PER ASHA VIJAYARAGHAVAN, J.M.: This appeal by the revenue is directed against the order of ld. CIT(A)-V, Hyderabad dated 01/08/2014 for AY 2011-12.

2. Briefly the facts of the case are that assessee is a public sector undertaking engaged in mineral exploration. For the AY under consideration, assessee company filed its return of income on 27/09/2011 admitting total income of Rs. 9710,93,49,602. Assessment u/s 143(3) of the Act was completed determining the total income of assessee at Rs. 9855,25,99,590 by making the following additions: i) Mine Closure obligation Rs. 10,55,00,000 ii) Depreciation on intangible assets Rs. 18,00,47,281 iii) Demurrages on shipment charges Rs. 5,54,00,000 ITA No. 1593/Hyd/2014 National Mineral Development Corporation Ltd. iv) Expenses on account of corporate social responsibility Rs. 37,33,00,000 v) Additional depreciation Rs. 25,80,00,000 vi) 40(a)(ia) for non deduction of tax Rs. 42,88,15,332 vii) Expenditure relating to earlier years Rs. 4,21,87,375 viii) Disallowance of interest u/s 115P Rs. 7,62,78,605

3. On appeal by the assessee before the CIT(A), the CIT(A) allowed the grounds raised by the assessee in respect of the aforesaid issues. Aggrieved by the order of CIT(A), the revenue is in appeal before us.

4. Ground Nos. 1 & 6 are general in nature. Ground No.2 is as follows:

The CIT(A) erred in granting relief to the assessee in respect of Mine Closure Obligation in view of the fact that it is not an ascertained liability and if at all any expenditure is to be allowed, it should be spread over evenly for all the years since the date of commencement of mining operations till the date of closure of mining activities.

5. In the profit & loss account, assessee debited Rs. 10.55 crores towards mine closure obligation. This was a provision made towards expected future liability to closure of mines which are exploited by the company. Assessee explained that this is a statutory liability for which a separate fund had been created by the company with LIC. AO did not agree with the contentions of the assessee and disallowed the mine closure obligation on the ground that the fund created is for meeting a liability which is contingent upon certain future events like disasters and floods and is therefore not an allowable revenue expense.

6. On appeal by assessee before the CIT(A), CIT(A) allowed the ground of assessee following the decision of his predecessor for AY ITA No. 1593/Hyd/2014 National Mineral Development Corporation Ltd. 2008-09 and decisions of ITAT in assessees own case for AY 2006- 07, 2008-09 and 2010-11. Aggrieved, revenue is in appeal before us.

7. The ld. DR has relied upon the order of AO. The ld. AR of assessee contended that this liability is for meeting the obligation of mine closure and restoration of environment as per Mines & Minerals Development and Regulation Ac 1957 (MMDR 1957) at the time of closure of the mines. He submitted that the provision has been estimated on the basis of technical assessment and charged to P&L account as and when the mining takes place. He submitted that the issue is decided in favour of assessee by the coordinate benches of ITAT, Hyderabad in assessees own cases for AYs 2006-07, 2008-09, 2009-10 and 2010-11. He pointed out that the AO has allowed mine closure obligation for AYs. 2005-06 and 2007-08.

8. We have considered the submissions of the parties and perused the orders of the revenue authorities as well as material on record. The coordinate bench in assessees own case for AY 2010-11 (appeal filed by revenue) in ITA No. 1793/Hyd/2013 vide order dated 9 th May, 2014 while dealing with the similar issue, held as follows: 46. Ground No.2 pertains to the issue of mine closure obligation of Rs.12.13 crores. The facts are that assessee is a public sector undertaking and debited the above amount towards mine closure obligation. This was a provision made towards expected future liability to close mines which are exploited by the organization. Assessee explained that that this is a statutory liability for which a separate fund has been created with LIC. The A.O. did not agree and disallowed the obligation on the reason that it is a contingent upon certain future events. Therefore, it was not allowable as revenue expenditure. Considering the detailed submissions and also the orders of his predecessor in the earlier year i.e., A.Y. 2008- 09, the Ld. CIT(A) allowed the expenditure.

