Deputy Commissioner of Income Tax, Circle-1, , Kakinada V. SAR Chandra Environ Solutions Private Limited, , Kakinada

ITA 149/VIZ/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0998 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 02-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS SUMAN MALIK
• Keywords: Business expenditure; Difference of opinion; Capital expenditure
• Section: 37(1); 147; 148; 6; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , HONBLE ACCOUNTANT MEMBER ITA NO S . 147 TO 149 / VIZ /201 8 (ASST. YEAR S : 20 1 0 - 11, 2013 - 14 & 2014 - 15 ) DCIT, CIRCLE - 1, KAKINADA. V S . M/S. SAR CHANDRA ENVIRON SOLUTIONS PVT. LTD., 2 ND FLOOR, 2 ND BLOCK, SUBHADRA ARCADE, BHANUGUDI JUNCTION, KAKINADA. PAN NO. AAKCS 0054 K (APPELLANT) (RESPONDENT) C.O.NOS.29 TO 31/VIZ/2018 (ARISING OUT OF ITA NO S . 147 TO 149 / VIZ /201 8) (ASST. YEAR S : 20 10 - 11, 2013 - 14 & 2014 - 15 ) M/S. SAR CHANDRA ENVIRON SOLUTIONS PVT. LTD., 2 ND FLOOR, 2 ND BLOCK, SUBHADRA ARCADE, BHANUGUDI JUNCTION, KAKINADA. VS. DCIT, CIRCLE - 1, KAKINADA. PAN NO. AAKCS 0054 K (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G.V.N. HARI ADV OCATE . DEPARTMENT BY : MRS. SUMAN MALIK SR. DR DATE OF HEARING : 20 / 1 1 /201 8 . DATE OF PRONOUNCEMENT : 28 / 1 1 /201 8 . O R D E R PER V. DURGA RAO, JUDICIAL MEMBER TH E S E APPEAL S BY THE REVENUE AND THE CROSS OBJECTIONS BY THE ASSESSEE ARE DIRECTED AGAINST THE SEPARATE ORDER S OF 2 ITA NO S . 147 - 149/VIZ/2018 C.O.NOS. 29 - 31/VIZ/2018 ( M/S. SAR CHANDRA ENVIRON SOLUTIONS P. LTD. ) COMMISSIONER OF INCOME TAX (APPEALS) - 9 , HYDERABAD , DATED 1 4 /0 2 /201 8, 15/02/2018 & 15/02/2018 FOR THE ASSESSMENT YEARS 20 10 - 11, 2013 - 14 & 2014 - 15 RESPECTIVELY . SINCE THE FACTS AND ISSUES ARE COMMON , CLUBBED AND HEARD TOGETHER AND DISPOSED OF BY WAY OF THIS CONSOLIDATED ORDER F OR THE SAKE OF CONVENIENCE . ITA NO. 147/VIZ/2018. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY, ENGAGED IN THE BUSINESS OF PROVID I NG VESSEL AND SHORE TANK CLEAN ING AND CO LLECTION AND TRANSPORTATION OF DRILLING WASTE AND TREATMENT OF WASTE AND SOBM /DRILL CUTTINGS SO COLLECTED , OFFERS ITS SERVICES TO THE OIL AND GAS DRILLING COMPANIES TO MEET THEIR ENVIRONMENTAL REQUIREMENTS AND HELPS TO COMPLY WITH THE POLLUTION CONTROL BOARD ON DRILLING WASTE DISPOSAL, FILED ITS RETURN OF INCOME BY DECLARING LOSS OF RS. 24,42,259/ - AND THE SAME WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'ACT') . THEREAFTER, ON PERUSAL OF THE BALANCE SHEET, IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE COMPANY HAS MADE PROVISION FOR OPERATIONAL EXPENSES AT RS.63,93,161/ - AND BELIEVED THAT THE SAME BEING INADMISSIBLE , IS CHARGEABLE TO TAX. ACCORDINGLY, HE RE - OPENED THE ASSESSMENT UNDER SECTION 148 OF THE A CT. IN RESPONSE TO THE NOTICE ISSUED BY 3 ITA NO S . 147 - 149/VIZ/2018 C.O.NOS. 29 - 31/VIZ/2018 ( M/S. SAR CHANDRA ENVIRON SOLUTIONS P. LTD. ) THE ASSESSING OFFICER, IT WAS SUBMITTED THAT THE ORIGINAL RETURN FILED BY THE ASSESSEE MAY BE TREATED AS FILED FOR THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT. THE ASSESSEE HAS MADE A DETAILED SUBMISSION BEFORE THE ASSESSING OFFICER PARTICULARLY , ON THE ACCOUNTING STANDARDS NAMELY IAS 18 AND SUBMITTED THAT IN RESPECT OF THE COST PROVISION FOR PROCESSING COST ARE REPRODUCED AS UNDER: - AS STATED ABOVE, THE BUSINESS OF SAR CHANDRA IS TO COLLECT SLOP/SOBM WASTE FROM VESSEL/SHORE TANK TO SKIPS. THE WASTE IS TRANSPORTED TO SAR CHANDRA FACILITY AND THE SLOPS TRANSFERRED TO A STORAGE TANK FOR TREATMENT. SLOPS ARE ALLOWED TO SETTLE OR SOMETIME TO FACILITATE NATURAL SEPARATION OF OIL, WATER AND SEDIMENT PHASES. THIS WASTE IS MECHANICALLY PROCESSED AND TREATED UNDER DIFFERENT STAGES TILL IT REACHES THE LEVELS SET BY POLLUTION CONTROL BOARD (PCB), AND THE FINAL CLEAN WATER CAN BE RE - USED AS WASHING WATER, OR DISCHARGED INTO 'THE G REEN BELT'. THIS IS A WASTE REDUCTION PROCESS. THE TREATED WATER IS USED FOR GREEN BELT DEVELOPMENT AND STORED AND RECYCLED FOR ONGOING BOAT CLEANING/TANK