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TMI Blog2019 (11) TMI 270X X X X Extracts X X X X X X X X Extracts X X X X ..... d number 1(a) of the appeal is dismissed. Asset ready for use or actually used - In the present case machinery spares does not constitute capital expenditures and thus the issue of whether the same were ready for use or actually used is not relevant in the facts of the case. This ground of the appeal no 1(b), is accordingly dismissed. In the event deduction towards depreciation on machinery spare is not allowed, deduction may be allowed on the basis of the actual consumption of the Spares - As mentioned by the assessee that in assessment year 2002-03 also the assessee has been allowed deduction on the basis of the actual consumption of the machinery spares. In our opinion, this prayer of the assessee is justified as the machinery spares which have been consumed in repair of fixed asset, satisfies the requirement of section 37(1) of the Act and accordingly, ground No.1(c) of the appeal of the assessee is allowed. Disallowance of deduction under section 80IA(4) - HELD THAT:- According to the assessment order, copies of all the agreements were before Assessing Officer yet Assessing Officer chose to make sweeping observation that the assessee is not developer. Such sweep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenses in respect of NTPC Korba project - CIT(A) held that no proof was provided by the assessee that the liability arose during the year under consideration, and hence he sustained the disallowance. Before us the Ld. counsel submitted that the expenditure represents the amount of expenditure not accepted by the client for reimbursement in a cost-plus contract and it is a regular expenditure in relation to various years. In our opinion, merely making a claim without substantiating that liability crystallised during the year under consideration, the claim cannot be allowed to the assessee. We do not find any error in the finding of the of the Ld. CIT(A) in sustaining the disallowance, and accordingly we uphold the same. Prior period expenses of Malaysia project - no evidence in support of the claim that oil was lifted in the year under consideration, has been brought on record by the assessee. In absence of any documentary evidence in support of the claim, we uphold the finding of the Ld. CIT(A) in sustaining the disallowance Prior period expenses pertaining to GAIL , L T , and OFC Ambala - Assessee submitted that at the time of raising bill in 1997- 98 and again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... financial year 2003-04 and decide the issue in accordance with law after providing adequate opportunity of being heard to the assessee. In the result, the ground No. 8 of the appeal is allowed for statistical purposes. Interest income from M/S National Building Construction Company (NBCC) - HELD THAT:- CIT(A) has brought on record facts in detail that the NBCC had agreed to liquidate the principal and interest due during the financial year relevant to the assessment itself and therefore under no circumstances the interest due could be said to be unrecoverable during the year under consideration. Before us the ld. counsel did not rebut any of the observation of the Ld. CIT(A) or submitted any documentary evidence in support of its claim except the claim that loan was sticky and disputed. In the case, the appellate authority against the award by the arbitrator, directed to refund entire amount of ₹ 15.93 crores within 2 months and beyond which interest would be levied at the rate of 15%. The NBCC complied and partly refunded the amount also. By merely filing appeal by the assessee before the Hon ble Delhi High Court, it cannot be said that interest was not accrued to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the assessee might be allowed deduction under section 80 HHB(A) of the Act. Since the assessee has already been allowed deduction under section 80IA of the Act by us while adjudicating the ground No. 2 of the appeal of the assessee, this alternative claim of deduction under section 80HHB(A) cannot be allowed in addition to the claim under section 80IA of the Act. The assessee has also not insisted for this claim before us. Accordingly, the ground of the appeal of the Revenue is allowed. Grant of deduction under section 80HHB in respect of foreign project without allocating corporate office expenses - HELD THAT:- This claim of deduction under section 80HHB was made only as alternative claim before the Ld. CIT(A). Since we have already allowed the main claim of the assessee under section 80HHC of the Act while adjudicating the ground No. 3 of the appeal of the assessee, and thus this claim of deduction under section 80HHB is denied to the assessee. Before us, the assessee has also not insisted for allowing this claim. Accordingly, the ground of the appeal of the Revenue is allowed. Deduction u/s 35DDA being 1/5th paid to the employees under the Voluntary Retirement Scheme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r in the order of the Ld. CIT(A) on the issue and accordingly, we uphold the same. Interest under section 234D - HELD THAT:- The explanation -2 to section 234D has been inserted by way of Finance Act 2012 which provides that provisions of section 234D would be applicable for assessment year commencing before 01/06/2003 if the proceeding for such assessment year is completed on or after 1.6.2003. It is undisputed that in the present case assessment proceedings have been completed on 25/03/2004 and hence provision of section 234D are applicable. Accordingly, the finding of the ld. CIT(A) are set aside and interest charged by the learned Assessing Officer under section 234D is restored. The ground of the appeal of the Revenue is accordingly allowed. - ITA Nos. 1825/Del/2005, 705/Del/2006 & 3804/Del/2008 ITA No. 2234/Del/2005& 3805/Del/2008 - - - Dated:- 31-10-2019 - BHAVNESH SAINI (JUDICIAL MEMBER) And O.P. Kant (ACCOUNTANT MEMBER) Assessee by Dr. Rakesh Gupta, Advocate Sh. Somil Aggarwal, Advocate Revenue by Sh. J.K. Mishra, CIT/DR ORDER O.P. Kant, A.M.: These appeals by the assessee and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cilities and thereby disallowing the claim for deduction u/s 80IA of the Act. 3(a). That on the facts and in the circumstances of the case, Ld. CIT(A) was not justified in confirming the disallowance of the claim of the appellant for deduction u/s 80HHC in respect of income earned from the business of export of goods amounting to ₹ 23,17,36,491/-. 3(b) That on the facts and in the circumstances of the case, and without prejudice to ground No. 3(a) taken here in above, the Ld. CIT(A) grossly erred in considering that the appellant entered into 'composite contract' which cannot be equated to the supply contract' thereby disallowing the claim for deduction u/s 80HHC of the Act. 4.0 That on the facts and in the circumstances of the case the Ld. CIT (A) was not justified in upholding the disallowance of ₹ 9,32,902/- on account of other miscellaneous donations. 5(a). That on the facts and in the circumstances of the case the Ld. CIT(A) was not justified in disallowing the claim of the appellant in respect of 'prior period expenses' amounting to ₹ 1,80,20,765/- out of the total claim of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thdrawn on finalization of the appellant's case for the said assessment year u/s 143(3) of the Act. 9(a) That on the facts and in the circumstances of the case the Ld. CIT (A) was not justified in confirming the addition of ₹ 2,00,30,000/- towards interest income on accrual basis on the disputed dues with NBCC whose matter is pending before the Hon'ble Delhi High Court. 9(b) That on the facts and in the circumstances of the case, and without prejudice to ground no. 9(a) taken here in above, the Ld. CIT (A)grossly erred in holding that principal and interest amounts due from a Government Company cannot be considered to be doubtful or sticky unless the said company has gone into liquidation. 10. That on the facts and in the circumstances of the case the Ld. CIT (A) was not justified in upholding the disallowance of ₹ 2,48,73,000/- and ₹ 53,98,000/- towards provision for doubtful advances respectively in computing the book profit for the purpose of section 115JB of the Act. 11. That on the facts and in the circumstances of the case, the Ld. CIT (A) was not justified in upholding the disallowance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he fact that the assessee did not file the requisite form No.10CCAH with the return of income from the accountant and also did not create the Project Reserve Account, required as per the law. Since the assessee did not qualify for deduction u/s 80HHB as per the law, the CIT(A) erred in granting the aforesaid relief to the assessee. 