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Income Tax Appellate Tribunal, “ A ” BENCH, AHMEDABAD
Before: SHRI R.P. TOLANI & SHRI PRADIP KUMAR KEDIA
आदेश / O R D E R
PER PRADIP KUMAR KEDIA, AM: The captioned appeal by the Assessee is directed against the order of the Commissioner of Income Tax(Appeals)-I, Baroda [CIT(A) in short] dated 17/01/2011 for the Assessment Year (AY) 1998-99.
ITA No. 996/Ahd/2011 Gujarat Urja Vikas Nigam Ltd. vs. ACIT Asst.Year – 1998-99 - 2 - 2. The grounds of appeal raised by the Assessee read as under:- 01. The learned Commissioner of Income Tax (Appeals) has erred in law and on facts in setting aside the disallowance of ₹ 9,10,80,852/- on account of non-reconciliation of provision for Gratuity despite the fact that all the facts necessary for deciding the issue were submitted at the time of hearing of the appeal. 2.0 The learned Commissioner of income Tax (Appeals) has erred in law and on facts in setting aside the disallowance of ₹ 5,06,818/- on account of unpaid sales tax under section 43B of the IT Act despite the fact that all the facts necessary for deciding the issue were submitted at the time of hearing of the appeal. 3.0 The learned Commissioner of Income Tax (Appeals) has erred in law and on facts in setting aside the disallowance of ₹ 89,13,462/- on account of unpaid bonus under section 43B of the IT Act despite the fact that all the facts necessary for deciding the issue were submitted at the time of hearing of the appeal. 4.0 The learned Commissioner of Income Tax (Appeals) erred in law and on facts has confirmed the disallowance of prior period expenses amounting to ₹ 53,53,28,278/- without appreciating the fact that the entire expenditure was crystallized during the year. 4.1. The learned Commissioner (Appeals) ought to have appreciated that on exactly identical fact the Hon’ble ITAT in the appellant’s own case for the Asst.Year 1997-98 has set aside the issue for re- verification. 5.0 The learned Commissioner of Income Tax (Appeals) erred in law and on facts has dismissed the ground relating to the initiation of penalty proceedings under section 271(1)(c) of the I.T.Act. 6.0 The appellant craves leave to add to, alter, delete or modify and of the grounds of appeal either before or at the time of hearing of this appeal.
ITA No. 996/Ahd/2011 Gujarat Urja Vikas Nigam Ltd. vs. ACIT Asst.Year – 1998-99 - 3 -
The assessee has raised certain grievances as per Ground Nos.1 to 3 against the order of the CIT(A) as noted above. These grounds concern certain disallowances by the Assessing Officer (AO) which were assailed before the CIT(A). On going through the order of the CIT(A), we notice that the CIT(A) has granted relief to the assessee subject to verification of attendant facts governing the issues involved as per these grounds. We find that the action of the CIT(A) is just and proper as warranted in the circumstances of the case and cannot be faulted. Thus, we do not see any merit in the grievances raised by the assessee as per Ground Nos.1 to 3 of its appeal. Resultantly, Ground Nos.1, 2 & 3 are dismissed.
Ground No.4 concerns disallowance of prior period expenses of Rs.53,53,28,278/-. In the course of hearing, the Ld.AR for the assessee Mr.J.P.Shah submitted that the assessee has credited prior period income of Rs.68,45,01,805/- in its Profit & Loss account concerning the earlier years. Likewise, total prior period expenses of Rs.1,21,98,30,083/- connected to earlier years have been debited during the year. Resultantly, the assessee has claimed net prior period expenses of Rs.53,53,28,278/- as its business expenses. The Ld.AR for the assessee submitted that the break-up of the prior period expenses have been provided to the AO which has been recorded in para-8 of its assessment order. He contended that the AO has wrongly disallowed the net prior
ITA No. 996/Ahd/2011 Gujarat Urja Vikas Nigam Ltd. vs. ACIT Asst.Year – 1998-99 - 4 - period expenses of Rs.53.53 crores as stated earlier on the premise that the assessee has failed to furnish proper reply in support of its claim. The Ld.AR submitted that the CIT(A) has also rejected the prior period expenses claimed by the assessee on wrong appreciation of facts and circumstances by a very brief and cryptic order. The Ld.AR referred to the decision of Hon’ble Gujarat High Court in the case of Pr.CIT vs. Adani Enterprises Ltd. in Tax Appeal No.573 of 2016 order dated 20/07/2016 for the proposition that when the expenditure of such nature having nexus to earlier year is a small fraction of the total transaction as in case of assessee and when the assessee is susceptible to tax at the same rate in the present year vis-à-vis earlier years, the claim of the assessee ought not to be rejected. The Ld.AR vehemently submitted that the assessee is a Public Sector Undertaking and its accounts are subjected to audit and review by the CAG. Therefore, the bonafides of the expenditure per se cannot be disputed. The limited dispute is the acceptability of expenses qua the current year income. The Ld.AR for the assessee submitted that the issue requires adjudication in the light of the decision of the Hon’ble Gujarat High Court(supra). The Ld.AR next submitted that similar issue arose in assessee’s own case in ITA No.3796/Ahd/202 relevant to AY 1997-98 order dated 26/06/2009 where the issue was set aside to the file of AO adopting common sense approach. The Ld.AR accordingly pleaded for suitable relief.