CLEANING REQUIREMENTS. THE TREATED DRILL CUTTINGS WHICH ARE DEVOID OF OIL ARE STORED AND SENT FOR SAF E DISPOSAL IN A LINED PIT. THE TREATED DRILL CUTTINGS WILL HAVE OIL BELOW 10GM/KG AND NO OTHER TOXIC ELEMENTS THUS MEETING THE MOEF GUIDELINES FOR DISPOSAL IN TO LINED PIT. WHEN YOUR ASSESSEE COLLECTS THE WASTE, ENTIRE AMOUNT OF REVENUE WILL BE RECEIVED. HOWEVER EXPENSES FOR THE PROCESSING WILL BE INCURRED LATER WHEN THE ACTUAL PROCESSING STARTS. THE COMPANY HAD TO PROCESS THE WASTE UNDER VARIOUS PROCESSES TO MEET WITH THE REQUIRED STANDARDS. WHEN THE AMOUNT IS RECEIVED FROM THE CLIENTS, THE ENTIRE AMOUNT IS BOOKED AS REVENUE IN THE BOOKS OF ACCOUNTS. HOWEVER, AS PROCESSING OF WASTE WILL TAKE SOME TIME AND IN MANY A TIMES THREE TO SIX MONTHS, AND HENCE SOME PART OF THE WASTE COLLECTED REMAINS AS UNPROCESSED WASTE AT ANY PARTICULAR POINT OF TIME. HENCE, PROV ISION IS CREATED IN THE ACCOUNTS TO MEET THE COSTS OF PROCESSING OF THIS UNPROCESSED WASTE. THE COST OF PROCESSING IS WORKED OUT BASED ON THE REASON FOR MAKING PROVISION FOR DISPOSAL OF REMAINING WASTE @ RS3450 PER TON. 4 ITA NO S . 147 - 149/VIZ/2018 C.O.NOS. 29 - 31/VIZ/2018 ( M/S. SAR CHANDRA ENVIRON SOLUTIONS P. LTD. ) THE GENERAL RULE GOVERNING THE TIMI NG OF DEDUCTIONS IS THAT ANY DEDUCTION IS TO BE TAKEN FOR THE TAXABLE YEAR WHICH IS THE PROPER TAXABLE YEAR UNDER THE METHOD OF ACCOUNTING USED IN COMPUTING TAXABLE INCOME. UNDER THE ACCRUAL METHOD OF ACCOUNTING, DEDUCTIONS ARE TO BE TAKEN WHEN LIABILITIES ARISE. THE EXPENDITURE FOR PROCESSING OF WASTE IS IN THE NATURE OF 'OPERATIONAL EXPENSES' AND IS AN INTEGRAL PART OF PROFIT - EARNING PROCESS AND FULFILLED THE REQUIREMENT OF SECTION 37( 1 ) OF THE ACT. AS PER SECTION 37(1), ANY EXPENDITURE (NOT BEING EXPENDITURE OF THE NATURE DESCRIBED IN SEC 30 TO 36 AND NOT BEING IN THE NATURE OF CAPITAL EXPENDITURE OR PERSONAL EXPENDITURE OF THE ASSESSEE), LAID OUT OR EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OR PROFESSION SHALL BE ALLOWED IN COMPU TING THE INCOME CHARGEABLE UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION'. AS THE PROCESSING IS PRECONDITION FOR RECEIPT OF MONEY FROM CLIENTS, THE EXPENSES PERTAINING TO PROCESSING OF WASTE IS REVENUE EXPENSE. YOUR ATTENTION IS INVITED TO DE CISION OF MADRAS ITAT IN THE CASE OF /TO VS SIFY E - LEARNING. LTD 2009 (124) TTJ 531 . GENERALLY, UNDER AN ACCRUAL METHOD OF ACCOUNTING, BUSINESS EXPENSES ARE DEDUCTIBLE, WHEN BOTH THE FOLLOWING CONDITIONS APPLY: - THE ALL - EVENTS TEST HAS BEEN MET - ECONOM IC PERFORMANCE HAS OCCURRED THE BASIC PURPOSE UNDERLYING THE VALUATION OF THE CLOSING STOCK IS TO BALANCE THE COSTS OF THE GOODS ENTERED ON THE OTHER SIDE OF THE ACCOUNT AT THE TIME OF THEIR PURCHASE OR PRODUCTION, SO THAT BY CANCELLING OUT OF THE ENTRIES , RELATING TO THE SOME STOCK FROM BOTH SIDES OF THE ACCOUNT, WOULD LEAVE ONLY THE TRANSACTIONS ON WHICH THERE HAVE BEEN ACTUAL SALES IN THE COURSE OF THE YEAR SHOWING PROFIT OR LOSS ACTUALLY REALISED ON THE YEAR'S TRADING. THE BASIC PRINCIPLE UNDERLYING TH E VALUATION OF STOCK IS TO GET A CORRECT PICTURE OF THE PROFITABILITY OF THE BUSINESS AND NOT FOR REDUCTION OR ENHANCEMENT OF PROFIT. IT IS MERELY A PROCESS OF CARRYING FORWARD OF COSTS FOR GOODS WHICH ARE YET TO BE SOLD AT THE YEAR END. VALUATION OF STOCK - IN - TRADE IS NOT A SOURCE OF PROFIT, AS LAID BY THE SUPREME COURT IN CHAINRUP SAMPATRAM V. CIT, (1953) 24 ITR 481, 487 (SC). IN THE CASE OF ROTORK CONTROLS INDIA PVT. LTD. (314 ITR 62) WHEREIN THE SC HAS OBSERVED THAT A PROVISION OF LIABILITY IS RECOGNIZED WHEN : (1) AN ENTERPRISE HAS A PRESENT OBLIGATION AS A RESULT OF A PAST EVENT (II) IT IS PROBABLE THAT AN OUTFLOW OF 5 ITA NO S . 