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2015 (8) TMI 318 - AT - Income TaxAddition being accrued interest on advances given to M/s Karsan - CIT(A) deleted the addition - Held that - The issue is squarely covered in favour of the assessee by an order passed by the ITAT on the very same issue for the AY 2004-05 and 2005-06 also affirmed by Hon ble Jurisdictional High Court 2012 (9) TMI 922 - DELHI HIGH COURT wherein held as having regard to the terms of the repeated Arbitration Act, 1940, an award could not be enforceable. The same was the case with the foreign award, the Court had to first adjudicate as to the enforceability.In these circumstances, the assessee s right to interest was a mere claim, till the date of the judgement of the Court dt. 4th Dec.2006. In other words, the right to interest crystallised after the judgement of the Court. Till then, it was inchoate. For this reason, the Tribunal s finding cannot be faulted with - Decided against revenue. Addition being demurrage & wharfage charges - CIT(A) deleted the addition - Held that - These charges are paid to the railways towards delay in loading and unloading operations beyond the time frame fixed by the Indian railways.The payment in question is not the penalty or fine for violation of any statute. It is compensatory in nature. See Nanhoomal Jyoti Prasad vs. CIT (1979 (8) TMI 38 - ALLAHABAD High Court) - Decided against revenue. Disallowance being provision for post retirement benefits - CIT(A) deleted the addition - Held that - The Hon ble Supreme Court in the case of Bharat Earth Movers vs. CIT (2000 (8) TMI 4 - SUPREME Court) has held that liability being a determined one, though to be discharged in future, did not make it a contingent liability and it is an allowable liability. The First Appellate Authority in this case has followed the judgement of Hon ble Supreme Court. Thus we find no reason to interfere with the same. - Decided against revenue. Disallowance being a provision made for wage arrears - CIT(A) deleted the addition - Held that - The issue is covered by the decision of the Hon ble Delhi High Court in the case of CIT vs. BHEL (2012 (9) TMI 515 - DELHI HIGH COURT ) wherein it was held that provision for wage revision was based on past experience, previous Pay Commission s reports and other relevant factors and the deduction claimed for period, between the expiry of one wage settlement or agreement, cannot be termed as contingent because the wage and the probable revision or rates of revision would be within the fair estimation of the employer thus, deduction claimed on account of wage revision are permissible.- Decided against revenue.
Issues:
1. Addition of interest accrued on advances given to M/s Karsan 2. Disallowance of demurrage and wharfage charges 3. Disallowance of provision for post retirement benefits 4. Disallowance of provision for wage arrears Issue 1: Interest Accrued on Advances to M/s Karsan The appeal concerned the deletion of an addition of accrued interest on advances given to M/s Karsan. The Tribunal referred to previous orders and held that the right to interest crystallized after a court judgment, making it a claim rather than a liability. Citing relevant case law, the Tribunal dismissed the Revenue's appeal against the deletion of this addition. Issue 2: Demurrage and Wharfage Charges The second ground challenged the deletion of demurrage and wharfage charges. The AO disallowed these expenses, considering them penalties, but the Tribunal found them compensatory in nature, not penalties for statutory violations. Referring to case law, the Tribunal upheld the First Appellate Authority's decision to delete the addition of these charges. Issue 3: Provision for Post Retirement Benefits Ground three contested the deletion of a provision for post retirement benefits. Citing a Supreme Court judgment, the Tribunal affirmed that such a liability, though to be discharged in the future, is allowable if determined. Following the First Appellate Authority's decision and the Supreme Court ruling, the Tribunal dismissed this ground. Issue 4: Provision for Wage Arrears The final ground challenged the deletion of a provision for wage arrears. The Tribunal noted that the liability had crystallized based on a government memorandum, making it a present liability, not contingent. Referring to relevant case law and a Delhi High Court decision, the Tribunal upheld the deletion of this provision. Consequently, the Tribunal dismissed the Revenue's appeal, affirming the decisions of the lower authorities. This comprehensive analysis covers the key issues raised in the legal judgment, detailing the Tribunal's reasoning and the application of relevant legal principles to each issue.
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