMDC Ltd. [2015] 56 taxmann.com 396 (Hyd. Trib.) (enclosed as page nos. 19 to 37), wherein following Panyam Cements (supra), stamp duty paid for renewal of mining lease was allowed as revenue expenditure.

Reliance is also placed on the decision of the Hon’ble Jaipur Tribunal in DCIT v. Wolkem (P.) Ltd. [1996] 54 TTJ 414 (JP), wherein expenditure in nature of consultancy fee incurred for extension/renewal of mining lease was held to be revenue expenditure since the lease already existed and the expenditure merely facilitated continuation thereof.

The Hon’ble Jurisdictional High Court in CIT vs. Reliance Industrial Infrastructure Ltd. [2015] 61 taxmann.com 407 (Bombay) (enclosed as page nos. 12 to 18) has held that stamp duty paid on execution of a lease deed for a period of 30 years, incurred for the purposes of carrying on the assessee’s business, is allowable as revenue expenditure.

The Hon’ble Supreme Court in Bikaner Gypsums Ltd. v. CIT [1991] 187 ITR 39 (SC) (enclosed as page nos. 38 to 44) has held that expenditure incurred for removal of obstruction or disability in carrying on existing business operations is revenue expenditure provided no new asset comes into existence.

However, in the recent decision of Asst. CIT vs. Bandekar Brothers (P.) Ltd. [2026] 183 taxmann.com 675 (Panaji Trib.) (enclosed as page nos. 45 to 55), the Hon’ble Panaji Tribunal held that the stamp duty paid by the assessee towards renewal of mining lease was, in substance, a payment for acquisition of mining lease rights, being a capital asset. Accordingly, the Hon’ble Tribunal held that such expenditure was capital in nature and therefore not allowable as deduction u/s. 37(1) of the Act.

However, in the said decision, the Hon’ble Tribunal has decided issue on the ‘doctrine of ‘substance over form’ and without considering the binding CBDT Circular No. 22 [R DISC. NO. 27(53)-IT/43], dated 23-06- 1943 on the income tax authorities, decision of the Hon’ble Jurisdictional High Court in CIT vs. Reliance Industrial Infrastructure Ltd. [2015] 61 taxmann.com 407 (Bombay) which is binding of the Hon’ble Tribunal and direct issue on allowably of stamp duty payment on renewal of mining decided by the Hon’ble AP High Court in CIT vs. Panyam Cements & Mineral Industries Ltd. [1997] 228 ITR 212 (AP) and the Hon’ble Hyderabad Tribunal in NMDC Ltd. vs. JCIT [2015] 56 taxmann.com 396 (Hyderabad -Trib.).

therefore not allowable as deduction u/s. 37(1) of the Act.

However, in the said decision, the Hon’ble Tribunal has decided issue on the ‘doctrine of

‘substance over form’ and without considering the binding CBDT Circular No. 22 [R DISC. NO. 27(53)-IT/43], dated 23-06- 1943 on the income tax authorities, decision of the Hon’ble Jurisdictional High Court in CIT vs. Reliance Industrial Infrastructure Ltd. [2015] 61 taxman n.com 407 (Bombay) which is binding of the Hon’ble Tribunal and direct issue on allowably of stamp duty payment on renewal of mining decided by the Hon’ble AP High Court in CIT vs. Panyam Cements & Mineral Industries Ltd. [1997] 228 ITR 212 (AP) and the Hon’ble Hyderabad Tribunal in NMDC Ltd. vs. JCIT [2015] 56 taxmann.com 396 (Hyderabad – Trib.).

It is humbly submitted that the impugned order passed by the Hon’ble Tribunal is contrary to the well- settled principles of judicial discipline and hierarchy, in asmuch as the Tribunal has passed an order against the assessee without considering the binding decisions of the Hon’ble Jurisdictional High Court (Bombay High Court) as well as the Hon’ble Andhra Pradesh High Court, both of which have decided the issue in favour of the assessee.

