This is Revenue’s appeal for the A.Y 2015-16 against the order of the CIT (A)-4, Hyderabad, dated 22.03.2019. The grounds raised by the Revenue are as under:

“1. The learned CIT (A) erred in deleting the addition made towards ‘Disallowance of expenditure toward Special Purpose Vehicle’ without appreciating the expenditure is punitive in nature and is not allowable u/s 37 (of Income Tax Act, 1961).

2. The learned CIT (A) erred in deleting the addition made towards ‘mine closure obligation’ when the same is not an ascertained liability.

3. The learned CIT (A) erred in deleting the addition made towards ‘Disallowance of expenditure towards Special Purpose Vehicle’ without appreciating that the assessee itself vide letter dated 07.03.2016 has submitted that the assessee company falls under Category ’B’ of the Mines for which mining was permitted to be continued with payment of penalty/ compensation by the assessee and that the expenditure is punitive in nature and is not allowable u/s 37 (of Income Tax Act, 1961).

4. Any other ground that may be raised at the time of hearing”.

2. Brief facts of the case are that the assessee company which is engaged in the business of Mining of Iron Ore, Diamonds etc., and generation of Wind Power, filed its original return of income for the A.Y 2015-16 on 29.09.2015 admitting total income at Rs.9765,78,96,000/- and book profits u/s 115JB (of Income Tax Act, 1961) at Rs.9802,24,54,613/-. Subsequently, it filed a revised return of income on 23.11.2016 admitting total income at Rs.9942,41,00,630/- and book profit u/s 115JB (of Income Tax Act, 1961) at Rs.9802,24,54,613/- stating that there is a mistake in the original computation of total income. In the computation of total income, the assessee company claimed deduction u/s 80IA (of Income Tax Act, 1961) amounting to Rs.481,26,169/-. The return was initially processed u/s 143(1) (of Income Tax Act, 1961).

Subsequently, the case was selected for scrutiny and during the assessment proceedings u/s 143(3) (of Income Tax Act, 1961), the AO observed that the assessee company is carrying out mining activity in Karnataka and the Hon'ble Supreme Court had taken note of large scale illegal mining in Karnataka and has categorized the assessee company into Category-B and had directed the assessee to pay a sum equivalent to 15% of the sale proceeds of its iron ore sold through Monitoring Committee as a penalty/compensation. The AO was of the opinion that the said payment is punitive in nature and therefore is to be disallowed u/s 37 (of Income Tax Act, 1961). Further, the AO also observed that the assessee has debited an amount of Rs.7.79 crores towards “Mine Closure Obligation” for the year ended on 31.03.2015 and has claimed it as an expenditure. Observing that the provision made is towards expected future liability to close the mines which are exploited by the organization, he held it to be in the nature of contingent liability and accordingly, disallowed the same and brought it to tax. Aggrieved, the assessee preferred an appeal before the CIT (A) who allowed the same by following the ITAT order in assessee’s own case for the A.Ys 2013-14 and 2014-15 and also for the A.Y 2012-13. Against the relief granted by the CIT (A), the Revenue is in appeal before us.

3. The learned DR supported the order of the AO while the learned Counsel for the assessee supported the order of the CIT (A) and has also filed copies of the orders of the Tribunal in the assessee’s own case for the earlier A.Ys on the same issue which had arisen during the relevant A.Ys.

