Andhra Pradesh Gas Power Corporatio Limited , Hyderabad V. Dy. Commissioner of Income Tax , Circle-1(1), Hyderabad

ITA 1452/Hyd/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 6121 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 20-07-2021
• Assessment Year: 2014-2015
• Appeal Filed On: 19-09-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: V SIVA KUMAR
• Keywords: Capital asset converted into stock in trade; Opportunity of being heard; Principle of natural justice; Question of law; Set aside
• Section: 143(3); 80HHC; 37(1); 41(2); 264; 73; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD (THROUGH VIDEO CONFERENCE) BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER ITA NO. A.Y. APPELLANT RESPONDENT 724/HYD/2018 2013-14 ANDHRA PRADESH GAS POWER CORPORATION LIMITED, HYDERABAD [PAN: AABCA9105C] DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1(1), HYDERABAD 1452/HYD/2019 2014-15 FOR ASSESSEE : SHRI V.SIVA KUMAR, AR FOR REVENUE : SHRI RAJENDRA KUMAR, CIT-DR (ITA NO.724/H/18) SHRI DANDA SRINIVAS, DR (ITA NO.1452/H/19) DATE OF HEARING : 13-07-2021 (ITA NO.724/H/18) 20-07-2021 (ITA NO.1452/H/19) DATE OF PRONOUNCEMENT : 09-09-2021 O R D E R PER S.S.GODARA, J.M. : THESE TWO ASSESSEES APPEALS FOR AYS.2013-14 AND 20 14- 15 ARISE AGAINST THE PR.CIT-1, HYDERABADS SEPARATE OR DERS DATED 30-01-2018 AND 12-03-2019 IN CASE F.NO.10 / PR .CIT-1, / 263 / 2017-18 AND F.NO.PR.CIT-1 / HYD / 263 / 11( 1) / 2018-19, INVOLVING PROCEEDINGS U/S.263 OF THE INCOME TAX ACT, 1961 [IN SHORT, THE ACT]; RESPECTIVELY. HEARD BOTH THE PARTIES. CASE FILES PERUSED. ITA NOS. 724/HYD/2018 & 1452/HYD/2019 :- 2 -: 2. IT TRANSPIRES AT THE OUTSET THAT THE ASSESSEES FORMER INSTANT APPEAL ITA NO.724/HYD/2018 SUFFERS FROM 13 DA YS DELAY STATED TO BE ATTRIBUTABLE TO THE REASON(S) BEYOND ITS CONTROL AS PER CONDONATION PETITION/AFFIDAVIT. NO REBU TTAL HAS COME FROM THE DEPARTMENTAL SIDE. THE IMPUGNED DELAY IS CONDONED THEREFORE. 3. COMING TO ASSESSEES LEAD AY.2013-14S APPEAL I TA NO.724/HYD/2018, WE NOTE THAT THE PCITS DETAILED DISCU SSION TERMING THE ASSESSING OFFICERS REGULAR ASSESSMENT DT.0 2-03- 2016 AS AN ERRONEOUS ONE CAUSING PREJUDICE TO THE INT EREST OF THE REVENUE; READS AS UNDER: 6.1 I HAVE GONE THROUGH THE ASSESSMENT ORDER, RECO RD, GROUNDS OF REVISION AND SUBMISSIONS MADE BY THE ASSESSEE COMPA NY IN REPLY TO THE SHOW CAUSE LETTER DATED 16.11.2017. 6.2 AS MENTIONED ABOVE, THE ASSESSEE-COMPANY VIDE L ETTER DATED 30.11.2017 DETAILED THE BACKGROUND OF THE AGREEMENT S THAT IT HAD ENTERED INTO WITH GAIL FOR SUPPLY OF NATURAL GAS RE QUIRED BY IT FOR POWER GENERATION AND THE CIRCUMSTANCES IN WHICH THE Y PROVIDED FOR COST OF NATURAL GAS AT US $ 5.73 /MMBTU IN THEIR BO OKS AS PER AGREEMENT ENTERED WITH GAIL EVEN THOUGH GAIL HAS RA ISED INVOICES FOR US $ 4.30/MMBTU. IT IS THE ARGUMENT OF THE APGP CL THAT THEY ARE BOUND TO PAY THE DIFFERENTIAL AMOUNT TO GAIL IN 3 D AYS AS PER THE AGREEMENT AS THE LATTER CAN DEMAND DIFFERENTIAL AMO UNT AT ANY TIME WITH 3 DAYS' NOTICE. IN SUPPORT OF ITS CLAIM, APGPC L FILED COPIES OF CORRESPONDENCE BETWEEN ITSELF AND GAIL AUTHORIZING SUPPLY OF GAS BETWEEN THE TWO ENTITIES. ON VERIFYING THE DOCUMENT S, IT IS FOUND THAT THE PROVISION THAT THE ASSESSEE-COMPANY HAD BEEN MA KING IN ITS BOOKS OF ACCOUNTS FOR THE DIFFERENTIAL RATE IN PRIC E OF GAS AT US $ 1.43/MMBTU WAS BASED ON A LETTER FROM GAIL IN F.NO.GAIL/HZO/GAS MKTG/RAVVA SATELLITE GAS/PRICING/ 2008 DATED 29.10.2008 TO THE APGPCL, THE CONTENTS OF WHICH ARE REPRODUCED HERE UNDER: 'IN ACCORDANCE WITH THE PROVISIONS OF THE UPSTREAM CONTRACT, RAVVA JCV HAS SOUGHT REVISION IN THE PRICE OF RAVVA SATEL LITE. GAS AND HAS INDICATED A PRICE OF US $ 5.73/ MMBTU WITH A VALIDI TY OF SUCH PRICE OF 3 YEARS FROM 01.12.2008 ITA NOS. 724/HYD/2018 & 1452/HYD/2019 :- 3 -: YOU MAY KINDLY NOTE THE POSSIBLE INCREASE IN THE PR ICE OF MVVA SATELLITE GAS W.E.F. 01.12.2008' THE ASSESSEE-COMPANY IN REPLY VIDE ITS LETTER NO.APGPCL/HO/F.GAIL/1036 DATED 29.11.2008 HAD STATE D AS FOLLOWS: 'THIS HAS WITH REFERENCE TO YOUR LETTER DATED 28.11 .2008. WE HEREBY AGREE TO GIVE OUR CONSENT FOR SUPPLY OF RAVVA SATEL LITE GAS AT $ 5.73 MMBTU TO OUR POWER PLANTS AT GAS TURBO POWER STATIO N, VIJJESWARAM SUBJECT TO THE OUTCOME OF THE COURT ORDER ON FIXATI ON OF PRICE OF THE SUPPLY OF THE GAS FROM RAVVA SATELLITE' AS CAN BE GATHERED FROM THE ABOVE CORRESPONDENCE, G AIL HAD ONLY INDICATED A POSSIBLE RISE IN PRICE OF RAVVA SATELLI TE GAS FROM US $ 4.3/MMBTU TO US $ 5.73/MMBTU WITH A VALIDITY OF SUC H PRICE FOR 3 YEARS FROM 01.12.2008 IN CASE THERE IS SUCH A PRICE RISE AS INDICATED ABOVE. FROM THE LANGUAGE OF THE LETTER OF GAIL, THE PRICE OF US $ 5.73/MMBTU IS INDICATIVE AND NOT CONCLUSIVE. THE CO NTENTS OF THE APGPCL'S LETTER ALSO INDICATE THAT SUPPLY OF RAVVA SATELLITE GAS AT $ 5.73/MMBTU TO THEIR POWER PLANTS AT GAS TURBO POWER STATION, VIJJESWARAM IS SUBJECT TO THE OUTCOME OF THE COURT ORDER ON FIXATION OF PRICE OF SUPPLY. THUS, THE WHOLE ISSUE OF PRICE RIS E WAS MIRED IN A THICK ELEMENT OF UNCERTAINTY. 