ACIT, Circle-1(1), Cuttack V. Paradip Port Trust, Jagatsinghpur

ITA 210/CTK/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 5330 (ITAT-CUTTACK)
• Duration Of Justice: 2 year(s) 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2020
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 12-06-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M K GAUTAM
• Assessee Lawyers: J M PATNAIK
• Keywords: Capital asset; Depreciation; Diversion of income
• Section: 13; 22

Judgement Text

P A G E 1 | 11 IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE SHRI CHANDRA MOHAN GARG , JUDICIAL MEMBER AND LAXMI PRASAD SAHU, ACCOUNTANT MEMBER ITA NO S . 210 & 211 /CTK/201 8 ASSESSMENT YEAR S : 2013 - 14 & 2014 - 15 ACIT, CIRCLE 1(1), CUTTACK VS. PARADIP PORT TRUST, PARADIP, DIST: JAGATSINGHPUR PAN/GIR NO. AAALP 0055 A (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI J..M.PATNAIK , AR REVENUE BY : SHRI M.K.GAUTAM, CIT DR DATE OF HEARING : 26 / 0 8 / 20 20 DATE OF PRONOUNCEMENT : 08 / 10 /20 20 O R D E R PER C.M.GARG,JM TH ESE ARE APPEAL S FILED BY THE REVENUE AGAINST THE SEPARATE ORDER S OF THE CIT(A), CUTTACK BOTH DATED 23.3.2018 FOR THE ASSESSMENT YEAR S 2013 - 14 & 2014 - 15, RESPECTIVELY . 2. SINCE FACTS ARE IDENTICAL AND ISSUES ARE COMMON, FOR THE SAKE OF CONVENIENCE, BOTH THE APPEALS WERE HEARD TOGETHER AND ARE DISPOSED OF BY THIS COMMON ORDER. THE REVENUE, MORE OR LESS , HAS TAKEN UP COMMON GROUNDS OF APPEAL FOR BOTH THE ASSESSMENT YEARS. FO R THE SAKE OF BREVITY, GROUNDS OF APPEAL TAKEN FOR AY 20 1 3 - 1 4 ARE EXTRACTED BELOW: - ITA NO S .210 & 211 /CTK/2018 ASSESSMENT YEAR S : 2013 - 14 & 14 - 15 P A G E 2 | 11 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) IS NOT CORRECT IN DELETING THE ADDITION OF RS.285,71,27,417/ - MADE UNDER THE HEAD 'PROVISIONS FOR ACCRU ED EXPENSES' TREATING THE SAME AS ASCERTAINED LIABILITIES WHEN THE LIABILITIES ARE PURELY CONTINGENT LIABILITIES. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) IS NOT CORRECT IN LAW IN DELETING THE ADDITION OF RS.52,69,00,000/ - MADE B Y THE ASSESSING OFFICER ON ACCOUNT OF ACCRUED INTEREST ON INVESTMENT REPLACEMENT, REHABILITATION, MODERNISATION OF CAPITAL ASSETS FUND FOR THE ASSESSMENT YEAR 2013 - 14. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) IS NOT CORRECT IN LAW IN DELETING THE ADDITION OF RS. 41,08,00,000/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ACCRUED INTEREST ON INVESTMENT DEVELOPMENT, REPAYMENT OF LOANS AND CONTINGENCIES FUND FOR THE ASSESSMENT YEAR 2013 - 14. 4. ON THE FACTS AND IN THE C IRCUMSTANCES 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 USE D MAINLY FOR RESIDENTIAL PURPOSE' ENTITLING THEM TO DEPRECIATION @ 10% AS PER RULE - 5 OF I. T. RULES & NEW APPENDIX - L(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 NAMEL Y 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 RS.2,85,71,27,417/ - TREATING THE S AME 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 ITA NO S .210 & 211 /CTK/2018 ASSESSMENT YEAR S : 2013 - 14 & 14 - 15 P A G E 3 | 11 