3. On the facts and in the circumstances of the case and in law, the CIT(A) has erred in directing the A.O. to delete the adjustment made by the AO and directing him to allow the deduction u/s 80HHB without considering the corporate office expenses. 4. On the facts and in the circumstances of the case and in law, the CIT(A)has erred in deleting the disallowance of the assessee s claim made by the AO u/s 35DDA, disregarding the objections raised by the AO as per the remand report. Since requisite conditions were not satisfied, the CIT(A) erred in granting the aforesaid relief to the assessee. 5. On the facts and in the circumstances of the case and in law, the CIT(A)has erred in deleting the disallowance of proportionate corporate expenses made by the AO from the profit of foreign project for the purpose of allowi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng that CIT(A) does not have the power to set aside issues and restore them to file of the AO. 12. On the facts and in the circumstances of the case and in law, the CIT(A) has erred in directing the AO to allow deduction u/s 80HHB in respect of the claim made by the assessee during the course of appellate proceedings for computation of book profit u/s 115JB of the I.T. Act disregarding the fact that the such adjustment is not permissible as per provisions of section 115JB of the Act. 13. On the facts and in the circumstances of the case and in law, the CIT(A) has erred in deleting interest charged by the AO u/s 234D of the I.T. Act. 4. Briefly stated facts of the case are that the assessee company is a government undertaking and was engaged in execution of Civil Engineering project in India and abroad. For the year under consideration, the assessee company filed its return of income on 30/10/2001 declaring total income of ₹ 28,43,46,290/-under regular provisions of Income Tax Act, 1961 (in short the Act) and book profit of ₹ 6,75,31,827/-under section 115JB of the Act. The total income was further revised to ₹ 16,43,46,29 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Ld. CIT(A) disallowed the claim of depreciation of the assessee on the Machinery spares . 7. Before us, the Ld. counsel of the assessee filed a paper book containing pages 1 to 266 and referred page 71 to highlight the Accounting Standard (AS-10). The Ld. counsel pointed out to para 8.2 of the Accounting Standard which reads that standby equipment and servicing equipment are normally capitalised and machinery spares are usually charged to the profit and loss account as and when consumed, however if such a spare can be used only in connection with an item of fixed asset and their use is expected to be regular, it may be appropriate to allocate the total cost on a systematic basis over a period not exceeding the useful life of the principal item. The Ld. counsel submitted that in view of the change in accounting policy, the assessee has capitalised its machinery spare parts and thus eligible for depreciation on the same. The Ld. counsel relied on the decision of the Hon ble Delhi High Court in the case of CIT Vs Insilco Ltd. reported in (2010) 320 ITR 322 (Del) . In support of the contention that depreciation is allowable on standby spare items, which are not taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... treatment of machinery spares is briefly that; machinery spares which are not specific to any fixed asset and can be used generally should be treated as part of inventory and charged to P L a/c as and when they are consumed during the ordinary course of business. On the other hand, , if the machinery spares are of the nature of capital spares/insurance spares which are specific to a particular item of fixed asset and their use is irregular, then , they should be capitalized separately and depreciated on a systematic basis over a time frame not exceeding the useful life of the fixed asset to which they relate. As a matter of fact, in case the fixed asset to which they relate, is discarded, the machinery spares will also have to be disposed of as these spares are integral parts of the fixed asset. 16.5 It is to be noted that these Accounting Standards are mandatory in nature and applied to accounts prepared after 1st April, 1999. In that sense the submission of the assessee has to be accepted that the change in the accounting policy had been brought about by virtue of the issuance of the revised Accounting Standards issued by the Counsel of the ICAI, which was, applicab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or computing income of the assessee chargeable under the head Profits and gains from business . The submission of the learned counsel for the Revenue that the accounting treatment to be meted out to a transaction in accordance with the Accounting Standards has no relevance for the purposes of the IT Act, 1961 is a submission which does not commend to us. 16.8 In the past, Courts have applied rules and principles of accountancy where words and expressions used in the Act have not been given a definitive meaning. The Supreme Court in the case of Challapalli Sugars Ltd. vs. CIT 1974 CTR (SC) 309 : (1975) 98 ITR 167 (SC) was called upon to interpret the meaning of the expression 'Actual cost' for the purposes of determining the justifiability of the assessee's claim for depreciation and development rebate under the Indian IT Act, 1961. The assessee sought to include in the cost of asset the interest paid by it for the period prior to commencement of business on borrowings taken up by it. The Supreme Court in coming to the conclusion that the assessee's stand was correct resorted to the rules of accountancy prevailing in the industry. In this context the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f accountancy by the Courts has also found favour in the judgments of the Supreme Court in the cases of CIT vs. Indo Nippon Chemicals Co. Ltd. (2003) 182 CTR (SC) 291 : (2003) 261 ITR 275 (SC) at p. 277(DE) and CIT vs. U.P. State Industrial Development Corporation (1997) 139 CTR (SC) 267 : (1997) 225 ITR 703 (SC) and also the judgment of a Division Bench of this Court in CIT vs. Woodward Governor India (P) Ltd. Ors. (2007) 210 CTR (Del) 354 : (2007) 294 ITR 451 (Del) at p. 463-464 (paras 15-16). The observations of UPSIDC being apposite are extracted hereinbelow : In our opinion, this contention is devoid of force. The accounting practice followed by the assessee in the instant case was in consonance with the general principles of accountancy governing underwriting accounts. It is a well accepted proposition that 'for the purposes of ascertaining profits and gains the ordinary principles of commercial accounting should be applied, so long as they do not conflict with any express provision of the relevant statutes, [see Whimster Co. vs. IRC (1925) 12 Tax Cases 813 (C. Sess); IRC vs. Cock Rusell Co. Ltd. (1949) 29 Tax Cases 387 (KB)]. This proposition has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve that the accepted accountancy rule for determining the cost of fixed assets is to include all expenditure necessary to bring such assets into existence and to put them in working condition. In case money is borrowed by newly started company which is in the process of constructing and erecting its plant, the interest incurred before the commencement of production on such borrowed money can be capitalized added to the cost of the fixed asset which have been created as a result of such expenditure. The above rule of accountancy should, in our view, be adopted for determining the Actual cost of the assets in the absence of any statutory definition or other indication to the contrary. 16.9 The learned counsel for the Revenue relied upon the judgment of the Supreme Court in the case of Tuticorin Alkali Chemicals Fertilizers Ltd. vs. CIT (1997) 141 CTR (SC) 387 : (1997) 227 ITR 172 (SC) to buttress her submission that accountancy principles cannot override the provisions of the Act. This proposition is unassailable. One cannot take resort to a principle or rule of accountancy when the Act provides specifically for the situation at hand. But when the situation is one wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted (supra). 