6.3 PERUSAL OF SUBSEQUENT CORRESPONDENCE BETWEEN TH E APGPCL AND GAIL SUBMITTED BY THE ASSESSEE-COMPANY IN SUPPORT O F ITS CLAIM REVEALS THAT IT WAS TIME AND AGAIN REITERATED BY GA IL THAT IT WAS IN DISCUSSION WITH RAVVA JV ON THE PRICE REVISION WHIC H IS INCONCLUSIVE AND THAT GAIL SHILL CONTINUE TO PAY FOR THE GAS AT THE PURCHASE PRICE FIXED FOR THE LAST QUARTER I.E. $ 4.3/MMBTU AS STIP ULATED UNDER THE GAIL-RAVVA JV CONTRACT. ACCORDINGLY, THE APGPCL IS REQUIRED TO PAY $4.3/MMBTU TO GAIL. GAIL HAS BEEN REITERATING TIME AND AGAIN THAT IT IS IN DISCUSSION WITH RAVVA JV ABOUT THE PRICE R EVISION, THAT NEGOTIATION WITH RAVVA JV ON THE PRICE REVISION WAS INCONCLUSIVE AND THAT GAIL SHALL CONTINUE PAY FOR THE GAS AT THE PUR CHASE PRICE FIXED FOR THE LAST QUARTER I.E. $ 4.3/MMBTU AS STIPULATED UNDER THE GAIL- RAVVA JV CONTRACT UNTIL THE NEW PRICE HAS BEEN DETE RMINED. ACCORDINGLY, GAIL HAD BEEN RAISING INVOICES ON APGP CL AT US $ 4.30/MMBTU EVERY FORTNIGHT WHICH THE LATTER HAD BEE N PAYING ILL THESE YEARS BUT AT THE SAME TIME MAKING A PROVISION TO THE CREDIT OF GAIL FOR THE DIFFERENTIAL PRICE IN ITS BOOKS OF ACC OUNTS AND DEBITING THE SAME TO THE PROFIT & LOSS ACCOUNTS. 6.4 FURTHER, THINGS AS STOOD ABOVE, IT WAS ALSO INF ORMED BY THE ASSESSEE-COMPANY VIDE ITS LETTER DATED 30.11.2017 T HAT IN RESPONSE TO ITS LETTER SEEKING CLARIFICATION ON THE PRICE RI SE, GAIL, VIDE ITS LETTER DATED 27.02.2017, CONFIRMED THAT THERE WOULD NOT BE ANY REVISION OF PRICE OF NATURAL GAS FROM RAVVA FIELD FOR THE PERIO D 01.12.2008 TO ITA NOS. 724/HYD/2018 & 1452/HYD/2019 :- 4 -: 31.10.2014 AND THE REVISION OF PRICE WILL BE DONE F ROM 01.11.2014 AS THE TALKS ARE INCONCLUSIVE WITH ITS PARTNER CAIRN E NERGY LTD. 6.5 IT IS CLEAR FROM THE CORRESPONDENCE BETWEEN APG PCL AND GAIL THAT THE LATTER ONLY HINTED AT A POSSIBLE REVISION OF PRICE OF NATURAL GAS TO BE SUPPLIED BY IT AND THE FORMER GAVE ITS CO NSENT TO PAY THE SAME IN CASE SUCH A REVISION WERE EVER TO TAKE PLAC E. HOWEVER, NO SUCH REVISION HAD ACTUALLY TAKEN PLACE AND GAIL HAD CONTINUED TO RAISE BILLS AT US $ 4.30/MMBTU OVER THE YEARS INCLU DING THE YEAR UNDER CONSIDERATION IN VIEW OF THE FACT THAT GAIL C ONTINUED TO PAY FOR THE GAS AT THE PURCHASE PRICE FIXED EARLIER I.E. $ 4.3/MMBTU AS STIPULATED UNDER THE GAIL-RAVVA JV CONTRACT. IN THI S BACKGROUND, THE APPARENT APPREHENSION OF THE ASSESSEE-COMPANY THAT IT MAY BE FORCED TO COUGH UP THE DIFFERENTIAL RATE OF US $1.4 3/MMBTU WITHIN A PERIOD OF 3 DAYS APPEARS TO BE WITHOUT ANY BASIS AS THERE IS NO HINT OF 'PAYMENT OF DIFFERENTIAL RATE WITHIN A PERIOD OF 3 DAYS' IN THE CORRESPONDENCE BETWEEN THE TWO. 6.6 IT IS MANIFEST FROM THE ABOVE' DISCUSSION THAT THE ASSESSEE- COMPANY HAS BEEN MAKING A PROVISION FOR THE DIFFERE NTIAL RATE OF US $ 1.43/MMBTU PRESUMING THAT IT MAY HAVE TO PAY UP THE DIFFERENTIAL RATE IN A SHORT SPAN OF TIME WITH A PURPORTED APPRE HENSION THAT FAILURE TO DO SO RESULTS IN DISASTROUS CONSEQUENCES BY WAY OF CUT IN SUPPLY OF NATURAL GAS. BESIDES, ITS OWN PRESUMPTION , THERE IS NOTHING CONCRETE WHICH THE ASSESSEE-COMPANY COULD BRING UP TO SHOW THAT THERE WAS AN ELEMENT OF CERTAINTY ABOUT THE PROVISI ON THAT IT CREATED IN ITS BOOKS OF ACCOUNTS TO THE CREDIT OF GAIL. IN THIS CONTEXT, IT MAY BE RELEVANT TO DISCUSS WHAT CONSTITUTES AN 'ASCERTAINE D LIABILITY' AS LAID OUT BY VARIOUS JUDICIAL FORUMS. THE HON'BLE SUPREME COURT IN THE CASE OF METAL BOX COMPANY OF INDIA LTD V THEIR WORKMEN ( 73 I.T.R. 53) HELD THAT ALTHOUGH THE QUANTIFICATION MAY BE POSTPO NED TO A FUTURE DATE, AS LONG AS THE EVENT IS A CERTAINTY, THE CLAI M FOR DEDUCTION CANNOT BE DENIED BUT WHERE THE LIABILITY ITSELF IS NOT CERTAIN, WHICH MAY HAPPEN OR MAY NOT HAPPEN, SUCH LIABILITIES ARE CONTINGENT IN CHARACTER AND CANNOT BE THE SUBJECT MATTER OF DEDUC TION, EVEN UNDER THE MERCANTILE SYSTEM OF ACCOUNTING. REFERRING TO T HE DECISION OF THE APEX COURT IN SHREE SAJJAN MILLS LTD V CLT. (156 I. T.R 