TaxTMI 
TaxTMI 
TaxTMI 
2020 (10) TMI 453
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....ies. 2. On the facts and in the circumstances of the case, the CIT(A) is not correct in law in deleting the addition of Rs. 52,69,00,000/- made by the Assessing Officer on account of accrued interest on investment Replacement, Rehabilitation, Modernisation of Capital Assets Fund for the assessment year 2013-14. 3. On the facts and in the circumstances of the case, the CIT(A) is not correct in law in deleting the addition of Rs. 41,08,00,000/- made by the Assessing Officer on account of accrued interest on investment Development, Repayment of loans and contingencies fund for the assessment year 2013-14. 4. On the facts and in the circumstances of the case, the CIT(A) is not correct in law in allowing depreciation @ 15% on "railways and rolling stock" treating the same as "Plant & Machinery", whereas ideally such items should be covered under the head "Buildings" other than those used mainly for residential purpose" entitling them to depreciation @ 10% as per Rule-5 of I. T. Rules & New Appendixl( Note-1)." 3. Apropos Ground No.1 of appeal, the relevant facts are like this. The assessee is engaged in the running of a major port namely Paradip Port established under the provisi....
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....datorily incurred every year. A statutory audit has to be conducted annually and, therefore the liability linked with it will also arise in that year. Similarly, the operations o the assessee necessitate the consumptions of heavy loads of electricity and the expenditure related the same will be a concrete, ascertained liability. During the appellate proceedings, the counsel for the assessee also submitted a chart to evidence the nature of these liabilities as 'ascertained' rather than as 'contingent' as held by the AO. In this chart, the actual payments under the various heads in the next financial year i.e. 01.04.2013 to31.03.2014 has been shown. The chart is reproduced as under : Sl.No. Description Accrued expenses as on 31.03.2013 Actual payments as on 31.03.2014 1. Audit Fees 1,60,00,000/- 1,11,09,645/4 2. Electrify Charges 3,67,11,892/- 3,67,03,468/- 3. Payment for contractors 14,94,32,891/- 14,28,56,664/- 4 Payment for other charges 19,40,65,016/- 25,38,42,520/- Hence, from the above it is clear that these liabilities are ascertained in nature since there is no uncertainty about the occurrence of the events giving rise to these 'Lia....
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.... the ld CIT (A) at page 3 of same order, it is clearly discernible that the actual audit fees is very less and Rs. 1,11,09,645/-, thus, this also requires examination by the AO about the treatment of remaining amount of excess provision. With these directions, the issue of audit fees is restored to the file of the AO. 10. Further, from the said tables, at page 2 & 3 of order for A.Y. 2013- 14, we also note that except electricity charges and payment for other charges, the provision under liability towards payment to contractors is also lesser and i.e. Rs. 14,28,56,664/- in comparison to provision of Rs. 14,94,32,991/-. Thus, the AO is also directed to examine that what treatment has been given to this excess amount of provision by the assessee. With these directions, the issue of provision towards payment to contractors is restored to the file of the AO for verification and examination. 11. Furthermore, in the chart at page showing provision and another chart page 3 showing actual payments, we also note that the assessee has made provision towards interest on Government in India, loan & interest on initial investment of Government of India loan but in the actual payment table, th....
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.... reserve fund and the repayment of loan and contingency reserve fund were created under the specific directions of the Govt, of India contained in its Memo No. GR-15024/7/93-PG dt. 46,06.1994 and No. P & F- 25/78 dt. 20.03.1978. As per the said directions of the Govt of India, the interest accruing on these funds alongwlth the corpus thereof were required to be utilized for the specific purposes of development of the Port and not in connection with the regular operations of the assessee. Hence, by the govt, directive, a specific charge was created both on the corpus and the interest of these funds whereby the same were to be diverted for specific uses. The assessee was not left with any discretion to utilize this interest in any manner he saw fit but was bound by the directives of the Govt, of India. This charge created on the interest accruing from these funds will insulate the assessee from tax consequence and merely because he receives the same, he cannot be taxed. In CIT Vs. Sitaldas Tirathdas (1961) 41ITR 367 (SC), the apex Court held that in deciding on the issue of diversion of income, it is the nature of obligation which is the decisive fact. The Supreme Court further opine....