147 - 149/VIZ/2018 C.O.NOS. 29 - 31/VIZ/2018 ( M/S. SAR CHANDRA ENVIRON SOLUTIONS P. LTD. ) RESOURC ES WILL BE REQUIRED TO SETTLE THE OBLIGATION (III) A RELIABLE ESTIMATE CAN BE MADE OF THE AMOUNT OF THE OBLIGATION. THE ASSESSEE HAS CREATED THE PROVISION UNDER DISCUSSION AFTER CALCULATING THE EXPENDITURE THAT WOULD BE REQUIRED BE MADE IN ORDER TO PROCES S THE MATERIAL AT HAND AT AN ESTIMATED RATE OF RS. 3450 PER TONNE. UPON STUDYING THE NATURE OF BUSINESS AND THE PROCESS OF MATERIAL HANDLING AND PROCESSING IN RELATION TO THE MONETARY TRANSACTIONS BEING MADE IT IS UNDERSTOOD THAT THE SOBM AND DRILL CUTTING WASTE ARE AKIN TO ANY 'MATERIAL TO BE PROCESSED' IN AN INDUSTRIAL PROCESS THE END RESULT OF WHICH IS PROCESSED WASTE THAT CONFORMS WITH REQUIRED POLLUTION CONTROL NORMS. MERE FACT THAT THIS 'MATERIAL TO BE PROCESSED' BEING AT HAND DOES NOT NECESSARILY MEA N THAT A PROVISION NEEDS TO BE MADE. IF CONSIDERED TO BE A SERVICE BEING PROVIDED, IT WOULD BE SIMILAR TO SEVERAL OTHER SERVICES IN WHICH SERVICE, SUPPORT, OR MAINTENANCE IS DONE AFTER COMPLETION OF THE BUSINESS TRANSACTION OR THE FINANCIAL TRANSACTION BET WEEN THE PARTIES. THIS IN NO WAY CALLS FOR PROVISIONS IN CASE OF ANY OR ALL OF SUCH EXPENSES THAT MAY ARISE. IT IS ONLY A ROUTINE PART OF THE ONGOING BUSINESS. FURTHER, THE ASSESSEE ALSO RELIED UPON THE FOLLOWING JUDICIAL PRONOUNCEMENTS IN SUPPORT OF ITS CLAIM RELATING TO NON - DISALLOWANCE OF THE PROVISION MADE IN RESPECT OF DRILL CUTTING DISPOSAL EXPENSES WHICH ARE PRODUCED AS UNDER: HON'BLE SUPREME COURT IN THE CASE OF CALCUTTA CO. LTD. V. CIT [1959] 37 ITR 1 (SC) HAS HELD THAT THE LIABILITY ON THE ASSESSEE HAVING BEEN IMPORTED, THE LIABILITY WOULD BE AN ACCRUED LIABILITY AND WOULD NOT CONVERT INTO A CONDITIONAL ONE MERELY BECAUSE THE LIABILITY WAS TO BE DISCHARGED AT A FUTURE DATE. THERE MAY BE SOME DIFFICULTY IN THE ESTIMATION THEREOF BUT THAT WOUL D NOT CONVERT THE ACCRUED LIABILITY INTO A CONDITIONAL ONE; IT WAS ALWAYS OPEN TO THE TAX AUTHORITIES CONCERNED TO ARRIVE AT A PROPER ESTIMATE OF THE LIABILITY HAVING REGARD TO ALL THE CIRCUMSTANCES OF THE CASE. LATER THE RATIO IS APPLIED IN THE CASE OF CI T VS VINITEC CORPORATION PVT . LTD 2005 AND HELD THAT PROVISION FOR FUTURE WARRANTY EXPENSES IS ALLOWABLE EXPENSES UNDER SECTION 37 OF THE ACT AND IT IS NOT A CONTINGENT LIABILITY. THUS 'EXPENDITURE' IS NOT NECESSARILY CONFINED TO THE MONEY WHICH HAS BEEN ACTUALLY PAID OUT. IT COVERS A LIABILITY WHICH HAS ACCRUED OR WHICH HAS BEEN INCURRED ALTHOUGH IT MAY 6 ITA NO S . 147 - 149/VIZ/2018 C.O.NOS. 29 - 31/VIZ/2018 ( M/S. SAR CHANDRA ENVIRON SOLUTIONS P. LTD. ) HAVE TO BE DISCHARGED AT A FUTURE DATE. AS HELD BY GAUHATI HIGH COURT IN THE CASE OF MKB (ASIA) P LTD VS CIT 167 TAXMANN 256 (GAU), THE ASSESSEE HAS LIBERTY TO ADOPT ANY RECOGNISED METHOD OF ACCOUNTING FOR ITS BUSINESS AND INCOME SHOULD BE COMPUTED IN ACCORDANCE WITH SUCH REGULAR MAINT AINED ACCOUNTING SYSTEM. INCOME TAX AUTHORITIES HAS NO JURISDICTION TO MEDDLE IN THE MATTER EITHER BY DIRECTING THE ASS ESSEE TO MAINTAIN ITS ACCOUNT IN A PARTICULAR MANNER OR ADOPT A DIFFERENT METHOD FOR VALUING WORK - IN - PROGRESS. HON'BLE SUPREME COURT IN BHARAT EARTH MOVERS VS CIT (2000) 245 ITR 428 (SC) CONSIDERED THE GENERAL PRINCIPLES REGARDING ALLOWANCE OF BUSINESS EX PENDITURE AND THE DIFFERENCE BETWEEN ACCRUED AND CONTINGENT LIABILITIES. IT WAS HELD THAT IF A BUSINESS LIABILITY HAS DEFINITELY ARISEN IN THE ACCOUNTING YEAR, THE DEDUCTION SHOULD BE ALLOWED ALTHOUGH THE LIABILITY MAY HAVE TO BE QUANTIFIED AND DISCHARGE D AT A FUTURE DATE. WHAT SHOULD BE CERTAIN IS THE INCURRING OF THE LIABILITY. IT SHOULD ALSO BE CAPABLE OF BEING ESTIMATED WITH REASONABLE CERTAINTY THOUGH THE ACTUAL QUANTIFICATION MAY NOT BE POSSIBLE. IF THESE REQUIREMENTS ARE SATISFIED THE LIABILITY IS NOT A CONTINGENT ONE. THE LIABILITY IS IN PRESENT THOUGH IT WILL BE DISCHARGED AT A FUTURE DATE. IT DOES NOT MAKE ANY DIFFERENCE IF THE FUTURE DATE ON WHICH THE LIABILITY SHALL HAVE TO BE DISCHARGED IS NOT CERTAIN. HOWEVER, THE ASSESSING OFFICER NOT AGREED WITH THE SUBMISSIONS MADE BY THE ASSESSEE AND BY FOLLOWING THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF BHARAT EARTH MOVERS VS. CIT [(2000) 245 ITR 428 (SC)] AND ALSO BY FOLLOWING HIS OWN ASSESSMENT ORDERS IN ASSESSEES OWN CASES IN THE ASSESSMENT YEARS 2008 - 09, 2009 - 10 & 2011 - 12 HAS ADDED THE PROVISION MADE BY THE ASSESSEE. 