It is a fundamental principle of law that decisions of a superior court are binding on all subordinate courts and tribunals within its jurisdiction. The Income Tax Appellate Tribunal, being a creature of statute under the Income T ax Act, 1961, is subordinate to the High Court and is bound to follow the decisions rendered by the Jurisdictional High Court. The Hon’ble Supreme Court in CIT v. Ramdas Pharmacy (1970) 77 ITR 276 (SC) has categorically held that the Tribunal is bound by the decision of the High Court to which appeals from the Tribunal would lie. It is not open to the Tribunal to ignore such decisions or take a contrary view. The said stand is also taken in the following cases:

Krishnamurthy & Co. v. CIT (1964) 53 ITR 122 (SC);

Union of India v. Kamlakshi Finance Corporation Ltd. AIR 1992 SC 711 (SC);

> CIT v. Godavari Devi Saraf (1978) 113 ITR 589 ( Bom);

> Mathuram Agrawal v. State of M.P. (1999) 8 SCC 667, etc.

Further, it is submitted that even the decision of the Hon’ble Andhra Pradesh High Court, though not the Jurisdictional High Court, carries significant persuasive value and ought to have been considered and distinguished, if not followed. Ignoring such a decision entirely amounts to a failure of judicial application of mind.

It is respectfully submitted that an order passed by the Hon’ble Tribunal in ignorance of a binding decision of the Jurisdictional High Court is:

Contrary to judicial discipline The Tribunal, as a subordinate forum, cannot arrogate to itself the power to ignore or bypass binding precedents of the Jurisdictional High Court.

Per incuriam – An order passed without considering binding precedents is rendered per incuriam and is liable to be set aside. The Hon’ble Supreme Court in State of U.P. v. Synthetics and Chemicals Ltd. (1991) 4 SCC 139 held that a decision rendered in ignorance of a binding precedent is per incuriam and not binding.

> Gives rise to judicial indiscipline In CIT v. Narendra Doshi (2002) 254 ITR 606 (Bom), the Hon’ble Bombay High Court deprecated the practice of the Tribunal ignoring binding High Court decisions and reiterated that such orders are unsustainable.

Thus, the said order passed by the Hon’ble Panaji Tribunal is clearly unsustainable in law, being contrary to the doctrine of binding precedent, judicial hierarchy, and the discipline expected of a statutory tribunal.

In the present case also, the payment of sta mp duty merely facilitated continuation of the Assessee’s existing mining business and therefore squarely falls within the ratio of Bikaner Gypsums Ltd. (supra). The same is also evident from the notices dated 14.02.2013 (enclosed as page nos. 1 to 2) and 25.02.2013 (enclosed as page nos. 3 to 8) issued by the Directorate of Mines, Government of Goa.

The CIT(A) has rightly appreciated based on documents submitted by the Assessee that the payment was not lease premium or royalty but merely stamp duty payabl e under the Indian Stamp (Goa Amendment) Act, 2012.

The CIT(A) correctly appreciated that stamp duty was payable under statutory mandate and not as consideration for acquisition of mining rights.

The CIT(A) has rightly held that the payment was in the nature of “duty” and therefore allowable as deduction.

The disallowance made by the AO therefore deserves to be deleted.

II. Renewal of Existing Lease does not Result in Acquisition of New Capital Asset or Enduring Advantage

The AO erred in holding that r enewal of mining lease resulted in acquisition of a new capital asset.

The Assessee was already carrying on mining operations under the existing lease and the renewal merely extended the tenure of existing rights.

The renewal did not create any independent or new source of income but merely enabled continuation of existing business operations.

The distinction between acquisition of a new asset and continuation of existing business rights has been recognized in several judicial precedents. Reliance is pla ced on CIT v. Indian Mica Supply Co. Pvt. Ltd. [1970] 77 ITR 20 (SC), wherein expenditure incurred for continuing existing mining rights was held to be revenue expenditure.

Reliance is further placed on CIT v. Gotan Lime Syndicate [1966] 59 ITR 718 (SC), wherein payments connected with extraction rights were held to be revenue in nature.

The AO failed to appreciate that stamp duty was not paid for acquisition of ownership rights over mines but only for execution of renewal deed under statutory provisions.

The Learned AO incorrectly equated payment of stamp duty with consideration for acquisition of mining rights.

The computation mechanism of stamp duty based on royalty or environmental clearance does not alter the true nature of payment being statutory duty.

Merely because the renewal period was for twenty years, the expenditure cannot automatically become capital expenditure particularly when the expenditure relates to continuation of existing business.

The enduring benefit test is not conclusive and h as to be applied in commercial sense considering the true nature and purpose of expenditure.

In the present case, the expenditure was incurred in ordinary course of carrying on mining operations and therefore constitutes revenue expenditure.

