TaxTMI 
TaxTMI 
2014 (7) TMI 803
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....ssee company submitted that it had entered into an agreement with Maharashtra Maritime Board (MMB) on 17.3.02. Pursuant to the said agreement, the assessee company started operation from one berth at Dighi Port. As per the said agreement, the assessee company had to pay the royalty to MMB for cargo handling at Dighi Port. The said expenditure claimed was thus relating to the whafage/port dues paid/payable by the assessee company to MMB. The AO however observed that the said agreement was between the Maharashtra Maritime Board (MMB) and Balaji Leasing & Industries Co. Ltd. - a group concern of the assessee's company (hereinafter referred to as the BLICL). As per the agreement, BLICL was to design, finance, construct, operate, maintain and manage a multi-purpose, common user port at Dighi. The MMB had agreed to grant license for 50 years to BLICL to build a multipurpose common user port on Build, Own, Operate, Share and Transfer (BOOST) basis on the terms and conditions contained therein. Since the license was given to BLICL, the assessee company was not required to pay any dues in the nature of wharege/port dues to MMB as the agreement was between MMB and BLICL. The A.O. furt....
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....MB was not a statutory body. He held that MMB was a Government organization, hence, the payment of wharfage/port dues was covered u/s. 43B of the Income Tax Act (hereinafter referred to as the Act). He further observed that the assessee has not paid wharfage/port dues but made a provision in the profit and loss A/c. which was disallowable u/s. 43B. He therefore confirmed the disallowance. The assessee thus is in appeal before us with the following grounds of appeal: "1. Whether on facts and circumstances of the case and in law, the CIT(A)-4 was justified in disallowance of wharfage/port dues amounting to Rs. 82,92,783/-. He erred in coming to the conclusion that wharfage/port dues are covered u/s.43B and that a provision was made since admittedly the said amount was disputed and is subject matter of violation of the contract. 2. Whether on facts and circumstances of the case and in law, the CIT(A)- 4 was justified in making an addition of Rs. 3,00,000/- to total income of assessee on the ground that there was no reconciliation in the TDS certificate. 3. The appellant craves leave to alter, amend, withdraw or substitute any ground or grounds or to add any ground or grounds ....
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....ra Pradesh High Court in the case of "CIT vs. Andhra Ferro Alloys (P.) Ltd." (2013) 213 Taxman 408 has held that the electricity charges were in the nature of statutory liability and the unpaid disputed electricity charges could not be disallowed by invoking provisions of section 43B of the Act as the same were not payable by way of any tax or duty or fee or cess, but as a consideration for the use of electricity. 7. The disallowance in question in this case is relating to wharfage/port dues which were in the shape of consideration payable by the assessee to the MMB as royalty for cargo handling at Dighi Port as per the contract between the parties. The said dues were not payable by way of tax, duty, cess or fee and hence as per the law laid down by the Hon'ble Supreme Court in the case of "CIT vs. McDowell & Co. Ltd." (supra) as well as by the Hon'ble Andhra Pradesh High Court in the case of "CIT vs. Andhra Ferro Alloys (P.) Ltd." (supra), the section 43B of the Act is not attracted in this case. Hence, the disallowance made/confirmed in this case by the lower authorities under section 43B of the Act was not called for and thus the finding of the ld. CIT(A) in this resp....
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....rned ClT(A) has erred in allowing relief to the assessee to the extent impugned in the grounds enumerated below: 1. The order of the CIT(A) is opposed to law and facts of the case. 2. On the facts and in the circumstances of the case and in law, CIT(A) erred in deleting the addition of Rs. 10,12,500/- on account of unexplained investment in plant and machinery u/s.69 without establishing the genuineness of purchase. 3. On the facts and in the circumstances of the case and in law, CIT(A) erred in allowing the depreciation on plant and machinery valued at Rs. 10,12,500/- without establishing the genuineness of purchase of plant and machinery and its use by the assessee. 4. On the facts and in the circumstances of the case and in law, CIT(A) erred in deleting disallowance of Rs. 1,00,955/- without appreciating the fact that the assessee had not produced complete documentary evidence before the A.O. during the assessment proceedings. 5. For these and other grounds that may be urged at the time of hearing, the decision of the CIT(A) may be set aside and that of the AO restored." 14. Apart from the above grounds of appeal, Revenue has also taken further additional groun....
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....ent between MMB and BLICL dated 22.10.02, copy of Concession agreement between assessee company, BLICL and MMB dated 17.03.02, copy of Novation agreement dated 07.12.06. As per clause 11 of the agreement dated 17.03.02 made between MMB and BLICL, the project at Dighi Port was agreed to be developed through a SPV. Further, as per the memorandum of understanding between the assessee and BLICL dated 04.03.02, it was agreed that the assessee would be the SPV being promoted by the BLICL and mange the Dighi Port and it was further agreed that the assessee company would be responsible for the financial and other commitments made to manage and start the operations at Dighi Port, in pursuance of the letter of intent received from MMT for the said purpose. Further, the perusal of the novation agreement dated 07.12.06 reveals that vide the said novation agreement, it was provided that the assessee would be the SPV to develop, manage and operate the Dighi Port. Though, the said novation agreement was executed later on, however it was specifically provided that the said novated agreement would be in force from the date of concession agreement ab initio i.e. from the date of inception of the ....
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....submitted that, in fact, the dispute by the time has been settled and the MMB has accepted the claim of the assessee regarding the rate at which the said wharfage/port dues were payable and after settlement of the dispute, the assessee has offered an amount of Rs. 82,92,784/- as its income in its return of income for assessment year 2008-09. He has produced before us the copy of form No.36A as well as copy of grounds/cross Objections in relation to ITA No. 287/Mum/2012, relevant to assessment year 2008-09 pending before this Tribunal, wherein the assessee, vide ground No.7, has claimed that the assessee is not liable to pay tax on the amount of Rs. 82,92,784/- on account of wharfage/port dues which have been written back and credited to the profit and loss account but the deduction in respect of the same has been disallowed under section 43B for the relevant assessment year 2005-06. 21. Since it was the assessee who was entitled to develop, manage and operate the Dighi Port and the assessee has also offered income from the cargo handling at Dighi Port and even the disputed dues, for which the provision was made, have been offered as income in the subsequent assessment year after....