4. Having regard to the rival contentions and the material on record, we find that as far as the expenditure paid towards Special Purpose Vehicle as per the directions of the Hon'ble Supreme Court is concerned, the Coordinate Bench of the Tribunal (to which the JM is the signatory) in ITA Nos.1823 and 1824 of 2017 for the A.Ys 2013-14 and 2014-15 and ITA Nos.1785 to 1786 of 2017 for the A.Ys 2013-14 and 2014-15 has considered this issue at length and at Paras 9 to 11 has held as under:

“9. Having regard to the rival contentions and the material on record, we find that the assessee is a Central Government Public Sector Undertaking and is under the administrative control of the Ministry of Steel, Government of India. It is seen that the assessee has paid Rs. 405.79 Crs towards contribution for the Special Purpose Vehicle (SPV) and compensation for encroachment of the mining area beyond the sanctioned lease area as per the directions of the Hon'ble Supreme Court. The assessee has filed a copy of the order of the Hon'ble Supreme Court, which is placed at pages 8 to 88 of the paper book. We find that the illegal mining activity in the State of Karnataka (in Bellary region) had come up before the Hon'ble Supreme Court of India and the Apex Court had formed a Committee viz., Central Empowered Committee (CEC) to examine and suggest the remedial action. The CEC submitted its report indicating large scale illegal mining at the cost and detriment of the environment due to which by order dated 29.07.2011 a complete ban on mining in the district of Bellary was imposed by the Hori'ble Supreme Court.

Further, vide order dated 26.08.2011, the ban was extended to Tumkur and Chitradurga Districts. Thereafter, a Joint Team was constituted by the Apex Court vide its order dated 06.05.2011 to determine the boundaries of initially 117 mining leases which has subsequently extended to 166, by inclusion of Tumkur and Chitradurga Districts. The Joint Team revealed a shocking state of depredation of nature's bounty by human greed and therefore, the Hon'ble Apex Court vide its order dated 23.09.2011 directed the Special Team to re-examine the issue. Thereafter, the CEC submitted its report termed as 'Final Report' dated 03.02.2012 by making two significant recommendations. The first was for categorization of the mines into three categories viz., 'A', 'B' and 'C' on the basis of the extent of the encroachment in respect of mining pits and over burden dumps determined in terms of percentage qua the total lease area. The second set of modified recommendations along with set of detailed guidelines for preparation and implementation of Reclamation and Rehabilitation Plans (R & R) were also submitted to the Court by the CEC on 13.03.2012. The Hon'ble Supreme Court therefore considered the recommendations of the CEC dated 03.02.2012 and 13.03.2012 and in its order the Court has reproduced the same. Relevant paras from the judgement dated 18.04.2013 are reproduced hereunder for ready reference:-

"5. We may now proceed to notice the relevant part of the two Reports of the CEC dated 3.2.2012 and 13.3.2012, as referred to hereinabove.

"IV. CLASSIFICATION OF LEASES IN DIFFERENT CATEGORIES ON THE BASIS OF THE LEVEL OF ILLEGALITIES FOUND.

27. The CEC, based on the extent of illegal mining found by the Joint Team and as appropriately modified by the CEC in its Proceeding dated 25th January, 2012 and after considering the other relevant information has classified the mining leases into three categories namely "Category-A", "Category-B" and "Category-C".

28. The "Category-A" comprises of (a) working leases wherein no illegality/marginal illegality have been found and (b) non working leases wherein no marginal/illegalities have been found. The number of such leases comes to 21 & 24 respectively.

29. "Category-B" comprises of (a) mining leases wherein illegal mining by way of (i) mining pits outside the sanctioned lease areas have been found to be up to 10% of the lease areas and/ or (ii) over burden/waste dumps outside the sanctioned lease areas have been found to be up to 15% of the lease areas and (b) leases falling on interstate boundary between Karnataka and Andhra Pradesh and for which survey sketches have not been finalized. For specific reasons as mentioned in the Page 9 9 statement of "Category-B" leases, M/s. S.B. Minerals (ML No. 2515), M/s. Shantalaxmi Jayram (ML No. 2553), M/ s. Gavisiddeshwar Enterprises (ML No. 80) and M/s. Vibhutigudda Mines (Pvt.) Ltd. (ML No. 2469) have been assigned in "Category- B". The numbers of such leases in "Category-B" comes to 72.