III. CBDT Circular No. 22 dated 23.06.1943 is Binding on the Department

The AO erred in disregarding the CBDT Circular No. 22 dated 23.06.1943 (enclosed as page no. 9).

The said Circular specifically provides that legal expenses incurred for renewal of lease for per iod less than fifty years are allowable as revenue expenditure.

The Circular continues to remain in force and has never been withdrawn.

It is a settled position of law that CBDT Circulars beneficial to the Assessee are binding upon the Revenue authorities.

Reliance is placed on several decisions of the Hon’ble Supreme Court (see UCO Bank vs. CIT [1999] 237 ITR 889 (SC)) holding that beneficial Circulars issued by the CBDT are binding on departmental authorities.

Chowgule & Company Private Limited

The CIT(A) has rightly relied upon the af oresaid Circular while deleting the addition.

The AO could not have ignored the binding Circular while framing the assessment order.

Therefore, the disallowance made contrary to the CBDT Circular deserves to be deleted.

IV. Decisions Relied upon by the Assessing Officer are Distinguishable on Facts

The AO has wrongly relied upon decisions dealing with acquisition of fresh mining rights or leasehold rights as capital assets.

The facts of the present case are materially different since the Assessee was already carrying on mining business under existing lease and only renewal thereof was undertaken.

The decisions relied upon by the AO primarily concern:

a. acquisition of fresh leasehold rights;

b. payment of lease premium;

c. transfer of capital asset; or

d. initial acquisition of mining rights.

In the present case, there was no acquisition of fresh mining rights and therefore the ratio of such decisions is not applicable.

The AO failed to appreciate the distinction between:

a. expenditure incurred for acquiring source of income; and

b. expenditure incurred for operating or continuing existing source of income.

The Assessee’s case falls within the second category and therefore the expenditure is revenue in nature.

V. Binding Nature of Jurisdictional and Favourable Judicial Precedents:

The CIT(A) has rightly followed the decisions of various High Courts and Tribunals supporting the Assessee’s claim.

The decision of the Hon’ble Andhra Pradesh High Court in Panyam Cements & Mineral Industries Ltd. ( supra) directly covers the issue in favour of the Assessee.

In absence of any contrary decision of the Hon’ble Jurisdictional Bombay High Court in CIT vs. Reliance Industrial Infrastructure Ltd. (supra) directly on the issue, the favourable decision of jurisdictional High Court as well as non- jurisdictional High Court deserves to be followed.

Without prejudice, it is a settled principle that where two views are possible, the view favourable to the Assessee ought to be adopted. Reliance is placed on the se ttled proposition laid down by the Hon’ble Supreme Court in CIT v. Vegetable Products Ltd. [1973] 88 ITR 192 (SC).

The CIT(A) has therefore correctly deleted the addition by following favourable judicial precedents and binding CBDT Circular.

VI. Without Prejudice, Depreciation u/s, 32 ought to be Allowed

Without prejudice to the above submissions, assuming without admitting that the expenditure is held to be capital in nature, the Assessee is entitled to depreciation u/s. 32 of the Act.

The mining lease rights constitute “business or commercial rights” eligible for depreciation as intangible assets u/s. 32(1)(ii) of the Act.

The stamp duty paid forms part of the cost of such intangible asset and depreciation ought to be allowed thereon.

Reliance is placed on the decision of the Hon’ble Panaji Tribunal in ACIT v. Bandekar Brothers (P.) Ltd. [2026] 183 taxmann.com 675 (Panaji- Trib.) (enclosed as page nos. 45 to 55), wherein although the expenditure was treated as capital in nature, depreciation u/s, 32 was directed to be allowed.

Therefore, without prejudice to the primary claim of revenue deduction, suitable depreciation ought to be granted to the Assessee.

In view of the facts of the case, statutory provisions, CBDT Circulars and judicial precedents relied upon hereinabove, it is respectfully prayed that the disallowance of stamp duty paid towards renewal of mining lease amounting to Rs. 35,03,60,000 be deleted and the claim of the Assessee be allowed.

Without prejudice, if the expenditure is held to b e capital in nature, suitable depreciation u/s. 32 of the Act may kindly be directed to be allowed.

ASSESSEE’S CROSS OBJECTION

L. CO No.2: Disallowance of 50% depreciation claimed on commercial vehicles:

Same as the Assessee’s Ground No. 2 in AY 2010-11.”