11.5 Thus, according to the above decision of the Hon ble High Court in the case of Insilco Ltd (supra), prime requirement is that the machinery spares should be integral part of the fixed asset or it should be of emergency nature. The Hon ble Delhi High Court has further laid down following requirements for considering machinery spares for capitalisation: (i) the spares should be in the nature of capital spares/insurances spares (ii) those capital/insurance spares should be specific to a particular item of fixed asset (iii) use of those capital/insurances spares is irregular 11.6 We find that in the instant case before us, the assessee has nowhere demonstrated the above requirements of the ratio in the case of Insilco Ltd (supra), and thus facts of the instant case being distinguishable, the ratio of the above decision cannot be applied and arguments of the assessee to treat those machinery spares as capital expenditure is rejected. 11.7 Further we find that Hon ble Supreme Court in the case of Kedarnath Jute Mfg. Co. Ltd vs Commissioner Of Income Tax, (1971) AIR 2145, 1972 SCR (1) 277 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a new asset or given enduring benefit to the assessee. In absence of satisfying the requirement for constituting a machinery spare as capital expenditure as laid down in the above decisions of the Hon ble Supreme Court, expenditure incurred on machinery repairs can not be allowed as capital expenditure and consequent depreciation claimed also cannot be allowed. Thus the ground number 1(a) of the appeal is dismissed. 11.10 The 2nd issue raised is can the depreciation be allowed on machinery in ready to use condition, though actually not put to use. 11.11 On this issue, the Ld. Counsel has referred to the decisions in the case of National Thermal Power Corporation limited versus CIT (supra) and CIT vs Yamaha motor India Private Limited(supra) to support the contention that depreciation is allowable on the asset kept ready for use but not actually used. But in the instant case as we have already held that machinery spares does not constitute capital expenditures and thus the issue of whether the same were ready for use or actually used is not relevant in the facts of the case. This ground of the appeal no 1(b), is accordingly dismissed. 11.12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee was only executing certain civil works relating to construction of infrastructure facility; (c) Deduction under section 80IA is admissible to an assessee who is engaged in developing infrastructure facility as a whole, when such a facility belongs to the assessee. At no point of time such a facility belonged to the assessee; (d) Receipt on account of contracts have been categorised as work receipts and on such receipts, TDS has been deducted, which further shows that the payment received by the assessee are as a contactor only; (e) The prominent gains of the assessee cannot be said to be derived from the eligible business. 12.4 Before us, the Ld. Counsel of the assessee submitted that issue in dispute is squarely covered in the favour of the assessee by the decision of the Tribunal in the case of the assessee for assessment year 2000-01. 12.5 The Ld.DR on the other hand relied on the order of the lower authorities. 12.6 We have heard the rival submission of parties and perused the relevant material on the record. The Tribunal in the case of the assessee in order dated 12/06/2017in ITA No. 2596 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the sides of both parties and decisions relied upon that appellant was developing infrastructure facility and claimed deduction u/s 80IA in respect of income derived from the development of infrastructure facilities. Explanation inserted below section 80IA(13) does not prevent developers in claiming deduction u/s 80IA(4). Similarly showing the receipts as work receipts in the books of accounts of the appellant alone cannot determine the character of the appellant which in our opinion was that of development. The argument of revenue that infrastructure facility should be owned by the appellant is also misplaced in view of ITO vs. Cable Constructions 354 ITR 13 (Guj.) and various decisions relied upon by the Ld. Counsel for the appellant. We also note that the Ld. CIT (DR) tried to raise issues which were not even the case of the Assessing Officer and this in our considered opinion is clearly impressible. Case laws relied by the revenue are clearly misplaced on facts and are clearly distinguishable. Special bench decision in the case of R. T. Patil (Mum.) 126 TTJ 577 was recalled later on as it did not consider the binding decision of Hon ble Bombay High Court in the case of ABG 32 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd erection of signalling system cannot be categorised as export of goods. 13.4 Before us the Ld. Counsel of the assessee submitted that issue in dispute is covered in favour of the assessee by the order of the Tribunal in assessment year 2000-01. 13.5 The Ld. DR on the other hand relied on the order of the lower authorities. 13.6 We have heard the rival submissions and perused the relevant material on record. We find that the Tribunal in ITA No. 2596/12/2004 for assessment year 2000-01 has held as under: 4.4 We have considered the arguments advanced by the parties on the issue raised in Ground No.2 in the matter of deduction u/.s 80HHC.We have gone through the agreement enclosed in the paper book and various clauses and various other pages of the paper book to which our attention was drawn. All these documents would show that it was a purchase / sale contract in which government of. Iran was buyer and appellant is a seller and the contract was that of sale the goods and the price of equipments completely built up was fixed in which the total contract price of US$ 2,50,000 was bifurcated between equipments and engineering, sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hallenged disallowance of ₹ 9,32,902/-on account of miscellaneous donations. 14.2 The Assessing Officer observed that following donations have been paid to various Sports and Railway welfare organisations, in addition to donation of ₹ 1,00,00,000/- to the Prime Minister Relief Fund: 1 Prime Minsister Relief Fund 1,00,00,000/- 2 Railway Board Sports Association, New Delhi 50,000/- 3 Railway Ministers Welfare Fund, New Delhi 5,00,000/- 4 Railway Women s Welfare Central Organization New Delhi 2,50,000/- 5 Railway Women s Welfare Central Organization Chennai 10,000/- 6 Andhra Pradesh Road Project, Huzurabad 835/- 7 Malaysia Loco K.L. Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Association and Welfare Societies of Railway employees and not on festivals or community celebration in the area of projects executed by the assessee.In absence of any such evidences of incurring expenses on account of festival or community celebration in the vicinity of project executed, the reliance placed by the assessee on the decision in the case of CIT Vs Bata India Ltd(supra) is misplaced. We do not find any infirmity in the order of the Ld. CIT(A) on the issue in dispute and accordingly, we uphold the same. The ground of the appeal of the assessee is dismissed. 15.1 The ground No. 5 of the appeal of the assessee relates to disallowance of prior period expenses amounting to ₹ 1,80,20,765/-sustained by the Ld. CIT(A). The ground No. 6 of the appeal of the Revenue, pertains to relief of ₹ 63,06,235/-allowed by the Ld. CIT(A) out of the disallowance of prior period expenses. Both the grounds being connected with the same issue, these are adjudicated together. 15.2 The Assessing Officer disallowed prior period expenses of ₹ 2,43,27,000/-stating that those did not pertain to the previous year relevant to the current assessment year an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arding the claim of ₹ 11,56,337 in respect of NOIDA Express Way Project vide its letter dated 17-01-2005. On going through the details filed, it is observed that the liability of the expenses was communicated to the appellant vide letter dated 18-04-2001 by the concerned authority. As the liability has not crystalised during the year,the same cannot be allowed as expenditure. 10.3.3 In the letter dated 18-01-2005, prior period expenses in respect of the NTPC Korba Project has been claimed of ₹ 11,48,247. On going through the details submitted on page No.6, it is observed that the bifurcation of the expenses relating to various years have been given but no proof has been attached that the liability arose during the year, hence, the same cannot be allowed as expenditure. 