Gujarat Mineral Development Corporation Ltd Vs DCIT (ITAT Ahmedabad)
It is pertinent to note that the assessee company made provision in Mining Closure Fund as per the guidelines issued by the Ministry of Coal which is mandatory to each mining company. It is not disputed fact that the assessee made claim u/s 43B every year as and when the actual expenditure is made. The department in the past has accepted this position. The said provision is mandatory and the assessee has made the said provision in books of accounts following the guidelines of the Ministry of Coal. The issue of ascertaining the said provision is covered in favour of the assessee by the decision of the Hon’ble Rajasthan High Court in case of Rajasthan state Mines and Mineral Ltd. (supra) as per the contentions of the Ld. AR. But the observation of the CIT(A) that the said Mining Closure Funds is not in the nature of tax, duty, cess, fee etc. as per Section 43B, appears to be justifiable as the guideline of Ministry of Coal has given the procedure and time period for the closure expenses to be incurred by the coal mine owners who are operating coal mines without the approval of any Mine Closure Plan. Thus, Section 43B claim is not applicable in assessee’s case. Thus, the CIT(A) was right in the said context. As regards the decision of the Hon’ble Rajasthan High Court the same is in the context of Section 37 claim made by the assessee therein. Thus, the said argument of the Ld. AR is rejected.
As regard to alternate argument that “even if the Tribunal is of the view that provision of Section 43B are not applicable to mine Closure Expense than the amount or provision of for mine closure of Rs. 49,60,39,000/- already disallowed by the assessee company u/s 43B of the Act in its computation of income during A.Y. 2013-14, should be allowed as expenses as the same has been made on accrual basis as per the Guidelines issued by Ministry of Coal and same relates to the business of the assessee” appears to be correct. Since the assessee has to make provision for mine closure as the requirement of the Mine owners, the same should be allowed as expenses. Thus, appeal of the assessee is partly allowed.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
This appeal is filed by the Assessee against the order dated 23/10/2019 passed by the Commissioner of Income-tax (Appeals)-2, Ahmedabad [“CIT(A)” in short] for Assessment Year 2013-14.
2. The Ground of appeal is as under :-
“1. On facts & circumstances of the case, Your Appellant, most respectfully submits that the Ld.CIT(A) has erred in law and on facts by confirming the addition in respect of Mine Closure expense of Rs.6,56,43,460/- by treating the same as deposit & not considering the same as actual payment of liability.”
3. The assessee-company is engaged in the business of mining of minerals and generation of power. The return of income was filed on 26.09.2013 declaring total income of Rs. 878,87,82,502/-. Subsequently, revised return of income was filed by the assessee on 22.07.2014 declaring total income of Rs. 878,53,47,676/-. The case was selected for scrutiny. Further, the scrutiny assessment u/s 143(3) of the Act was completed on 17.03.2016 determining the total income of the assessee at Rs. 884,63,78,824/ – making following additions/disallowances:
