IN THE ITAT CUTTACK BENCH
Mahanadi Coalfields Ltd.
Deputy Commissioner of Income-tax
Misc. Application Nos. 42 to 56 (CTK.) OF 2011
IT Appeal Nos. 84 to 88 (Ctk.) of 2001, 386 (Ctk.) of 2002, 275, 276 & 750 (Ctk.) of 2004, 97 (Ctk.) of 2006, 226 & 227 (Ctk.) of 2009 and 456 to 458 (Ctk.) of 2010
[Assessment years 1993-94 to 2007-08]
May 25, 2012
K.K. Gupta, Accountant Member
All these Misc. Applications have been filed by the assessee raising a common issue and were heard together and are being disposed of by this common order for the sake of convenience and brevity.
2. Misc. Application Nos.42 to 47/CTK/2010 have been filed by the assessee on 30.12.2011. Registry has pointed out that the consolidated order of the Tribunal in which the assessee has filed these Misc. Applications, was received by the assessee on 28.12.2005. Thus, it is seen that the Misc. application has been filed beyond the limitation period of four years. Section 254(2) of the I.T.Act,1961 provides that the Tribunal, at any time within four years from the date of the order, with a view to rectifying any mistake apparent from the record, amend any order passed by it under sub-section (1), and shall make such amendment if the mistake is brought to its notice by the assessee or the [Assessing] Officer. In view of this, Misc. Application Nos.42 to 47/CTK/2010 having been filed beyond the period of four years without any petition for condonation of the delay filed by the assessee, are dismissed being barred by time.
3. In Misc. Application Nos.48 to 56/CTK/2010, the assessee has raised almost common contention that while disposing of the respective corresponding appeals the Tribunal has dismissed the common ground in all the respective AYs relating to disallowance towards charge on lease hold land for lease period expire on misconceived facts and the orders have been passed on a wrong appreciation of facts. In support of this, the learned AR of the assessee referred to the consolidated order dt.2.1.2008 in ITA Nos.275,276,750/CTK/2004 and ITA No.97/CTK/2006 for the AYs 1999-2000, 2000-01, 2001-02 and 2002-03, wherein while deciding such similar issue, the Tribunal has followed its earlier consolidated dt.30.11.2005 in ITA Nos.84-88/CTK/2002 pertaining to the AYs 1993-94 to 1998-99, wherein the Tribunal while deciding similar issue had held as under :
11. We have considered the rival submissions made by both the sides and perused the orders of the authorities below. The appellant in this case has required a right from the Govt. for exploitation of coal. In our opinion only the minerals present in the said land can be considered as a commercial assets and not the land. Further, we find that there is no provision anywhere in the act to provide depreciation on land. The expenditure incurred for lease of land with a right to exploit the mineral resources has to be held as a capital expenditure. We also find that the assessee itself had not claimed either any write off or any depreciation in the original return or the revised return.
12. We further find that the id. CIT(A) while considering the issue has elaborately discussed the issue. The relevant para of his order reads as under: –
“I have gone through the grounds of appeals, the orders of the AO the written submissions of the appellant, the arguments of the AR and the AO on the date of hearing. The orders in respect of various grounds are as under:
(i) Charges against lease period expired on leasehold land:
(ii) On consideration of the facts relating to the above ground, I am inclined to agree with the orders of the AO that the appellant has acquired a right from the Government for exploitation of coal. The minerals present in the land taken on lease is the commercial asset and not the right to acquire and exploit the land inside which the commercial assets exits. There is no provision under the Income Tax Act during the years under appeal that such payments can be allowed as fully revenue expenditure or it can be treated as a depreciable asset. It has been widely held that where minerals are part of the land and have to be won, extracted and brought to the surface, expenditure for acquiring the right over or in the land to win the minerals would be of capital nature. Where amount is paid for lease of land with a right to exploit the mineral resources as in the case of the appellant, the expenditure incurred has been held to be capital expenditure. The contention of the appellant that it is holding the land as a commercial asset is not found to be acceptable as whether it is leasehold land or freehold land, the character of land does not change and there is no provision under the Act to allow any depreciation or part write off The appellant itself in its accounts has not claimed any write off and also has not claimed any depreciation either in the original return or in the revised return. Any item which is specifically allowable under the Act, even if the treatment in different under the accounts, can only be claimed as a deduction. The 5% write off claimed by the appellant is not specifically allowable under the Act and therefore, there cannot be a different treatment under the Income-tax law separate from the accounting treatment of land where no depreciation or write off of 5% has been claimed by the appellant. In any case, the amount paid as lease money for acquiring leasehold land is towards acquiring a right to exploit land which is a capital expenditure and not allowable for computation for taxable income. The claim of the appellant, therefore, for various years are found to be not sustainable. The disallowance made by the AO for various years as under are, accordingly, maintained.”
