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2019 Supreme(Bom) 589
IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT GOA
R.D. Dhanuka, Prithviraj K. Chavan, JJ.
Pr. Commissioner of Income Tax, Panaji Goa – Appellant
Vs.
Rajesh Prakash Timblo – Respondent
Tax Appeal No. 52 of 2018, 55 of 2018, 56 of 2018, 60 of 2018
Decided On : 15-04-2019
Susan Linhares, Adv., Jitendra Jain, Adv., Gaurang D Panandiker, Adv.
Headnote:
Income Tax Act, 1961 – Sections 260, 40 – Assessment – Whether in law and circumstances of the case the ITAT has erred in deleting the action of the Assessing Officer of disallowing the expenses of Rs. 6,96,00,000/- in respect of payment of liquidated damages made for cancellation of contract during F.Y. 2009-10 – Whether in law and circumstances of the case the ITAT was unjustified in allowing the claim made by the appellant at the time of hearing of appeal in respect of allowance of liquidated damages of Rs. 6,96,00,000/- paid for the cancellation of contract accrued the said sum during the F.Y. 2009-10 – Whether in law and circumstances of the case the ITAT has erred in allowing the expenditure of Rs. 6,96,00,000/- (pertaining to the liquidated damages) accrued in the earlier year that is Assessment year 2010-11 and therefore the same cannot be allowed for the year under consideration – Whether in law and circumstances of the case the ITAT erred in deleting the action of the Assessing Officer of disallowing the deferred revenue expenditure of Rs. 50,82,117/- claimed by the respondent in return of income filed for the year, when it was established by the A.O. that the expenditure claimed by the Assessee of Rs. 1,67,95,982/- for the TMPL has accrued in F.Y.2009-10. – Also the expenditure claimed by the assessee of Rs. 6,96,00,000/- for TMPL has accrued in F.Y. 2009-10. – Thus the total amount accrued in F.Y. 2009-10 comes to Rs. 8,63,95,982/- is divided into 17 installments by the assessee and claimed deferred expenditure of Rs. 50,82,117/- in each year which the AO has disallowed and added to the income – Held, In so far as disallowance of the deferred revenue expenditure of Rs.50,82,117/- claimed by the Assessee in return of income filed for the relevant year is concerned, there is no dispute between the parties that the expenditure claimed by the Assessee was the revenue expenditure. – Assessee had claimed deduction at the rate of 1/17th of the said expenditure while filing the return of income in the impugned assessment year. – But during the course of assessment proceedings, the Assessee made a claim for full sum of Rs.6.96 crores. – There was no dispute about the genuineness as well as the nature of expenditure. – It was urged by the Assessees before the Tribunal that in view of first proviso to Section 40(a)(ia) of the Act, since the Assessees had deducted the tax on the payment of Rs.2.32 crores, and Rs. 2.31 crores, in the Assessment Year 2011-12 and 2012-13, the Assessees be allowed deduction in respect of said sum in those years. – Tribunal held that following the rule of consistency, deduction to the Assessee amounting to Rs.9,87,993/- being 1/17th of Rs.1,67,95,982/- was allowed. – These findings of fact rendered by the Tribunal in the impugned order are admittedly not impugned by the Revenue and have attained finality. – Issue raised by the Revenue recorded in paragraph 3(D) aforesaid is also academic and does not raise any substantial question of law. – Appeals Dismissed
R.D. Dhanuka, J.
These Appeals under Section 260-A of the Income Tax Act, 1961 (for short 'the Act') arise against the common order dated 5.9.2017 in ITA No.215-216/PAN/2017 which are subject matters of Tax Appeal No.52/2018 and Tax Appeal No. 60/2018 for the Assessment Year 2011-12 and 2012-13 in case of Rajesh P. Timblo and the Order of the Income Tax Appellate Tribunal, Panaji Bench, Panaji in ITA Nos.217 & 218/PAN/2017 for the Assessment Year 2011-12 and 2012-13, in case of Smt. Vidya Rajesh Timblo which are subject matters of Tax Appeals No.55/2018 and 56/2018.
2. All the aforesaid Appeals were heard together and are being disposed of by a common judgment.
3. The Revenue has urged the following questions of law for our consideration.
(A) Whether in law and circumstances of the case the ITAT has erred in deleting the action of the Assessing Officer of disallowing the expenses of Rs. 6,96,00,000/- in respect of payment of liquidated damages made for cancellation of contract during F.Y. 2009-10 ?
(B) Whether in law and circumstances of the case the ITAT was unjustified in allowing the claim made by the appellant at the time of hearing of appeal in respect of allowance of liquidated damages of Rs. 6,96,00,000/- paid for the cancellation of contract accrued the said sum during the F.Y. 2009-10 ?
(C) Whether in law and circumstances of the case the ITAT has erred in allowing the expenditure of Rs. 6,96,00,000/- (pertaining to the liquidated damages) accrued in the earlier year that is Assessment year 2010-11 and therefore the same cannot be allowed for the year under consideration ?
(D) Whether in law and circumstances of the case the ITAT erred in deleting the action of the Assessing Officer of disallowing the deferred revenue expenditure of Rs. 50,82,117/- claimed by the respondent in return of income filed for the year, when it was established by the A.O. that the expenditure claimed by the Assessee of Rs. 1,67,95,982/- for the TMPL has accrued in F.Y.2009-10. Also the expenditure claimed by the assessee of Rs. 6,96,00,000/- for TMPL has accrued in F.Y. 2009-10. Thus the total amount accrued in F.Y. 2009-10 comes to Rs. 8,63,95,982/- is divided into 17 installments by the assessee and claimed deferred expenditure of Rs. 50,82,117/- in each year which the AO has disallowed and added to the income ?
4. Some of the relevant facts for the purpose of deciding these appeals are as under :
(A) The Assessees were engaged in the business of extraction and sale of iron ore. In so far as the facts in Tax Appeal No.52/2018 and Tax Appeal No.60/2018 are concerned, the assessee Mr. Rajesh Prakash Timblo was granted mining lease by the State Government, which was renewed for a period of 20 years from 2008 upto 2018 on 21/09/2000. The Assessee entered into an agreement for extraction and transportation of iron ore with M/s. Timblo Minerals Pvt. Ltd. and granted extraction of iron ore right in such mining lease to the said M/s. Timblo Mineral Pvt. Ltd.. The said extraction agreement was renewable automatically every five years till the iron ore contained therein were economically explorable.
(B) On 5th March, 2010, the Assessee and the said M/s. Timblo Mineral Pvt. Ltd. entered into an agreement with other parties as well, consisting of said M/s. Timblo Mineral Pvt. Ltd.. Under the said agreement, the Assessee agreed to pay Rs. 6,96,00,000/- to the said M/s. Timblo Minerals Pvt. Ltd. in installments. It was agreed that the first intallment of Rs.2,32,13,982/- would be paid upon deduction of tax at source amounting to Rs.4,64,280/- vide cheque No.018256 dated 5th March, 2010 in favour of M/s. Timblo Minerals Pvt. Ltd. It was agreed that the second installment of Rs.2,32,17,000/- would be paid upon deduction of tax at source amounting to Rs.4,64,340/- by cheques dated 15th April 2010 drawn in favour of M/s. Timblo Minerals Pvt. Ltd.. It was further agreed that the third installment of Rs.2,31,69,018/- to be paid upon deduction of tax at source
