Income Tax Deduction u/s 43B not applicable to Mine Closure Fund: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench held that Income Tax Deduction u/s 43B of Income Tax Act, 1961 not applicable to Mine Closure Fund.

The assessee-company,Gujarat Mineral Development Corporation Limited is engaged in the business of mining of minerals and generation of power. The return of income was filed declaring total income of Rs. 878. 87 crores. Subsequently, revised return of income was filed by the assessee declaring total income of Rs. 878.53 crores.

The case was selected for scrutiny. Further, the scrutiny assessment u/s 143(3) of the Income Tax Act was completed determining the total income of the assessee at Rs. 884.63 crores.

Aggrieved by the said order u/s 143(3) of the Income Tax Act the assessee preferred an appeal before the CIT(A), who partly allowed the appeal of the assessee, thereby deleting the disallowance of Rupees twenty -three lakhs made u/s 14A r.w.r 8D of the Income Tax Act and allowed depreciation at 15%.

Further, order u/s 263 of the Income Tax Act, was passed by the Pr. CIT under which the order passed by the Assessing Officer u/s 143(3) of the Income Tax Act was set aside on the issue which relates to the payment of Rs. 6 crores u/s 43B of the Income Tax Act towards Mining Closure Fund.

The order giving effect u/s 143(3) r.w.s. 263 of the Income Tax Act was passed thereby the Assessing Officer made disallowance u/s14A r.w.r. 8D, wrong claim of additional depreciation and disallowance u/s 43B of the Income Tax Act in respect of payment made towards mining closure fund. The total income assessed by the Assessing Officer was Rs. 890.62 crores.

A Bench comprising Suchitra Kamble, Judicial Member and Waseem Ahmed, Accountant Member observed that “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 of the Income Tax Act, 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.”

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to TaxscanAdFree. Follow us on Telegram for quick updates.