TaxTMI 
TaxTMI 
2016 (1) TMI 1456
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....at observation of the CIT(A) that proper evidences were not filed in support of claim of prior period expenses is highly arbitrary, uncalled for any without any factual basis. 2. (i) That on the facts and circumstances of the case, the CIT(A) is not justified in confirming addition of Rs. 201.66 lacs being in the nature of contingent claim without proper appreciation of facts or legal principles. (ii) That the impugned claim is of contingent nature and there was counter claim by other party and both these issues were in dispute under arbitration proceedings, there is no case of any accrual of income. (iii) That the observation of the CIT(A) that evidence in respect of pending arbitration proceedings was not filed is not incorrect as necessary evidence in support of arbitration proceedings was placed on record during the appellate proceedings and as such order of CIT(A) is not sustainable. 3. (i) That on the facts and circumstances of the case, the CIT(A) was not justified in confirming addition of Rs. 71.26 crore even though no such income had accrued or received during the year under reference. (ii) That in respect of IRAQ dues, assesse....
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....e assessee and made an addition of Rs. 201.66 lacs as the assessee was following mercantile systems of accounting. 2.3 The ld. Assessing Officer further observed that the assessee had shown interest to an extent of Rs. 17.75 crores as receivables from BAAR Project. The ld. Assessing Officer rejected the assessee's contentions that the interest being shown as receivable amounts to a contingent liability and, therefore, cannot be treated as income for the year under consideration. The ld. Assessing Officer added an amount of Rs. 17.75 crores to the income of the assessee as interest in respect of BAAR Project. 3. Aggrieved by the order of the ld. Assessing Officer the assessee preferred an appeal before the ld. CIT(A). 3.1 The ld. CIT(A) after going through the contentions and submissions made by the assessee deleted the addition made in respect of prior period expenses to an extent of Rs. 1,67,08,386/-, for which the assessee had produced documents for admissibility of the same. In respect of the balance of Rs. 67,99,614/- the ld. CIT(A) confirmed the addition as the assessee did not produce any explanation. In respect of the interest on mobilization advance, as interest on....
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....thereto the assessee has filed the following submission: "The prior period expenses have already been allowed to RITES in the earlier years. RITES, is a Govt. of India undertaking and in such organizations, there are well laid down procedures for providing income or liability after requisite approval is obtained from the designated authority. This has been the regular practice for many years and the same is applied uniformly in respect of income and expenses. The expenses/income is considered to be crystallized only in the year in which these are approved by designated authority. The same view has been taken in earlier years by Appellate Authority and COD which are on the record. This view is upheld by CIT(A) and ITAT in the case of ITDC and similar decisions in other cases like the decision of Gujarat High Court in the case of Saurashtra Cement and Chemicals Industries v. CIT, 213 ITR 525. In view of the above, the claim for prior period expenses are justified and, therefore, be allowed." The Hon'ble High Court in assessee's own case for AY 2006-07 and 2007-08 has reproduced similar findings of the ld. CIT(A), in para 4 of the order. To avoid repetiti....
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....s and counter claims against the company have been included as contingent liabilities. 8.2 The ld. AR submitted that an arbitral Tribunal has been constituted for resolving the issues between the assessee and M/s RML by the Hon'ble Jharkhand High Court vide its order dated 13/07/2006 which has been further modified vide order dated 03/05/2013. The ld. AR has also produced order sheet of the arbitral proceeding dated 29/11/2015 which shows that the proceedings have not yet been concluded and that the matter has been adjourned for January, 2016. 8.3 The ld. AR submitted that as the arbitration proceedings are still under process the counter claims are shown as contingent liabilities in the notes to the accounts. As the arbitration proceedings are still in process, the rights of the parties are therefore suspended till arbitration award is passed. 9. On the contrary, the ld. DR supported the order of ld.AO and submitted that as the assessee is following mercantile basis of accounting the addition made by the ld. Assessing Officer needs to be confirmed. 10. We have perused the relevant pages of the paper book and are convinced that as the amount has not been crystallized th....
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....of India to the assessee. The ld. AR submits that after a continuous follow up with the Ministries the Government agree to pay provided a separate cabinet note be put up against a balance amount of Rs. 117.75 crores. 11.2. The ld. AR in the paper book has relied upon a letter dated 28/03/2008, wherein a proposal to provide relief to the PSU's of the Ministry of Railways being the assessee on outstanding dues on deferred payment basis have been made. Initially, the proposal was to pay interest at 8.75% p.a. which was subsequently modified vide office memorandum dt. 03/06/08 placed at page 53 to 6% p.a. 11.3. The ld. AR at page 54 of the PB has placed an order dt. 04/12/2008, wherein an amount of Rs. 166.62 crores has been sanctioned pertinent to the above office memorandum. Accordingly, the said amount has been released and the relevant documents and a copy of the account payee cheque issued by the Government of India have been placed at page 52 to 57 of the PB. Thus, it is sufficiently clear that the assessee has been awarded an interest of Rs. 48.87 crores as against Rs. 71.26 crores which has been added by the ld. Assessing Officer. 12. We have perused all the above page....