585), THE MADRAS HIGH COURT IN THE CASE OF C.I.T. V. DYNAVISI ON LTD (265 I.T.R 289) HELD, THAT 'THE BASIC REQUIREMENT IS THAT THE AMOUNT SOUGHT TO BE EXCLUDED SHOULD BE AN EXPENDITURE AND THE EXPENDITU RE, WHICH IS DEDUCTIBLE FOR INCOME-TAX PURPOSES, IS ONE WHICH IS TOWARDS A LIABILITY ACTUALLY EXISTING AT THE TIME, BUT THE PUTTING ASID E OF MONEY, WHICH MAY BECOME EXPENDITURE ON THE HAPPENING OF AN EVENT , IS NOT AN EXPENDITURE'. THE ABOVE DECISIONS CLEARLY' BRING OU T THE NATURE OF CONTINGENT LIABILITY VIS-A-VIS AN ASCERTAINED LIABI LITY. IN THE INSTANT CASE, THE ASSESSEE COMPANY CREATING A PROVISION IN FAVOUR OF GAIL TOWARDS THE DIFFERENTIAL PRICE OF NATURAL GAS OF US $ 1.43/MMBTU IN ITS BOOKS OF ACCOUNTS AND DEBITING THE SAME TO THE PROFIT & LOSS ITA NOS. 724/HYD/2018 & 1452/HYD/2019 :- 5 -: ACCOUNT WAS BASED ON AN INDICATIVE PRICE RISE TO BE EFFECTED IN FUTURE BY ITS SUPPLIER, GAIL AS SUGGESTED IN ONE OF ITS CO RRESPONDENCE. THE REVISION OF PRICE SUGGESTED BY GAIL WAS ONLY INDICA TIVE, NEVER CERTAIN AND NO FURTHER PRICE DIFFERENTIAL WAS DEMANDED FROM THE ASSESSEE- COMPANY BY GAIL. 6.7 THE ASSESSEE COMPANY ITSELF STATED THAT TILL DA TE THE GAIL HAS NOT CHARGED TOWARDS DIFFERENTIAL PRICE. IT HAS WRITTEN BACK THE PROVISION WHICH HAS BEEN MADE OVER A PERIOD OF TIME. THE RELE VANT PORTION OF THE SUBMISSION OF THE ASSESSEE AT PAGE 4 OF THE LET TER DATED 30-11- 2017 IS AS UNDER: 'THUS GAIL HAD BEEN INFORMING US IN ITS LETTERS EVE RY TIME THAT THE REVISION OF PRICE OF NATURAL GAS OF RAVVA FIELD WOU LD BE EFFECTIVE FROM 01-12-2008. THUS IN THE SAID LETTER DATED 27-02-201 7 ONLY, IT IS CONFIRMED THAT WE DO NOT HAVE ANY LIABILITY FOR GAS SUPPLIED FROM RAVVA FILED FOR THE PERIOD 01-12-2008 TO 31-10-2014 AND PROVISIONAL PRICE CHARGED AT $4.30/ MMBTU BECOMES FINAL RATE. W E HAD THEREFORE WRITTEN BACK RS.81,20,86,672/ - DUE TO GAIL AS PER OUR BOOKS AND TREATED IT AS INCOME IN THE FINANCIAL YEAR 2016-17 RELEVANT TO ASSESSMENT YEAR 2017-2018 AND PAID TAX THEREON. 7.1 IN THIS BACKGROUND, THE ASSESSMENT MADE BY THE ASSESSING OFFICER IS IN A VERY CASUAL AND MECHANICAL MANNER A ND DESERVES TO BE SET ASIDE ON THE ISSUES MENTIONED ABOVE. ASSESSMENT MADE WITHOUT PROPER ENQUIRY IS HELD AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND THE COMMISSIONER OF INCOME TAX IS E MPOWERED TO REVISE SUCH ASSESSMENT BY INVOKING THE PROVISIONS O F SECTION 263. THERE ARE VARIOUS JUDICIAL DECISIONS IN SUPPORT OF SUCH PROPOSITION WHICH ARE AS UNDER: I.RAMPYARI DEVI SAROGI V S. CIT (SC) 67 ITR 84 II.MALABAR INDUSTRIAL CO. LTD. V S. CIT(SC) 243 ITR 83 III.SWAMP VEGETABLE PRODUCTS INDUSTRIES LTD. VS. CI T (ALL) 187 ITR 412 IV.GEE VEE ENTERPRISES VS. ADDL.CIT & ORS (DEL.) 99 ITR 375 V.RAJALAKSHMI MILLS LTD. VS. ITO (ITAT, SB-CHENNAI) 121 ITD 343, 313 ITR(AT) 182 VI.SRM SYSTEMS & SOFTWARE PVT. LTD. VS. ACIT 2010-T IOL-646-HC- MAD-IT. VII.SHAKTI CREDITS LTD VS. CIT 2015 TAX PUB (DT) 30 58 (LUCK.'A' TRIB) VIII.SHORELINE HOTEL PVT.LTD. V S. CIT 2015 TAX PUB (DT) 2982 (MUM.'E' TRIB.) IX.KAPIL RATAN ASSOCIATES VS CIT 2015 TAX PUB (DT) 2931 (MUM.'A'TRIB) 69 SOT 188 (MUM.) X.SWADESHI VILAS PRIVATE LTD VS. ACIT ITA NO.599/HY D/2013 DT:25- 09-2013. ITA NOS. 724/HYD/2018 & 1452/HYD/2019 :- 6 -: 7.2 THERE WAS INCORRECT APPLICATION OF LAW WHICH CO NSTITUTES AN ERROR AND AS SUCH THE ASSESSMENT IS ERRONEOUS AND PREJUDI CIAL TO THE INTERESTS OF THE REVENUE SINCE THERE IS LOSS OF REV ENUE. IN THIS REGARD, SUPPORT IS DRAWN FROM THE FOLLOWING DECISIONS: I) CIT VS. JAWAHARBHATTACHARJEE, 341 ITR 434 (GAU.) II) JAI BHARATH TANNERS VS. CIT, 264 ITR 673 (MAD.) III) VASHTI MANAGEMENT SERVICES PVT. LTD. VS. ITO ( ITAT, DEL.)(2010- TIOL-642-ITAT-DEL) 7.3 IN THE CASE OF CIT VS. JAWAHARBHATTACHARJEE (SU PRA), THE FOLLOWING RATIO WAS LAID DOWN: JURISDICTION UNDER SECTION 263 CAN BE EXERCISED WH ENEVER IT IS FOUND THAT THE ORDER OF ASSESSMENT WAS ERRONEOUS AND PREJ UDICIAL TO THE INTEREST OF THE REVENUE. CASES OF ASSESSMENT ORDER PASSED ON WRONG ASSUMPTION OF FACTS, OR INCORRECT APPLICATION OF LA W, WITHOUT DUE APPLICATION OF MIND OR WITHOUT FOLLOWING THE PRINCI PLES OF NATURAL JUSTICE ARE NOT BEYOND THE SCOPE OF SECTION 263 OF THE ACT. ' 7.4 IN THE CASE OF JAI BHARATH TANNERS VS. CIT(SUPR A), IT WAS HELD AS UNDER: WE, THEREFORE, HOLD THAT THE APPELLATE TRIBUNAL WA S CORRECT IN HOLDING THAT- THE COMMISSIONER HAS EXERCISED HIS JURISDICTI ON ON PROPER AND VALID GROUNDS AND HE HAS EXERCISED HIS JURISDICTION PROPERLY WHEN HE FOUND THAT THE ASSESSING OFFICER HAD GRANTED DEDUCT ION UNDER SECTIONS 80HDD AND 80HHC OF THE ACT WITHOUT VERIFYI NG THE SAME. