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TMI Blog2020 (10) TMI 453X X X X Extracts X X X X X X X X Extracts X X X X ..... to examine and verify the actual amount of expenditure and treatment of excess amount of provision, if any, by the assessee in the books of account. Accordingly, this ground of revenue for A.Y. 2013-14 is restored to the file of the AO and thus allowed for statistical purposes. Accrued interest on investment Replacement, Rehabilitation, Modernisation of Capital Assets Fund - HELD THAT:- We find that the issue is squarely covered in favour of the assessee by the decision of the Tribunal in assessee s own case for the assessment year 2007-08 [ 2011 (3) TMI 1797 - ITAT CUTTACK] which has been followed by the ld CIT(A) in the impugned order. CIT(A) has relied on the judgment of Sitaldas Tirathdas [ 1960 (11) TMI 17 - SUPREME COURT] wherein, it is held that in deciding on the issue of diversion of income, it is the nature of obligation which is the decision fact and where by virtue of obligation, the income never reaches the assessee, same cannot be brought to tax. Further, ld D.R. has not brought on record any order of the higher forum that the order of the Tribunal in assessee s own case for the assessment year 2007-08 (supra) has been reversed. - Decided against revenue. Depreciatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 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 provisions of the Major Port Trust Act, 1963. During the course of assessment proceedings, the Assessing Officer noticed that the assessee had shown provision for accrued expenses of ₹ 2,85,71,27,417/- treating the same as ascertained liabilities as under: " Sl.No. Particulars Amount (Rs.) 1 Audit fees 1,60,00,000 2. Electricity charges 3,67,03,648 3. Payment to contractors 14,94,32,891 4. Payment for other charges 19,40,65,016 5. Int. on Govt. of India loan 229.97,23,247 6. Int. on initial investment of Govt. of Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 'Liabilities'. Also, the accuracy of the provisions when compared with the actual payments made in the next financial year further substantiates the assessee's stand. In view of the above, the addition of ₹ 285,71,27,417/- made by the AO on account of accrued expenses being in the nature of contingent liabilities is hereby deleted." 6. Assailing the impugned order, ld DR submitted that ld CIT(A) is not justified in deleting the additions made under the head "provisions for accrued expenses". He submitted that the assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ors is also lesser and i.e. ₹ 14,28,56,664/- in comparison to provision of ₹ 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, these two items are missing and there is no details available on the record about actual payment by the assessee on these two heads. Thus, these two issues ae also restored to the file of the AO to examine and verify the actual amount of expenditure and treatment of excess amount of provision, if any, by the assessee in the books of account. Accordingly, this ground of revenue for A.Y. 2013-14 is restored to the file of the AO and thus allowed for statistical purposes. 13. Ground No.1 for A.Y. 2014-15 is also having si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rective, 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 opined that where, by virtue of the obligation, the income never reaches the assessee, the same cannot be brought to tax. In the assessee's case in the appeal before the undersigned, the interest accruing on the funds is outside his dominion as he cannot exercise any control over its utilization but must spend it in the manner prescribed by the Govt, of India. In other words, the interest is diverted into these prescribed uses immediately on its accrual and the assessee enjoys no discretion whatsoever in its ut ..... X X X X Extracts X X X X X X X X Extracts X X X X
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