Deduction of the amount retained by the monitoring committee out of sale proceeds

IN THE INCOME TAX APPELLATE TRIBUNAL “B’’BENCH:

BANGALORE

BEFORE SHRI GEORGE GEORGE K., JUDICIAL MEMBER AND

SHRI B.R. BASKARAN, ACCOUNTANT MEMBER

ITA No.3411/Bang/2018 Assessment Year : 2014-15

M/s. Muneer Enterprises Upstairs M/s. Muneer Car Hospet-Bellary Road Hospet 583 201

PAN NO : AAGFM6500R

vs

ITO Ward-1 Hospete 583 201

Appellant by : Shri Siva Prasad Reddy, A.R.

Respondent by : Dr. Manjunath K., D.R.

Date of Hearing : 20.10.2021

Date of Pronouncement : 01.12.2021

O R D E R

The assessee has filed this appeal challenging the order dated 25.10.2018 passed by Ld. CIT(A), Gulbarga and it relates to assessment year 2014-15.

2. Before proceeding to the specific issue urged before us, it is necessary to discuss about the back ground that led to scrutiny of mining operations carried out by various lessees of mines. These details have been culled out from the order dated 18-04-2013 passed by Hon’ble Supreme Court in the same of Samaj Parivartana Samudaya & Ors vs. State of Karnataka (Writ Petition (Civil) No.562 of 2009). The decision rendered by Hon’ble Supreme Court in this case has resulted in making certain additions by the Assessing officer.

3. Over exploitation or rampant mining in the State of Karnataka, particularly in the district of Bellary, was engaging the attention of the State Government from time to time. Not satisfied with the investigation carried in the State of Karnataka, a NGO named M/s Samaj Parivartana Samudaya had instituted a writ petition before Hon’ble Supreme Court under Article 32 of the Constitution complaining of little or no coercive action on the part of the State; seeking Hon’ble Supreme Court’s intervention in the matter and specifically praying for certain reliefs. The writ petition was entertained and a Committee called “Central Empowered Committee” (CEC) was formed and it was asked to submit a report on the allegations of illegal mining in the Bellary region of the State of Karnataka.

4.It can be noticed that all the amounts collected from the lessees under different categories are directed to be given to the SPV, which will in turn take various types of ameliorative and mitigative steps 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. Under these set of facts, it cannot be said that these amounts are penal in nature. We notice that the Hyderabad bench of Tribunal in the case of NMDC Ltd (supra) came to the same conclusion by following the decision rendered by Hon'ble Kolkata High Court in the case of Shyam Sel Ltd (supra) and State Pollution Control Board vs. Swastik Ispat (P) Ltd (supra), wherein identical types of payments made to remedy the river pollution caused by the parties were held to be compensatory in nature.

5. In the result, the appeal of the assessee is treated as allowed for statistical purposes. Order pronounced in the open court on 1st Dec, 2021

Please find attached the enclosed file for the full judgement.