3 . ON APPEAL, LD. CIT(A) BY FOLLOWING THE DECISIONS OF THE ITAT, VISAKHAPATNAM BENCH IN ASSESSEES OWN CASES FOR THE ASSESSMENT 7 ITA NO S . 147 - 149/VIZ/2018 C.O.NOS. 29 - 31/VIZ/2018 ( M/S. SAR CHANDRA ENVIRON SOLUTIONS P. LTD. ) YEARS 2 008 - 09, 2009 - 10 & 2011 - 12, DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. 4 . ON BEING AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 5. LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER PASSED BY THE ASSESSING OFFICER. 6 . ON THE OTHER HAND, LD. COUNSEL FOR THE ASSESSEE HAS RELIED ON THE ORDER OF THE LD. CIT(A) AND ALSO THE DECISIONS OF THE ITAT, VISAKHAPATNAM B ENCH IN ASSESSEES OWN CASE S FOR THE ASSESSMENT YEARS 2008 - 09, 2009 - 10 & 2011 - 12. 7. WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND ORDERS OF THE AUTHORITIES BELOW. 8 . THE ONLY ISSUE INVOLVED IN TH IS APPEAL IS THAT WHETHER THE PROVISION MADE BY THE ASSESSEE IN RESPECT OF EXPENDITURE IS ALLOWA B LE DURING THE YEAR UNDER CONSIDERATION OR NOT. T HE CASE OF THE ASSESSEE IS THAT THE ENTIRE CONTRACT RECEIPTS CANNOT BE CONSIDERED YEAR UNDER CONSIDERATION , SINCE THERE IS AN OBLIGATION TO DISCHARGE THE RESPONSIBILITY TO PROCESS THE WASTE MATERIALS. HENCE, THE GROSS CONTRACT RECEIPTS CANNOT BE CONSIDERED NET INCOME OF THE ASSESSEE I.E. , INCOME ARISING FROM THE SAID CONTRACT ALONE CAN BE BROUGHT TO TAX, IN WHICH THE CORRESPONDING 8 ITA NO S . 147 - 149/VIZ/2018 C.O.NOS. 29 - 31/VIZ/2018 ( M/S. SAR CHANDRA ENVIRON SOLUTIONS P. LTD. ) EXPENDITURE IS REQUIRED TO BE ALLOWED AS DEDUCTION. HENCE, THE LIABILITY TO PROCESS THE MATERIALS CONSTITUTE ASCERTAI NED LIABILITY IN PRESENT AND HENCE THE ASSESSEE IS JUSTIFIED IN PROVIDING FOR THOSE EXPENSES IN ORDER TO ARRIVE AT THE NET PROFIT. IN RESPECT OF LIABILITY ALREADY ACCRUED, THE ACTUAL DATE OF INCURRING OF EXPENSES IS IRRELEVANT AND HENCE THE PAYMENT COULD BE POSTPONED IN SUBSEQUENT YEARS. IT IS ALSO THE CASE OF THE ASSESSEE IS THAT THE ASSESSEE HAS REVERSED THE PROVISION IN THE IMMEDIATELY SUCCEEDING YEAR I.E. , THE SAID PROVISION IS OFFERED AS INCOME IN THE SUCCEEDING YEAR IN THE FORM OF REDUCTION OF CORRE SPONDING EXPENDITURE. HE ALSO RELIED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. EXCEL INDUSTRIES LTD., [(2013) 358 ITR 295 (SC)] BEFORE THE TRIBUNAL. THE TRIBUNAL BY CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE AND ALSO BY FO LLOWING THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF EXCEL INDUSTRIES LTD. (SUPRA) , DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. FOR THE SAKE OF CONVENIENCE, THE RELEVANT PORTION OF THE ORDER IS EXTRACTED AS UNDER: - 14. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE RECORD. WE HAVE ALSO CAREFULLY GONE THROUGH THE ORDER PASSED BY THE ID CIT(A). A CAREFUL PERUSAL OF THE IMPUGNED APPELLATE ORDER CLEARLY REVEALS THAT THE LD. CIT(A) HAS CONSIDERED AND ADJUDICATED THE ISSUE, I N QUESTION, AFTER APPRECIATION OF THE FACTS OF THE CASE, MATERIAL AVAILABLE ON RECORD AND VARIOUS JUDICIAL PRECEDENTS. FOR 9 ITA NO S . 147 - 149/VIZ/2018 C.O.NOS. 29 - 31/VIZ/2018 ( M/S. SAR CHANDRA ENVIRON SOLUTIONS P. LTD. ) THE SAKE OF CONVENIENCE, WE EXTRACT THE RELEVANT OBSERVATIONS MADE BY THE ID CIT(A) AT PARAS 4.8 TO 4.12 AS UNDER: '4.8 FROM THE ABOV E, IT CAN BE SEEN THAT IT IS THE RESPONSIBILITY OF THE ASSESSEE TO COLLECT THE WASTE AND DISPOSE IT OFF AFTER TREATMENT AT THE FACILITY OF THE ASSESSEE. THE RESPONSIBILITY OF THE OIL DRILLING COMPANY WITH REGARDS TO POLLUTION CONTROL NORMS IS DISCHARGED ON CE THE WASTE IS REMOVED BY THE ASSESSEE COMPANY FROM THE PREMISES OF OIL DRILLING COMPANY. SUBSEQUENTLY, IT BECOMES THE RESPONSIBILITY OF THE ASSESSEE COMPANY TO TREAT THE SAID WASTE AND DISPOSE IT OFF AS PER THE POLLUTION CONTROL BOARD NORMS. IT IS BECAUS E THE RESPONSIBILITY SHIFTS TO THE ASSESSEE THE ENTIRE AMOUNT IS BILLED TO THE OIL DRILLING COMPANY AS SOON AS THE WASTE IS LIFTED FROM THE DRILLING COMPANY'S PREMISES. THUS ASSESSEE RECEIVES ENTIRE PAYMENT AS SOON AS THE WASTE