The learned AR of the assessee contended before us that the aforesaid finding seems to be self contradictory in as much as in the first line it is stated that
“I am inclined to agree with the orders of the AO that the appellant has acquired a right from the Government for exploitation of coal. The minerals present in the land taken on lease is the commercial asset and not the right to acquire and exploit the land inside which the commercial assets exits”
And while coming towards the end of paragraph it is stated that
the amount paid as lease money for acquiring leasehold land is towards acquiring a right to exploit land which is a capital expenditure and not allowable for computation for taxable income
The learned AR of the assessee, in view of the above, contended that from the aforesaid it may be appreciated that the issue has been misconceived and the order has been passed on a wrong appreciation of facts which is a mistake apparent from the record and needs to be rectified. He further submitted that the issue has not been appraised in its correct and real perspective of Commercial Assets and the total thrust was given considering the expenditure as “LAND” which is also a mistake apparent from the record and needs to be rectified. Moreover, the land on which deprecation is not allowed basically represent self-owned land whose value does not depreciates rather appreciates whereas in case of leasehold Coal Bearing Land the value of land generally depreciates and the same is on account of lessor only. He further pointed out that the finding that – The appellant itself in its accounts has not claimed any write off and also has not claimed any depreciation either in the original return or in the revised return, is also factually not correct as the assessee is claiming the write off in its accounts and its related accounting policy is clearly stated in the schedule of Significant Accounting policies. In view of the aforesaid, the learned AR of the assessee prayed to recall the order and pass a fresh order rectifying mistakes apparent from record and allowing relief to the assessee in this regard after appreciating the facts in its correct perspective.
3.1 The learned DR, on the other hand, contended that there being no mistake apparent on the face of record and since the assessee has prayed to reconsider the issue afresh amounts to review of own order which is beyond the scope of Section 254, the Misc. applications filed by the assessee deserve to be dismissed.
3.2 Having heard both the parties and perusing the impugned orders of the Tribunal, we find that the assessee sought for rectification of the consolidated order dt.30.11.2005 in ITA Nos.84-88/CTK/2002 pertaining to the AYs 1993-94 to 1998-99, which has been followed in subsequent AYs 1999-00, 2000-01, 2001-02 and 2002-03 in ITA Nos.275,276,750/CTK/2004 and ITA No.97/CTK/2004 and also in subsequent AYs 2003-04 to 2007-08 in ITA Nos.226,227,456, 457 and 458/CTK/2010.
3.3 We may observe here that the Misc. Application Nos.48 to 56/CTK/2011 seeking re-adjudication of the issue in question by recalling the consolidated order dt.30.11.2005 in ITA Nos. 84 to 88/CTK/2001 & 386/CTK/2002 for the AYs 1993-94 to 1998-99 have been dismissed being barred by limitation. Therefore, the prayer made in the present Misc. application Nos. 48 to 56/CTK/2011 to recall and rectify the earlier order dt.30.11.2005 for the AYs 1993-04 to 1998-99 cannot be sustained.
