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TMI Blog2013 (9) TMI 606X X X X Extracts X X X X X X X X Extracts X X X X ..... ounting to Rs. 1,37,57,980/-. The case was selected for scrutiny and thereafter the assessment was framed under Section 143(3) and the total taxable income was determined at Rs. 31,24,710/-. 4. Aggrieved by the order of Assessing Officer, Assessee carried the matter before CIT(A). CIT(A) vide order dated 19.04.2010 partly allowed the appeal of the assessee. Aggrieved by the aforesaid order of CIT(A), the Assessee is now in appeal before us and has raised the following grounds. a. Disallowance of provision made for Sludge Disposal Charges amounting to Rs. 6,15,015/- 1.1 On the facts and in the circumstances of the case and in law, the Commissioner of Income Tax (Appeals) erred in upholding the action of the Dy. Commissioner of Income tax, disallowing the provision made for sludge disposal charges amounting to Rs. 6,15,015/-. 1.2 In doing so, the Commissioner of Income Tax (Appeals) erred in the following respects: 1.2.1 In not appreciating the fact that the provision made for sludge disposal charges amounting to Rs. 6,15,015/- has been made on the basis of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .3 I have carefully considered the rival contentions and also the judicial decisions cited in this regard. It is a fact that the appellant has in A.Y. 1999-00 debited the sludge disposal charges on actual basis and departing from the same subsequently the assessee started making provisions. It has not been argued in assessment or established in appeal that said liability could be estimated with reasonable certainty. In other words the provision made for future disposal of sludge when the actual liability has not arisen is not an allowable expenditure. My predecessor in appellant's own case has held a similar view for A.Y. 2005-06, The disallowance by Assessing Officer is therefore confirmed. 6. Aggrieved by the order of CIT(A) the Assessee is now in appeal before us. 7. Before us, the learned A.R. at the outset, submitted that on identical facts, in the assessee's own case for A.Y. 2005-06, the Hon. Tribunal has decided the issue in favour of assessee. He placed on record the copy of the aforesaid order. He therefore submitted that since the facts in the year under appeal are identical to that of A.Y. 2005-06 the decision of earlier years be followed and the appeal of Assessee be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rum filters (RVDF). The like-is removed from the filter and stored for sun drying. This sludge is always having different quality because of the water received from different industries is varying nature daily. This solid sludge is to be disposed off as per GPCB and regulations. The sludge disposal charges thus depend upon the generation of sludge, nature and quality of sludge. As per the rules of Gujarat Pollution Control Board (GPCB), the sludge that is of the nature has to be sent only to the company operating a Secured Land Fill facility for solid waste. Bharuch Envuo Infrastructure Ltd. (BEIL) is the only Company in a Secured Land Fill facility for the disposal of solid waste generated by the Industries in and around Bharuch District and accordingly the solid waste generatedt is sent to BEBL. The sludge generated which match exactly with the specification of Cement Industry is sent to the Cement Industry as per their requirement as per the GPCB rules the sludge generated ready for dispatch has to be removed from the site and accordingly the balance of nontoxic sludge which is not lifted by the Industry has to be sent to BEIL being the only Company operating a Secured Land for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 ITR 706 (Raj), wherein it is stated that the assessee company was engaged in open cast mining of soap stone ceude. A lease for exploration of mines was granted to it by the State Government of Rajasthan. There was an agreement between the assessee and the State that as far as possible a lease shall restore the surface land so used to its original condition. The estimated cost of refilling the pit was coming to Rs. 1,51,360/- arid the provision for the same was made as per the clause 2 of part V of the lease agreement. The assessee-company claimed that the liability to refill pits accrued as soon as the pits were dug. The AO denied the claim on the ground that the liability stipulated in the lease agreement to restore the land has not accrued in the assessment year in hand and it does arise when the assessee has filled the pits. The Commissioner of Income-tax (Appeals) has allowed the claim. In appeal before the Tribunal, the tribunal restored the view taken by the Assessing officer. On the further Appeal to High Court at page 708 of 261 ITR, it was held that we agree with the view taken by the Commissioner of income-tax (Appeals) that the assessee digs the pits, the liability doe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per the norms of the GPCB, liability to dispose off the sludge accrues as soon as the sludge is generated during the process of effluent treatment. 1st ground is with respect to sludge disposal charges:- 14. Both the parties before us submitted that the facts in present ground are identical to that of ground no. 1 in ITA No. 2224 for A.Y. 2006-07 and the submissions made by them in A.Y. 2006-07 are equally applicable to present appeal. Since the facts of the case in the present ground are identical to that of A.Y. 2006-07. We for reasons given while disposing of this ground of A.Y. 2006-07 also decide this ground in favour of Assessee. Thus this ground of the Assessee is allowed. Ground no. 2 is with respect to disallowing expenditure while claiming deduction u/s 80IA:- 15. During the course of assessment proceedings, Assessing Officer noticed that Assessee has claimed deduction under Section 80IA of Rs. 1,15,67,000/- & had reduced 22,84,941/- as other income,the details of which are as under:- Interest Income Rs.25,38,823/- Less: Expenses incurred to earn other income (10% of Rs. 25,38,823/-) Rs.2,53,882/- Rs.22,84,941/- 16. He furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest on delayed payments from customers amounting to Rs. 5,65,953/-, total aggregating to Rs. 11,51,321/- being income derived by the Industrial undertaking from business of infrastructure development. The appellant has claimed 10% of the balance of interest amouting to Rs.25,38,823/-as expenditure incurred towards earning the aforesaid income while computing the deduction under section 80IA of the Act, The actual interest expenditure incurred by the appellant on membership deposits during the year under reference amounts to Rs,15,62,744/- which is much higher than the amount of relief claimed in the appeal. It is submitted that in case the ground of appeal is decided against the appellant, the deduction under section 80IA of the Act be increased to account for disallowance on account of interest. The Assessing Officer has excluded the entire interest income in computing the deduction under section 80IA of the Act aggregating to Rs. 36,90,144/- in the assessment order passed under section 143(3) of the Act. 6.3 I have considered the submission of the Id. AR and facts of the case. It may be noted here that the AO has made a diametrically opposite addition in this re ..... 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