MATERIAL IS LIFTED. SUCH RECEIPT CANNOT BE DEFER RED BY THE ASSESSEE TO A FUTURE DATE AS THE AMOUNT IS BOTH BILLED AND RECEIVED DURING THE YEAR UNDER CONSIDERATION. HOWEVER PROCESSING OF SAID WASTE TAKES TIME OF THREE MONTHS TO SIX MONTHS. THUS, AS FAR AS THE MATERIAL LIFTED DURING THE LAST THREE MONTHS THE ENTIRE REVENUE IS ACCOUNTED FOR AND THE CORRESPONDING EXPENDITURE NEEDS TO BE MADE IN THE COMING FINANCIAL YEAR. IT IS IN LIGHT OF THIS DELAY IN PROCESSING THE MATERIAL, ASSESSEE HAD TO RESORT TO CERTAIN ESTIMATED DEBIT OF PROCESSING CHARGES. IT IS BAS ICALLY THIS DEBIT WHICH IS THE EYE OF THE CONTROVERSY OF THE PRESENT APPEAL. AS PER THE ASSESSEE'S ARGUMENT THE SAID EXPENDITURE DEBITED IS AN ASCERTAINED LIABILITY AS IT IS THE RESPONSIBILITY OF THE ASSESSEE TO DISPOSE OFF THE WASTE MATERIAL AS PER THE NO RMS OF PCB. HOWEVER AS PER AO THE SAID PROVISION IS ONLY A CONTINGENT LIABILITY TO MEET A FUTURE EXPENDITURE AND HENCE CANNOT BE ALLOWED IN THE YEAR UNDER CONSIDERATION. TO ANSWER THIS QUESTION AS TO WHETHER THE SAID PROVISION IS A CONTINGENT LIABILITY OR AN ASCERTAINED LIABILITY, ONE HAS TO GO THROUGH THE PROVISIONS OF SECTION 37(1). THE LANGUAGE USED IN SECTION 37(1) IS EXPENDITURE LAID OUT OR EXPENDED. THE SAID SECTION PRESCRIBES MANY OTHER CONDITIONS LIKE THE EXPENDITURE NOT BEING IN THE NATURE OF CAPIT AL EXPENDITURE OR PERSONAL EXPENDITURE ETC. AS THERE IS NO DISPUTE ON THESE ISSUES AND AS THE ONLY DISPUTE IS WHETHER THE SAID DEBIT IS AN EXPENDITURE OR NOT, THE DISCUSSION IS BEING CONFINED ONLY TO THAT ASPECT. THE WORDS USED ARE 'LAID OUT' OR 'EXPENDED' , MEANING THEREBY THAT THE EXPENDITURE SHOULD EITHER BE SPENT OR LAID OUT THE MEANING OF WORD EXPENDITURE IS ANALYZED BY THE HON'BLE APEX COURT IN THE CASE OF INDIAN MOLASSES COMPANY (P) LTD AS UNDER: 'EXPENDITURE' IS EQUAL TO 'EXPENSE' AND 'EXPENSE' IS MO NEY LAID OUT BY CALCULATION AND INTENTION THOUGH IN MANY USES OF THE WORD THIS ELEMENT MAY NOT BE PRESENT, AS WHEN WE SPEAK OF A JOKE AT ANOTHER'S EXPENSE. BUT THE IDEA OF 'SPENDING' IN THE SENSE OF 'PAYING OUT OR AWAY' MONEY IS THE PRIMA R Y MEANING AND IT IS WITH THAT MEANING THAT WE ARE CONCERNED. 'EXPENDITURE' IS THUS WHAT IS 'PAID OUT OR AWAY' AND IS SOMETHING WHICH IS GONE IRRETRIEVABLY. 4.9 THE HON'BLE COURT HELD THAT THERE IS A DISTINCTION BETWEEN THE 'CONTINGENT LIABILITY' AND A PAYMENT DEPENDING UPO N A CONTINGENCY'. FURTHER DISTINCTION IS MADE BETWEEN AN ACTUAL LIABILITY IN PRAESENTI AND A LIABILITY DE FUTURE WHICH, FOR THE TIME BEING, IS ONLY CONTINGENT. THE COURT HELD 10 ITA NO S . 147 - 149/VIZ/2018 C.O.NOS. 29 - 31/VIZ/2018 ( M/S. SAR CHANDRA ENVIRON SOLUTIONS P. LTD. ) THAT THE FORMER IS DEDUCTIBLE BUT NOT THE LATTER. THE RECURRING LIABILITY OF PENS ION WHICH IS COMPRESSED INTO A LUMP PAYMENT SHOULD ITSELF BE A LEGAL OBLIGATION, AND THAT, IF CONTINGENT, THE PRESENT VALUE OF THE FUTURE PAYMENTS SHOULD BE FAIRLY ESTIMABLE. IF THE PENSION ITSELF BE NOT PAYABLE AS AN OBLIGATION, AND IF THERE BE A POSSIBIL ITY THAT NO SUCH PAYMENT MAY BE NECESSARY IN THE FUTURES THE WHOLE OF THE AMOUNT CANNOT BE DEDUCTED BUT ONLY THE PRESENT VALUE OF THE FUTURE LIABILITY, IF IT CAN BE ESTIMATED. FROM THE ABOVE OBSERVATIONS, IT CAN BE SEEN THAT THE HON'BLE COURT EXAMINED TWO ISSUES. WITH REGARD TO 'PAYING OUT' IT IS HELD BY HON'BLE COURT THAT EVEN IF THE AMOUNT IS PAID OUT THE REQUIREMENT OF SUCH PAYMENT AS PER LAW NEEDS TO BE EXAMINED AND EVERY PAYMENT AS PER THE ACCOUNTING PRACTICE OF THE ASSESSEE IS NOT ALLOWABLE UNDER INCO ME - TAX LAW. SIMILARLY, WITH REGARD TO THE 'REQUIREMENT OF PAYMENT' IT IS HELD BY THE COURT THAT THE EXPENDITURE WHICH IS DEDUCTIBLE FOR INCOME - TAX PURPOSE IS TOWARDS A LIABILITY ACTUALLY EXISTING AT THAT TIME BUT SETTING APART MONEY WHICH MAY BECOME EXPEND ITURE ON HAPPENING OF AN EVENT IS NOT AN EXPENDITURE. 