30. The "Category-C" comprises of leases wherein (i) the illegal mining by way of (a) mining pits outside the sanctioned lease area have been found to be more than 10% of the lease area and/or (b) over burden/ waste dumps outside the sanctioned lease areas have been found to be more than 15% of the lease areas and/ or (ii) the leases found to be involved in flagrant violation of the Forest (Conservation) Act and/ or found to be involved in illegal mining in other lease areas. The number of such leases comes to 49.

RECOMMENDATIONS (as modified by CEC by its Report dated 13.3.2012. Items 1 to IV of the Report dated 3.2.2012 stood replaced by Items A to I of the Report dated 13.3.2012 which are reproduced below along with Items V to XIV of the initial Report dated 3.2.2012).

(A) the findings of the Joint Team and as modified after careful examination by the CEC may be accepted and directed to be followed by the concerned authorities and the respective leases, notwithstanding anything to the Page 10 10 contrary. The 9 boundaries of the mining leases should accordingly be fixed on the ground.

(B) a ceiling of 25 Million Metric Tonnes (MMT) for total production of iron ore from all the mining leases in District Bellary may be prescribed. A ceiling of 5 MMT for production of iron ore from all the mining leases in Districts Chitradurga and Tumkur together may be prescribed;

(C) the proposed "guidelines for the preparation of the R&R Plans" may be approved by this Hon'ble Court and the prescriptions/provisions of the R&R Plans, prepared as per these guidelines, may be directed to be followed by the respective lessees and the concerned authorities;

(D) the iron ore which becomes available should be used for meeting the iron ore requirement of the steel plants and associated industries located in Karnataka and also of those plants located in the adjoining States which have been using the iron ore from the mining leases located in these Districts.

Exports, outside the country, should be permissible only in respect of the material which the steel plants and associated industries are not willing to purchase on or above the average price realized by the Monitoring Committee for the corresponding grades of fines/ lumps during the sale of about 25 MMT of the existing stock of iron ore. Similarly, the iron ore produced by the beneficiation. plants after Page 11 11 processing should also not be permitted to be exported outside the country;

(E) the sale of the iron ore should continue to be through e-auction and the same should be conducted by the Monitoring Committee constituted by this Hon'ble Court. However, the quantity to be put up for e-auction, its grade, lot size, its base/floor price and the period of delivery will be decided/provided by the respective lease holders. The Monitoring Committee may permit the lease holders to put up for e-auction the quantities of the iron ore planned to be produced in subsequent months. The system of sale through the Monitoring Committee may be reviewed after say two year;

(F) 90% of the sale price (excluding the royalty and the applicable taxes) received during the e-auction may be paid by the buyer directly to the respective lease holders and the balance 10% may be deposited with the Monitoring Committee alongwith the royalty, FDT and other applicable taxes/ charges;

(G) The responsibility of the Monitoring Committee will be (a) to monitor the implementation of the various provisions/prescriptions of the R&R Plans, (b) to ensure strict compliance of the conditions on which the environment clearance, the approval under the Forest (Conservation) Act, 1980 and the other statutory approvals/ clearances have been accorded, (c) to ensure that the mining is undertaken as per the approved Mining Plan, (d) to ensure Page 12 12 that the ceiling on annual production fixed for the lease does not exceed, (e) to ensure that the safety zone is maintained around the lease area and in respect of the clusters of mining leases around the outer boundary of such cluster of mining 10 leases and (f) to ensure compliance of the other applicable condition/provisions. Any lease found to be operating in violation of the stipulated conditions/provisions should be liable for closure and/ or termination of the lease;

(H) the present Members of the Monitoring Committee should continue for a period of next two years; and