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE AP PELLATE TRIBUNAL AND ACCORDINGLY, WE ANSWER THE QUESTION OF LAW REFERRED TO US IN THE AFFIRMATIVE, AGAINST THE ASSESSEE AND IN FAVOUR OF THE REVENUE. NO COSTS. 7.5 IN THE CASE OF VASHTI MANAGEMENT SERVICES PVT. LTD. VS. ITO (SUPRA), ONE OF THE ISSUES WAS WRONG APPLICATION OF PROVISIONS OF SECTION 41(2) IN RESPECT OF PROFITS EARNED ON SALE OF ASSETS IN PLACE OF SECTION 50 AND THE ASSESSING OFFICER ALLOWED BROUGH T FORWARD LOSSES AGAINST SUCH PROFITS CLAIMED U/S 41(2) BY THE ASSES SEE. THE ASSESSING OFFICER DID NOT EXAMINE THE NATURE OF INC OME AND SUBMISSIONS OF THE ASSESSEE WERE NOT GONE INTO DETA IL TO COME TO A CONCLUSION WHETHER THE SUBMISSIONS ARE CORRECT OR N OT. THE HON'BLE ITAT OBSERVED AS UNDER: 'COMING TO THE APPLICABILITY OF SECTION 263, THERE IS NO POSSIBILITY OF TAKING DIFFERENT VIEWS IN THIS MATTER. THE FINDING OF THE LD.CIT IS THAT THE ASSESSING OFFICER SIMPLY IGNORED THE ISSUE INVO LVED DESPITE THERE BEING A SPECIFIC QUERY RAISED BY HIS PREDECESSOR. W E FIND THAT THE ASSESSING OFFICER HAS NOT EXAMINED THE NATURE OF TH E INCOME. HE WAS NOT SURE WHETHER THE SUBMISSIONS OF THE ASSESSEE WE RE CORRECT AS ITA NOS. 724/HYD/2018 & 1452/HYD/2019 :- 7 -: SUCH SUBMISSIONS ONLY APPEARED TO BE CORRECT TO HIM . IN VIEW THEREOF, THE ORDER IS ERRONEOUS AS IT IS NOT BASED UPON APPR ECIATION OF FACTS AND LAW IN THE MATTER AND, IN FACT, IS CONTRARY TO THE DECISION DISCUSSED ABOVE. IT HAS ALSO CAUSED PREDUDICE TO TH E INTEREST OF THE REVENUE AS THERE HAS BEEN LOSS OF REVENUE. THE LD. CIT HAS MERELY RESTORED THE MATTER TO THE ASSESSING OFFICER TO DEC IDE THE MATTER AFRESH AFTER HEARING THE ASSESSEE. WE DO NOT FIND A NY FAULT WITH HIS FINDING. THEREFORE, IT IS HELD THAT THE LD.CIT WAS RIGHT IN HOLDING THE ORDER TO BE ERRONEOUS AND PREJUDICIAL TO THE INTERE ST OF REVENUE ON THIS GROUND. ' 7.6 IN THE CASE OF ERR V S EMERY STONE MANUFACTURIN G COMPANY (213 ITR 843) (RAJ) IT WAS HELD THAT EVEN THOUGH THE ASS ESSEE HAD DISCLOSED ALL THE FACTS BEFORE THE ASSESSING OFFICE R, THE CIT CAN VERY WELL EXERCISE BIS POWER U/ S.263 IF THE CORRECT PRO VISIONS OF LAW HAVE NOT BEEN EXAMINED BY THE ASSESSING OFFICER. 7.7 THE ASSESSING OFFICER, WHILE COMPLETING THE ASS ESSMENT, HAS NOT CAUSED ANY INQUIRY INTO THE NATURE OF PROVISION THA T WAS BEING DEBITED TO THE PROFIT & LOSS ACCOUNT AND ALLOWED TH E SAME AS A DEDUCTION. THUS, THE ORDER PASSED BY THE ASSESSING OFFICER RENDERED ITSELF ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IT MAY BE RELEVANT TO REFER TO THE FOLLOWI NG DECISIONS IN CASE NO PROPER ENQUIRY IS MADE: I. PRAGATHI FINANCIAL MANAGEMENT PVT. LTD. VS CIT ( 386ITR 162) (CAL), II. RAJMANDIR ESTATES PVT. LTD., VS PR.CIT (386 ITR 162)(KOL) III. DANIEL MERCHANTS PVT. LTD., VS ITO(APPEAL(C) N O.23976/2017) (SC) WHEREIN IT WAS HELD THAT THE CIT CAN REVISE THE ASS ESSMENT ORDER WHEN THE ASSESSING OFFICER DOES NOT MAKE PROPER INQ UIRY WHILE MAKING THE ASSESSMENT AND ACCEPTING THE CLAIM OF TH E ASSESSEE FOR A DEDUCTION. 8. IN VIEW OF THE DISCUSSION ABOVE AND THE REASONS MENTIONED IN THE SHOW CAUSE NOTICE, THE ASSESSMENT ORDER DATED 02.03 .2016 PASSED U/ S 143(3) OF THE INCOMETAX ACT FOR A.Y.2013.14 IS FOUND TO BE ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVEN UE. SINCE, THE TWIN CONDITIONS, NAMELY, (I) THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS: AND (II) IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, ARE SATISFIED AND IN ORDER TO SERVE THE INTEREST OF JUSTICE, THE ASSESSMENT ORDER PASSED U/ S 143(3) ON 02.03.2016 NEEDS TO BE SET AS IDE. ACCORDINGLY, I DIRECT THE ASSESSING OFFICER TO REVISE THE ASSESS MENT ORDER PASSED U/ S 143(3) OF THE INCOME-TAX ACT, 1961 DATED 02.03 .2016 AFTER DISALLOWING THE PROVISION OF RS.18, 30,18,9891 DEBI TED TO THE P & L ACCOUNT TOWARDS THE VARIED PRICE OF NATURAL GAS SUP PLIED TO IT BY GAIL WHICH IS CONTINGENT IN NATURE AND THEREFORE, NOT AN ASCERTAINED LIABILITY. ITA NOS. 724/HYD/2018 & 1452/HYD/2019 :- 8 -: 9. IN VIEW OF THE ABOVE DISCUSSION, ASSESSMENT ORDE R DATED 02.03.2016 FOR THE A.Y.2013-14 IN THE CASE OF THE A SSESSEE COMPANY IS SET ASIDE TO REVISE THE INCOME KEEPING IN VIEW T HE ABOVE DIRECTIONS AFTER ALLOWING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE COMPANY. 