76. We have heard the rival arguments made by both the sides and perused the record. The issue for our consideration is that whether the expenditure incurred on stamp duty paid towards the execution of documents for renewal of mining lease is allowable as revenue expenditure or to be treated as capital expenditure. Assessee has incurred expenditure towards stamp duty paid at the instance of Director of Mines, Government of Goa for the execution of documents for renewal of mining lease. This fact is not in dispute that the alleged sum paid is not paid towards the mining lease but it is merely a stamp duty paid for execution of documents for renewal of the mining lease deeds. Apparently, this is a legal expenditure incurred in connection with the renewal of lease deeds for a period of 20 years, i.e. less than 50 years. We take note of the CBDT Circular No.002 of 1943 which has not been cancelled or amended till date and the same reads as under:

“CIRCULAR: NO. 22 [R DISC. NO. 27(53)-IT/43], DATED 23-6 -1943

1. The Board have, following the practice obtaining in the United Kingdom, decided that legal expenses incurred in connection with the renewal of lease should be allowed as an admissible deduction for purposes of income-tax provided that the re newal of the lease is for a period of less than fifty years.

2. For the purposes of excess profits tax, however, such expenditure on renewals covering more than one year should be spread over the number of years for which the lease is renewed under rule 11 of the Schedule I to the Excess Profits Tax Act, 1940.

3. The Board have also decided that expenditure incurred on the compulsory removal of business premises, i.e ., in cases where the removal has taken place under the directions of Government should, a s in the case of air raid precautions expenditure, be allowed as a deduction for purposes of income- tax and excess profits tax.”

77. The above circular clearly indicates that legal expenses incurred in connection with renewal of lease is to be allowed as an admissible expenses for the purpose of income tax provided that renewal of lease period is less than fifty years.

78. Next we take note of the judgment of Hon’ble Andhra Pradesh High Court in the case of CIT Vs. Panyam Cements & mineral Industries Ltd. (1997) 228 ITR 212 (AP) where similar stamp duty paid for renewal of mining lease has been held to allowable as revenue expenditure. This judgment was further followed by Coordinate Bench, Hyderabad in the case of JCIT Vs. NMDC Ltd. (2015) 56 taxmann.com 396 (Hyd.Trib). We further note that Hon’ble Jurisdictional High Court in the case of CIT Vs. Reliance Industrial Infrastructure Ltd. (2015) 61 taxmann.com 407 (Bombay) has held that stamp duty paid on execution of a lease deed for a period of 30 years i ncurred for the purpose of carrying on the assessee’s business is allowable as revenue expenditure. Similarly in the case of Bikaner Gypsums Ltd. Vs. CIT (1991) 187 ITR 39 (SC) even though not directly in connection with stamp duty the Hon’ble Apex Court held that expenditure incurred for removal of obstruction or disability in carrying on existing business operations is revenue expenditure provided no new asset has come into existence. In the instant case also, it is only at the instance of the Director of Mines, Government of Goa that th e assessee had to make payment of stamp duty for renewal of mining lease.

79. So far as the decision referred and relied on by ld. DR in the case of ACIT Vs. Bandekar Brothers (P) Ltd. (2026) 183 taxmann.com 675 (Panaji) is concerned, we note that the decision arrived by this Tribunal is without considering the judgment of Hon’ble Bombay High Court in the case of CIT Vs. Reliance Industrial Infrastructure Ltd. (supra) and the judgment of Hon’ble Andhra Pradesh High Court in the case of CIT Vs. Panyam Cements & Mineral Industries Ltd. (supra). Hon’ble Supreme Court in the case of CIT Vs. Vegetable Products Ltd. (1973) 88 ITR 192 (SC) had laid down principle that when two views are possible the view favourable to the assessee that should be adopted. Further, the judgment in of Hon’ble Bombay High Court in the case CIT Vs. Reliance Industrial Infrastructure Ltd. (supra) and the judgment of Hon’ble Andhra Pradesh High Court in the case of CIT Vs. Panyam Cements & Mineral Industries Ltd. (supra) are squarely applicable on the facts of the instant case. Since there is no other binding precedent of the Hon’ble Jurisdictional High Court contrary to the above decisions, placed before us by the Revenue authorities, considering the judicial precedents, we are bound to follow the judgment of Hon’ble Jurisdictional High Court and also Hon’ble Andhra Pradesh High Court as referred supra.