(I) in the larger public interest the mining operations in the two leases of M/ s. NMDC may be permitted to be continued. However, it will be liable to deposit penalty/compensation as payable for the mining leases falling in "Category-B" (V) In respect of the mining leases falling in "CATEGORY-B" (details given at Annexure-R 10 to this Report) it is recommended that:

i) the R&R Plan, under preparation by the ICFRE, after incorporating the appropriate changes as per the directions of this Hon'ble Court, should be implemented in a time bound manner by the respective lessees at his cost. In the event of his failure to do so or Page 13 13 if the quality and/or the progress of the implementation of the R&R Plan is found to be unsatisfactory by the Monitoring Committee or by the designated officer(s) of the State of Kamataka, the same should be implemented by the State of Kamataka through appropriate agency(ies) and at the cost of the lessee;

ii) for carrying out the illegal mining outside the lease area, exemplary compensation/ penalty may be imposed on the lessee. It is recommended that:

a) For illegal mining by way of mining pits outside the leases area, as found by the Joint Team, the compensation/ penalty may be imposed at the rate of Rs. 5. 00 crore (Rs. Five Crore only) for per ha. of the area found by the Joint Team to be under illegal mining pit; and

b) For illegal mining by way of over burden dump(s) road, office, etc. outside the sanctioned lease area, the compensation/ penalty may be imposed @ Rs.1.00 crores (Rs. One Crores only) for per ha. of the area found to be under illegal over burden dump etc.

iii) Mining operation may be allowed to be undertaken after (a) the implementation of the R& R Plan is physically undertaken and is found to be satisfactory based on the predetermined parameters (b) penalty/ compensation as decided by this Hon'ble Page 14 14 Court is deposited and (c) the conditions as applicable in respect of "Category-A" leases are fulfilled/followed;

iv) In respect of the seven mining leases located on/ nearby the interstate boundary, the mining operation should presently remain suspended. The survey sketches of these leases should be finalized after the interstate boundary is decided and thereafter the individual leases should be dealt with depending upon the level of the illegality found; and

v) Out of the sale proceeds of the existing stock of the mining leases, after deducting : a) The penalty/compensation payable; b) Estimated cost of the implementation of the R& R Plan; and c) 10% of the sale proceeds to be retained by the Monitoring Committee for being transferred to the SPV d) The balance amount, if any, may be allowed to be disbursed to the respective lessees.

(ii) Conditions which have been suggested for opening of Category 'A' mines and additionally the R& R Plans for Category 'B' mines 43. The conditions subject to which Category 'A' and 'B' mines are to be reopened and the R&R Plans that have been recommended as a precondition for reopening of Category 'B' mines are essentially steps to ensure scientific and planned exploitation of the scarce mineral resources of the country. The details of the preconditions and the R&R plans have already been noticed and would not require a repetition. Suffice it would be to say that such recommendations are wholesome and in the interest not only of the environment and ecology but the mining industry as a whole so as to enable the industry to run in a more organized, planned and disciplined manner. FIMI was actively associated in the framing of the guidelines and the preparation of the R&R Plans. There is nothing in the preconditions or in the details of the R&R plans suggested which are contrary to or in conflict or inconsistent with any of the statutory provisions of the MMDR Act, EP Act and FC Act. In such a situation, while accepting the preconditions subject to which the Category 'A' and 'B' mines are to be reopened and the R&R plans that must be put in place for Category 'B' mines, we are of the view that the suggestions made by the CEC for Page 80 80 reopening of Category 'A' and 'B' mines as well as the details of the R&R plans should be accepted by us, which we accordingly do. This will bring us to the most vital issue of the case, i.e., the future of the Category 'C' mines. "

The Annexure R-9 which is an extract from the CEC Report dated 03.02.2012 classifying the category 'A' mining leases is as under:-