4. BOTH THE LEARNED REPRESENTATIVES ARE AD IDEM DURING THE COURSE OF HEARING THAT THE LEARNED PCIT HAD ADOPTED THE VERY DETAILED DISCUSSION MUTATIS MUTANDIS IN AY.2014-15 APPEAL ITA NO.1452/HYD/2019 AS WELL. 5. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RIVAL PLEADINGS AGAINST AND IN SUPPORT OF THE PCITS REVISIO N ACTION QUA THE SOLE AND FORMER SUBSTANTIVE ISSUE; ASSESSMENT YEAR - WISE, RESPECTIVELY IN THESE TWIN ASSESSMENT YEARS. WE ARE ADMITTEDLY DEALING WITH THE GIVEN ISSUE OF ASSESSEES PROVISION(S) MADE AND DEBITED TO ITS P&L A/C TOWARDS THE VARIED PRICE OF NATURAL GAS SUPPLIED BY M/S.GAS AUT HORITY OF INDIA LTD. (GAIL). CASE FILES SUGGEST THAT THE VERY ISS UE HAD ARISEN BETWEEN THE PARTIES IN ASSESSEES APPEALS ITA NOS.2092 TO 2094/HYD/2018 FOR AYS.2011-12, 2012-13 AND 2015-1 6 DECIDED ON 19-11-2019. LEARNED CO-ORDINATE BENCH THER EIN HAD ACCEPTED THE VERY NATURE OF PROVISION(S) IN THE S AID ASSESSMENT YEARS TO BE ALLOWABLE VIDE FOLLOWING DETAIL ED DISCUSSION: 9. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE ASSESSEE HAD ENTERED IN TO AN AGREEMENT WITH GAIL FOR SUPPLY OF NATURAL GAS AND G AIL WAS SOURCING THE FUEL/RAW MATERIAL FROM CAIRN ENERGY LT D WHICH ON THE OTHER HAND, WAS SOURCING THE NATURAL GAS FROM I TS RAVVA SATELLITE GAS FIELD. AS PER THE LETTER DATED 29.10. 2008 (WHICH IS PLACED AT PAGE 6 OF THE PAPER BOOK), THERE IS AN IN TIMATION TO THE ASSESSEE FROM GAIL THAT RAVVA JV SOUGHT REVISIO N OF THE GAS PRICE AND HAS INDICATED A PRICE OF $5.73 PER MM BTU WITH A VALIDITY OF SUCH PRICE FOR THREE YEARS FROM 1.12.20 08 AND THAT ITA NOS. 724/HYD/2018 & 1452/HYD/2019 :- 9 -: THE POSSIBLE INCREASE IN THE RATE OF RAVVA SATELLIT E GAS PRICE IS FROM 1.12.2008. IN THE LETTER DATED 28.11.2008, IT ALSO INTIMATED TO THE ASSESSEE THAT THE PRICE OF RAVVA S ATELLITE GAS PRICE HAS BEEN AGREED AT US $ 4.30 PER MMBTU FOR TH E PERIOD 1.10.2006 TO 30.11.2008 AND THAT VIDE LETTER DATED 29.10.2008, IT HAS BEEN INFORMED TO THE ASSESSEE TH AT IN ACCORDANCE WITH THE PROVISIONS OF UPSTREAMING CONTR ACT, RAVVA JV HAS ENTERED INTO, THE RAVVA GAS FIELD HAS INDICA TED A PRICE OF US $ 5.73 PER MMBTU WITH A VALIDITY OF SUCH PRIC E FROM 1.12.2008. IT IS ALSO MENTIONED THAT THE NEGOTIATIO NS WITH RAVVA JV ON THE PRICE REVISION ARE INCONCLUSIVE AND THAT THE SELLER CONTINUES TO SUPPLY GAS FROM RAVVA SATELLITE GAS FIELD TO THE ASSESSEES PLANT AS PER THE LETTER DATED 8.2.20 07 WITH CLEAR UNDERSTANDING THAT, AS AND WHEN, THE AGREEMENT ON R AVVA SATELLITE GAS PRICE IS REACHED WITH RAVVA JV, THE S AME WOULD BE APPLICABLE FOR THE RAVVA SATELLITE GAS SUPPLIED TO THE ASSESSEES PLANT W.E.F. 1.12.2008. IT IS ALSO MENTI ONED THAT THE BUYER I.E. THE ASSESSEE HAS AGREED TO PAY THE PRICE FOR THE GAS AS AGREED TO BETWEEN GAIL AND RAVVA JV. THE ASSESSE E BEING THE PURCHASER, HAD AGREED TO THE PRICE PROPOSED TO BE CHARGED BY THE GAIL AND RAVVA JV. FROM THE SUBSEQUENT COMMUNICATIONS BETWEEN THE ASSESSEE AND GAIL, IT IS SEEN THAT THE DISCUSSIONS WITH RAVVA JV FOR THE REVISION OF P RICE W.E.F. 1.12.2008 FOR THE GAS SUPPLIED FROM RAVVA GAS FIELD IS INCONCLUSIVE. THEREFORE, IT CAN BE REASONABLY CONCL UDED THAT THE ASSESSEE HAD A POSSIBLE LIABILITY TO PAY GAIL $ 5.7 3 PER MMBTU W.E.F. 1.12.2008, EVEN IF THE DISCUSSIONS ON THE PRICE REVISION CULMINATED AT A LATER DATE. THEREFORE, THE ASSESSEES COLLECTING THE CHARGES FROM ITS SHAREHOLDERS/CONSUM ERS @ 5.73 PER MMBTU IS A PRUDENT PRACTICE, AS ADMITTEDLY, THE RE WERE NO RESTRICTIONS ON THE SHAREHOLDERS FROM SELLING/TRANS FERRING THEIR SHARES AND THE NEW SHAREHOLDERS WOULD NOT BE LIABLE TO PAY THE CHARGES FOR THE CONSUMPTION OF POWER BY THE EAR LIER SHAREHOLDERS AND THE ASSESSEE WOULD NOT BE ABLE TO RECOVER THE REVISED CHARGES FROM THE EARLIER SHAREHOLDERS WHO H AD CONSUMED THE POWER. THEREFORE, THE ASSESSEE COLLECT ING THE PRICE AT THE POSSIBLE REVISED PRICE FROM THE CUSTOM ERS CANNOT BE FAULTED. WE FIND THAT THE ASSESSEE HAS MADE A PROVI SION OF THE EXCESS OF THE AMOUNT RECEIVED AND HAS CLAIMED IT AS AN EXPENDITURE DURING THE YEAR OF RECEIPT ITSELF, THOU GH IT HAS NOT MADE THE PAYMENT. THE ALLOWABILITY OF THIS CLAIM IS THE QUESTION BEFORE US. THE LEARNED COUNSEL FOR THE ASS ESSEE HAS RELIED UPON VARIOUS CASE LAWS FOR THE ALLOWABILITY OF SUCH A CLAIM. LET US THEREFORE, SEE THE APPLICABILITY OF T HE SAID CASE LAWS TO THE FACTS OF THE CASE BEFORE US. ITA NOS. 724/HYD/2018 & 1452/HYD/2019 :- 10 -: 10. IN THE CASE OF CALCUTTA CO. LTD (SUPRA), THE AS SESSEE THEREIN WAS DEALING IN LANDED PROPERTY AND CARRIED ON LAND DEVELOPING ACTIVITY AND IN THE COURSE OF THE SAID B