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 INDIA LOAN 16,12,02,795 TOTAL: 285,71,27,417 4. BEFORE THE AO, THE ASSESSEE SUBMITTED THAT THE EXPENSES WERE ACTUALLY PAID IN THE SUBSEQUENT YEARS AND, THEREFORE, THE CLAIM SHOULD BE ALLOWED FOR THE RELEVANT ASSESSMENT YEAR. ACCORDING TO THE AO, THE ASSESSEE COULD NOT SATISFACTORILY EXPLAIN HOW THE SAME CONSTRUED AS ASCERTAINED LIABILITY WHICH CRYSTALISED DURING THE YEAR . IN VIEW OF ABOVE, THE AO DISALLOWED RS.285,71,27,417 / - TREATING THE SAME AS CONTINGENT LIABILITIES. 5. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED APPEAL BEFORE THE LD CIT(A). THE LD CIT(A) DELETED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER, INTER ALIA, OBSERVING AS UNDER: I HAVE CONSIDE RED THE RIVAL SUBMISSION. NOW, A CONTINGENT LIABILITY IS A POTENTIAL LIABILITY THAT MAY OCCUR DEPENDING ON THE OUTCOME OF AN UNCERTAIN FUTURE EVENT. HENCE, WHAT DISTINGUISHES A CURRENT LIABILITY FROM A CONTINGENT ONE IS THAT IN THE FORMER THE EVENT HAS D EFINITELY OCCURRED AND A CERTAIN AMOUNT IS OWED TO THE CREDITOR WHEREAS IN THE LATTER THE OCCURRENCE OF THE EVENT IS UNCERTAIN. ON EXAMINING THE HEADS UNDER WHICH THE ASSESSEE [ HAS RECORDED THE ACCRUED EXPENSES, IT IS CLEAR THAT NO CONTINGENCY OR UNCERTA INTY IS ATTACHED TO THESE EVENTS. IT MIGHT ONLY HAPPEN THAT THE ASSESSEE IS UNABLE TO ESTIMATE WIT! COMPLETE CERTAINTY THE PRECISE AMOUNT OF THE LIABILITY BUT THIS WOULD BY NO MEANS RENDER THE LIABILITY AN UNASCERTAINED ONE SINCE THE OCCURRENCE OF THE EVEN T GIVING RISE TO TH E LIABILITY IS NEVER IN DOUBT. THE INTEREST ON THE LOAN TAKEN BY THE ASSESSEE FROM THE GOVT, O F INDIA WILL ACCRUE FOR PAYMENT EVERY YEAR AS THE LOAN HAS ALREADY BEEN AVAILED OF. LIKEWISE, THE EXPENDITURES UNDER THE HEAD OF AUDIT FEES, ELECTRICITY, PAYMENT TO CONTRACTORS CAN ALS O BE ASCERTAINED WITH HIGH A DEGREE OF PROBABILITY SINCE THESE ARE REGULAR EXPENSES WHICH AR E MANDATORILY INCURRED EVERY YEAR. A STATUTORY AUDIT HAS TO BE CONDUCTED ANNUALLY AN D, THEREFORE THE LIABILITY LI NKED ITA NO S .210 & 211 /CTK/2018 ASSESSMENT YEAR S : 2013 - 14 & 14 - 15 P A G E 4 | 11 WITH IT WILL ALSO ARISE IN THAT YEAR. SIMILARLY, THE OPERATIONS O THE ASSESSEE NECESSITATE THE CONSUMPTIONS OF HEAVY LOADS OF ELECTRICITY AND THE EXPENDITURE RELATED THE SAME WILL BE A CONCRETE, ASCERTAINED LIABILITY. DURING THE APPELLATE PROCEEDINGS, THE COUNSEL FOR THE ASSESSEE ALSO SUBMITTED A CHART TO EVIDENCE THE NATURE OF THESE LIABILITIES AS 'ASCERTAINED' RATHER THAN AS 'CONTINGENT' AS HELD BY THE AO. IN THIS CHART, THE ACTUAL PAYMENTS UNDER THE VARIOUS HEADS IN THE NEXT FINANCIAL YEAR I.E. 01.0 4.2013 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 MAD E IN THE NEXT FINANCIAL YEAR FURTHER SUBSTANTIATES THE ASSESSEE'S STAND. IN VIEW OF THE ABOVE, THE ADDITION OF RS.