ACIT, BHUBANESWAR vs. ORISSA POWER TRANSMISSION CORPORATION LTD., BHUBANESWAR

आयकर अपीऱीय अधिकरण, कटक न्यायपीठ,कटक IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI N.S.SAINI, AM & SHRI PAVAN KUMAR GADALE, JM आयकर अऩीऱ सं./ITA No.91/CTK/2015 (नििाारण वषा / Assessment Year :2009-2010) ACIT, Corporate Circle-1(2), Vs. Orissa Power Bhubaneswar Transmission Corporation Limited, Janapath, Bhubaneswar स्थायी लेखा सं./जीआइआर सं./ PAN/GIR No. : AAACO 7873 L (अऩीऱाथी /Appellant) (प्रत्यथी / Respondent) .. राजस्व की ओर से /Revenue by : Shri D.K.Pradhan, DR ननधााररती की ओर से /Assessee by : Shri P.V.Rao, AR सुनवाई की तारीख / Date of Hearing : 27/06/2017 घोषणा की तारीख/Date of Pronouncement 28/06/2017 आदेश / O R D E R Per Shri Pavan Kumar Gadale, JM: The revenue has filed the appeal against the order of CIT(A)-1, Bhubaneswar, dated 26.12.2014, passed in I.T.Appeal No.0297/14-15, wherein the revenue has raised the following grounds :- 1. On the facts and in the circumstances of the case, the ld. CIT(A) is not justified in law as well as on facts by deleting additions of Rs.28,74,375/- under the head other expenses (Prior period Expenses) and of Rs.34,94,615 under the head employee cost (Prior Period Expenses). 2. On the facts and in the circumstances of the case, the ld. CIT(A) has erred in law in not accepting the examination of findings made by the AO on the issues. 2. Brief facts of the case are that the assessee is a public limited company of Odisha State and is engaged in the Business of transmission of power and filed the Return of income electronically on 24.09.2009

2 ITA No.91/2015 declaring total income Rs.Nil for the assessment year 2009-2010. Subsequently, the assessee’s case was selected for scrutiny and notices u/s.143(2) and 142(1) of the Act along with questionnaire are issued to the assessee. The AO on verification of books of accounts found that the assessee has claimed in other expenses prior period expenditure of Rs.31,94,054/- and employee cost of Rs.34,94,615/-. The AO observed that the prior period expenses were not allowed u/s.37(1) of the Act and dealt with the provisions u/s.145 of the Act on the maintenance of Books of accounts and came to the conclusion that each year’s income has to be calculated separately and the matching concept of expenses has to be complied and disallowed the aggregate amount of Rs.66,88,669/- and passed the order u/s.143(3) of the Act dated 29.12.2011. 3. Aggrieved by the order of AO, the assessee has preferred an appeal before the CIT(A). In the appellate proceedings, ld. AR of the assessee argued the grounds and explained that these expenses pertain to earlier years crystallized during the current year and therefore, has to be allowed. Further, Ld. AR submitted that the other expenses include service tax payment of Rs.28,74,375/- which was crystallized during the year and which was collected from M/s Dharma Port Co. Ltd. and deposited with the Government treasury. Since the service tax has been collected and paid, and same cannot be called as prior period expenses. The ld. CIT(A) dealt with the decisions of Hon’ble Supreme Court and Hon’ble High Courts on the concept of crystallisation of the claim, and the

3 ITA No.91/2015 ld. CIT(A) is of the opinion that expenses are allowable u/s.37(1) of the Act and allowed the appeal of the assessee. 4. Aggrieved by the order of the CIT(A) the revenue contested with appeal before the Tribunal. The ld. DR argued that the ld. CIT(A) was erred in law by deleting the additions of other expenses and employee cost being prior period and supported the orders of the AO. Per Contra, ld. AR relied on the order of CIT(A) and prayed for dismissal of the revenue’s appeal. 5. We heard the rival submissions and perused the material available on record. The ld. DR’s contention that the CIT(A) was not justified in deleting the addition of prior period expenses. We find that the CIT(A) relied on the decision of the coordinate bench of the Tribunal in the case of OMC Vs.Addl. CIT, Range-1, in ITA No.551/CTK/2012, dated 21.12.2012. The ld. AR explained that the expenditure pertains to service tax payment, which was collected and paid to the Government and there is no prior period expenses. Similarly, the expenditure liability has to be allowed in the impugned assessment year in which it crystallised and become payable. Since the employee cost and the service tax amount is crystallised during the financial year and was incurred wholly and exclusively for the purpose of business, we are of the considered opinion that these expenses are allowable u/s.37(1) of the Act. Accordingly, we are not inclined to interfere with the order of ld. CIT(A) and dismiss the grounds of appeal of the revenue. 6. In the result, appeal of the revenue is dismissed.

4 ITA No.91/2015

Order pronounced in the open court on this 28/06/2017. Sd/- Sd/- (N. S. SAINI) (PAVAN KUMAR GADALE) ऱेखा सदस्य / ACCOUNTANT MEMBER न्यानयक सदस्य / JUDICIAL MEMBER कटक Cuttack; ददनांक Dated 28/06/2017 प्र.कु.मि/PKM, Senior Private Secretary आदेश की प्रनिलऱपप अग्रेपषि/Copy of the Order forwarded to : 1. अपीलाथी / The Appellant- ACIT, Corporate Circle-1(2), Bhubaneswar 2. प्रत्यथी / The Respondent-Orissa Power Transmission Corp. Ltd. 3. आयकर आयुक्त(अपील) / The CIT(A), आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण, कटक / DR, ITAT, Cuttack 5. गार्ा पाईऱ / Guard file. 6. सत्यापऩत प्रनत //True Copy// आदेशािुसार/ BY ORDER,

(Senior Private Secretary) आयकर अपीऱीय अधिकरण, कटक / ITAT, Cuttack