10.3.4 For the Malaysia Project, a sum of ₹ 24,23,120 has been claimed vide letter dated 18-01-2005. As per the details submitted on page No.7, it is observed that only expenses of ₹ 1,24,352/-, ₹ 12,279 and ₹ 77,700 was ascertained during the year and for all the other expenditure claimed, the liability has not ascertained during the year. The major exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate office, the assessee failed to furnish any evidence for liability in respect of ₹ 2,36,798/- related to arrears of foreign service contribution of Sri Manoher Lal for the financial year 1986-87, claimed as crystallised in the year under consideration and accordingly sustained the disallowance in respect of the amount of ₹ 2,36,798/-. Before us also no evidences in this respect have been furnished by the assessee. Accordingly, we uphold the said disallowance of ₹ 2,36,798/-. 15.7 The Ld. CIT(A) disallowed claim of prior period expenses of ₹ 11,56,337 in respect of NIODA Expressway project holding that liability of the expenses was communicated to the assessee vide letter dated 18/04/2001 by the concerned authority and thus the liability had not crystallised during the year and same was not allowable as expenditure in the year under consideration. Before us the Ld. counsel has submitted that this amount represents expenditure not accepted by the client for reimbursement in a costplus contract. He further submitted that as the loss was quantified and same was provided in the earliest available accounts and moreover, the above letter dated 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort of the claim that oil was lifted in the year under consideration, has been brought on record by the assessee. In absence of any documentary evidence in support of the claim, we uphold the finding of the Ld. CIT(A) in sustaining the disallowance of ₹ 22,08,789/-. 15.11 Next disallowance under prior period expenses amounting to ₹ 53,20,297/-pertaining to GAIL , L T , and ₹ 17,56,806/- pertaining to OFC Ambala was upheld by the ld. CIT(A), in view of no documentary evidences. Similarly disallowance of ₹ 63, 06, 235/-has been sustained by the Ld. CIT(A) in view of no details and evidence of the expenses. As no evidences were filed by the assessee in support of the claim that liability arose during the year under consideration, the Ld. CIT(A) upheld the disallowance. Before us the Ld. counsel claimed that retention money deducted and released by the client has been booked as income twice. He submitted that at the time of raising bill in 1997- 98 and again on receipt of retention money in the year 1999 and this error was detected in the previous year relevant to the assessment year 2001-02 and therefore same was charged to expenses under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilways in relation to DBV s Bills of electricity 5. Corporate Office Expenses 9,33,652 225 Includes cost of air tickets and Various fees bonus etc payable For earlier years 6. Malaysia Project 2,14,331 231 Includes ticket training expenses for the year 1999-00 TOTAL 63,06,235 15.14 This factual finding has not been rebutted by the learned DR before us. In view of unrebutted fact that the liability amounting to ₹ 63,06,235/-crystallised during the year under consideration, the action of the Learned CIT(A) in allowing relief to the assessee to the extent, is justified. We do not find any error in the order of the Learned CIT(A) in this regard. The ground No. 6 of the appeal of the Revenue is accordingly dismissed. 16.1 The ground No. 6 of the appeal of the assessee relates to provision for demobilisation expenses sustained by the Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... auditors have given complete item- wise details of the above provision of ₹ 6,43,12,810 and the tax auditors have certified out of the above, expenditure amounting to ₹ 2,85,63,198 is contingent in nature and are not allowable as business expenditure. Accordingly, the appellant claimed the balance provision of ₹ 3,57,49,612. As the expenditure has been incurred during the normal course of business, the same is thus allowable as expenditure. (iii) It is a settled law now that the estimated provisions based on definite obligations are allowable as expenditure even if the part of the same is written back. Reliance has been placed on the following case laws: (a) ITO Vs. Wanson India Ltd., 5 ITD 102; (b) Thermax Babcock Wilcox Ltd. Vs. DCIT,72 TTJ 8271; (c) Voltas Ltd. Vs. DCIT, 64 ITD 232; (d) Calcutta Co. Ltd. Vs. CIT, 37 ITR 1, (e) CIT Vs. Navbharat Nirman Ltd., 141 ITR 723 (iv) The claim of the appellant is allowed in its own case in the earlier years. The claim on account of demobilization expenses and other expenses were disallowed only in AY 1985-86 and 1995-96 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e company and there is a stay order. It has been further mentioned in the note that the cost of demobilization asset is for two financial years. The appellant counsel has not been able to provide any evidence that this liability got ascertained during the year nor information has been given when the project was completed and what is the matter of dispute pending in the Patna High Court. Therefore, the same cannot be allowed as an expenditure and the AO has rightly not allowed the same. (c) In respect of NTPC Farakka MGR Project, demobilization expenses of ₹ 96 lakhs have been claimed. Again in the annexure filed in page No.22 alongwith letter dated 25-01-2005, it is observed that the expenses has been claimed as establishment charges of 42 employees for two years as there is no work at Farakka. Again no evidence has been filed when this project was completed and how after completion of the project, the liability of the appellant to pay the employees arises. Therefore, the AO has rightly made the addition. To sum up. out of the total disallowance made by the AO of ₹ 4,80,49,000/-, a sum of ₹ 2,13,04,000 (₹ 3,04,000 + ₹ 1,14,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis The AO has also mentioned that a part of such provision of expenses was written off in subsequent years which prove that the expenses were merely estimation. The onus was on the assessee to prove that there was ascertained liability, which has not been discharged by the assessee. It is trite that merely provision of an expense cannot be allowed. Reference is made to para 2.2 on page 277 of the PB. It was submitted before the CIT(A) that the assessee has not been able to identify the Actual year of completion of projects in respect of which provisioning of expenses was made and the details were being compiled Hence, the provision of expenses was merely estimation and hence, unascertained liability which is not allowable u/s 37(1) of the Act. 6.2 in this regard, reliance is made on the decision of the Hon ble Madras High Court in the case of FFE Minerals India Pvt. Ltd. Vs. JCIT [2018] 98 taxmann.com 170 (Madras), particularly para 26-28. In para 26 of the order, the Hon ble Court has held that - Possibility has been defined as an event that may or may not happen. Thus, degree of proof required to show that there is a probability of ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sallowance only in the event where the assessee failed to substantiate its claim with documentary evidences. As the assessee failed to discharge its onus of substantiating whether the respective liabilities were ascertained or arose during the year under consideration, the ld. CIT(A) is justified in sustaining the respective disallowances. As far as the decisions relied upon the learned counsel of the assessee are concerned, same cannot be applied without ascertaining the facts with documentary evidences. No such documentary evidences, as pointed out by the Ld. CIT(A), have been produced before us also. In the circumstances, we do not find any error in the order of the Ld. CIT(A) on the issue in dispute and accordingly uphold the same. The ground No. 6 (a) of the appeal the assessee is dismissed. 16.7 The ground No. 6(b) of the appeal of the assessee being identical to ground number 5(b), same is dismissed following our reasoning while deciding ground number 5(b) of the appeal. 16.8 As regard to the relief of ₹ 2.67 crores allowed by the Learned CIT(A) , against which Revenue is in appeal in ground No. 7, we find that Learned CIT(A) has verified ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. As theft occurred in the FY 1999- 00 relevant to AY 2000-01, the liability did not arise during the FY relevant to the AY 2001-02 and the same cannot be allowed. (b) The appellant has claimed a sum of ₹ 1,27,32,338 for Jaipur Bypass Road Project. As per the details filed at page No.41 to 49 in the submissions made vide letter dated 25-01-2005, it is observed that the liability of ₹ 69,44,024 in respect of Gupta Construction Company was only ascertained during the year which can be allowed as expenditure. The further papers attached for claiming the balance liability of Kamal Builders shows that they have only made a request for releasing an amount of ₹ 60 lakhs as an advance to clear the liability vide their letter dated 10-10-2000 and the other letter of M/s. Kamal Builders is dated 24-08-2001 which is related to subsequent financial year and is also on the issue of refund of additional retention money. Therefore, only a sum of ₹ 69,44,024 is allowable from the claim made of ₹ 1,27,32,338. (c) Regarding the claim in respect of projects APSH-1A, 1B 3 and Bhopal Hospital, a sum of ₹ 76 lakhs and ₹ 18,57,405 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ascertained liability and was not merely estimation. 