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TMI Blog2021 (9) TMI 126X X X X Extracts X X X X X X X X Extracts X X X X ..... to appreciate that there was no evidence that the assessee had transferred the contract received from Wardha Power Private Limited to another party, Viz Infra Consultants Private Limited, except for a letter issued by the assessee to Wardha Power Private Limited and a tripartite settlement agreement to which Wardha Power Private Limited i.e., the company that gave the contract was not a party, and hence the same has no validity. 4. The Ld. CIT(A) erred in directing the Assessing Officer to allow the deduction of Rs. 5,00,00,000/- being service fee paid without effecting TDS though liable to TDS u/s 194J on the condition that on furnishing original Form 26AS by the assessee wherein the recipient has accounted for the same as income for the A.Y.2011-12, overlooking the fact that the second proviso of section 40(a)(ia) upon which the Ld.CIT(A) has relied to allow the deduction for the A.Y.2011-12, was inserted vide Finance Act, 2012, w.e.f. 01.04.2013 whereas the instant issue pertains to A,Y.2007-08. 5. Any other ground that may be raised at the time of hearing." 3. Briefly, the facts of the case are that the appellant company engaged in the business of storage of OIL and Gas h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l as the business under consideration. The A.O in the assessment order has mentioned the quantum as Rs. 2,46,00,000/- which is as per TDS Certificate, however, it has been clarified with the above re-produced ledger accounts that the quantum is Rs. 2,46,00,000/-. He, therefore, held that in view of the above facts, the receipt is not the income of the appellant under peculiar factual circumstances of the case under consideration and therefore, Rs. 2,41,08,000/- (as mentioned at Rs. 2,46,00,000/- in the assessment order) is hereby deleted. 9. Before us, the ld. DR submitted that there was no evidence that the assessee had transferred the contract received from Wardha Power Pvt. Ltd. to another party, Viz Infra Consultants Pvt. Ltd., except for a letter issued by the assessee to Wardha Power Pvt. Ltd. and a tripartite settlement agreement to which Wardha Power Pvt. Ltd. i.e., the company that gave the contract was not a party, and hence, the same has no validity. He, therefore, submitted that the order of AO may be restored. 10. The ld. AR, on the other hand, reiterated the submissions made before the lower authorities and submitted that the assessee company went into severe financ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the CIT(A) in directing the AO to allow the deduction of Rs. 5 crores being service fee paid without effecting TDS, the AO considered the same as contingent liability and also disallowed it as a payment which cannot be allowed as a revenue expenditure for the year under consideration for non-deduction of TDS u/s 40(a)(ia) of the Act. 13. The CIT(A) observed that whether the provision made by the assessee is a contingent or not, it is seen that the liability arose vide agreement dated 26/09/2005, wherein clause 7 of the agreement between the appellant and Sainj Hydro Power Pvt. Ltd., and VIZ Pojects Pvt. Ltd., it was provided as under:- "EIPL shall pay service fee of 10% of the amount of Rs. 50,00,00,000/-, which is the minimum upset amount fixed for negotiating and settling the debts of EIPL to VIZ and Sainj in proportion to the amounts set up by VIZ and Sainj respectively." 13.1 The CIT(A) observed that the appellant passed an entry on 30.09.2006 regarding the provision of Rs. 5,00,00,000/ - as service fee after one year of entering into the agreement. The parties were supposed to arrange the fund to the tune of Rs. 43,60,00,000/- combined towards payment of OTS amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) is allowed. In view of the same, the same cannot be added while computing income u/s 115JB and therefore the ground 4(b) is also allowed." 14. Before us, the ld. DR relied on the order of AO and the ld. AR of the assessee relied on the order of CIT(A). 15. We have considered the rival submissions and perused the material on record as well as gone through the orders of revenue authorities. As quoted by the CIT(A), as per the agreement dated 26/09/2005 entered into between assessee and Amongst VIZ Projects Pvt. Ltd. & Sainj as per clause 7, the assessee shall pay the service at 10% on the upset amount of Rs. 50 crores to VIZ and Sainj in proportion to the amounts set up by them before end of November, 2006. Therefore, the liability of 5 crores is not contingent in nature and was liability for the year under consideration and the assessee has rightly the same as revenue expenditure in view of the said agreement. Therefore, we do not find any infirmity in the order of the CIT(A) in deleting the addition of Rs. 5 crores made by the AO u/s 40(a)(ia) treating it as contingent in nature. Accordingly, the ground raised by the revenue on this issue is dismissed. ITA No. 2403/Hyd/2018 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the appellant as part of final settlement. The party VIZ thus finally received its due, which was assigned way back in September 2007 by the appellant as part of the reorganizing conditions and restructuring of debt which are part of record and are a matter of fact. The appellant was liable for its promise of the transfer of the debt of HPCL to VIZ for the assistance and funds provided in its debt restructuring and the appellant could not have been an impediment in the realization of the debt by the party VIZ from HECL. The appellant has thus waived off its receipt so awarded and also this grant by arbitrator was not final and was a subjudice matter. The prolonging of this matter would have resulted in locking of the realizable fund which was promised and assigned by the appellant to VIZ and therefore a commercial decision was taken by the appellant. The appellant in the submission has made very categorical statement that it has never received the quantum granted by the arbitrator and further it has itself waived the same off as part of commercial expediency and consideration. The appellant has also furnished the necessary evidences in this regard and also the same were furni ..... X X X X Extracts X X X X X X X X Extracts X X X X
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