4.10 IN THE LIGHT OF ABOVE JUDG MENT IT NEEDS TO BE EXAMINED WHETHER THERE IS ANY LIABILITY ACTUALLY EXISTING DURING THE YEAR UNDER CONSIDERATION IN THE CASE OF THE ASSESSEE. AS PER THE FACTS OF THE CASE ONCE THE MATERIAL IS LIFTED ASSESSEE IS DUTY BOUND TO PROCESS THE SAME OR FACE THE CONSEQUENCES OF VIOLATION OF CONTRACT AS WELL AS THE LEGAL CONSEQUENCES FROM PCB. THUS THERE IS NO DOUBT THAT AS ON DATE OF LIFTING THE WASTE MATERIAL ASSESSEE IS LEGALLY A ND CONTRACTUALLY BOUND BY THE LIABILITY OF DISPOSING OFF THE SAID MATERIAL. THUS THE INCOME EARNED BY THE ASSESSEE HAS STRINGS ATTACHED TO IT IN THE FORM OF THE REQUIREMENT OF PROCESSING THE MATERIAL. THEREFORE THE ASSESSEE CANNOT BE SAID TO HAVE EARNED TH E ENTIRE REVENUE WITHOUT INCURRING THE EXPENDITURE ON PROCESSING THE SAME. IN VIEW OF THE ABOVE, THE PROVISION MADE BY THE ASSESSEE ON ESTIMATED BASIS CANNOT BE SAID TO BE A CONTINGENT LIABILITY THOUGH THE SAID EXPENDITURE CANNOT BE FULLY QUANTIFIED AS ON THE GIVEN DATE. INCURRING OF EXPENDITURE IS CONTINGENT UPON LIFTING OF THE WASTE MATERIAL. AS THE SAID CONTINGENCY OF LIFTING OF WASTE MATERIAL HAS HAPPENED DURING THE YEAR, REASONABLE EXPENDITURE RELATABLE TO THE SAME NEEDS TO BE ALLOWED DURING THE YEAR U NDER CONSIDERATION THOUGH THERE CAN BE DIFFERENCE OF OPINION WITH REGARD TO THE FAIR ESTIMATION AS THE SAME. REVERTING BACK TO THE LANGUAGE OF THE SECTION 37(1), THE TWO WORDS USED ARE 'LAID OUT OR 'EXPENDED'. LAW - MAKERS HAVE DELIBERATELY USED THESE TWO WO RDS TO DENOTE THAT LAYING OUT AN AMOUNT AND SPENDING THE SAME ARE NOT ONE AND THE SAME. THE INTENTION OF THE LAW MAKERS THUS IS TO ALLOW THE EX P ENDITURE WHICH IS LAID OUT THOUGH NOT EXPENDED DURING THE YEAR UNDER CONSIDERATION. HAVING SAID SO, ONE HAS TO E XAMINE WHETHER SUCH LAYING OUT IS IN THE NATURE OF CONTINGENT LIABILITY. CONTINGENT LIABILITY DOES NOT CONSTITUTE EXPENDITURE AND CANNOT BE THE SUBJECT MATTER OF DEDUCTION EVEN UNDER MERCANTILE SYSTEM OF ACCOUNTING. EXPENDITURE WHICH IS DEDUCTIBLE FOR INCO ME - TAX PURPOSE IS TOWARDS A LIABILITY ACTUALLY EXISTING AT THE TIME. FOR DETERMINING WHETHER THERE IS AN EXPENDITURE, IT IS NECESSARY TO SEE WHETHER THERE IS AN EXISTING LIABILITY TO PAY OUT MONIES IRRETRIEVABLY. IN CALCUTTA CO LTD CASE (37 ITR 1) THE HON' BLE APEX COURT POINTED THAT A DISTINCTION SHOULD BE 11 ITA NO S . 147 - 149/VIZ/2018 C.O.NOS. 29 - 31/VIZ/2018 ( M/S. SAR CHANDRA ENVIRON SOLUTIONS P. LTD. ) MADE BETWEEN A CONTINGENT LIABILITY WHICH MAY OR MAY NOT ARISE IN FUTURE AND A PRESENT LIABILITY WHICH HAS TO BE PERFORMED IN FUTURE. IN THE LATER CASE THE LIABILITY HAVING ACCRUED IN THE YEAR OF ACCOUNT, THE AMOUNT TO BE EXPENDED IN DISCHARGE OF THAT LIABILITY WOULD HAVE TO BE ESTIMATED IN ORDER THAT UNDER MERCANTILE SYSTEM OF ACCOUNTING THE AMOUNT SO ESTIMATED SHOULD BE DEBITED BEFORE IT IS ACTUALLY DISBURSED. IN THE CASE OF CIT VS. GEMINI CASHEW SALES C ORPN. (65 ITR 643), THE HON'BLE SUPREME COURT OBSERVED THAT, BROADLY STATED, THE PRESENT VALUE ON COMMERCIAL VALUATION OF MONEY TO BECOME DUE IN FUTURE, UNDER A DEFINITE OBLIGATION, WILL BE A PERMISSIBLE OUTGOING OR DEDUCTION IN COMPUTING THE TAXABLE PROFI TS, EVEN IF IN CERTAIN CONDITIONS THE OBLIGATION MAY CEASE TO EXIST BECAUSE OF FORFEITURE OF THE RIGHT. IN DECIDING THE QUESTION WHETHER PRESENT LIABILITY HAS ACCRUED AGAINST THE ASSESSEE ALL THE CIRCUMSTANCES OF THE CASE HAVE TO BE TAKEN INTO ACCOUNT. THE HON'BLE SUPREME COURT IN CALCUTTA CO LTD CASE FURTHER HELD THAT INCOME TAX DEPARTMENT IS PRONE TO CONSIDER WHAT IS NOT PAYABLE DURING THE YEAR IS MERELY CONTINGENT. HOWEVER THE HON'BLE COURT LEFT A WORD OF CAUTION THAT SUCH CONCLUSION IS NOT ALWAYS CORREC T. THE HON'BLE SUPREME COURT IN THE CASE OF BHARAT EARTH MOVERS 245 ITR 428 HELD AS UNDER: 'THE LAW IS SETTLED: IF A BUSINESS LIABILITY HAS DEFINITELY ARISEN IN THE ACCOUNTING YEAR, THE DEDUCTION SHOULD BE ALLOWED ALTHOUGH THE LIABILITY MAY HAVE TO BE QUANTIFIED AND DISCHARGED AT A FUTURE DATE. WHAT SHOULD BE CERTAIN IS THE INCURRING OF THE LIABILITY. IT SHOULD ALSO BE CAPABLE OF BEING ESTIMATED WITH REASONABLE CERTAINTY THOUGH THE ACTUAL QUANTIFICATION MAY NOT BE POSSIBLE. IF THESE REQUIREMENTS ARE SAT ISFIED, THE LIABILITY IS NOT A CONTINGENT ONE. THE