Madhucon Agra Jaipur Expressways Limited, Hyderabad V. Asst. Commissioner of Income Tax, Circle-16(2), Hyderabad

ITA 1820/Hyd/2017

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 6099 (ITAT-HYDERABAD)
• Duration Of Justice: 4 year(s) 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2021
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: DB-B
• Assessment Year: 2012-2013
• Appeal Filed On: 06-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y V S T SAI
• Keywords: Depreciation; Retrospective amendment
• Section: 143(3)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH “B”, HYDERABAD BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI S.S. GODARA, JUDICIAL MEMBER ITA No. 1820/Hyd/2017 Assessment Year: 2012-13 Madhucon Agra Jaipur Expressways Limited, Hyderabad. PAN: AAECM 4426 F Vs. ACIT, Circle-16(2), Hyderabad. (Appellant) (Respondent) Assessee by: Sri P. Murali Mohan Rao Revenue by: Sri YVST Sai, CIT-DR Date of hearing: 15/12/2021 Date of pronouncement: 20/12/2021 ORDER PER A. MOHAN ALANKAMONY, AM.: This appeal is filed by the assessee against the order of the Ld. CIT (A)-4, Hyderabad in appeal No. 0167/15-16/ACIT, Cir.16(2)/CIT(A)- 4/Hyd/17-18, dated 31/8/2017 passed U/s. 143(3) r.w.s 250(6) of the Act for the AY 2012-13. The assessee has raised 24 grounds in its appeal, and they are extracted herein below for reference: “1. The order of the Ld. CIT (A) is erroneous both on facts and in law. 2. The Ld. CIT (A) erred in not giving proper opportunity of being heard to the appellant. 3. The Ld. CIT (A) erred in not adjudicating the grounds of appeal filed by the appellant before him and by not passing a speaking order on this issue. 2 4. The Ld. CIT (A) ought to have considered the information in the form of paper book which was available on file. 5. The Ld. CIT (A) erred in confirming addition of Rs. 5,98,00,000/- made by the AO towards ‘disallowance of provisions for periodic maintenance’. 6. The Ld. CIT (A) ought to have appreciated the fact that the appellant is under obligation to carry out repairs and refurbishment of tolling system and hardware and other equipment once for every five years and carry out major maintenance work, for which huge expenditure is required to be incurred throughout the concessionaire period. 7. The Ld. CIT (A) ought to have appreciated the matching principle concept in respect of provision for the year under consideration as the need for incurring the expenditure arises over a period of time. 8. The Ld. CIT (A) ought to have appreciated that AO erred in deducting the capital grant of Rs. 38.40 crs without considering clause 23.3 of the agreement between the assessee and the NHAI, wherein it was stated that the amount of grant received by the assessee will be treated as a part of the shareholders fund. 9. The Ld. CIT (A) ought to have appreciated the fact that entire expenditure of Rs. 3,26,70,55,057/- incurred from internal funds and should be taken as the total cost of the project without reducing any grant amount received from NHAI. 10. The Ld. CIT (A) ought to have appreciated the fact that NHAI grant is not for the purpose of acquiring any particular asset and hence it should not be deducted from Cost of Project. 11. The Ld. CIT (A) ought to have appreciated the fact that provision of periodic maintenance in the five years as per the clause no.3.3.7 of the concession agreement with NHAI, the company is required to overlay the entire project expenditure at a stretch once in every 5 th year from the date of commercial operation. 12. The Ld. CIT (A) ought to have appreciated the fact that the provision for periodic maintenance at Rs. 5.98 Crs has been based on the project financial cost of Rs. 20.79 crs as per the PIM report dated Feb 2011 and same should be allowed. 13. The Ld. CIT (A) ought to have appreciated the fact that company has made provision of Rs. 72,08,61,213/- in the five years whereas the actual expenditure has been incurred by the assessee company at Rs. 91,02,10,975/- excess provision was made. 14. The Ld. CIT (A) ought to have appreciated the fact that the appellant is following the significant accounting policies viz., mandatory accounting standards (AS) issued under Companies Accounting Standard Rules, 2006 and relevant provisions of Companies Act, 1956. 