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Income Tax Appellate Tribunal, CUTTACK BENCH, CUTTACK
Before: S/SHRI N.S SAINI & PAVAN KUMAR GADALE
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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.
In Ground No.1 of the appeal, the grievance of the Revenue is that
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 brief facts of the case are that the Assessing Officer found that
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
Audit fee 80,00,000.00 40,00,000.00 40,00,000.00 80,00,000.00
Payment to 77,12,08,152.64 4,20,51,608.00 15,37,37,830.00 65,95,21,930.64 contractor 4. Other 45,03,51,527.14 25,78,93,653.00 18,41,02,389.80 52,41,42,790.34 charges 5. Int. accrued 229,97,23,247.20 - - 229,97,23,247.20 on Govt. of India loan 6. Int. liability 15,48,11,418.00 21,30,459.00 - 15,69,41,877.00 on initial investment by GOI Total: 368,73,42,285.77 30,60,75,720.00 34,18,40,219.80 365,15,77,785.97
The Assessing Officer found that that no explanation was furnished
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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Before the CIT(A), it was submitted by the assessee that the
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.
After considering the submission of the assessee, the CIT (A) held
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.
Before us, ld D.R. relied on the order of the Assessing Officer
whereas ld A.R. of the assessee supported the order of the CIT(A).
We have heard the rival submissions, perused the orders of lower
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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On appeal, the CIT(A) deleted the addition following the decision of
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.
Ld D.R. could not point out any specific mistake in the above
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.
In view of above, we find no good reason to interfere with the order
of the CIT(A), which is hereby confirmed and ground of appeal of the
revenue is dismissed.
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In Ground No.2 of the appeal, the grievance of the revenue is that
the CIT(A) was not justified in deleting the addition made towards
pension fund for Rs.2,94,94,640/-.
We find that this ground does not arise out of the order of the
CIT(A) for the assessment year 2011-12. Hence, we dismiss this ground
of appeal of the revenue.
In Ground No.3 of the appeal, the grievance of the Revenue is that
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.
The Assessing Officer observed that Rs.50,00,00,000/- was created
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,
On appeal before the CIT(A), the assessee submitted that the fund
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.
The CIT(A) deleted the addition made by the Assessing Officer
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.
Before us, ld D.R. submitted that income from investment of this
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).
After considering the rival submissions and perusing the materials
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.
Ground No.4 of the appeal reads as under:
“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”
The Assessing Officer observed that the assessee has claimed
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.
Before the CIT(A), the assessee submitted that the fixed assets as
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).
The CIT(A) held that this Bench of the Tribunal in the case of the
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.
Ld D.R. supported the order of the Assessing Officer whereas ld A.R.
supported the order of the CIT(A).
After considering the rival submissions and perusing the orders of
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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Before us, ld D.R. could not point out any specific mistake in the
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.
In the result, appeal filed by the 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