10. Thus, from the table reproduced above, it is seen that the assessee has been classified as Category-A' whereas the Assessing Officer has considered the assessee as Category-B" company. The Hon'ble Supreme Court has clearly indicated that Category-A comprises of (i) 'working leases' wherein no illegality / marginal illegality have been found and (ii) 'non-working leases' wherein no marginal / illegalities have been found, whereas Category-B comprises of (i) mining leases wherein illegal mining is 10% to 15% of the sanctioned lease areas. However, CEC had recommended that both "A" and "B" categories may be allowed to resume the mining activity subject to the payment of penalty/compensation decided by the Court. Thus, according to the assessee, the said expenditure is nothing but a payment which was required to be made without which the assessee could not have carried on the mining activities and therefore, it is a 'business expenditure'. Since the CEC had categorised the assessee as a Category-A company and the Hon'ble Supreme Court has accepted the said categorization, there would have been marginal illegalities committed by the assessee and the compensation j penalty as directed by the Hon'ble Supreme Court is only to compensate the Government for the loss of revenue from such mining or marginal illegalities and not as a penalty. Though the nomenclature given is "penalty" it is not for infraction or violation of any law to hold it to be punitive in nature, as presumed by the Assessing Officer. Learned Counsel for the Assessee placed reliance on various case law, particularly the decision of the Coordinate Bench of the ITAT, Kolkata in the case of Essel Mining & Industries Ltd vs. Addl. CIT (ITA No. 352/Kol/2011 and others, dated 20.05.2016); ACIT vs. Freegade & Co. Ltd (ITA No.934/Kol/2009, dated 05.08.2011) and also the decision of the Hon'ble Calcutta High Court in the case of Shyam Sel Ltd vs. DCIT (72 Taxmann.com 105) (Cal.). On going through the said decisions, we find that the Hon'ble Calcutta High Court has considered the case of an assessee who failed to install Pollution Control Device within factory premise within prescribed time and that the assessee had to pay Rs. 12.50 lakh for compensating damage to environment and the same was recovered by State Pollution Control Board on the principle of 'polluter pays' and the A.O. had treated it as penalty and did not allow the same as business expenditure. The Hon'ble High Court had taken note of the fact that the assessee's business was not illegal and that compensation was paid because of its failure to install pollution control device within prescribed time and therefore, such payment was undoubtedly for the purpose of business and in consequence of business carried on by the assessee and was thus covered by section 37 (of Income Tax Act, 1961). For coming to this conclusion, Hon'ble High Court has also considered the judgment of the Hon'ble National Green Tribunal in the case of State Pollution Control Board vs. Swastik Ispat (P.) Ltd wherein at para 38 of the judgment the Tribunal held as under:-

"Being punitive is the essence of 'penalty'. It is in clear contradistinction to 'remedial' and/or 'compensatory'. 'penalty' essentially has to be for result of a default and imposed by way of punishment. On the contrary, 'compensatory may be resulting from a default for the advantage already taken by that person and is intended to remedy or compensate the consequences of the wrong done. For instance, if a unit has been granted conditional consent and is in default of compliance, causes pollution by polluting a river or discharging sludge, trade affluent or trade waste into the river or on open land causing pollution, which a Board has to remove essentially to control and prevent the pollution, then the amount spent by the Board, is thus, spent by encashing the bank guarantee or is adjusted thread and this exercise would fall in the realm of compensatory restoration and not a penal consequence. In gathering the meaning of the word 'penalty' in reference to a law, the context in which it is used is significant."

11. Applying this ratio to the facts of the case before us, we find from para 43 of the Hon'ble Supreme Court's order reproduced above that the condition of payment for resuming the mining activity by Categories 'A' & 'B' companies is to not to punish the companies for any violation of law but is to ensure scientific and planned exploitation of mineral resources in India. Further the Hon'ble Supreme Court had directed as under:-

"(X) Out of the 20% of sale proceeds retained by the Monitoring Committee in respect of the cleared mining leases falling in «(Category A), 10% of the sale proceeds may be transferred to the SPV while the balance 10% of the sale proceeds may be reimbursed to the respective lessees.