15. The Ld. CIT (A) ought to have appreciated the fact that the appellant has prepared financial statements under the historical 3 cost convention on accrual basis and has been following the accounting policies consistently over the years. 16. The Ld. CIT (A) ought to have appreciated the fact that the appellant has created the provision towards periodic maintenance on proportionate basis as per the accrual system of accounting in a scientific manner and therefore it is an ascertained liability and it is an allowable deduction under the provisions of income tax Act. 17. The ld. CIT (A) ought to have appreciated the fact that deduction should be allowed although liability may have to be quantified and discharged at a future date, when it is definite to incur such liability. 18. The Ld. CIT (A) erred in confirming the disallowance of interest paid of Rs. 23,72,500/- which is not correct and bad in law. 19. The Ld. CIT (A) erred in confirming disallowance of depreciation of Rs. 43,17,06,474/- which is not correct. 20. The Ld. CIT (A) ought to have appreciated that the AO erred in applying the CBDT Circular No.09/2014 dated 23/04/2014 which is not applicable in year under consideration as same does not have retrospective effect. 21. The Ld. CIT (A) ought to have appreciated the fact that the assessee claimed depreciation @ 25% on the “carriageways” which is shown under the intangible assets in books of accounts. 22. The Ld. CIT (A) ought to have appreciated the fact the assessee company has not constructed any buildings and roads cannot be considered under building category. 23. The Ld. CIT (A) ought to have appreciated the fact that right to collect toll in concession agreement is an intangible asset under section 32(1)(ii) of the Act and accordingly depreciation should be allowed @ 25%. 24. The appellant may add or alter or amend or modify or substitute or delete and / or rescind all or any of the grounds of appeal at any time before or at the time of hearing of the appeal.” 3. At the outset, the Ld. AR submitted before us by stating that the Ld. CIT (A) has passed ex-parte order without providing proper opportunity to the assessee of being heard. It was therefore pleaded that the matter may be remitted back to the file of the Ld. CIT (A) in order to provide one more opportunity to the assessee of being heard. Ld. DR, on the other hand, vehemently opposed to the submissions of 4 the Ld. AR and argued that sufficient opportunities had been provided to the assessee however, on the given dates of hearing, neither the assessee nor its Representative appeared before the Ld. CIT (A). Therefore the Ld. CIT (A) had no other option but to pass ex-parte order based on the materials available on record. Hence, it was pleaded, that the order passed by the Ld. CIT(A) does not call for any interference. 4. We have heard the rival submissions and carefully perused the materials on record. On examining the facts of the case, We find merit in the submissions of the Ld. DR. The Ld. CIT (A) had posted the case on several occasions. However, none appeared on behalf of the assessee before the CIT(A) on the dates of hearing. Therefore, the Ld. CIT (A) was left with no other option except to adjudicate the appeal ex-parte. In this situation, We do not find much strength in the arguments advanced by the ld. AR. However, considering the prayer of the Ld. AR as well as the issues involved in the appeal, in the interest of justice, We hereby remit the matter back to the file of Ld. CIT (A) in order to consider the appeal afresh on merits by providing one more opportunity to the assessee of being heard. At the same breath, We also hereby caution the assessee to promptly co-operate before the Ld. CIT (A) in the proceedings, failing which the Ld. CIT (A) shall be at liberty to pass appropriate order in accordance with law and merits based on the materials on the record. It is ordered accordingly. 5 5. In the result, appeal filed by the assessee is allowed for statistical purposes as indicated hereinabove. Pronounced in the open Court on the 20 th December, 2021. Sd/- Sd/- (S.S. GODARA) (A. MOHAN ALANKAMONY) JUDICIAL MEMBER ACCOUNTANT MEMBER Hyderabad, Dated: 20 th December, 2021 OKK Copy to:- 1) Madhucon Agra Jaipur Expressways Limited, C/o. P. Murali & Co., Chartered Accountants, 6-3-655/2/3, 1 st Floor, Somajiguda, Hyderabad. 2) Asst. Commissioner of Income Tax, Circle-16(2), Hyderabad. 3) The CIT (A)-4, Hyderabad 4) The Pr. CIT-4, Hyderabad. 5) The DR, ITAT, Hyderabad 6) Guard File