ITA No. 996/Ahd/2011 Gujarat Urja Vikas Nigam Ltd. vs. ACIT Asst.Year – 1998-99 - 5 -
The Ld.DR for the Revenue Mr.R.I.Patel, on the other hand, relied upon the order of authorities below and in furtherance submitted that the factual details concerning the expenses claimed requires to be verified which has not been placed on record before the lower authorities.
We have carefully heard the rival submissions and perused the orders of the authorities as well the case-laws referred. The assessee is aggrieved by the disallowance of prior period expenses of Rs.53.53crores as per Ground No.4 of its appeal. The disallowance has been made on the ground that the expenses under various heads as noted in the assessment order pertained to earlier years and the assessee which is following system of accounting should have made provision for expenses in those respective years and claimed them as deduction. We have gone through the break-up of the expenses as noted in para-8 of the assessment order and observe that certain expenses declared under the head ‘other adjustments Rs.30.75 crores’; ‘other charges Rs.79.34 lakhs’; ‘depreciation under provided Rs.7.86 crores’ etc. are ostensibly vague and does not indicate the nature of claim with sufficient particularity obscure. We simultaneously note that assessee is a State Government Undertaking and its accounts are subjected to review by CAG and therefore it cannot be postulated that there was any deliberateness in not furnishing relevant details before the revenue authorities. The
ITA No. 996/Ahd/2011 Gujarat Urja Vikas Nigam Ltd. vs. ACIT Asst.Year – 1998-99 - 6 - bonafides of the Assessee is also augmented by the facts that the Assessee has reported staggering carry forward losses in its returned income. Thus, there is no immediate tax advantage accrued to the assessee by the claim of impugned prior period expenses per se. We therefore deem it expedient to restore the issue back to the file of AO for examining the issue de novo after verifying facts as may be considered necessary and expedient in accordance with law. The AO shall bear in mind the ratio laid down by the Hon’ble Gujarat High Court in the case of Adani Enterprises Ltd. (supra) while adjudicating the issue. Needless to say, reasonable opportunity shall be provided to the assessee while adjudicating the issue. Hence, all the contentions of the assessee are kept open. The issue raised as per Ground No.4 is thus set aside to the file of AO in terms of directions noted above. As a result, Ground No.4 is allowed for statistical purposes.
Ground No.5 concerns initiation of penalty proceedings which is pre-mature and does not call for any separate adjudication and accordingly dismissed.
Ground No.6 is general in nature does not require any adjudication.
ITA No. 996/Ahd/2011 Gujarat Urja Vikas Nigam Ltd. vs. ACIT Asst.Year – 1998-99 - 7 - 9. In the result, appeal of the assessee is partly allowed. This Order pronounced in Open Court on 31 /05/2017
Sd/- Sd/- (आर.पी.तोलानी) (�द�प कुमार के�डया) उपा�य� लेखा सद�य ( R.P. TOLANI ) ( PRADIP KUMAR KEDIA ) VICE PRESIDENT ACCOUNTANT MEMBER Ahmedabad; Dated 31 / 05 /2017 ट�.सी.नायर, व.�न.स./T.C. NAIR, Sr. PS
आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त(अपील) / The CIT(A)-I, Baroda �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 5. 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, स�या�पत ��त //True Copy//
उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील�य अ�धकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation .. 30.5.17 (dictation-pad 16- pages attached at the end of this appeal-file) 2. Date on which the typed draft is placed before the Dictating Member …30.5.2017 3. Other Member… 4. Date on which the approved draft comes to the Sr.P.S./P.S…………….. 5. Date on which the fair order is placed before the Dictating Member for pronouncement…… 6. Date on which the fair order comes back to the Sr.P.S./P.S…….31.5.17 7. Date on which the file goes to the Bench Clerk…………………31.5.17 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order…………………….. 10. Date of Despatch of the Order………………