80. Admittedly, in the present case, the stamp duty is in the nature of revenue expenditure incurred for execution of renewal of mining lease and certainly is not resulting into acquisition of any new capital asset. We take note the judgment of Hon’ble Supreme Court in the case of CIT Vs. India Mica Supply Co. Ltd. (1970) 77 ITR 20 (SC) wherein the expenditure has been incurred for continuing existing mining right was held to be revenue expenditure. Similarly in the case of CIT Vs. Gotan Lime Syndicate (1966) 59 ITR 718 (SC) the Hon’ble Supreme Court has held that payments connected with extraction rights were held to be revenue in nature. It seems that ld. Assessing Officer has inadvertently/wrongly treated the payment of stamp duty as payment for acquisition of mining lease rights and has failed to consider that even though stamp duty is computed based on royalty or environmental clearance but it does not alter the true nature of payment being statutory duty for the renewal of mining lease deed. Enduring benefit test is not conclusive and has to be applied in commercial sense considering the true nature and purpose of expenditure. I n the present case, the alleged expenditure incurred in the ordinary course of business and it actually enabled the assessee to continue existing business operations and no enduring benefit was achieved. Under the given facts and circumstances, we note that in the present case payment of stamp duty has been made merely for facilitating the continuation of the assessee’s existing mining business and it is rather a legal expense in the nature of stamp duty which was require d to be incurred for the execution of documents for renewal of mining lease and is certainly not the amount of mining lease paid for acquiring some rights for future years. T he alleged sum is merely a revenue expenditure incurred to continue the business activity of the assessee and the alleged payment is not a lease premium or Royalty but merely stamp duty payable as per the Indian Stamp Goa (Goa Amendment) Act, 2012 under the statutory mandate and not the consideration for acquisition of mining rights. W e therefore in light of aforementioned judicial precedents and discussion hold that the expenditure incurred by the assessee towards payment of stamp duty for towards execution of documents for renewal of mining lease is allowable as revenue expenditure. Finding of ld.CIT(A) needs no interference and grounds of appeal raised by the Revenue are dismissed.

81. The next issue raised by the Revenue in Ground No.9 for A.Y. 2014- 15 is against the deletion of dumping conversion charges.

82. Facts concerned this issue are that the assessee is engaged in the business of export of iron ore and carried on mining operations at various locations in Goa. Assessee utilized lands adjoining the mining lease areas situated at Costi, Shelvona, Pale, Sirigao and other mining areas for dumping overburden and reject ore generated during mining activity. The Government of Goa notified a policy for regulating mining dumps encroached upon Government and private lands and imposed conversion fees under the Land Revenue Code with reference to the area utilized for dumping activity. The policy required mining lessees to make payment of conversion charges for the period up to 31.03.2013 and thereafter annual payments were to be made and based on the directions of Government of Goa assessee paid a sum of Rs.47.96 crore approximately as per the computation mechanism prescribed under the said Notification and assessee claimed it as revenue expenditure treating it to be statutory levy imposed during the previous year. Ld. Assessing Officer however invoked Explanation 1 to section 37(1) of the Act and observed that the payment has been made for the violation of statutory law and therefore could not be considered expenditure incurred wholly and exclusively for the purpose of business and that assesssee was under obligation to make payment to Government authorities due to default committed under the statutory provisions. Ld. AO has referred to the judgment of the Hon’ble Supreme Court in the case of Indian Aluminium Co. Ltd. v. CIT 79 ITR 514 (SC) observing that since any payments made under statutory compulsion due to default could not constitute allowable business expenditure and accordingly made disallowance invoking Explanation 1 of the section 37(1) of the Act. Ld. Assessing Officer however observed that alleged payment has resulted in enduring benefit to the assessee and has given a right to use the land and such right constituted a capital asset. Ld. Assessing Officer thus disallowed the claim of Rs.47.96 crore (approx.) treating the same as non- allowable expenditure. Assessee challenged this addition before ld.CIT(A) and considering the submissions of the assessee ld.CIT(A) has noted the fact that the payment was made pursuant to the policy notified by the Government of Goa on 03.09.2013 for regulating the land used for dumping mining rejects and the amount has been calculated for the past usage of land for a period of 20 years ending in 2013 and not the payment for subsequent period. Ld. CIT(A) also held that the payment is in the na ture of a statutory levy/duty imposed by the Government under the notified policy. Ld. CIT(A) further held that t he policy nowhere stated that the levy is in nature of penalty and that policy itself clarifies that the charges were levied towards regularization of land used by mining operators and prescribed conversion fees and related charges and thus allowed the claim of the assessee. Now the Revenue is in appeal before this Tribunal relying on the order of the Assessing Officer whereas ld.Counsel for the assessee relied on the order of the ld.CIT(A).