17.6 We have heard rival submission of the parties and perused the relevant material on record. We find that the Ld. CIT(A) has sustained the disallowance due to failure on the part of assessee in substantiating whether the liability arose during the year under consideration and also failure to submit necessary documentary evidence in support of the claim. Before us also, no evidences have been furnished by the assessee to substantiate the claim whether the expenses crystallised during the year. In our opinion, the order of the Ld. CIT(A) on the issue in dispute is well reasoned and we do not find any infirmity in the same. Accordingly, the finding of the Ld. CIT(A) on the issue in dispute is upheld. The ground No.7(a) of the appeal of the assessee ground No. 8 of the appeal of the Revenue, are dismissed. 17.7 The ground number 7(b) of the appeal of the Revenue is also dismissed, being identical to ground number 5(b) of the appeal, which has already been dismissed by us. 18.1 The ground No. 8 of the appeal of the assessee relates to interest received vide intimation under section 143(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that when the assessee received refund under intimation under section 143(1) of the Act, an enforceable debt was created in favour of the assessee in respect of the interest due on such refund and thus income accrued as the right to receive was acquired. The relevant finding of the Tribunal is reproduced as under: 9. The main contention of the assessee's counsel is that such right is contingent as the interest so received can be varied or withdrawn after the assessment under s. 143(3 ). We are unable to accept such contention of assessee for the reasons given hereafter. According to the dictionary meaning, a right or an obligation can be said to be contingent when such right or obligation is dependent on something not yet certain. According to s. 244A. the only condition for grant of interest is that there must be a refund due to assessee under any provision of the Act. There is no other condition in the said provision affecting such right. Therefore, the moment a refund becomes due to assessee, an enforceable debt is created in favour of assessee and assessee acquires a right to receive the interest. Sub-s. (3) of s. 244A only affects its quantification under ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... illagers. Therefore, if capital gain has been assessed in the hands of some of the persons where lands were acquired, such assessment would become patently erroneous, as the basis itself has ceased to exist. Such assessment would, therefore, amount to mistake, which, in our opinion, can be rectified. Similarly, any income assessed may become non-taxable by virtue of retrospective amendment and consequently, erroneous assessment can be rectified. Therefore, in our humble opinion, if the interest granted under s. 244A(1) is varied under sub-s. (3) of such section, then the interest originally granted would be substituted by the reduced/increased amount as the case may be. Thus, income on account of interest if assessed can be rectified under s. 154. 18.7 In view of the above finding of the Tribunal (supra), we restore the issue in dispute to the file of the Ld. Assessing Officer for verifying that the interest granted under section 143 (1) in relation to assessment year 2000-01 in the previous year corresponding to assessment year under consideration, but same has been subsequently withdrawn under section 143(3) of the Act passed in financial year 2003-04 and decide th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant and NBCC. (ii) The committee on disputes (COD) referred the matter to arbitration in August 1996. The arbitrator awarded that 20% of the contract amount be forfeited and the balance to be refunded to the appellant. The appellant appealed against the award but the appellate authority upheld the award on 08-10-1999 and held that the entire amount of ₹ 15.93 crores paid by the appellant be refunded to it by NBCC within two months beyond which interest would be leviable at the rate of 15%. (iii) After continuous persuasion, NBCC only refunded a sum of ₹ 416.50 lakhs on 14-02-2001 and ₹ 126.50 lakhs on 28-02-2001. IRCON thereafter wrote number of letters dated 30-03-2001, 01-06- 2001, 16-08-2001, etc. The appellant has gone into litigation and the appeal is pending before the Hon ble High Court of Delhi. (iv) The outstanding interest receivable to the appellant was ₹ 2 crores arising out of the delayed refund of advance payment by NBC to the appellant. The disputed and unaccrued interest is not chargeable to tax under the mercantile system of accounting as per the judgment of the Apex Court in the case of UCO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated its claim by relying upon a Supreme Court judgment and no revised claim was filed by the appellant. In any case, the fresh claim should have been entertained by the AO has been held in the appellant s own case for the AY 2000-01 and 1994-95 by the CIT(A). 19.4 The Ld. CIT(A) distinguished the decision in the case of UCO Bank (supra) as under: In the above decision, the Apex Court has decided the issue taking into consideration the CBDT Circular of 9th Oct 1984 and have held that the circulars are binding. Even in this case, as per the Circular of 1984, the interest charged in an account where there has been no recovery for three consecutive accounting years is not to be subjected to tax in the fourth year and onwards. Thus, the decision of the Apex Court is under different set of circumstances and is in relation to whether the circular issued by the CBDT is binding or not. In the case of the appellant, the facts are entirely different because NBCC has not denied its liability to pay the principal and interest due during the year. In fact, NBCC has agreed to make the payment due to IRCON in three instalments payable on 31-01-2001, 28-02-2001 and 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come due to the appellant and neither the liability to pay the same has been denied by the NBCC. Therefore, under no stretch of imagination, it cannot be said that interest has not become due to the appellant or the accrued interest is not the real income of the appellant. Merely filing of a suit for recovery against NBCC in subsequent year by the appellant does not mean that the interest has not become accrued to the appellant during the year or the loan has become sticky, hence, no interest is due. In any case, the principal and interest has not become sticky at least during the financial year relevant to assessment though as mentioned above, in the present circumstances of the case, it cannot be held that the recovery of due amount from NBCC has become sticky. Therefore, the addition made by the AO is confirmed and the appeal of the appellant on this issue is dismissed. 19.6 Before us, the ld. counsel of the assessee relied on the decision in the case of UCO Bank (supra) and submitted that interest arising out of sticky and disputed loans cannot be shown as income as long as its realisation is doubtful. 19.7 The learned DR, on the other hand, relied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , observed that the assessee failed to add back the provision for bad and doubtful debts amounting to ₹ 2,48,73,000/-and provision for doubtful advances of ₹ 53,98,000/-. It was submitted by the assessee that the provisions were ascertained liability and, therefore, it was not required to added back in computing the book profit. The assessee explained that provisions for doubtful debts and doubtful advances were infact assets and not liabilities and thus, no adjustment under clause (c) of Explanation-II, below provision of section 115JBwas to be called for, relying on the judgement in the case of CIT Vs Echjay Forging (P) Ltd (2001) 251 ITR 15 (Bombay). 