USINESS, IT MAINTAINED ITS ACCOUNT ON MERCANTILE SYSTEM. IN THE RELEVANT ACCOUNTING PERIOD, IT HAD SOLD CERTAIN PLOTS AND HA D RECEIVED THE ENTIRE SALE PRICE, BUT IT HAD TO ALSO CARRY OUT DEVELOPMENTS WITHIN SIX MONTHS FROM THE DATE OF SALE. ACCORDINGL Y, IT ESTIMATED A SUM AS EXPENDITURE FOR DEVELOPMENTS TO BE CARRIED OUT IN RESPECT OF THE PLOTS SOLD OUT DURING THE REL EVANT YEAR AND DEBITED THE SAID SUM IN ITS BOOKS OF ACCOUNT AS ACC RUED LIABILITY. THE DEPARTMENT DID NOT ALLOW THE SAID ES TIMATED EXPENDITURE, AND THE MATTER TRAVELLED UPTO THE HON' BLE SUPREME COURT AND THE HON'BLE SUPREME COURT HELD THAT THE A SSESSEE HAD ALREADY UNDERTAKEN A LIABILITY UNDER THE TERMS OF ITS SALE DEEDS OF LANDS IN QUESTION AND THEREFORE, IT WAS AN ACCRUED LIABILITY AND HAD TO DISCHARGE SUCH A LIABILITY AND THEREFORE, IT WAS ENTITLED TO DEBIT THE SAME IN ITS BOOKS OF ACCO UNT IN THE ACCOUNTING YEAR AGAINST THE RECEIPTS WHICH REPRESEN TED SALE PROCEEDS OF SAID LANDS. WE FIND THAT THIS DECISION IS APPLICABLE TO THE ASSESSEE. THE ASSESSEE THEREIN HAD RECEIVED THE INCOME AND HAS ESTIMATED THE EXPENDITURE TOWARDS A LIABILI TY WHICH HAD ACCRUED TO IT AS PER THE TERMS OF THE SALE DEED . IN THE CASE BEFORE US ALSO, THE ASSESSEE HAD SOLD THE POWER GEN ERATED BY IT BY UTILIZING THE FUEL SOURCED FROM RAVVA SATELLI TE GAS FIELD AND AS THE PRICE WAS LIKELY TO BE REVISED, THE LIAB ILITY OF THE ASSESSEE TO PAY THE REVISED PRICE WITH EFFECT FROM THE DATE OF SUPPLY HAD ACCRUED , THOUGH IT HAD TO BE DISCHARGED AT A LATER DATE. THUS, THIS DECISION IS CLEARLY APPLICABLE TO THE ASSESSEE. 11. IN THE CASE OF BHARAT EARTH MOVERS (SUPRA), THE ASSESSEE THEREIN HAD MADE A PROVISION FOR MEETING THE LIABIL ITY TOWARDS LEAVE ENCASHMENT TO BE PAID TO ITS EMPLOYEES PROPO RTIONATE TO THE ENTITLEMENT EARNED BY THE EMPLOYEES OF THE COMP ANY, SUBJECT TO A CEILING ON ACCUMULATION AS APPLICABLE ON RELEVANT DATE. ON THE QUESTION WHETHER THE ASSESSEE WOULD BE ENTITLED TO A DEDUCTION OF SUCH PROVISION OUT OF GROSS RECEI PTS FOR THE ACCOUNTING YEAR DURING WHICH THE PROVISION WAS MADE FOR LIABILITY IN AS MUCH AS THE LIABILITY WAS A CONTING ENT LIABILITY, THE HON'BLE SUPREME COURT HAS HELD THAT THE ASSESSE E WAS ENTITLED TO DO SO. IT WAS HELD THAT THE LIABILITY W AS AN ASCERTAINABLE LIABILITY AS THE ASSESSEE HAD EMPLOYE ES AND THE ACTUAL EMOLUMENTS TO BE PAID TO THEM WAS ASCERTAINA BLE AND THEREFORE, THE PROVISION WHICH HAD TO BE MADE FOR F UTURE LIABILITY, WAS ALLOWABLE AS EXPENDITURE. 12. IN THE CASE OF IBP CO. LTD (SUPRA) ALSO, THE AS SESSEE THEREIN HAD MADE A PROVISION FOR PAYMENT ON FINALIZ ATION OF REVISION OF PAY SCALE AND OTHER BENEFITS TO ITS OFF ICERS. THE ITAT ITA NOS. 724/HYD/2018 & 1452/HYD/2019 :- 11 -: HELD THAT IT WAS DECIDED BY THE GOVT. OF INDIA TO I NCREASE SALARY W.E.F. A CERTAIN DATE IN ACCORDANCE WITH CERTAIN NO RMS AND THEREFORE, LIABILITY FOR SUCH INCREASE HAD DEFINITE LY ARISEN AND COULD NOT BE SAID TO BE A CONTINGENT LIABILITY. 13. IN THE CASE OF INSILCO LTD (SUPRA), THE HON'BLE DELHI HIGH COURT WAS CONSIDERING THE CASE OF AN ASSESSEE WHICH HAD EVOLVED A SCHEME WHEREBY EMPLOYEES WHO RENDERED LON G PERIOD OF SERVICE TO THE ASSESSEE COMPANY WERE MADE ENTITLED TO MONETARY AWARDS AT VARIOUS STAGES OF THEIR EMPLO YMENT EQUIVALENT TO A DEFINED PERIOD OF TIME AND BASED ON ACTUARIAL CALCULATION, THE ASSESSEE MADE A PROVISION FOR LON G SERVICE AWARD PAYABLE TO ITS EMPLOYEES AND CLAIMED DEDUCTI ON OF THE SAME. THE HON'BLE DELHI HIGH COURT HELD THAT SINCE THE PROVISION FOR LONG SERVICE AWARD WAS ESTIMATED BASE D ON ACTUARIAL CALCULATION, THE DEDUCTION CLAIMED BY THE ASSESSEE HAS TO BE ALLOWED. 14. IN THE CASE OF MONICA INDIA (SUPRA), THE ASSESS EE THEREIN HAD PURCHASED IMPORTED GOODS FROM TWO PARTIES AND A S PER THE PURCHASE AGREEMENT, CUSTOMS DUTY PAYABLE BY SELLERS FOR IMPORT, WOULD BE INCLUDED IN THE SALE CONSIDERATION . ACCORDINGLY, THE ASSESSEE HAD CLAIMED DEDUCTION OF CUSTOMS DUTY AS PART OF COST OF GOODS PURCHASED. REVENUE AU THORITIES DENIED DEDUCTION OF CUSTOMS DUTY ON THE GROUND THAT LIABILITY TO PAY CUSTOMS DUTY WAS CONTINGENT LIABILITY AS SELLER /IMPORTERS HAD CHALLENGED THE SAME IN THE SUPREME COURT AND OB TAINED STAY AGAINST THE ADMISSION OF CUSTOMS DUTY. THE HON 'BLE BOMBAY HIGH COURT HELD THAT SINCE THE ASSESSEE HAD LIABILITY TO PAY THE SELLERS THE COST OF CUSTOMS DUTY ON GOODS P URCHASED, IT WAS TO BE BORNE BY THE ASSESSEE PURCHASER, ONLY AND THUS THE ASSESSEE WOULD BE ENTITLED TO DEDUCT THE SAID AMOUN T AS CONSIDERATION PAID FOR GOODS IN THE RELEVANT A.Y, I RRESPECTIVE OF FACT THAT SELLERS/IMPORTERS HAD DISPUTED SUCH A LIA BILITY. 