3.4 Further, we may observe that in the AYs 2003-04 to 2007-08 in ITA Nos.226, 227, 456, 457 and 458/CTK/2010 vide consolidated order dt.12.9.2011, while deciding the issue in question has not only relied on the earlier order of the Tribunal but also considered various judicial pronouncements. The relevant observation in paragraph 20 of the said order is reproduced as under :
“20. Identical issue has been decided by the ITAT, Cuttack Bench in assessee’s own case for the Assessment Years 1999-2000 to 2002-03, relying on which the learned CIT(A) has dismissed the ground of the assessee in this regard. The learned AR of the assessee submitted that the assessee company is taking Lease-Hold Land from Govt. for and mining which is leased out to the company for certain fixed period with a particular object and with no right to transfer/sale to use the said land for any other purposes. After completion of lease period the land is to be handed over back to the Government in lieu of the same the company is required to pay a sum and certain expenses are incurred towards such lease. During the period of lease, even if the mines are totally exhausted, the land is required be maintained as prescribed by the Government. Hence, the company is holding Lease-Hold Land not as a Land, rather as a “Commercial Assets” taken on lease for fixed period say 20 years and used for business purposes; hence the same is being written-off and charged to profit & loss account. The lease period may vary from 20-25 years but for write-off purposes it is considered as 20 years and all the amount paid and expenses incurred on such lands are written over a period of 20 years i.e., at 5% per year on Straight Line method. Therefore, the lease rent paid, is allowable as revenue expenditure. In support, the learned AR of the assessee relied on the decision of Hon’ble Gujarat High Court in the case of DCIT v. Sun Pharmaceuticals Inds. Ltd. [(2009) 227 CTR (Guj.)], wherein advance lease rent paid for acquiring land and paying nominal monthly rent was held allowable as revenue expenditure. We find that the facts of this case is completely different from that of the assessee Company before us. In that case, the assessee, a company, claimed deduction of a sum of Rs. 48,02,616, being payment to Gujarat Industrial Development Corporation (GIDC). It was contended by the assessee that the lease rent in respect of the land allotted to the assessee company being very nominal, i.e., @ Rs. 40 per year, the said payment was nothing else but advance rent and hence, allowable as revenue expenditure. The AO disallowed the claim holding that the assessee had acquired a benefit of enduring nature in the form of use of land for a period of 99 years. Matter went upto the Tribunal and the Tribunal accepted the claim of the assessee and on further appeal by the Department, Hon’ble High Court upheld the order of the Tribunal observing that the Tribunal has held that the land in question was not acquired by the assessee. That merely because the deed was registered the transaction in question would not assume a different character. The lease rent was very nominal. By obtaining the land on lease the capital structure of the assessee did not undergo any change. The assessee only acquired a facility to carry on business profitably by paying nominal lease rent. In light of the aforesaid findings of fact there is no warrant for interference. Even the AO has recorded that the payment was for use of land. There is no legal infirmity committed by the Tribunal. It is necessary to note that the Revenue was not even aggrieved by the aforesaid findings recorded by the Tribunal and had not even proposed a question on this issue when the tax appeal was filed as the memorandum of tax appeal reveals. Tribunal was therefore justified in holding that the lease rent paid by the assessee to GIDC was allowable as revenue expenditure. But in the instant case the assessee has taken lease hold land from Government for exploration and mining which is leased out to the assessee company for certain fixed period with a particular object and with no right to transfer/sale or to put to use for any other purposes and after the completion of lease period the land is to be handed over back to the Government and in lieu of the same the assessee is required to pay premium and certain expenses as incurred towards such lease. Various judicial authorities have held that the price paid for the purchase of mining