20.3 The Assessing Officer rejected the contention of assessee with the detailed reasons mentioned in para 16.1.2 of the assessment order. According to the Assessing Officer, since provision was made, it clearly signified that liabilities were unascertained liabilities. The Ld. Assessing Officer observed that while computing the business income, the assessee added the provisions therefore there is no reason as why the same are not added for computing book profit. Regarding the provision for doubtful advance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. The Ld. counsel in support of his contention relied on following decisions: (i) CIT versus Yokogawa India Ltd (2012) 204 Taxman 305 (kar). (ii) Phillips Carbon Black Ltd versus ACIT (ITA No. 741/Kol/2012) (iii) Murigappa Morgan Thermal Ceramics Ltd. Vs ACIT (ITA No. 2208/Mds/2010) (iv) Trent Limited Vs DCIT (ITA No. 1073/Mum/2005). 20.6 The Ld. DR on the other hand relied on the order of the lower authorities and submitted as under: 10.1. On perusal of P L account (PB-page-2 for ITA 1825), it is noted that provision of ₹ 36.38 crores has been deducted out of operating profit. The details of such provisions are givenin Sch P )PB-pg 19). Provision for Bad and doubtful debts is for ₹ 248.73 lakhs whileprovision for bad and doubtful advances amounted to ₹ 53.98 lakhs.The said provision has been debited to P L account. 10.2. The aforesaid provision is required to be added to total income in terms of clause )i) to Explanation 1 to Section 115JB. This issue is in fact no longer res integra in view of the said insertion of clause (i) w.e.f. 01.04.2001. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Less :Provision 1063.70 439.00 4,446.20 4,263.29 Other debts Considered good 18,920.26 17,948.30 33,366.55 22,211.59 It is not clear whether the total debts of ₹ 23,366.55 lakhs is after deducting the provision of ₹ 1,063.70 lakhs. The amount of ₹ 624.70 lakhs considered by the Assessing Officer for addition is obviously difference between opening provision of ₹ 439 lakhs and closing provision of ₹ 1063.70 lakhs, mentioned in the above schedule. If the provision debited by assessee is indeed deducted from the total debts and only the net balance shown in the balance-sheet then by virtue of decision of the Hon ble Karnataka High Court in the case of Yokogawa India Ltd. (supra) there cannot be any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s concerned, we find that while adjudicating the ground No. 7 and 8 of the appeal of the Revenue, we have already upheld the decision of the Ld CIT(A) of holding the relevant amount of provision under demobilisation and other expenses as ascertained liability and hence , we concur with the decision of the Ld CIT(A) that same are not required to be added to book profit u/s 115JB of the Act. The ground no. 9 of the appeal of the Revenue is accordingly dismissed. 22.1 The ground No. 13 of the appeal of the assessee relates to denial of exclusion of income amounting to ₹ 76,80,17,697/- earned from permanent establishment in foreign countries while computing book profit under section 115JB of the Act by applying the provisions of Double Tax Avoidance Agreement (DTAA). 22.2 The Assessing Officer held that adjustment can be made only as provided in Explanation to section 115J as decided by the Hon ble Supreme Court in the case of Apollo tyres Vs CIT (2002) 255 ITR 273 (SC). According to him, exclusion of DTAA is not provided in that explanation. The Ld. CIT(A) confirmed the action of the Assessing Officer. 22.3 Before us the Ld. Counsel of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stment Company Private Limited reported in (2001) 249 ITR 597(Bombay). 23.2 Before us, the Ld. Counsel of the assessee clearly conceded that issue in dispute is covered against the assessee by the decision of the Hon ble Bombay High Court in the case of Vee Kay Lal Investment Company Private Limited (supra) and the decision of the Hon ble Kerala High Court in the case of NJ Jose and Company Private Limited Vs CIT (2010) 321 ITR 132 (ker.). 23.3 We have heard the rival submission and perused the relevant material on record. The hon ble Bombay High Court in the case of Veekaylal Investment Company Private Limited (supra) held that while computing the book profit under the companies Act, the assessee has to include capital gains for computing the book profit under section 115J of the Act. The relevant finding of the Hon ble High Court is reproduced as under : 7. We find merit in this appeal. According to s. 1153(1), in the case of an assessee being a company if the total income is less than 30 per cent of its book profits then the total income of such company shall be deemed to be an amount equal to 30 per cent of such book-profit and such in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of computing book profits. That, capital gains would certainly be one of the various items whose information is required to be given to the share holders under the said cl. 3 (xii)(b). So also, the disclosure is required to be made in respect of investment in the capital of a partnership firm if the company is a partner on the date of the balance sheet (see p. 1651 of the Companies Act by A. Ramaiya [Fourteenth Edn.]. Similarly, profits or losses on such investments are also required to be disclosed. [See cl. 3(xii)(a) of Part II of Sch. VI of the Companies Act]. 23.4 As the Ld. CIT(A) has followed a binding precedent on the issue in dispute, we do not find any error in the order of the Ld. CIT(A) on the issue in dispute and accordingly, we uphold the same. The ground No. 14 of the appeal of the assessee is accordingly dismissed. 24.1 The ground No. 15 of the appeal of the assessee relates to disallowance of claim of deduction under section 80HHC of the Act amounting to ₹ 28.97 crores while computing the book profit under section 115JB of the Act. 24.2 The Assessing Officer disallowed the claim of deduction under section 80HHC of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ates to deduction of ₹ 1.42 Crs. under section 80HHB(A) allowed to the assessee. 26.2 This claim of deduction was made for the first time before the Ld. CIT(A). It was submitted that if deduction under section 80IA of the Act is denied to the assessee, then the deduction under section 80HHB(A) of the Act might be allowed as the assessee fulfils all the requisite condition of the said provision. The assessee submitted that three projects namely APSH 1A Hazurabad , APSH 1B Kareem Nagar and APSH 3 Kamalapuram totalling ₹ 2,03,55,02,091/-which were funded by the World Bank, were eligible for claim of deduction at the rate of 40% of such profit, which was worked out to ₹ 1,42,00,837/-. The assessee submitted that all the required conditions including maintenance of separate books of accounts, furnishing of audit report of chartered accountant certificate in prescribed form 10CCAA, creation of a special reserve etc have been fulfilled, and hence the assessee is eligible for the deduction. 26.3 The Ld. CIT(A) called for the remand report from the Assessing Officer, wherein he submitted that the two conditions of furnishing of a certificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been allowed by the Ld. CIT(A). 27.2 Before us, the ld. counsel of the assessee submitted that it was an alternative ground for deduction under section 80HHB of the Act, in the unlikely event, the disallowance of deduction under section 80HHC is upheld in appeal. He submitted that the Tribunal in the assessee s own case for assessment year 2000-01 has allowed the deduction under section 80HHC of the Act, thus, the assessee is not insisting for claim under section 80HHB of the Act. The ld. DR, on the other hand, has not objected to the withdrawal of the claim by the assessee. 27.3 We have heard the rival submissions and perused the relevant material on record. We have already allowed claim of the assessee for deduction under section 80HHC of the Act, while adjudicating, the ground No. 3 of the appeal of the assessee, and thus, this alternative claim cannot be allowed to the assessee. The assessee has also withdrawn this claim before us. Accordingly this ground of the appeal of the Revenue is allowed. 28.1 The ground No.3(three) of the appeal of the Revenue relates to the grant of deduction under section 80HHB in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evident that the deduction claimed pertained to those employees who had actually resigned during the concerned period. The Ld. CIT(A) allowed the claim of the assessee considering that - (i) The assessee is a government of India undertaking, whose accounts are audited by the statutory and government auditors. (ii) All the details are available in the audited balance sheet and the assessee has also submitted all the details of the VRS before him and also before the Assessing Officer in remand proceedings. 