LIABILITY IS IN PRAESENTI THOUGH IT WILL BE DISCHARGED AT A FUTURE DATE. IT DOES NOT MAKE ANY DIFFERENCE IF THE FUTURE DATE ON WHICH THE LIABILITY SHALL HAVE TO BE DISCHARGED IS NOT CERTAIN : - 4.11 IT IS AL SO HELD BY VARIOUS COURTS THAT TAXABLE INCOME IS NOT GROSS RECEIPTS BUT PROFITS AND GAINS OF BUSINESS AND PROFIT SHOULD BE UNDERSTOOD IN ITS NATURAL AND PROPER SENSE WHICH NO COMMERCIAL MAN WOULD MISUNDERSTAND. BASED ON THIS PRINCIPLE VARIOUS COURTS HAVE T IME AND AGAIN HELD THAT EVEN WARRANTY EXPENSES WHICH ARE A FUTURE LIABILITY ARE ALLOWABLE EXPENDITURE BASED ON PROPER ESTIMATION. IT IS FURTHER HELD BY VARIOUS COURTS THAT WHERE LIABILITY CLEARLY EXISTS, THE DIFFICULTY IN ESTIMATION OR QUANTIFICATION SHOUL D NOT STAND IN THE WAY OF THE ASSESSEE DEBITING IT OR ELSE TRUE PROFITS CANNOT BE ASCERTAINED. BEFORE A DEDUCTION CLAIMED CAN BE ALLOWED AS EXPENDITURE, IT MUST HAVE BEEN VALUED OR QUANTIFIED AT LEAST PROVISIONALLY. HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS SWARUP VEGETABLE PRODUCTS, 210 ITR 716 WENT TO THE EXTENT OBSERVING THAT THE LIABILITY FOR ADDITIONAL PURCHASE PRICE OF SUGARCANES WAS DEDUCTIBLE UNDER MERCANTILE SYSTEM OF ACCOUNTING BEFORE IT IS QUANTIFIED AND EVEN WHEN SUCH LIABILITY IS DISPU TED AND EVEN IF THE ASSESSEE DOES NOT MAKE ANY PROVISION IN ITS BOOKS OF ACCOUNT. COURTS HAVE OFF LATE BEEN HOLDING THAT THE PRESENT VALUE OF A FUTURE LIABILITY IS AN ALLOWABLE EXPENDITURE PROVIDED ITS PRESENT VALUE IS ASCERTAINABLE ON A SCIENTIFIC BASIS. 12 ITA NO S . 147 - 149/VIZ/2018 C.O.NOS. 29 - 31/VIZ/2018 ( M/S. SAR CHANDRA ENVIRON SOLUTIONS P. LTD. ) 4.12 IN THE LIGHT OF THE ABOVE JUDICIAL PRONOUNCEMENTS IT WOULD BE PERTINENT TO EXAMINE THE FACTS OF THE CASE AGAIN. IN THE CASE OF THE ASSESSEE THERE IS A DEFINITE LIABILITY TO PROCESS AND DISPOSED OFF THE DRILLING WASTE. AS LONG AS THE WASTE MATERIAL IS LYING IN THE COMPOUND OF THE ASSESSEE THERE IS A LEGAL/CONTRACTUAL LIABILITY OF THE ASSESSEE TO PROCESS SUCH MATERIAL. IF ONLY THE RECEIPT OF THE ASSESSEE IS CONSIDERED WITHOUT CONSIDERING THE CORRESPONDING EXPENDITURE RELATED TO THE SAME IT WOULD LEAD TO ABSURD RESULTS IN THE PROFITS OF THE COMPANY. THEREFORE THE ASSESSEE IS OBLIGED TO PROVIDE FOR EXPENDITURE ON THE INCOME WHICH IS ALREADY ACCOUNTED FOR. ASSESSEE IN THE PRESENT CASE HAS DONE SO. FROM THE ESTIMATION OF EXPENDITURE MADE BY THE ASSESSEE IT CA N BE SEEN THAT IT HAS REASONABLY ESTIMATED THE EXPENDITURE TAKING INTO ACCOUNT THE AVERAGE EXPENDITURE OVER A PERIOD OF TIME. THUS THE EXPENDITURE DEBITED IS LESS THAN THE ACTUAL PER TON EXPENDITURE INCURRED DURING THE YEAR UNDER CONSIDERATION. FURTHER THE RE IS NO DISPUTE REGARDING THE BASIS OF ESTIMATION BY THE AO. IT IS ALSO NOT THE ARGUMENT OF THE AO THAT THE SAID ESTIMATION IS DISPROPORTIONATE OR ON HIGHER SIDE. IN VIEW OF THE ABOVE DISCUSSION, I AM OF THE CONSIDERED OPINION THAT GIVEN THE PECULIAR FACT S AND CIRCUMSTANCES OF THE CASE THE PROVISION DEBITED BY ASSESSEE IS IN THE NATURE OF ASCERTAINED LIABILITY AND HENCE IS DEDUCTIBLE. AO IS THUS DIRECTED TO ALLOW THE SAID PROVISION DEBITED.' 15. WE NOTICE THAT THE ORDER PASSED BY LD CIT(A) IS WELL REASONED ONE AND BASED ON PROPER APPRECIATION OF FACTS AND LEGAL POSITION. THE LD CIT(A) HAS NOTICED THAT THE ASSESSEE HAD RECEIVED ENTIRE CONTRACT AMOUNT UPON LIFTING OF THE WASTE MATERIALS. FURTHER THE RESPONSIBILITY TO PROCESS THE MATERIALS IS SHIFTED TO THE AS SESSEE UPON LIFTING OF THE MATERIALS. HENCE, IT MAY NOT BE PROPER TO PRESUME THAT THE ENTIRE CONTRACT RECEIPTS REPRESENT THE INCOME OF THE ASSESSEE, SINCE INCOME REPRESENTS RECEIPTS LESS EXPENDITURE INCURRED OR REQUIRED TO BE INCURRED IN CONNECTION WITH SU CH RECEIPTS. IN THE INSTANT CASE, THE ASSESSEE HAD TO INCUR VARIOUS EXPENSES FOR PROCESSING THE MATERIALS LIFTED BY IT AND HENCE THOSE EXPENSES SHOULD BE CONSIDERED AS THE EXPENDITURE RELATING TO THE CONTRACT RECEIPTS RECEIVED BY THE ASSESSEE. UNDER THE AC COUNTING PRINCIPLES, ALL THE KNOWN EXPENSES, LIABILITIES AND LOSSES HAVE TO BE PROVIDED FOR, IN ORDER TO ARRIVE AT THE NET PROFIT. HENCE WE ARE OF THE VIEW THAT THE PROVISION FOR EXPENSES MADE BY THE ASSESSEE CANNOT BE CONSIDERED TO BE A CONTINGENT LIABILI TY AND IT CAN ONLY BE CONSIDERED TO BE AN ASCERTAINED LIABILITY. 