In respect of the mining leases falling in "Category -B", after deducting the penalty / compensation, the estimated cost of the implementation of the R & R Plan, and 10% of the sale proceeds to be retained for being transferred to the Spv, the balance amount, if any may be reimbursed to the respective lessees;"

The fact that the compensation is proportionate to area of illegal mining outside the leased area and that the assessee has paid the proportionate compensation for mining in the areas outside the sanctioned area allotted to it and that 1 0% of sum is to be transferred to Spy and the balance 10% is to be reimbursed to the respective lessees, according to us, proves that it is a payment made as 'compensation' for extra mining, without which the assessee could not have resumed its activities. Therefore, we are inclined to accept the contention of the assessee that it is compensatory in nature and is a 'business expenditure' and is allowable ix] s 37(1) of the Act. Thus, Grounds No.2 and 3 raised by the assessee are allowed.

4. Respectfully following the same, we do not see any reason to interfere with the orders of the CIT (A) and the grounds 1 & 3 on this issue are accordingly dismissed.

5. As regards the ground No.2 against the deletion of the addition of Rs.264,78,210/- made by the AO by disallowing the expenditure incurred towards mine closure obligation, which has been deleted by the CIT(A), we find that this issue also had come up in the assessee’s own case for the A.Y 2012-13 in ITA No.148/Hyd/2017 and vide orders dated 9.05.2017, this issue was considered and adjudicated at Paras 6 to 9 as under:

“6. As regards Ground No.1 & 2 is concerned, we find that the Tribunal for the A.Y 2009-10 in ITA No.287/Hyd/2013 dated 18.7.2014 has considered this issue at length and has held as under:

“19. The next effective ground of the assessee in this appeal relates to addition of Rs.15,38,26,817 made by the Assessing Officer and sustained by the CIT(A) on account of mine closure obligation.

20. We heard both sides and perused the orders of the Revenue authorities on this issue and other material available on record. It has been brought to our notice by the learned counsel for the assessee, which has not been controverted by the learned Departmental Representative, that this issue is covered by the decisions of the Tribunal in assessee's own cases dated 28.2.2014 for assessment year 2008-09 in ITA No.714/Hyd/2012 and dated 9.5.2014 for assessment year 2010-11 in ITA No.1795/Hyd/2013. We find that the coordinate benches of this Tribunal, vide Paras 9 and 9.1 of its order dated 28.2.2014 for assessment year 2008-09, cited supra, decided the issue in the following manner:

"9. We have heard the arguments of both the parties, perused the record and have gone through the orders of the authorities below as well as the decisions cited. In AY 2006-07, the coordinate bench in assessee's own case (supra), held as follows:

"11. We have heard both the parties, perused the record and gone through the orders of the authorities below. It is observed that the basis of calculation for the relevant AY 2006-07 for Rs. 71.18 crores was submitted during the original assessment and accepted by the AO. The detailed calculation of Rs. 21.31 crores charged to P&L A/c (on the basis of Rs. 71.18 crores) was also enclosed and produced before the CIT. Hence, the CIT is wrong in his observation that the estimate of Rs. 21.31 crore is excessively on a higher side and absolutely no realistic or rational basis for such calculation.

12. The CIT is not correct in invoking the provisions of section 263 (of Income Tax Act, 1961) as we find that the issue is debatable and when two views are possible the AO has taken one view. The Apex Court in the case of Malabar Industrial Co. Ltd. Vs. CIT reported in 243 ITR 83 as well as CIT Vs. Max India Ltd. reported in 295 ITR 282 has held that when there are two views possible and the AO has taken one view, the order of the AO cannot be considered as erroneous and hence the CIT cannot exercise revisional power u/s 263 (of Income Tax Act, 1961). As pointed out above, the provisions for an accrued existing liability, even though, the actual expenditure may take place at a later date, is an allowable deduction and the CIT erred in treating it as an unascertained liability. Therefore, we set aside the order of the CIT passed u/s 263 (of Income Tax Act, 1961) and the order of the AO is restored."