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 FAILED TO FURNISH THE REASON FOR CLAIMING THE LIABILITY AS EXPENDITURE AS ASCERTAINED LIABILITIES OF THE ASSESSEE, WHICH CRYSTALIZED DURING THE YEAR . LD D.R. FURTHER SUBMITTED THAT THE ASSESSEE HAS ALSO FAILED TO PRODUCE THE DETAILS OF LOANS OBTAINED FROM GOVERNMENT OF INDIA. ITA NO S .210 & 211 /CTK/2018 ASSESSMENT YEAR S : 2013 - 14 & 14 - 15 P A G E 5 | 11 7. REPLYING TO ABOVE, LD A.R. OF THE ASSESSEE SUPPORTING THE ORDER OF THE LD CIT(A) FURTHER SUBMITTED THAT THE ASSESSEE HAS RECORDED THE ACCRUED EXPENSES IN HIS BOOKS OF ACCOUNT, WHEREFROM, IT CAN BE SEEN THAT NO CONTINGENCY OR UNCERTAINTY IS ATTACHED TO THE EVENTS. HENCE, HE P RAYED THAT THE ORDER OF LD CIT(A) BE UPHELD. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS ON RECORD OF THE TRIBUNAL. WE FIND THAT THE ASSESSING OFFICER HAS NEGATED THE CONTENTION OF THE ASSESSEE THAT THE LIABILITIES SHOWN UNDER THE DIF FERENT HEADS WERE ASCERTAINED LIABILITIES. HOWEVER, DURING THE FIRST APPELLATE PROCEEDINGS, THE ASSESSEE HAS SUBMITTED A CHART TO EVIDENT THE NATURE OF THE LIABILITIES AS CURTAINED RATHER THAN AS CONTINGENT. IN THE SAID CHART, THE ACTUAL PAYMENTS HAVE BE EN SHOWN UNDER THE VARIOUS HEADS IN THE NEXT FINANCIAL YEAR I.E. 1.4.2013 TO 31.3.2014. IN VIEW OF ABOVE, LD CIT(A) HELD THAT THESE LIABILITIES ARE ASCERTAINED IN NATURE AS THERE IS NO UNCERTAINTY ABOUT THE OCCURRENCE OF THE EVENTS GIVING RISE TO THESE LI ABILITIES. 9. FROM PERUSAL OF THE CHART, AS REPRODUCED BY THE LD CIT(A) IN TOP PARA AT PAGE 2 OF THE IMPUGNED ORDER, WE OBSERVE THAT THE PROVISION OF RS.1,60,00,000/ - HAS BEEN MADE ON ACCOUNT OF AUDIT FEES BUT AUDIT WORK WILL BE DONE ON CLOSURE OF F.Y. 20 12 - 13 I.E. AFTER 31.3.2013. FOR CLAIMING SUCH PROVISION, THE ASSESSEE HAS TO SHOW THAT SERVICES OF AUDITOR IN THE FORM OF CONTINUOUS AUDIT OR INTERNAL AUDIT WAS TAKEN THEN ALSO CLAIM OF ASSESSEE UPTO THAT EXTENT WILL BE ALLOWABLE AND NOT ENTIRE PROVISION . FROM ITA NO S .210 & 211 /CTK/2018 ASSESSMENT YEAR S : 2013 - 14 & 14 - 15 P A G E 6 | 11 ANOTHER CHART NOTED BY THE LD CIT (A) AT PAGE 3 OF SAME ORDER, IT IS CLEARLY DISCERNIBLE THAT THE ACTUAL AUDIT FEES IS VERY LESS AND RS.1,11,09,645/ - , THUS, THIS ALSO REQUIRES EXAMINATION BY THE AO ABOUT THE TREATMENT OF REMAINING AMOUNT OF EXCESS PROVISION. WITH THESE DIRECTIONS , THE ISSUE OF AUDIT FEES IS RESTORED TO THE FILE OF THE AO. 10. FURTHER, FROM THE SAID TABLES, AT PAGE 2 & 3 OF ORDER FOR A.Y. 2013 - 14, WE ALSO NOTE THAT EXCEPT ELECTRICITY CHARGES AND PAYMENT FOR OTHER CHARGES, THE PROVIS ION UNDER LIABILITY TOWARDS PAYMENT TO CONTRACTORS IS ALSO LESSER AND I.E. RS.14,28,56,664/ - IN COMPARISON TO PROVISION OF RS.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 AVA ILABLE 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 ITA NO S .210 & 211 /CTK/2018 ASSESSMENT YEAR S : 2013 - 14 & 14 - 15 P A G E 7 | 11 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 SIMILAR FACTS AND CIRCUMSTANCES. HENCE, T HE AO IS ALSO DIRECTED TO VERIFY AND EXAMINE THE HEADS OF PROVISION AS PER OUR DIRECTIONS FOR A.Y. 2013 - 14. ACCORDINGLY, GROUND NO.1 OF REVENUE FOR A.Y. 2014 - 15 IS ALSO ALLOWED FOR STATISTICAL PURPOSES. 