47. At the outset, it was submitted that this issue was crystalised in favour of the assessee against the Revenue by ITAT in earlier years and in the later year in A.Y. 2008-09 in ITA No. 1593/Hyd/2014 National Mineral Development Corporation Ltd. ITA.No.714 & 885/Hyd/2012 dated 28.02.2014 decision is as under : 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 assessees 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 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 [LQ/SC/2000/302 ;] as well as CIT Vs. Max India Ltd. reported in 295 ITR 282 [LQ/SC/2007/1339] 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. 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 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 assessees 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. The order passed u/s 263 read with section 143(3) and the order passed u/s 143(3) read with section 251 are standing on different footing. The scope of section 263 is not par with the provisions of section 251 of the Act. 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 assessees counsel. In the present case, there is a categorical finding given by the ITA No. 1593/Hyd/2014 National Mineral Development Corporation Ltd. 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 breakup. 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, prorata has 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 part of the order and accordingly, we confirm the same. This ground raised by the assessee is dismissed.

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.

9. As the issue under consideration is materially identical to that of AY 2010-11, respectfully following the decision of the coordinate bench in that year, we remit the issue to the file of the AO with a direction to verify and allow the assessees claim following the decision of coordinate bench in AY 2010-11. This ground of revenue is allowed for statistical purposes.

10. Ground Nos. 3 & 4 are as follows:

3. The CIT(A) erred in law and in facts in holding that the leasehold land is an intangible asset and depreciation on such asset is allowable when intangible assets are such assets which cannot be touched or can be seen. ITA No. 1593/Hyd/2014 National Mineral Development Corporation Ltd.

4. The CIT(A) erred in holding that the leasehold rights on land is an intangible asset and depreciation on such an asset is allowable in accordance with the business exigencies of the assessee, without appreciating that leasehold rights on lands are not specified in any block of assets to be eligible for depreciation.

11. Assessee has claimed a sum of Rs. 18,00,47,281 during the year towards depreciation of intangible assets. When AO asked assessee to explain the nature of the assets acquired and the allowability of such depreciation, it was replied in the letter dated 17/01/04 that the intangible assets are mainly lease hold land acquired from various State Governments which can be used over a certain period. The AO observed that the lands are not owned by assessee company but are obtained on lease from statement govt. for certain period and the period for which the land is to be held has not been explained and the purpose for which the land acquired is also not explained. He observed that even if it is considered that the land is taken on lease for the purposes of exploitation of mining, it cannot be treated as plant & machinery, for which depreciation is available under the IT Provisions. He further observed that the provisions of section 32(1) are not applicable to assets which are in the form of land since the assets for which depreciation is admissible under the IT Act is specified under Rule 5 of IT Rules. Further, it was observed that the intangible assets are defined as know-how, patents, copyrights, trademarks, licenses, franchises or any other business or commercial rights of similar nature. In view of the above observations, AO held that since land does not form an intangible asset, the depreciation claimed by assessee for such asset is not admissible. Accordingly he disallowed the depreciation claim of assessee.

12. On appeal, the CIT(A) following the decision of the coordinate benches of Hyderabad in assessees own case for AYs 2008-09 and ITA No. 1593/Hyd/2014 National Mineral Development Corporation Ltd. 201011, allowed the assessees claim of depreciation. Aggrieved by the order of CIT(A), revenue is in appeal before us.

13. The ld. DR relied on the order of the AO. Ld. AR of assessee contended that leasehold rights fall under Part B of depreciation schedule in intangible assets of Rule 5 of the IT Rules as any other business or commercial rights of similar nature. The accounting policy/method is consistently followed by number of years and was allowed as deduction. He submitted that the issue is covered by the decisions of coordinate benches of ITAT, Hyderabad for AY 2008-09, 2009-10 and 2010-11 in assessees own case.