83. We have heard the rival submissions and perused the record placed before us. Revenue is aggrieved with the deletion of disallowance of dumping conversion charges paid by the assessee in pursuance to Notification No.16/7/2008 -RD(Part- III) dated 03.09.2013 issued by the Government of Goa. As per this policy, the mining lessees were required to make payment of conversion charges for regulating mining dumps encroached upon the Government and Private land s and such conversion fees has been charged under the Land Revenue Code with reference to the area utilised for dumping activity and the amount has been calculated for the period upto 31.03.2013 and thereafter annual payments were to be made as per the said policy. However, ld. Assessing Officer disallowed the said claim made by the asesssee invoking Explanation 1 to section 37(1) of the Act making two fold observations, firstly that the alleged payment is in the nature of penalty in violation of statutory law and therefore Explanation 1 to section 37(1) of the Act is applicable and secondly without prejudice to the first observation that since the conversion expenditure related to the conversion of land to use for a period of 20 years prior to 31.03.2013 and therefore resulted in enduring benefit to the assessee therefore is a capital expenditure. Ld.CIT(A) however gave relief to the assessee observing that firstly payment is not penal is nature and that in the policy no where it is stated it is in the nature of penalty and secondly liability has been crystalised during the year therefore the same has been rightly claimed as revenue expenditure. We have gone through the Notification issued by the Government of Goa (supra) which is placed in the paper book wherein it is mentioned that as per the Land Revenue Code Amendment Act, 2013 vide amendment to Section 33 of the Code has empowered the Government to impose a fine in cases where the land has been used for dumping  mining rejects or like material without permission. The Government may impose such fine as may be prescribed under the levy of charges the 20 years time period of the unauthorised use shall be considered till 31.03.2013 for the purpose of calculating levy of charges and method has been formulated. Further, we observe that in the said Notification, the said conversion charges have never been mentioned as penalty but has been mentioned as fee/charges and also the applicant is required to make advance payment of all the charges as mentioned in this policy including the charge for future use of Government land for such period as intended to be used by the applicant. Delayed payment also attracts the interest charges. From this policy, we note that for the business concerns who are doing excavation work, mining dumps remains on the Government and Private lands. Now in order to clean up these mining rejects from the Government and Private lands, Government has to incur additional expenditure on clearing and environment protection and therefore such type of charges has been levied.

84. We observe that the assessee has already acquired mining rights and is carrying on mining operations since several years. Alleged payment has been made for regulating the land used in connection with the existing mining operations and not for acquiring any new capital asset. The conversion charges are in the nature of statutory charges payable under the Government Notification. The Government also provides a mechanism for regulating the mining dumps and levy of collec tion charges and that the policy no where characterises the levy as penalty for any offence.

85. We also note that this Tribunal in the case of Salitho Ores Pvt. Ltd. Vs. ACIT – ITA No.72/PAN/2018 order dated 21.09.2023 under identical facts relating to dumping conversion charges paid under the very same scheme held that such expenditure as revenue expenditure observing that the assessee already had an existing mining rights and the expenditure incurred is for removal of restriction/obstruction in carrying on the business and no capital asset acquired and that the expenditure incurred is revenue in nature. We also take note of the judgment of Hon’ble Apex Court in the case of Bikaner Gypsums Ltd. Vs. CIT (1991) 187 ITR 39 (SC) where it has been held that expenditure incurred to facilitating mining operations and remove obstruction in carrying on business does not result in acquisition of any enduring advantage or capital asset.

Hon’ble Court further held that since the assessee had an existing rights to c arry on business, the expenditure incurred for removal of any restriction/obstruction or disability would constitute revenue expenditure. Further, Coordinate Bench, Hyderabad in the case of NMDC Vs. ACIT (2019) 102 tyaxmann.com 268 has held that the compensation paid to the Government for mining activities beyond sanctioned lease area was held to be compensatory in nature and allowable as business expenditure.

