Principal Commissioner of Income Tax (Central) & Anr. v. Obulapuram Mining Company Pvt. Ltd.

1. FACTS OF THE CASE

Revenue challenged the Tribunal’s 20 October 2016 order in IT(TP)A 182/Bang/2014. The disputed AY 2009-10 additions comprised transfer-pricing adjustments of Rs.112,20,92,081, transportation disallowance of Rs.86,43,47,335 and section 37(1) disallowance of Rs.387,76,69,992. The source also discusses AY 2008-09 proceedings; paragraphs 3 and 51 identify the present assessment as AY 2009-10, dated 31 December 2013, despite inconsistent dates/year references elsewhere.

Source: PDF pp.2–3, paragraph 3; p.57, paragraph 51

2. DISCUSSION BY THE COURT

For the relevant previous year, GLATIPL’s sole share was held by ILSGL, with no established ownership or directorial link to the assessee. A common director alone did not satisfy section 92A(2). On transportation, the Tribunal had rejected statements unavailable for requested cross-examination. It treated the 40% mining-expense disallowance as an unsupported attribution of ordinary expenditure to an unlawful purpose.

Source: PDF pp.47–57, paragraphs 44–50

3. JUDICIAL DECISION

The Court held the section 92A requirements unmet and Chapter X inapplicable on these facts. It found no basis to interfere with the Tribunal’s treatment of transportation and section 37(1) expenses, and rejected Revenue’s appeal while confirming the Tribunal’s order.

Source: PDF pp.51–57, paragraphs 47–50; pp.64–65, paragraphs 58–59

4. OUTCOME

The assessee succeeded against Revenue’s appeal. The confirmed Tribunal order deleted the challenged disallowances and retained its separate remand of the land-sale issue for a fresh computation allowing acquisition cost, if incurred. The judgment does not determine criminal liability for alleged illegal mining.

Source: PDF pp.56–57, paragraph 50; p.65, operative order

5. Expert Comments

AKHB editorial analysis, distinct from the Court’s findings.

Section 92A requires year-specific proof

The December 2007 ownership history did not establish the required relationship during April 2008–March 2009. Map control and ownership to the relevant previous year and a specific section 92A(2) condition; a shared director did not replace that proof here.

Source: PDF pp.47–52, paragraphs 44–47

Cross-examination affected the evidence relied upon

The confirmed reasoning excludes transporters’ statements where requested cross-examination was denied and finds the disallowance unsustainable without them. This turns on the evidentiary record; it is not a rule that every transportation claim succeeds or every procedural defect prevents remand.

Source: PDF pp.53–57, paragraphs 49–50

Section 37(1) concerns the expenditure’s purpose

The reasoning distinguishes ordinary mining expenditure from expenditure facilitating an offence or a penalty. A 40% attribution, while allowing 60% of the same expense pool, did not establish the prohibited purpose. The decision neither legalises mining nor allows all expenses connected with unlawful conduct.

Source: PDF pp.54–55, paragraph 49

Preserve the limits of the confirmed relief

The land-sale issue remained remanded for cost-based computation; confirmation did not erase it. References to AY 2008-09 concern other proceedings and include inconsistent narrative wording. The present appeal’s identified AY 2009-10 and final Tribunal-order reference should control its description.

Source: PDF pp.56–60, paragraphs 50–54; p.65, order