29.2 Before us, the Ld. DR relied on the order of the Assessing Officer and submitted that requisite details of employees resigned were not filed by the assessee, and therefore deleting the disallowance by the Ld. CIT(A) was not justified. 29.3 We have heard the rival submissions in view of the order of the lower authorities and other material on record. We find that the Ld. CIT(A) has allowed the claim of the deduction of the assessee observing as under: 7.2.3 In the rejoinder filed by the appellant counsel vide letter dated 09- 02-2005, it has been submitted that it is obvious that the employees who resigned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 14, which prescribed that no deduction of expenditure shall be allowed in relation to income which do not form part of the total income. In view of this observation, the Ld. Assessing Officer allocated ₹ 51,68,697/-and ₹ 3,15,44,520/- towards DTA income from Bangladesh and Malaysia respectively. 30.3 Before the Ld. CIT(A), the assessee submitted that all corporate office expenses attributable to permanent establishment outside India had been charged to the related projects. According to the assessee, separate books of accounts were maintained for each project at the project site itself and all the expenses were debited to profit and loss account. It was submitted that even the expenditure relating to any visit of an executive from corporate office and/or any expenditure incurred by the corporate office has been directly booked in the accounts of the project itself. 30.4 The Ld. CIT(A) deleted the allocation of corporate office expenses towards the DTAA income observing as under: 9.2.4. In the preceding assessment years 1999-00 and 2000-01, it was allowed in favour of the appellant. 9.3. The adjustment m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. CIT(A) is reproduced as under: 15B. The next issue of appeal taken by the appellant in Ground No.15(c) is that the AO is not justified and grossly erred in considering that the provision for gratuity amounting to ₹ 44,39,494 is on account of liability other than ascertaining liability and adding it to the computation of book profit for the purpose of Section 115JB of the Act. 15B.1 The grounds taken for disallowing the provision for gratuity by the AO have already been summarized in the Ground No. 15(a). 15B.2 The submissions made by the appellant counsel on the issue during the course of appellate proceedings are summarized below: (i) The company has set up a gratuity trust fund which is being administered by LIC of India. The annual gratuity liability is determined by LIC based on actuarial valuation under group gratuity scheme. During the previous year under consideration, the company provided for gratuity amounting to ₹ 44,39,494 based on actuarial valuation. (ii) Since the determination of the gratuity provision is by way of an actuarial valuation it cannot be said that the same is an unasc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ground No. 11 of the appeal of the Revenue relates to amount of ₹ 9,00,77,782/- which has been reduced by the assessee from the book profit for computation of MAT liability u/s 115JB of the Act in view of clause (i) of explanation below section 115JB(2) of the Act. According to the AO the assessee was required to enhance the book profit of previous/ earlier years corresponding to the reduction in book profit claimed on account of written back liabilities. 32.2 The Ld. CIT(A) keeping in view the provisions of the Act as amended and the decisions relied upon by the assessee restored the issue partly for verification by the Assessing Officer observing as under: 18.2 The various submissions made by the appellant counsel during the course of appellate proceedings are as under: (i) The observation of the AO is totally incorrect and contrary to the provisions of the Act. According to clause (i) of Explanation to Section 115JB of the Act, it is clear that any amount withdrawn from reserves or provisions which are created and/or provided in the previous year ended on or before 31-03-1996 should be allowed. The said clause imposes certain re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment year 2000-01 by the Ld. CIT(A) and no appeal has been preferred by the Department against the issue before the Tribunal. 32.4 We have heard rival submission of the parties and perused the relevant material on record. The ld. CIT(A) has explained the clause(i) of explanation to section 115JB of the Act that it applies to any amount withdrawn from the reserves or provision which are created and/or provided in the previous year ended on or before 31/03/96 and should be allowed. In our opinion, the Ld. CIT(A) has correctly appreciated the position of the law into the facts of the instant case. We do not find any error in the order of the Ld. CIT(A) on the issue and accordingly, we uphold the same. 33.1 The ground No. 12 of the appeal of the Revenue relates to allowance of claim for deduction under section 80HHB while computing book profit under section 115JB of the Act. 33.2 Before us, the Ld. Counsel of the assessee submitted that this ground was only taken as alternative ground in unlikely event the disallowance under section 80IA and 80HHC is not allowed. Since, we have already allowed the deduction under section 80IA and 80HHC of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dice to ground no. 1(a) taken here in above, the Ld. CIT(A) grossly erred in holding that although depreciation is allowable on machineries in 'ready to use' condition but the same is not allowable on machinery spares which are also in 'ready to use 'condition. 2(a) That on the facts and in the circumstances of the case, the Ld. CIT(A) was not justified in disallowing appellant's claim for deduction u/s 80-IA in respect of income earned from the business of development of infrastructure facilities amounting to ₹ 19,03,52,236/-. 2(b) That on the facts and in the circumstances of the case and without prejudice to ground No. 2(a) taken here in above, the Ld. CIT(A) grossly erred in considering that the appellant's role in executing various infrastructure projects is that of a contractor which cannot be equated to the business of developing the infrastructure facilities and thereby disallowing the claim for deduction u/s 80-IA of the Act. 2(c). That on the facts and circumstances of the case and without prejudice to ground No. 2(a) and 2(b) taken here in above, the Ld. CIT(A) was not justified in not taking into co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings without affording reasonable opportunity to the appellant for furnishing all the relevant documents and hence the impugned issue may be set aside for allowing the same on merits. 6(a) That on the facts and in the circumstances of the case, the Ld. CIT (A) was not justified in upholding the disallowance of the claim of the appellant towards provision for other expenses amounting to ₹ 28,85,31 1/- out of the total claim for ₹ 1,18,85,311 /-. 6(b) That on the facts and in the circumstances of flu* case and without prejudice to ground no. 6(a) taken here in above, the Ld. C1T(A) completed the appellate proceedings without affording reasonable opportunity to the appellant for furnishing all the relevant documents and hence the impugned issue may be set aside for allowing the same on merits. 7(a) That on the facts and in the circumstances of the case, the Ld. CIT(A) was not justified in confirming the disallowance made by the Ld. AO in respect of interest received vide intimation u/s 143(1) for the assessment year 2001-02 amounting to ₹ 2,00,469/-. 7(b) That on the facts and in the circumstances of the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting to ₹ 5,53,92,513/- out of the total claim for ₹ 7,46,71,237/- for computing the book profits for the purpose of 115JB of the Act. 12.0 That on the facts and in the circumstances of the case, the Ld. CIT(A) was not justified in upholding the disallowance of the claim of the appellant towards provision for other expenses amounting to ₹ 28,85,311/- out of the total claim for ₹ 1,18,85,311/- for computing the book profits for the purpose of 115JB of the Act. 13.0 That on the facts and in the circumstances of the case the Ld. CIT (A) was not justified and grossly erred in disallowing deduction of income earned from permanent establishment in foreign countries and not chargeable to tax under Double Taxation Avoidance Agreement amounting to ₹ 1,10,27,05,706/- in computing the book profit for the purpose of Section L15JB of the Act. 14.0 That on the facts and in the circumstances of the case, the Ld. CIT (A) was not justified in upholding the disallowance of the claim of the appellant amounting to ₹ 2,24,79,738/- on account of the profit on sale of fixed asset in computing the book profit for the purpose of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred in not considering that the appellant is an enterprise and not a person, who executes a work contract with an undertaking and thereby disallowing the claim for deduction u/s 80IA of the Act. 2(d) That on the facts and in the circumstances of the case, and without prejudice to ground No. 2(a) and 2(b) taken here in above, the Ld. CIT (A) was not justified in not taking into consideration the decision of Hon'ble Mumbai ITAT in the case of ACIT vs Bharat Udhyog Ltd., (ITA No 6137/Mum/2005) wherein based on the identical facts as that of the appellant, the benefit of deduction u/s 80-IA of the Act has been allowed. 