86. Further, we note that the liability for paying the alleged dumping conversion charges crystalized during the year on account of issue of Government Notification and payment has been made during the year and therefore such type of payments come in the category duty/cess as referred in the provisions of section 43B of the Act and are allowable on the basis of payment. Therefore, under the given facts and circumstances of the case and on the basis of the judicial precedents referred hereinabove, we are of the considered view that since the alleged sum paid for dumping conversion charges is a payment made at the instance of Director of Mines, Government of Goa under the policy for regulating the mining rejects on Government and Private lands. The said payment is purely a revenue expenditure incurred for effectively carrying out the business of mining. Thus, no interference is called for in the finding of ld.CIT(A). Ground No.9 raised by the Revenue is dismissed.

87. Now we take up the remaining grounds raised by the Revenue for A.Y. 2016-17. Ground No.4 is raised against the deletion of disallowance of depreciation on Goodwill for acquisition of MPL.

88. Facts in brief are that during F.Y. 2004- 05 on account of amalgamation of the assessee with the Associated company, Goodwill was accounted for in the books and depreciation claimed thereon. The scheme of amalgamation has been sanctioned by the Hon’ble Bombay High Court vide order dated 10.12.2004. The Goodwill claimed during F.Y. 2004- 05 was subject matter before the Hon’ble Bombay High Court and the said claim was allowed. During the year under consideration, assessee claimed depreciation on the written down value (WDV) of the Goodwill carried forward from A.Y. 2005- 06 and ld. Assessing Officer disallowed the claim observing that the Goodwill in the case of amalgamated company should be the same as that in the case of amalgamating company and since no depreciation on Goodwill was claimed by the amalgamating company the assessee’s claim deserved to disallowed. In appeal, the First Appellate Authority followed the judgment of Hon’ble Bombay High Court in Income Tax Appeal No.28 of 2012 order dated 12.01.2016 rendered in assessee’s own case and allowed the claim. Now the Revenue is in appeal before this Tribunal.

89. Ld. DR vehemently argued relying on the order of the Assessing Officer whereas Ld. Counsel for the assessee relied on the order of ld.CIT(A).

90. We have heard the rival submissions and perused the record placed before us. We note that the Goodwill has been created in the books during F.Y. 2004- 05 and the depreciation claimed has been consistently allowed to the asesssee in the past. The said claim has been made on the written down value of the Goodwill. We also take note of the judgment of Hon’ble Bombay High Court at Goa in Tax Appeal No.28/2012 dated 12.01.2016 in the case of present assessee dealing with this issue for A.Y. 2005-06 wherein the Hon’ble Court has followed the judgment of Hon’ble Apex Court in the case of Commissioner of Income Tax v. Smifs Securities Ltd. [(2012) 348 ITR 302 (SC)] and followed the principle laid down by the Hon’ble Apex Court and held that depreciation on Goodwill paid by the amalgamating company is a permissible deduction in terms of section 32 of the Act. We also take note of the decision of this Tribunal in assessee’s own case for A.Y. 2006- 07 deciding similar issue in favour of the assessee and allowed the claim of depreciation on the Goodwill arising out of the amalgamation with the Associate company during F.Y. 2004-05. We therefore respectfully following the above judgment of Hon’ble Bom bay High Court and also considering that Goodwill has not been created during the year but depreciation claimed on the written down value brought forward from preceeding year, fail to find any infirmity in the finding of ld.CIT(A). Ground No. 4 raised by the Revenue for A.Y. 2016-17 is dismissed.

91. Ground No.5 raised by the Revenue is against the deletion of disallowance of interest income u/s.36(1)(iii) of the Act.

92. Brief facts are that the assessee which is engaged in the mining business of expor t of iron ore advanced loans and advances and outstanding as on 31.03.2016 stood at Rs.863.38 crore out of which loan of Rs.6.59 crore has been advanced at prevailing market rates and also loans amounting to Rs.57.40 crore were given during the year and the remaining sum is brought forward from earlier years. Ld. Assessing Officer while examining this issue disallowed the interest expenditure at Rs.66,01,100/- u/s.36(1)(iii) of the Act and held that the assessee has diverted borrowed funds for granting int erest free loans to subsidiaries. Ld. Assessing Officer has observed that out of the borrowed funds at Rs.207.02 crore the assessee has advanced interest free loans at Rs.5.74 crore to its subsidiaries and assessee failed to justify the commercial expediency for granting interest free loans. Against the said disallowance, the First Appellate Authority observed that barring a sum of Rs.5.74 crore all other loans have been advanced in the earlier years and the loans obtained by the assessee is basically to refinance the stamp duty and land conversion charges paid by the assessee in earlier years. Ld.CIT(A) held that there is no nexus between the loans given and money borrowed and therefore there is no case of disallowing the interest. Aggrieved Revenue is now in appeal before this Tribunal.