rights is a capital expenditure. The case laws relied on by the Assessing Officer in his order are – Kamakshya Narain Singh v. CIT (11 ITR 513) (PC),wherein it was held that receipts and payments in connection with acquiring or disposing of leaseholds of mines or minerals are usually on capital account. Similar view has been expressed in CIT v. Reddy (17 ITR 15), MP Inds. v. CIT (37 ITR 342), CIT v. Ramlal (57 ITR 742)(FB) that the price paid for the purchase of mining rights is a capital expenditure. In the case of Golden Horse Shoe v. Thurgood (18 TC 280, 301 (CA), it was held that the purchase of a mine is not a purchase of coal but a purchase of land with the right of extracting coal from it and it therefore relates to fixed capital. The price paid for the purchase of lease hold land with the object of getting coal by open-cast mining methods would be capital expenses even if the mining operations are not expected to last more than 2 or 3 years. The Assessing Officer has also relied on the decisions in the cases of Alianza Co. Ltd., v. Bell  2 KB 666,673, CIT v. Chengalvaroya Mudaliar (2 ITR 395)(Mad), Chengalvaroya Chettiar v. CIT, (5 ITR 70), CIT v. Siddareddy Venkatasubba Reddy & Bros (17 ITR 15 (Mad), N Peer Sahib v. CIT (54 ITR 681)(Mys), Stow Bardolph Gravel Co. Ltd. v. Poole (1 W.L.R. 1058). Further, as already observed earlier, the ITAT, Cuttack Bench has already decided identical issue against the assessee in assessee’s own case for the Assessment 1999-2000 to 2002-03. Therefore, considering the facts and circumstances of the case in the light of various judicial authorities and also the decision of the Tribunal ITAT referred to above in assessee’s own case and being consistent with the view taken therein, we uphold the impugned order of the learned CIT(A) on this issue and dismiss the ground raised by the assessee.
3.5 Further under section 254(2) of the Income-tax Act, 1961, the Appellate Tribunal may, “with a view to rectifying any mistake apparent from the record”, amend any order passed by it under sub-section (1) within the time prescribed therein. It is an accepted position that the Appellate Tribunal does not have any power to review its own orders under the provisions of the Income-tax Act, 1961. The only power which the Tribunal possesses is to rectify any mistake in its own order which is apparent from the record. This is merely a power of amending its order [see CIT v. Ramesh Electric & Trading Co.  203 ITR 497/ 77 Taxman 43 (Bom.)]. The extent of this power of rectification was considered by the Supreme Court as far back as in 1971 in the case of T.S. Balaram, ITO v. Volkart Brothers  82 ITR 50. The Supreme Court said (headnote) : —“A mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long drawn process of reasoning on point”. This view of the Supreme Court has held the field for a long time, and has been followed by other High Courts. In the case of V.P. Minocha, ITO v. ITAT  106 ITR 691, Hon’ble Gujarat High Court, relying upon Volkart Bros case (supra), said that a decision given by the Tribunal on a debatable point of law cannot be subsequently considered as showing any mistake apparent from the record which the Tribunal could consequently rectify. Similarly, Hon’ble Madras High Court in the case of CIT v. R. Chelladurai  118 ITR 108, said that the Tribunal’s power under section 254(2) is not to review its earlier order but only to amend it with a view to rectifying any error apparent from the record. The power of rectification under section 254(2) of the Income-tax Act can be exercised only when the mistake which is sought to be rectified is an obvious and patent mistake which is apparent from the record, and not a mistake which requires to be established by arguments and a long drawn process of reasoning on points on which there may conceivably be two opinion. Therefore, we are of the considered opinion that recalling of the orders of the Tribunal for the AYs 1999-00 to 2007-08 for re-adjudicating the issue in question afresh, as prayed in the Misc. applications would tantamount to review/revision of the order of the Tribunal, which is not permissible in law, as discussed in the foregoing paragraphs. Therefore, considering the facts and circumstances of the case, we do not find any merit in the present Misc. applications and as such, the Misc. applications filed by the assessee are dismissed.
4. In the result, all the Misc. Applications filed by the assessee are dismissed.