3(a) That on the facts and in the circumstances of the case, Ld. CIT(A) was not justified in confirming the disallowance of the claim of the appellant for deduction u/s 80HHC relating to the export of goods and supplies made to the Government of Syria amounting to ₹ 1,60,34,887/- . 3(b) That on the facts and in the circumstances of the case, and without prejudice to ground No. 3(a) taken here in above, the Ld. CIT(A) grossly erred in considering that the appellant entered into 'composite contract' which cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the circumstances of the case and without prejudice to ground no. 7(a) taken here in above, the Ld. CIT (A) completed the appellate proceedings in haste without affording reasonable opportunity to the appellant for furnishing all the relevant documents and hence the impugned issue may be set aside for allowing the same on merits. 8(a) That on the facts and in the circumstances of the case, the Ld. CIT (A) was not justified in not allowing assessee's claim of ₹ 25,56,813/- arising from withdrawal made by the department in the instant Assessment Year in respect of interest granted u/s 244A pertaining to Assessment Year 2000- 2001 which was already taxed in the Assessment Year 2001-2002. 8(b) That on the facts and in the circumstances of the case and without prejudice to ground no. 8(a) taken here in above, the Ld. CIT (A) grossly erred in holding that the interest amounting to ₹ 25,56,813/- received by the appellant on provisional assessment u/s 143(1) for the assessment year 2000-01 to be due and final, disregarding the fact that the same was subsequently withdrawn on finalization of the appellant's case for the said assessment year u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 84,82,65,351/- in computing the book profit for the purpose of Section 115JB of the Act. 12.0 That on the facts and in the circumstances of the case, the Ld. CIT (A) was not justified in upholding the disallowance of the claim of the appellant amounting to ₹ 1,90,11,891/- on account of the profit on sale of fixed asset in computing the book profit for the purpose of Section 115JB of the Act. 13.a) That on the facts and in the circumstances of the case, the Ld. CIT (A) grossly erred in not considering the claim of the appellant amounting to ₹ 99,12,075/- towards provision for bad and doubtful debts, advances, demobilization expenses, maintenance expenses, etc., utilized during the year, which have already been taxed in the earlier years by the department, resulting taxation of the aforesaid provisions once again in the instant assessment year while computing the book profits. 13.b). That on the facts and in the circumstances of the case and without prejudice to ground no. 13(a) taken here in above, the Ld. CIT (A) completed the appellate proceedings in haste without affording reasonable opportunity to the appellant for furnishi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 38. Similarly, grounds Nos. 2(a), 2(b) 2(c) raised by assessee for A.Y. 2002-03 and 2003-04 are covered by our decision on grounds Nos. 2(a) 2(b) in appeal of assessee for A.Y. 2001-02. Accordingly, ground No. 2(a), 2(b) of assessee s appeals for both these years are allowed. As regards ground No. 2(c) was raised without prejudice to ground no. 2(a) and 2(b) only and not required to be adjudicated , when we have already allowed ground no. 2(a) and 2(b) of the appeal. 39. Grounds Nos. 3(a) and 3(b) in both these appeals of the assessee are covered by our decision on grounds Nos. 3(a) 3(b) in appeal of assessee for A.Y. 2001-02. Accordingly, these grounds of assessee s appeals for both these years, are allowed. 40. Ground Nos. 4(a) 4(b) for A.Y. 2002-03 are covered by our decision on ground Nos. 6(a) 6(b) of assessee s appeal for A.Y. 2001-02. Accordingly, these grounds of assessee are dismissed. Similarly, ground Nos. 4(a) 4(b) raised in A.Y. 2003-04, are identical to grounds Nos. 7(a) and 7(b) raised in A.Y. 2001-02, which we have decided against the assessee. Accordingly, these grounds of appeal for A.Y. 2003-04 are also dismissed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r A.Y. 2003-04 are also dismissed. 45. Grounds Nos. 8(a) 8(b) in appeal for A.Y. 2002-03 are similar to ground Nos. 9(a) and 9(b) of assessee s appeal for A.Y. 2001-02, which have been dismissed. Accordingly, these grounds of assessee for A.Y. 2002-03 are also dismissed. 46. As regards ground No. 8(c) of assessee s appeal for A.Y. 2002- 03, which has been taken without prejudice to ground No. 8(a) and 8(b) is concerned, we are of the opinion that the assessee is not entitled to deduction of interest on loans to NBCC as already held by us. Accordingly, this ground no. 8(c) of the appeal for AY 2002- 03 is dismissed. 47. The ground No. 8(a) and 8(b) in assessee s appeal for A.Y. 2003-04, pertain to interest u/s 244A of the Act. The issue in dispute has been adjudicated while deciding the ground No. 8(a) and 8(b) for assessment year 2001-02, wherein we have remitted the issue in dispute to file of the assessing officer for deciding in view of the decision of special bench in the case of Avada Trading Company (P) Ltd. (supra). The issue in dispute being identical, the ground No. 8(a) and 8(b) of the appeal for AY 2003-04 are also allowed for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of appeal of the assessee is dismissed. 54. Ground No. 13(a) and 13(b) of assessee s appeal for A.Y. 2003- 04 pertain to disallowance of provision of ₹ 99,12,075/-. The assessee s claim that relevant amount of provisions were disallowed in assessment year 2001-02 and 2002-03, out of which the assessee utilised in the previous year relevant to assessment year 2003-04, the amount of ₹ 20,15,350/-and ₹ 78,96,725 from the provision for demobilisation expenses and other expenses respectively totalling ₹ 2,99,12,075/-. We find that the identical issue raised by the assessee before the Ld. CIT(A) in assessment year 2002-03 has been restored to the assessing officer for verification in para 16.3 of the order of the Ld. CIT(A) for assessment year 2002-03. In our opinion, the issue needs verification at the end of the assessing officer and accordingly, we rest of this issue to the file of the assessing officer for verification and deciding a fresh. The ground of the appeal is accordingly allowed for statistical purposes. 55. The ground No. 14 for assessment year 2002-03 relates to disallowance on profit on sale of fixed asset ₹ 2,24, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Revenue s appeal for A.Y. 2001-02, which as per our above decision, has been dismissed. Accordingly, this ground of Revenue is also dismissed. 61. Ground No. 4 of this appeal is covered by our decision rendered on ground No. 7 of Revenue s appeal for A.Y. 2001-02, which has been dismissed in the identical facts of the case. Accordingly, this ground of Revenue is also dismissed. 62. Ground No. 5 the appeal relates to addition of ₹ 1,28,77,257/-deleted by the Ld. CIT(A) on account of provision for maintenance expenses. We find that the Ld. CIT(A) has verified that the liability on account of maintenance expenses arisen in the year under consideration. The Ld. DR could not rebut this factual finding of Ld. CIT(A). Accordingly we do not find any error in the order of the Ld. CIT(A) in deleting the disallowance. The ground of the appeal of the Revenue is accordingly dismissed. 63. The issue raised in Ground No. 6 pertaining to provision for demoblization and provision for maintenance and other expenses, is covered by our decision given on ground No. 9 of Revenue s appeal for A.Y. 2001-02, which we have dismissed vide our findings given ..... X X X X Extracts X X X X X X X X Extracts X X X X
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