93. We have heard the rival contentions and perused the record placed before us. The alleged disallowance has been made by the Assessing Officer holding that the assessee has diverted borrowed funds for granting intere st free loans to its subsidiaries. We not that Hon’ble Apex Court in the case of S.A. Builders Ltd. VS. CIT reported in 288 ITR 1 has held that interest free loans advanced to subsidiaries for the purpose of business and on account of commercial expediency does not call for any interest disallowance u/s.36(1)(iii) of the Act. It has been consistently held by the Hon’ble Courts including that of CIT Vs. Reliance Industries Ltd. Reported in (2019) 102 taxmann.com 52 (SC) that when interest free funds availa ble to the assessee sufficient to meets its investment with subsidiaries, interest expenditure cannot be disallowed u/s.36(1)(iii) of the Act. We also take note that no such disallowance has been made in the earlier years for the loans and advances to the subsidiaries for the business purposes and commercial expediency. In view of the above and the settled judicial precedents referred (supra) we fail to find any infirmity in the finding of ld.CIT(A) deleting the said disallowance u/s.36(1)(iii) of the Act. Ground No.5 raised by the Revenue is dismissed.

94. Ground No.6 raised by the Revenue is against the deletion of disallowance of Foreign Travel Expenses.

95. Facts of the case as emanating from the record are that the Directors and Executives are required to undertake Foreign Travel for meeting existing and prospective buyers and customers. During the year, assessee has incurred Foreign Travel Expenses (FTE) at Rs.1,57,62,710/- claiming it to wholly and exclusively for the business purposes. Ld. Assessing Officer has disallowed 20% of the FTE amount of Rs.31,52,542/- alleging that the assessee failed to submit requisite documents in support of FTE. In appeal before ld.CIT(A) the assessee filed detailed written submissions. Ld. First Appellate Authority taking note that such type of FTE are necessary for the nature of business carried out by the assessee specifically noted that merely for absence of mining business during the year under consideration ld. Assessing Officer assessee had no valid reason to make adhoc disallowance of FTE. Ld.CIT(A) deleted the disallowance considering the explanation given by the assessee. Aggrieved revenue is now in appeal before this Tribunal. Ld.CIT- DR relied on the order of Assessing Officer and ld.Counsel for the assessee on the order of ld.CIT(A).

96. We have heard the rival contentions and perused the record placed before us. The issue for our consideration is against the deletion of adhoc disallowance of 20% Foreign Travel Expenses at Rs.31,52,542/-. It is a lso noted that the mining business of the assessee has come to a halt during the year under consideration. However, the other business of the assessee company are being carried out. Ld. Assessing Officer has not disputed that assessee has incurred FTE. However, he has made adhoc disallowance mainly on the ground that assessee failed to submit the requisite documents in support of claim of FTE. We note that in absence of complete details, ld. Assess ing Officer had to resort for the adhoc disallowance taking into consideration the personal nature of expenses included in the FTE. We however considering the facts and circumstances of the case and the submissions filed by the assessee deem it appropriate to sustain the disallowance of FTE at 10% as against 20% made by the Assessing Officer and partly allow the ground raised by the revenue against the disallowance of FTE. Ground No.6 raised by the revenue is partly allowed.

97. To sum up, the captioned appeals filed by the Revenue and the cross appeal/cross objections filed by the assessee are allowed/partly allowed/dismissed in the following manner:

ITA Nos.	A.Yrs.	Result
Appeals by Revenue
ITA Nos. 43,24,25,26,27 and 44/PAN/2020	A.Yrs. 2010-11 to 2014-15 and 2016 -17	Partly allowed
ITA No.23/PAN/2020	2009-10	Dismissed
Cross Objections/Cross appeal by Assessee
C.O. Nos.1 /PAN/2020 and Co.No.1/PAN/2021	A.Y. 2009-10 and 2016-17	Dismissed
C.O. Nos.2 , 3,4 and to 5/PAN/2020	A.Y.2011-12 to 2014-15	Partly Allowed
ITA No.36/PAN/2020	A.Y.2010 -11	Allowed

Order pronounced on this 20th day of August, 2026.