16. THE AO HAS OBSERVED THAT THE ACCOUNTING PRINCIPLES CANNOT OVERRIDE INCOME TAX PROVISIONS. HOWEVER THE SAID OBSERVATION WAS MADE BY THE HON'BLE SUPREME COURT IN THE CASE OF TUTICORIN ALKAL I CHEMICALS AND FERTILISERS LTD (SUPRA) IN THE CONTEXT OF INCOME EARNED DURING THE CONSTRUCTION PERIOD. HERE, WE ARE CONCERNED WITH THE ACCOUNTING PRINCIPLES RELATING TO ASCERTAINING THE 'NET PROFIT', WHERE AS THE HON'BLE SUPREME COURT, IN THE 13 ITA NO S . 147 - 149/VIZ/2018 C.O.NOS. 29 - 31/VIZ/2018 ( M/S. SAR CHANDRA ENVIRON SOLUTIONS P. LTD. ) ABOVE SAID C ASE, DEALT WITH A MATTER RELATING TO TAXABILITY OF INCOME THAT HAS ALREADY ACCRUED. HENCE THE RELIANCE PLACED BY THE AO ON THE ABOVE SAID DECISION IS MISPLACED. THE LD D.R ALSO PLACED RELIANCE ON A NUMBER OF DECISIONS. WE HAVE CONSIDERED THE SAME AND WE AR E OF THE VIEW THAT THE RATIO LAID DOWN IN THOSE CASES IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. IN THE PRESENT CASE, THE UNDISPUTED FACT REMAINS THAT THE CONTRACT RECEIPTS CANNOT BE CONSIDERED TO BE FREE MONEY AVAILABLE WITH THE ASSESSEE, SINCE T HERE IS OBLIGATION TO DISCHARGE THE RESPONSIBILITY TO PROCESS THE WASTE MATERIALS. HENCE THE GROSS CONTRACT RECEIPTS CANNOT CONSIDERED TO BE THE NET INCOME OF THE ASSESSEE, I.E., THE INCOME ARISING FROM THE SAID CONTRACT ALONE CAN BE BROUGHT TO TAX, IN WHI CH THE CORRESPONDING EXPENDITURE IS REQUIRED TO BE ALLOWED AS DEDUCTION. HENCE THE LIABILITY TO PROCESS THE MATERIALS CONSTITUTE ASCERTAINED LIABILITY IN PRAESENTI AND HENCE THE ASSESSEE IS JUSTIFIED IN PROVIDING FOR THOSE EXPENSES IN ORDER TO ARRIVE AT TH E NET PROFIT. IN RESPECT OF LIABILITY ALREADY ACCRUED, THE ACTUAL DATE OF INCURRING OF EXPENSES IS IRRELEVANT AND HENCE THE PAYMENT COULD BE POSTPONED IN SUBSEQUENT YEARS. 17. EVEN OTHERWISE, IT IS SUBMITTED THAT THE ASSESSEE HAS REVERSED THE PROVISION IN THE IMMEDIATELY SUCCEEDING YEAR, I.E., THE SAID PROVISION IS OFFERED AS INCOME IN THE SUCCEEDING YEAR IN THE FORM OF REDUCTION OF CORRESPONDING EXPENDITURE. AS OBSERVED BY HON'BLE SUPREME COURT IN THE CASE OF EXCEL INDUSTRIES LTD. (SUPRA), ACCOUNTING POLIC Y ADOPTED BY THE ASSESSEE IS TAX NEUTRAL IN NATURE. 18. IN VIEW OF ABOVE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE L D . CIT(A) ON THIS ISSUE AND, ACCORDINGLY, WE UPHOLD THE SAME. 9 . THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASES FOR THE ASSESSMENT YEARS 2008 - 09, 2009 - 10 & 2011 - 12 IN ITA NOS.286/VIZ/2012, 333/VIZ/2013 & 285/VIZ/2012 , WE FIND NO REASON TO INTERFERE WITH THE ORDER PASSED BY THE LD. CIT(A). HENCE , THESE APPEALS FILED BY THE REVENUE ARE DISMISSED. 14 ITA NO S . 147 - 149/VIZ/2018 C.O.NOS. 29 - 31/VIZ/2018 ( M/S. SAR CHANDRA ENVIRON SOLUTIONS P. LTD. ) 10 . SO FAR AS APPEALS FOR THE ASSESSMENT YEARS 2013 - 14 & 2014 - 15 ARE CONCERNED, THE FACTS INVOLVED IN THESE APPEALS ARE SIMILAR TO THE FACTS OF ASSESSMENT YEAR 2010 - 11 . T HEREFORE, OUR DECISION IN ASSESSMENT YEAR 2010 - 11 SHA LL APPLY MUTATIS MUTANDIS TO THESE APPEALS ALSO. 1 1 . SO FAR AS CROSS OBJECTIONS ARE CONCERNED, IN VIEW OUR ABOVE DECISION IN THE APPEALS FILED BY THE REVENUE, THE SAME HAVE BECOME INFRUCTUOUS AND ARE DISMISSED ACCORDINGLY. 1 2 . IN THE RESULT, APPEAL S FILED BY THE REVENUE AND THE CROSS OBJECTIONS FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON TH IS 28 TH DAY OF NOV ., 201 8 . SD/ - SD/ - ( D.S. SUNDER SINGH ) ( V. DURGA RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 28 TH NOVEMBER , 201 8 . VR/ - COPY TO: 1. THE ASSESSEE - M/S. SAR CHANDRA ENVIRON SOLUTIONS PVT. LTD., 2ND FLOOR, 2ND BLOCK, SUBHADRA ARCADE, BHANUGUDI JUNCTION, KAKINADA. 2. THE REVENUE DCIT, CIRCLE - 1, KAKINADA. 3. THE PR. CIT - 2, VISAKHAPATNAM 4. THE CIT(A) - 9, HYDERABAD 5. THE D.R . , VISAKHAPATNAM 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.