ACIT, CUTTACK vs. PARADIP PORT TRUST, JAGATSINGHPUR

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IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK

BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER

ITA No.122/CTK/2015 Assessment Year : 2011-2012

ACIT, Circle -1(1), Cuttack Vs. Paradip Port Trust, At: Paradeep, Jagatsinghpur PAN/GIR No.AAALP 0055 A (Appellant) .. ( Respondent)

Assessee by : Shri J.M.Patnaik, AR Revenue by : Shri Kunal Singh, CIT DR

Date of Hearing : 05/10/ 2017 Date of Pronouncement : 10 /10/ 2017

O R D E R Per N.S.Saini, AM

This is an appeal filed by the Revenue against the order of the

CIT(A)- Cuttack, dated 29.12.2014 for the assessment year 2011-12.

the CIT(A) was not justified in deleting the various additions made for

Rs.3,65,15,77,786/- under the head “provisions for accrued expenses” on

the ground that there is no change in the nature of such claim of current

liabilities in the balance sheet.

the assessee had shown in the current liabilities an amount of

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Rs.3,65,15,77,786/- for the assessment year 2011-12 for accrued

expenses. Before the Assessing Officer, the assessee furnished the

details of accrued expenses as under:

Details of accrued expenses as on 31.3.2011

Op.balance as on Provision for Payment made Bal. as on Sr. particulars 31.3.10 2010-11 during 10-11 31.3.11 No 1. Police exp. 32,47,940.79 - - 32,47,940.79

by the assessee as to why the provisions were made. Therefore, in the

absence of details, the Assessing Officer observed that the claim could not

be verified and, therefore, he disallowed the amount and added the same

to the income of the assessee.

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amounts being accrued expenses are purely current liabilities in nature.

Out of the above, Rs.245 67 crores relate to interest liability on Govt, of

India loan. The interest liability of Govt, of India loan was an ascertained

liability and provisions of Section 43B would not be applicable in the case

of the Govt, of India and as such the liability has not been claimed in the

P & L A/c. Similarly the other current liability namely audit fees payable

to the C & AG, amounts payable to contractors and other payments were

also part of the current liabilities which were explained to the

Assessing Officer. The assessee further submitted that the Learned

CIT(A), in the appeal order in the case of the assessee for AY 2009-10

have verified such current liabilities and decided that the same were

ascertained liabilities.

that the assessee submitted that the above amounts were in the nature of

current liabilities and have furnished the details of the same. It was

further submitted that there has been no provision claim for such

liabilities in the P & L A/c. except for interest payable on initial investment

of Govt, of Odisha and India amounting to Rs.21,30,459/- for the

assessment year under consideration. In fact, the amount has been kept

in the provision for a number of years from earlier period as the same

was though ascertained have not yet been paid to the Govt, of

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Odisha/India. The CIT(A) relying on the order of the CIT(A),Cuttack in

the case of the assessee for AY 2009-10, where the CIT(A) had forwarded

the details submitted by the assessee to the Assessing Officer for further

verification and considering the remand report given by the Assessing

Officer, considered the provisions for accrued expenses such as audit

fees, payments to contractors, other charges, interest of Govt, of India

loan and interest on initial investment of Govt, of India to be ascertained

liabilities. He observed that there has been no change in the nature of

such claim of current liabilities made by the assessee in the Balance

Sheet. He, therefore found the same as ascertained liabilities and very

much part of current liabilities and deleted the addition made by the

Assessing Officer.

whereas ld A.R. of the assessee supported the order of the CIT(A).

authorities and materials available on record. The undisputed facts of the

case are that the Assessing Officer disallowed the claim of the assessee

on the ground that no details were furnished by the assessee to ascertain

the actual liability and as to why the provisions were made.

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the CIT(A) in assessee’s own case for the assessment year 2009-10,

wherein, the CIT(A) based on the remand report of the Assessing Officer

considered the provisions for accrued expenses such as audit fees,

payments to contractors, other charges, interest of Government of India

loan and interest on initial investment of Government of India to be

ascertained liabilities and there was no change of facts in the assessment

year under consideration.

findings of the CIT(A) except relying on the order of the Assessing Officer.

Also the findings of the CIT(A) that the provisions for accrued expenses

such as audit fees, payments to contractors, other charges, interest of

Government of India loan and interest on initial investment of

Government of India to be ascertained liabilities, were uncontroverted by

ld D.,R.

of the CIT(A), which is hereby confirmed and ground of appeal of the

revenue is dismissed.

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the CIT(A) was not justified in deleting the addition made towards

pension fund for Rs.2,94,94,640/-.