9.1 The above decision relied upon by the AR of the assessee, though, it was delivered in assessee's own case for AY 2006-07 cannot be applied to the facts of the case as that order was delivered by the Tribunal in connection with the order passed u/s 263 (of Income Tax Act, 1961). The order passed u/s 263 (of Income Tax Act, 1961) read with section 143(3) (of Income Tax Act, 1961) and the order passed u/s 143(3) (of Income Tax Act, 1961) read with section 251 (of Income Tax Act, 1961) are standing on different footing. The scope of section 263 (of Income Tax Act, 1961) is not par with the provisions of section 251 (of Income Tax Act, 1961). Being so, we cannot borrow support from the order of the Tribunal passed in ITA No. 991/Hyd/2011 for AY 2006-07, on which reliance placed by the assessee's counsel. In the present case, there is a categorical finding given by the CIT(A) that there are certain mines not yet commenced. On that mine closure obligation works out to Rs. 4,98,058/- cannot be allowed.

Further, mines at Kumaraswamy and Lalpur where there is no production, being so, no obligation is allowable. Further, assessee has not given year-wise break- up. Being so, the CIT(A) directed the AO to ascertain the account of year-wise mining, which has been done from the remaining mines and allow mine closure obligation to the extent mining done corresponding to the current year. He further gave a direction to the AO if the assessee fails to provide such data, then, pro rata h as to be applied. Thus, the CIT(A) has given a categorical finding in Paras 4.3 & 4.4 of his order. Therefore, we do not find any infirmity on that p art of the order and accordingly, we confirm the same. This ground raised by the assessee is dismissed".

Following the above decision of the Tribunal dated 28.2.2014, coordinate bench of this Tribunal, vide Paras 47 and 48 of its order dated 9.5.2014 for the assessment year 2010-11 in ITA No.1795/Hyd/2013, though held that mine closure obligation is not a contingent liability, but an ascertained liability,restored the matter to the file of the Assessing Officer, for recomputing the disallowance, in the following manner-

"48. Respectfully following the above decision, we hold that mine closure obligation is not a contingent liability but ascertain liability. However, it has to be verified that whether assessee has made the claim on the mines which are in working condition which are being operated or not. If the assessee has made the claim on mines which have not started operations, the same cannot be allowed. As rightly held by the CIT(A) in A.Y. 2008-09, ascertainability of liability is to be ascertained year-wise. Therefore, to that extent, following the Coordinate Bench decision, we direct the assessee to furnish the relevant data to the A.O. towards the mines closure obligation and A.O. is directed to verify and allow the amount accordingly. Subject to the above observations, the ground No.2 is considered as allowed for statistical purposes."

21. In this view of the matter, following the consistent view taken by the Tribunal in assessee's own cases for other years noted above, we hold that the mine closure obligation is not a contingent liability but an ascertained liability. Since the quantum of such ascertained liability has to be determined year-wise, as observed in the order for assessment year 2010-11, extracted above, we direct the assessee to furnish the relevant data to the Assessing Officer towards mines closure obligation. The Assessing Officer shall verify such data and recompute the disallowance, if any, warranted, in accordance with law and after giving reasonable opportunity of hearing to the assessee.

Assessee's grounds on this issue are treated as allowed for statistical purposes”.

7. Respectfully following the same, we reject the grounds of appeal No. 1 & 2.

8. As regards Ground of appeal No.3, we find that the Tribunal in the assessee’s own case for the A.Y 2009-10 has considered this issue at length and held as under:

“22. The next effective ground of the assessee in this appeal relates to addition of Rs.10,66,56,599 made by the Assessing Officer and sustained by the CIT(A), by disallowance of assessee's claim for depreciation on lease hold land.