15. LET US NOW CONSIDER THE APPLICABILITY OF CASE L AWS RELIED UPON BY THE LEARNED DR. IN THE CASE LAWS RELIED UPO N BY THE LEARNED DR, WE FIND THAT THE HON'BLE SUPREME COURT IN THE CASE OF ROTORK CONTROLS INDIA (P) LTD, HAS HELD THAT A P ROVISION FOR THE WARRANTY PERIOD IS ALLOWABLE WHERE ITS HISTORIC AL TREND INDICATES THAT IN PAST LARGE NUMBER OF SOPHISTICATE D GOODS WERE BEING MANUFACTURED AND DEFECTS EXISTED IN SOME OF T HE ITEMS MANUFACTURED AND SOLD. IT WAS HELD THAT THE PROVIS ION MADE FOR WARRANTY IN RESPECT OF ARMY OF SUCH SOPHISTICAT ED GOODS WOULD BE ENTITLED TO A DEDUCTION FROM GROSS RECEIPT S U/S 37(1) OF THE ACT. 16. IN THE CASE OF FFE MINERALS INDIA (P) LTD, THE ASSESSEE THEREIN WAS ENGAGED IN THE BUSINESS OF TURNKEY PROJ ECTS, IN ITA NOS. 724/HYD/2018 & 1452/HYD/2019 :- 12 -: WHICH, THE TIME WAS ESSENCE OF CONTRACT. ONE OF THE CONDITIONS ENUMERATED IN THE CONTRACT WAS DELIVERY OF EQUIPMEN T IN TIME, WHICH IF NOT DONE WITHIN STIPULATED TIME, WOULD LEA D TO LIQUIDATED DAMAGES. THE CASE OF THE ASSESSEE THERE IN WAS THAT DURING THE RELEVANT A.Y THERE WAS A DELAY IN DELIVE RY OF MACHINERY AND THUS, LIABILITY TO PAY LIQUIDATED DAM AGES AROSE AND ACCORDINGLY IT MADE A PROVISION FOR THE SAME AN D CLAIMED DEDUCTION U/S 37(1) OF THE ACT. REVENUE REJECTED TH E ASSESSEES CLAIM ON THE GROUND THAT THE LIABILITY TO PAY DAMAG ES DID NOT CRYSTALLIZE IN THE RELEVANT A.Y. THE HON'BLE HIGH C OURT HELD THAT IN THE A.Y IN QUESTION, ONLY NEGOTIATIONS AND DISCU SSIONS TOOK PLACE AND THE FINALLY LIQUIDATED DAMAGES WERE COMPU TED MUCH LATER AND THEREFORE, THE ASSESSMENT ORDER DID NOT R EQUIRE ANY INTERFERENCE. 17. IN THE CASE OF MICROLAND LTD (SUPRA), THE ASSES SEE THEREIN HAD CLAIMED DEDUCTION U/S 37(1) OF THE ACT IN RESPE CT OF PROVISIONS MADE FOR PROVIDING A POSSIBLE FUTURE WAR RANTY CLAIM DURING YEARS OF UNEXPIRED WARRANTY IN RESPECT OF PR ODUCTS SOLD DURING THE ACCOUNTING PERIODS IN QUESTION. THE HON' BLE KARNATAKA HIGH COURT HELD THAT SINCE THERE WAS NOTH ING ON RECORD TO INDICATE THAT ANY SUCH EXPENSES HAVE BEEN INCURRED OR LAID OUT BY THE ASSESSEE AS HAS BEEN CLAIMED BEF ORE THE AUTHORITIES BELOW, THE AO WAS JUSTIFIED IN REJECTIN G THE ASSESSEES CLAIM. IT HAS REPORTED THAT IT WAS THE A SSESSEE WHO HAD NOT PLACED ANY MATERIAL EITHER BEFORE THE AO OR BEFORE THE APPELLATE AUTHORITIES. 18. IN THE CASE OF THERMAX BABCOCK & WILCOX LTD (SU PRA), THE ASSESSEE THEREIN HAD CLAIMED DEDUCTION IN RESPECT O F WARRANTY IN ITS ACCOUNT ON THE GROUND THAT IT WAS UNDER AN O BLIGATION TO REPLACE THE DEFECTIVE COMPONENTS OF BOILERS DURING THE WARRANTY PERIOD AND THAT AMOUNTS PROVIDED REPRESENTED ESTIMA TED LIABILITIES IN RESPECT OF THAT OBLIGATION. WHEN THE LIABILITY UNDER WARRANTY CLAUSE IN CONTRACT DID NOT ACCRUE DURING T HE RELEVANT ACCOUNTING YEARS, MERELY BECAUSE PROVISION HAD BEEN MADE AS PER ACCOUNTING STANDARDS OR THAT IT WAS IN CONSONAN CE WITH ESTABLISHED COMMERCIAL PRINCIPLES, IT COULD NOT BE ALLOWED UNDER THE I.T. ACT. IT WAS FURTHER HELD THAT SINCE NO BOILER HAD BEEN DELIVERED OR COMMISSIONED DURING THE RELEVANT A.Y, THERE WAS NO MATERIAL WITH REFERENCE TO ANY LIABILITY UND ER WARRANTY AND THUS THERE WAS NOT EVEN A SEMBLANCE OF LIABILIT Y DURING THE RELEVANT PERIOD LET ALONE ACCRUED LIABILITY. 19. THE COMMON PRINCIPLES THAT EMERGE FROM THE ABOV E CASE LAWS RELIED UPON BY THE LEARNED COUNSEL AS WELL AS THE REVENUE ARE THAT A PROVISION CAN BE ALLOWED AS A DE DUCTION ONLY IF IT IS AN ASCERTAINED LIABILITY AND IF IT IS COMPUTED ON ITA NOS. 724/HYD/2018 & 1452/HYD/2019 :- 13 -: ACTUARIAL BASIS OR ON THE BASIS OF PAST EXPERIENCE AND THE PROVISION IS MADE ON A SCIENTIFIC BASIS. THE HON'BL E SUPREME COURT IN THE CASE OF ROTORK CONTROLS INDIA (P) LTD (SUPRA) HAS LAID DOWN 4 TESTS FOR ALLOCATING A PROVISION. IT HE LD THAT AS PER THE RECOGNIZED PRACTICE WHEN A PARTY HAS THE PRESEN T OBLIGATION AS A RESULT OF THE PAST EVENTS, SETTLEMENT OF WHICH IS EXPECTED TO RESULT IN AN OUTFLOW OF RESOURCES AND IN RESPECT OF WHICH A RELIABLE ESTIMATE OF THE AMOUNT OF OBLIGATION IS PO SSIBLE, THEN A PROVISION MADE TO MEET SUCH AN OBLIGATION IS ALLOWA BLE U/S 37(1) OF THE ACT. 20. IN THE CASE BEFORE US, WE FIND THAT THERE IS A CASE FOR THE ASSESSEE TO COLLECT THE CHARGES FROM THE CUSTOMERS AT $5.73 PER MMBTU W.E.F. 1.12.2008, BECAUSE AS PER THE INTIMAT ION DATED 29.10.2008 FROM GAIL TO THE ASSESSEE, RAVVA