CIT(A) for the assessment year 2011-12. Hence, we dismiss this ground

of appeal of the revenue.

the CIT(A) was not justified in deleting the addition of Rs.50 crores made

by the Assessing Officer relying upon the ratio of decision by the ITAT for

the assessment year 2007-08.

by the assessee but not credited to profit and loss account. He felt that

the income earned/accrued on the investments on account of this fund

should be considered as income of the assessee for the concerned

financial year and added the same accordingly,

was created as per the specific direction of the Government of India, the

interest of which is to be utilised for the specific purpose of development

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of the Port and not in connection with the regular operation of the

business.

considering the decision of this Bench of the Tribunal in assessee’s own

case for the assessment year 2007-08 in ITA No.99/ & 114/CTK/2011,

wherein, it was held that the fund was created under the specific direction

of the Government of India and the interest on funds is to be utilised for

the development of Port, and, therefore, the interest income cannot be

added to the revenue income of the assessee.

fund has been credited directly to the respective fund account and,

therefore, the Assessing Officer was right in adding the same to the

income of the assessee.

17, Ld A.R. of the assessee supported the order of the CIT(A).

available on record, we find that the CIT(A) while deleting the addition

has followed the decision of the Cuttack Bench of the Tribunal in

assessee’s case for the assessment year 2007-08 (supra). No good

reasons could be shown by ld D.R. as to why the order of the Tribunal for

assessment year 2007-08 in the case of the assessee itself should not

have been followed by the CIT(A). Therefore, we find no good reason to

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interfere with the order of the CIT(A), which is hereby confirmed and

gr4ound of revenue is dismissed.

“In the facts and circumstances of the case, the CIT(A) is not justified in directing the AO to allow depreciation at the higher rate @ 15% on railways and rolling stock treating the same as plant and machinery as against depreciation of 10% allowed in the impugned assessment order treating the same as “building”

depreciation @15% on railways and rolling stock treating the same as a

part of plant & machinery. The Assessing Officer further observed that

the depreciation should be 10% as per the law and also noted that the

A/R of the assessee accepted the same and submitted a revised chart

claiming 10% of depreciation on the above. Accordingly, the Assessing

Officer disallowed the excess depreciation claimed by the assessee and

added an amount of Rs.11.20 crore to the income of the assessee.

above served some special purpose for the working of the port and

therefore are considered as plant & machinery of the assessee. Reliance

was placed on the decision of Hon'ble Apex Court in the case of CIT v.

Dr. B.Venkata Rao (243 ITR 82).

assessee for the AY 2007-08 (ITA No.99 & 114/CTK/2011) held that "The

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assessee was denied of the higher rate of depreciation on the assets

finding that they are not "plant & machinery". But as can be seen from

the admitted facts and circumstances of the case, the fixed assets serve

some special purpose of the working and thereby they are considered as

"plant & machinery" in the working process of the assessee. This claim of

the assessee is fortified by the decision of Hon'ble Supreme Court

rendered in the case of CIT v. Dr. B.Venkatrao (243 ITR 82}, CCI(Admn)

v. Viswesarayya Iron & Steel Ltd.,Karnataka (199 ITR 98} and Kalinga

Tubes Ltd. v. CIT (96 ITR 20). In the light of the dictums stated supra,

the assessee's claim is substantiated and hence found entitled to higher

rate of depreciation at 15% on the fixed assets as claimed by the

assessee." Following the decision of the Tribunal in assessee’s own case

for the assessment year 2007-08 (supra), the CIT(A) directed the

Assessing Officer to allow deprecation @ 15% on railways and rolling

stock.

supported the order of the CIT(A).

the lower authorities, we find that the CIT(A) has directed the Assessing

Officer to allow depreciation @ 15% on the assets following the decision

of this Tribunal in assessee’s own case for the assessment year 2007-

08(supra).

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above quoted findings of the CIT(A). Therefore, we find no good reason

to interfere with the order of the CIT(A), which is hereby confirmed and

ground of appeal of revenue is dismissed.

Order pronounced in the open court on 10/10/2017.

Sd/- sd/-

(Pavan Kumar Gadale) (N.S Saini) JUDICIALMEMBER ACCOUNTANT MEMBER Cuttack; Dated 10 /10/2017 B.K.Parida, SPS Copy of the Order forwarded to : 1. The Appellant : ACIT, Circle -1(1), Cuttack 2. The Respondent. Paradip Port Trust, At: Paradeep, Jagatsinghpur 3. The CIT(A)-Cuttack 4. Pr.CIT- Cuttack 5. DR, ITAT, Cuttack 6. Guard file. //True Copy// BY ORDER,

SR.PRIVATE SECRETARY ITAT, Cuttack