14 . APROPOS GROUND NOS.2 & 3 OF APPEAL FOR A.Y. 2013 - 14 , THE LD A.R. SUBMITTED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THIS BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2007 - 08 IN ITA NO.099/CTK/2011 ORDER DATED 20.5.2011, COPY OF WHICH IS PLAC ED ON RECORD IN THE PAPER BOOK. HE SUBMITTED THAT LD CIT(A) FOLLOWING THE ORDER OF THE TRIBUNAL HAS DELETED THE DISALLOWANCE OF RS. 52 , 69 ,00,000/ - MADE TOWARDS INTEREST ACCRUED ON INVESTMENT IN REPLACEMENT, REHABILITATION, MODERNISATION OF CAPITAL ASSET FU ND AND RS.4 1 ,0 8 , 00, 000/ - TOWARDS INTEREST ACCRUED ON INVESTMENT OF DEVELOPMENT, REPAYMENT OF LOANS AND CONTINGENCIES FUND. 1 5 . ON THE OTHER HAND, LD D.R. DUTIFULLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 1 6 . ON CAREFUL CONSIDERATION OF THE RIVAL SUBMISSIONS AND PERUSING THE MATERIALS AVAILABLE ON RECORD, WE FIND THAT THE ISSUE IS SQUARELY COVERED IN ITA NO S .210 & 211 /CTK/2018 ASSESSMENT YEAR S : 2013 - 14 & 14 - 15 P A G E 8 | 11 FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2007 - 08(SUPRA), WHICH HAS BEEN FOLLOWED BY THE LD CIT(A) IN THE IMPUGNED ORDER. FURTHER, WE ALSO FIND THAT LD CIT(A) HAS CATEGORICALLY DISCUSSED ON THE ISSUE AND DELETED THE DISALLOWANCE BY OBSERV ING AS UNDER: I HAVE PERUSED THE FACTS OF THE CASE AND THE RIVAL SUBMISSIONS. NOW, FOR AN INCOME TO BE HELD DIVERTED AT SOURCE, CERTAIN CONDITIONS MUST HOLD, NAMELY: I) INCOME IS DIVERTED AT SOURCE. II) THERE IS AN OVERRIDING CHARGE OR TITLE FOR SUCH DIVERSION AND III) THE CHARGE/OBLIGATION IS ON THE SOURCE OF INCOME AND NOT ON THE RECEIVER. IN THE ASSESSEES CASE, THE CAPITAL ASSET REPLACEMENT RESERVE FUND AND THE REPAYMENT OF LOAN AND CONTINGENCY RESERVE FUND WERE CREATED UNDER THE SPECIFIC DIRECTIONS OF THE GOVT, OF INDIA CONTAINED IN ITS MEMO NO. GR - 15024/7/93 - PG DT. 46,06.1994 AND NO. P & F - 25/78 DT. 20.03.1978. AS PER THE SAID DIRECTIONS OF THE GOVT OF INDIA, T HE INTEREST ACCRUING ON THESE FUNDS ALONGWLTH THE CORPUS THEREOF WERE REQUIRED TO BE UTILIZED FOR THE SPECIFIC PURPOSES OF DEVELOPMENT OF THE PORT AND NOT IN CONNECTION WITH THE REGULAR OPERATIONS OF THE ASSESSEE. HENCE, BY THE GOVT, DIRECTIVE, A SPECIFIC CHARGE WAS CREATED BOTH ON THE CORPUS AND THE INTEREST OF THESE FUNDS WHEREBY THE SAME WERE TO BE DIVE RTED 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 O N 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 ITA NO S .210 & 211 /CTK/2018 ASSESSMENT YEAR S : 2013 - 14 & 14 - 15 P A G E 9 | 11 IMMEDIATELY ON ITS ACCRUAL AN D THE ASSESSEE ENJOYS NO DISCRETION WHATSOEVER IN ITS UTILIZATION. IT SHOULD BE MENTIONED HERE THAT THE ITAT, CUTTACK BENCH VIDE ITS ORDER IN ITA NO.099/CTK/2011 DT. 20.05.2011 IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2007 - 08 HAS HELD THAT THE INTE REST ACCRUING ON THESE FUNDS STOOD DIVERTED AT SOURCE AND CANNOT, THEREFORE, HE HELD TO BE THE ASSESSEE'S INCOME. HENCE, IN VIEW OF THE ABOVE MENTIONED COMMENTS, THE ADDITION MADE BY THE AO IN TREATING THE ACCRUED INTEREST ON THESE FUNDS AS THE ASSESSEES INCOME IS HEREBY DELETED. 