23. We heard both sides and perused the orders of the Revenue authorities on this issue and other material available on record. It has been brought to our notice by the learned counsel for the assessee, which has not been controverted by the learned Departmental Representative, that this issue is covered by the decisions of the Tribunal in assessee's own cases dated 28.2.2014 for assessment year 2008-09 in ITA No.714/Hyd/2012 and dated 9.5.2014 for assessment year 2010-11 in ITA No.1795/Hyd/2013. We find that the coordinate bench of this Tribunal, vide para 22 and 22.1 of its order of this Tribunal dated 28.2.2014 for assessment year 2008-09, cited supra, decided the issue in favour of the assessee in the following manner;

"22. We have heard the arguments of both the parties and perused the record as well as gone through the orders of the M/s. National Mineral Development Corporation Limited, Hyderabad authorities below. Similar came up for consideration before the coordinate bench of ITAT, Cuttack in case East India Minerals Ltd. Vs. JCIT in ITA No. 224/CTK/2012, vide its order dated 25/06/2012, on which reliance placed by the assessee, wherein it has been held as follows:

"7. We have heard the rival contentions of the parties and perused the material available on record. Considering the facts and circumstances of the case, we uphold the contention of the learned Counsel for the assessee for the simple reason that the denial of claim of depreciation has been made on misinterpretation of law and the applicability thereof. Explanation to Section 32(1)(ii) (of Income Tax Act, 1961) leans in favour of the assessee to the extent that it is the actual action of put to use which entitles the assessee to claim depreciation. A straight line method of claiming the writing off of lease hold rights for the period of lease cannot be denied to the assessee for the simple reason it being intangible asset has been written off which pertains to land being a intangible asset. It is nobody's case that the land either belonged to the lessee or to the Government.

This simply indicates that a depletion of the land against the payment of premium it was leased has to be claimed after capitalization thereof by the assessee which is for the purpose of its main business. All expenses are incurred for the purpose of business and are incidental to the holding of rights were claimed u/s.32(1)(ii) (of Income Tax Act, 1961) being the license to carry out the mining therefore could not be denied insofar as the Government and the lessee are in control of the asset. The definition of depreciation therefore has been misconstrued for the purpose of allowing deduction by the Assessing Officer and the learned CIT(A) in holding a view on the promulgation of Section 32(1)(ii) (of Income Tax Act, 1961) with effect from the year 1998-99 which has been further amended i.e. Assessment Year 2003-04. In this view of the mater, we are inclined to hold that the assessee is entitled to depreciation as charged to the P & L account in accordance with its business exigencies. We direct accordingly. On the claim of deduction/s.80G,the A.O., is directed to verify the receipts and allow the deduction in accordance with the provisions of Income-tax Act,1961."

22.1 Since the issue under consideration is materially identical to that of the case decide by the Tribunal in the case of East India Minerals Ltd., respectfully following the same, we set aside the order of the CIT(A) and direct the AO to delete the addition made in this regard".

Following the above decision of the Tribunal dated 28.2.2014, coordinate bench of this Tribunal, vide Paras 36 and 37 of its order dated 9.5.2014 M/s. National Mineral Development Corporation Limited, Hyderabad for the assessment year 2010-11 in ITA No.1795/Hyd/2013, decided this issue in favour of the assessee. In this view of the matter, following the consistent view taken by the Tribunal in assessee's own cases for other years noted above, we delete the addition of Rs.10,66,56,599 made by the Assessing Officer and sustained by the CIT(A), by disallowing the assessee's claim for depreciation on lease hold land. Assessee's grounds on this issue are accordingly allowed”.

9. Thus, ground of appeal No.3 is rejected”.

6. Further, the learned Counsel for the assessee has also filed the consequential order passed by the AO for the A.Y 2013-14 in respect of mine closure obligation, wherein the AO, after verification, has allowed the expenditure claimed by the assessee. In view of the same, we do not see any reason to interfere with the order of the CIT (A) on this issue as well.

7. In the result, Revenue’s appeal is dismissed.

Order pronounced in the Open Court on 19th February, 2020.

Sd/- Sd/-

(A. MOHAN ALANKAMONY)

ACCOUNTANT MEMBER

(P. MADHAVI DEVI)

JUDICIAL MEMBER

Hyderabad, dated 19th February, 2020.