SATELLL ITE JV WAS LIKELY TO REVISE THE PRICE AND THAT SUCH REVISED PR ICE TO $5.73 PER MMBTU IS APPLICABLE W.E.F. 1.12.2008. AFTER SUC H INTIMATION, THE ASSESSEE HAD AGREED TO PAY AT THE F INALLY AGREED REVISED PRICE AND ALSO RECEIVED THE FUEL FRO M RAVVA SATELLITE JV THEREAFTER. THEREFORE, THERE IS AN IMP LICIT OBLIGATION OF THE ASSESSEE TO PAY THE REVISED PRICE, SUBJECT T O THE MAXIMUM OF $ 5.73 PER MMBUT. THUS, THE LIABILITY HA D ACCRUED DURING THE RELEVANT A.YS. THE DISCUSSIONS BETWEEN G AIL AND RAVVA JC ON REVISION OF PRICE CONTINUED, BUT REMAIN ED INCONCLUSIVE TILL FEB.2017, WHEN IT WAS FINALIZED T HAT THE GAIL SHALL CHARGE THE ASSESSEE AT US $ 4.30 PER MMBTU ON LY, TILL 2014 AND THEREAFTER AT $5.73 PER MMBTU. THEREFORE, THE LIABILITY OF THE ASSESSEE TO PAY AT THE REVISED PRI CE IS AN ASCERTAINED LIABILITY AND NOT A CONTINGENT LIABILIT Y AS HELD BY THE REVENUE. THE ASSESSEE WAS LIABLE TO PAY THE R EVISED CHARGES W.E.F. 1.12.2008 BUT THE REVISED CHARGES WE RE NOT FINALIZED THOUGH THE MAXIMUM PRICE WHICH COULD BE R EVISED OR INCREASED WAS MENTIONED IN THE COMMUNICATION FROM G AIL. THE LEARNED DRS SUBMISSIONS THAT THE PRICE IS FIXED BY THE GOVT. IS ALSO STRICTLY NOT CORRECT. FROM PAGE 34 OF THE PAPE R BOOK FILED BY THE ASSESSEE WHICH IS A COPY OF THE NEW DOMESTIC NA TURAL GAS PRICE 2014, DATED 25.10.2014, IT IS SEEN THAT THE C OST OF THE PRICE SHALL BE DETERMINED IN ACCORDANCE WITH THE FO RMULA GIVEN THEREIN AND IT WAS ALSO CLARIFIED THAT THE COST OF THE PRICE SO DETERMINED UNDER THESE GUIDELINES WAS NOT TO BE APP LICABLE WHERE PRICES HAVE BEEN FIXED DIRECTLY FOR A CERTAIN PERIOD OF TIME, TILL THE END OF SUCH PERIOD. THEREFORE, WE AR E OF THE OPINION THAT THE CLAIM OF THE ASSESSEE U/S 37(1) OF THE ACT IS ALLOWABLE PARTICULARLY SINCE THE ASSESSEE ITSELF HAS OFFERED THE CESSATION OF LIABILITY TO TAX IN THE YEAR OF CRYSTALLIZATION. THEREFORE, THE APPEALS OF THE ASSESSEE ARE ALLOWED. ITA NOS. 724/HYD/2018 & 1452/HYD/2019 :- 14 -: 5.1. THERE IS NO DISTINCTION ON FACTS OR LAW; AS THE C ASE MAY BE, FROM THE REVENUE SIDE DURING THE COURSE OF HEARI NG. WE THUS HOLD THAT THE ASSESSING OFFICERS REGULAR ASSESSM ENTS FORMING SUBJECT MATTER OF REVISION HEREIN FRAMED ON 02 -03- 2016 AND 31-08-2016 HAD RIGHTLY NOT DISALLOWED THE AS SESSEES PROVISIONS(S) QUA ITS GAS PRICING. AND THAT THE LEARNED PCIT HEREIN THEREFORE HAS ERRED IN LAW AND ON FACTS IN HOL DING THE SAME TO BE ERRONEOUS ONES CAUSING PREJUDICE TO THE INTE REST OF THE REVENUE. WE MAKE IT CLEAR THAT THE HON'BLE APEX COU RTS LANDMARK DECISION MALABAR INDUSTRIAL CO. VS. CIT [24 3 ITR 83] (SC) HAS SETTLED THE LAW THAT AN ASSESSMENT HAS TO BE BO TH ERRONEOUS AS WELL AS CAUSING PREJUDICE TO INTEREST O F THE REVENUE BEFORE THE CIT OR THE PR.CIT; AS THE CASE MAY BE, ASSUMES SECTION 263 REVISION JURISDICTION. WE THEREFO RE ACCEPT THE ASSESSEES SOLE SUBSTANTIVE GROUND AS WELL IN THE MAIN APPEAL ITA NO.724/HYD/2018 FOR AY.2013-14 AND FORME R SUBSTANTIVE GRIEVANCE TO THIS EFFECT IN AY.2014-15. ITS FORMER APPEAL ITA NO.724/HYD/2018 IS ALLOWED. 6. NEXT COMES THE LATTER ISSUE OF UN-EXPLAINED CASH DEP OSITS OF RS.5,22,416/- FORMING PART OF OTHER EXPENSES AS PER THE PR.CITS DISCUSSION IN PARA 10 IN AY.2014-15S ORDE R. THE ASSESSEES CASE BEFORE US IS THAT THE SAME REPRESENTS CASH DISCOUNT THAN CASH DEPOSITS. WE ARE OF THE OPINION IN THIS FACTUAL BACKDROP THAT THE INSTANT LATTER ISSUE REQUIRES AF RESH FACTUAL VERIFICATION AT THE ASSESSING OFFICERS END. WE THEREFORE UPHOLD THE LEARNED PR.CITS DIRECTIONS IN PRINCIPLE A ND LEAVE IT OPEN FOR THE ASSESSING OFFICER TO CONSIDER AND EXAMIN E THE ITA NOS. 724/HYD/2018 & 1452/HYD/2019 :- 15 -: INSTANT LATTER ISSUE IN AY.2014-15S CONSEQUENTIAL PROC EEDINGS AS PER LAW. THIS LATTER APPEAL ITA NO.1452/HYD/2019 IS PARTLY ALLOWED. 7. TO SUM-UP, ASSESSEES FORMER APPEAL ITA NO.724/HYD/2018 IS ALLOWED AND ITS LATTER APPEAL ITA NO.1452/HYD/2019 IS PARTLY ALLOWED. A COPY OF THIS CO MMON ORDER BE PLACED IN THE RESPECTIVE CASE FILES. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH SEPTEMBER, 2021 SD/- SD/- (LAXMI PRASAD SAHU) (S.S.G ODARA) ACCOUNTANT MEMBER JUDICIAL MEM BER HYDERABAD, DATED: 09-09-2021 TNMM ITA NOS. 724/HYD/2018 & 1452/HYD/2019 :- 16 -: COPY TO : 1.ANDHRA PRADESH GAS POWER CORPORATION LIMITED, #20 1, 2 ND FLOOR, MY HOME SAROVAR PLAZA, SECRETARIAT ROAD, HYDERABAD. 2.THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1(1 ), HYDERABAD. 3.PR.CIT-1, HYDERABAD. 4.D.R. ITAT, HYDERABAD. 5.GUARD FILE.