1 7 . ON PERUSAL OF THE IMPUGNED ORDER, WE ALSO FIND THAT THE LD CIT(A) HAS RELIED ON THE JUDGMENT OF HONBLE SUPREME COURT I N THE CASE OF SITALDAS TIRATHDAS (SUPRA), 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 CAN NOT 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 ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2007 - 08 (SUPRA) HAS BEEN REVERSED. HENCE, WE DO NOT FIND ANY INFIRMITY IN THE OR DER OF THE LD CIT(A) TO INTERFERE, WHICH IS HEREBY UPHELD. GROUND NOS.2 &3 OF APPEAL ARE DISMISSED. 1 8 . GROUND NO.4 FOR A.Y. 2013 - 14 RELATES TO ALLOWANCE OF DEPRECIATION @ 15% ON RAILWAYS AND ROLLING STOCK TREATING THE SAME AS PLANT AND MACHINERY . 1 9 . LD D.R. CONTENDED THAT THE LD CIT(A) IS NOT JUSTIFIED IN ALLOWING DEPRECIATION @ 15% ON RAILWAYS AND ROLLING STOCK , WHARFS , ROADS & ITA NO S .210 & 211 /CTK/2018 ASSESSMENT YEAR S : 2013 - 14 & 14 - 15 P A G E 10 | 11 BOUNDARIES, DOCKS, SEAWALLS & BREAKWATER TREATING THE SAME PLANT AND MACHINERY . LD D.R. SUBMITTED THAT THE ASSETS ON WHICH DEPRECIATION CLAIMED WAS IN THE NATURE OF BUILDING AND NOT PLANT AND MACHINERY . THEREFORE, THE ORDER OF THE LD CIT(A) BE REVERSED. 20 . REPLYING TO ABOVE, LD A.R. SUPPORTED THE ORDER OF LD CIT( A) AND ALSO RELIED ON THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2007 - 08 IN ITA NO.099/CTK/2011 DATED 20.5.2011, WHEREIN, ON SIMILAR FACTS, THE ASSETS WERE TREATED AS PLANT AND MACHINERY, HAS ALLOWED DEPRECIATION @ 15%. 21 . ON CAREFUL CONSIDERATION OF THE RIVAL SUBMISSIONS, WE FIND THAT THE ASSESSING OFFICER HAS ALLOWED DEPRECIATION @ 10% ON RAILWAYS AND ROLLING STOCK, WHARFS, ROADS & BOUNDARIES, DOCKS, SEAWALLS & BREAKWATER TREATING THE SAME AS BUILDING. HOWEVER, LD CIT(A) DIRECTED T HE AO TO ALLOW THE DEPRECIATION @ 15% TREATING THE SAME AS PLANT AND MACHINERY. WE ALSO FIND THAT THE LD CIT(A) HAS ALLOWED THE DEPRECIATION @ 15% FOLLOWING THE DECISION OF THIS BENCH IN THE CASE OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2007 - 08, WHEREIN, T HE TRIBUNAL HAS FOLLOWED THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS DR. B.VENTATRAO, 243 ITR 82 (SC). NO OTHER DECISION WAS PLACED ON RECORD BY LD D.R. TO TAKE A CONTRARY VIEW THAN THE VIEW TAKEN BY ITAT IN ASSESSEES OWN CASE (SUPRA). H ENCE, WE ARE INCLINED TO UPHOLD THE ORDER OF THE LD CIT(A) AND DISMISS GROUND NO.4 OF THE REVENUE. ITA NO S .210 & 211 /CTK/2018 ASSESSMENT YEAR S : 2013 - 14 & 14 - 15 P A G E 11 | 11 22 . GROUND NOS.2 TO 4 OF APPEAL FOR ASSESSMENT YEAR 2014 - 15 ARE SIMILAR TO THE GROUNDS NOS.2 TO 4 OF APPEAL FOR A.Y. 2014 - 15 ON SIMILAR FACTS. AS PER OUR DEC ISION IN ASSESSMENT YEAR 2013 - 14, THESE GROUNDS OF REVENUE ARE DISMISSED. 23 . IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 8 / 10 /20 20 . S D/ - SD/ - (LAXMI PRASAD SAHU) ( CHANDRA MOHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER CUTTACK; DATED 8 / 10 /20 20 B.K.PARIDA, SPS (OS) COPY OF THE ORDER FORWARDED TO : BY ORDER SR . PVT. S ECRETARY ITAT, CUTTACK 1. THE APPELLANT : ACIT, CIRCLE 1(1), CUTTACK 2. THE RESPONDENT. PARADIP PORT TRUST, PARADIP, DIST: JAGATSINGHPUR 3. THE CIT(A) - , CUTTACK 4. PR.CIT - , CUTTACK 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//