14. We have considered the submissions of the parties and perused the material on record. On perusal of record, we find that the issue is squarely covered by the decisions of the coordinate benches of ITAT, Hyderabad in assessees own case. In AY 2010-11 in ITA No. 1795/Hyd/2012, the coordinate bench while dealing similar issue, held as follows: 36. Ground No.3 pertains to depreciation on intangible assets. Assessee claimed an amount of Rs.16,77,48,219/- towards depreciation on intangible assets. In the course of scrutiny proceedings, assessee was asked to explain the nature of the assets acquired and the liability of such depreciation. It was explained that intangible assets are mainly lease hold lands acquired from various State Governments which can be used for certain period. A.O. noted that from the above explanation that the lands are not owned by the assessee company but are obtained on lease from State Government and the period of lease also was not explained. A.O. was of the opinion that land was taken on lease for the purpose of exploitation of mining and it cannot be treated as plant and machinery for which depreciation was allowable under the Income Tax provisions. He was of the opinion that the lease hold rights does not come within the purview of intangible assets so as to allow depreciation. Therefore, the claim of assessee was disallowed and amount was added back.

36.1. On appeal, Ld. CIT(A) following his predecessor order for A.Y. 2008-09 confirmed the disallowance. At the outset it was submitted that the issue in A.Y. 2008-09 was decided in favour ITA No. 1593/Hyd/2014 National Mineral Development Corporation Ltd. of the assessee in assessees own case by order of the ITAT B Bench in ITA.No.714 & 885/Hyd/2012 dated 28.02.2014 wherein the claim was allowed by holding as under : 22. We have heard the arguments of both the parties and perused the record as well as gone through the orders of the 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) 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 nobodys 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) 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) with effect from the year 1998-99 which has been further amended w.e.f. 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.

ITA No. 1593/Hyd/2014 National Mineral Development Corporation Ltd.

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.

37. Respectfully following, we allow the assessees claim. Ground No.3 of the assessee is allowed.

15. As the issue under consideration is identical to that of AY 2010- 11 in assessees own case(supra), following the decision of coordinate bench in that year, we uphold the order of CIT(A) in allowing the depreciation claim of assessee. This ground of revenue is dismissed.

16. Ground No. 5 reads as follows:

The CIT(A) erred in allowing the claim of expenses incurred towards corporate social responsibility, without appreciating that sub-section (1) of section 37 has been amended by the Finance Act, 2014 by way of insertion of Explanation (2) as per which the expenditure incurred by the assessee on the activities relating to corporate social responsibility referred to in section 135 of the Companies Act, 2013 shall not be deemed to be expenditure incurred by the assessee for the purpose of business or profession, and that the amendment by way of the Explanation is clarificatory in nature and as such would apply retrospectively.

17. Assessee incurred an amount of Rs. 37,33,00,000 towards flood relief, payments made to various collectorates etc. and claimed that these payments were in the nature of business expenditure and hence allowable as deduction. AO asked the assessee as to why the expenditure incurred towards Corporate Social Responsibility should not be disallowed since such expenditure is not related to the business of the assessee. Assessee replied vide letter dated 17/01/2014. After considering the contents in that letter, the AO held that the expenditure incurred by assessee are not related to the business of assessee as they are in the nature of donations which is not allowable expenditure under the provisions of the IT Act. He, ITA No. 1593/Hyd/2014 National Mineral Development Corporation Ltd. therefore, disallowed the same. The CIT(A) after considering the submissions of the assessee and following the decisions of ITAT in assessees own case for AY 2010-11 and 2008-09 directed the AO to allow the said expenditure subject to the observations of the ITAT in the said years. Aggrieved by the order of CIT(A), the revenue is in appeal before us.

18. We have heard the submissions of the parties and perused the material on record. We find that similar issue came up for consideration before the coordinate bench in assessees own case for AYs. 2005-06 to 2010-11. In AY 2010-11 in ITA No. 1795/Hyd/2013 vide order dated 09 th May, 2014, the coordinate bench held as follows: 40. Ground No.5 pertain to claim of Rs.71,20,08,354/- on corporate social responsibility stated to have been incurred wholly and exclusively for the purpose of business. Assessee has incurred the above amount only to operate mines in remote places. It was submitted that the expenditure was necessary for the smooth conduct of the business such as installing traffic signals at circle near the vicinity of the Office, flood relief etc., and following the Union Governments CSR policy, NMDC has to create budget mandatorily at Rs.104 crores (2% of PBT) whereas, company has spent only Rs.71.20 crores. The A.O. however, held that the amount is not related to the business of the assessee and they are in the nature of donations which cannot be allowed under section 37(1). Ld. CIT(A) confirmed the same.

41. At the outset, it was submitted that similar issue was allowed by the ITAT in earlier years and the latest being ITA.No.714 & 885/Hyd/2012 dated 28.02.2014 wherein this issue was examined and allowed vide para 35 as under :

35. We have considered rival submissions and perused the record. We find that the issue in dispute is squarely covered by the decision of coordinate bench in assessees own case for AY 2005-06 in ITA No. 1791/Hyd/2008 dated 30/09/2009 wherein it has been held as follows:

14. We have considered the rival submissions on either side and also perused the material available on record. No doubt the assessee incurred an expenditure of Rs. ITA No. 1593/Hyd/2014 National Mineral Development Corporation Ltd. 5,00,00,000/- as contribution for establishing a medical college. The fact that the assessee is having a mining unit and a steel plant in Chattisgaarh is not dispute. The objection of the Department appears to be that the medical college was located at a distance of 16 kms. And the assessee, instead of providing relief to the affected people, directly incurred the expenditure for establishing the medical college. The fact remains that one of the conditions for contributing the money was to give free medical treatment to the Adivasis who were affected by the assessees project in the locality. Moreover, the employees of the assessee and their dependents were to be treated free of cost. Five seas were reserved in the medical college for the children of the employees of the assessee. In fact admission was also given to the children of the employees of the assessee as per the condition stipulated while contributing the money. The assessee also had a representation in the Board. In view of the above, in our opinion, the contribution of Rs. 5 crores is only a welfare measure for the upliftment of the Adivasis in the locality where the mining unit was situated and also for the welfare of the employees of the assessee. This contribution would definitely go a long way in conducting the assessees mining business in a profitable manner. When the assessee is having a mining unit in a remote corner of the country, the cooperation of the villagers is very much required for conducting the business. More particularly, the cooperation of the people who are affected by the mining operation of the assessee is required. Merely because the hospital and medical college are situated 16 kms away from the unit, that will not deter the medical institution in giving treatment to the affected people. Moreover, admission was given to the children of the assessees employees in the medical college. Therefore, indirectly the contribution made by the assessee takes care of the education of the employees children. This would certainly be a welfare measure on the part of the assessee for carrying out the business in an effective and efficient manner. Therefore, in our opinion, the contribution of Rs. 5,00,00,000 has to be treated as revenue expenditure for the purpose of the business. Therefore, we do not find any justification in disallowing the sum. Accordingly, we set aside the orders of the lower authorities and delete the entire addition.

36. Since the issue under consideration is identical to that of AY 2005-06, we delete the additions made under the heads from (i) to vii). ITA No. 1593/Hyd/2014 National Mineral Development Corporation Ltd.

36.1 However, we make it clear that the expenditure incurred at Rs. 3,48,04,548/- shown as miscellaneous expenses cannot be allowed as the assessee has not furnished the details of expenditure, therefore, in the absence of requisite information the said expenditure cannot be allowed. Accordingly, this ground is partly allowed.

42. AO is directed to examine the expenditure in this year also and allow accordingly. Ground No.5 is considered allowed.

19. As the issue is similar to AY 2010-11, following the decision of the coordinate bench in that year, we uphold the order of CIT(A) in allowing the claim of assessee. This ground of revenue is dismissed.

20. In the result, appeal of revenue is partly allowed for statistical purposes. Pronounced in the open court on 20 th March, 2015 Sd/- Sd/- (P.M. JAGTAP) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER Hyderabad, Dated: 20 th March, 2015 kv Copy to:- .

1. Dy. Commissioner of Income-tax, Circle 16(1), Room No. 612, 6 th Floor, Aayakar Bhavan, L.B. Stadium Road, Basheerbagh, Hyderabad 500 004.

2. M/s National Mineral Development Corporation Ltd., Khaij Bhavan, 10-3-311/A, Castle Hills, Masab Tank, Hyderabad.

3. CIT(A)-V, Hyderabad

4. CIT-IV, Hyderabad

5. The DR, ITAT, Hyderabad