MUMBAI INTERNATIONAL AIRPORT P. LTD, MUMBAI V. ADDL CIT RG 8(2), MUMBAI

ITA 2760/MUM/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1610 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 14-10-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 24-04-2012
• Court: TRIBUNAL
• Department Lawyers: N P SINGH
• Keywords: Capital asset; Business income; Depreciation; Charitable institution; Diversion of income; Earning of tax free income; Proportionate interest; Difference of opinion; Revised return; Revenue expenditure; Capital expenditure
• Section: 143(3); 14A; 37(1); 194C

Judgement Text

, , B, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.3232/MUM/2012 ASSESSMENT YEAR: 2008-09 AD DL. CIT 8(2), R.NO.216-A, AAYAKAR BHAVAN M.K. RD. MUMBAI / VS. MUMBAI INTERNATIONAL AIRPORT P. LTD. 3 RD FLOOR, CORPORATE CENTRE, OPP. HOTEL, LOTUS SUITES, MORAL PIPELINE, ANDHERI KURLA RD. GOLDEN BEACH RUIYA PARK, JUHU MUMBAI-400049 ( REVENUE ) ( RESPONDENT ) P.A. NO. AAECM6285C ITA NO.2760/MUM/2012 ASSESSMENT YEAR: 2008-09 MUMBAI INTERNATIONAL AIRPORT P. LTD. 3 RD FLOOR, CORPORATE CENTRE, OPP. HOTEL, LOTUS SUITES, MORAL PIPELINE, ANDHERI KURLA RD. GOLDEN BEACH RUIYA PARK, JUHU MUMBAI-400049 / VS. ADDL. CIT 8(2), R.NO.216-A, AAYAKAR BHAVAN M.K. RD. MUMBAI (APPELLANT ) ( REVENUE ) P.A. NO. AAECM6285C REVENUE BY SHRI N .P. SINGH ( CIT - D R) ASSESSEE BY SHRI VIJAY MEHTA ( A R) / DATE OF HEARING : 6/09/2016 M/S. MUMBAI INTERNATIONAL AIRPORT 2 / DATE OF ORDER: 30/11/2016 / O R D E R PER ASHWANI TANEJA (ACCOUNTANT MEMBER): THESE CROSS APPEALS HAVE BEEN FILED AGAINST THE ORD ER OF LD. COMMISSIONER OF INCOME TAX(APPEALS) -17 MUMBAI, {(IN SHORT CIT}, DATED 28.02.2012 PASSED AGAINST THE A SSESSMENT ORDER OF THE AO U/S 143(3) DATED 29.12.2010 FOR A.Y . 2008-09. 2. DURING THE COURSE OF HEARING, ARGUMENTS WERE MADE B Y SHRI VIJAY MEHTA, AUTHORISED REPRESENTATIVE (AR) ON BEHA LF OF THE ASSESSEE AND BY SHRI N.P. SINGH, DEPARTMENTAL REPRE SENTATIVE (CIT-DR) ON BEHALF OF THE REVENUE. 3. FIRST WE SHALL TAKE UP APPEAL FILED BY THE REVEN UE IN ITA NO.3232/MUM/2012 FILED ON FOLLOWING GROUNDS: 1.'ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN DELETING TH E DISALLOWANCE OF RS.74,01,325/- INCURRED OIL OF PERIMETER ROAD, TREATED BY THE A() AS CAPITAL EXPENDITURE, WITHOUT CONSIDERING THE FACT THAT THE ENTIRE EXPENDITURE HAS BEEN INCURRED FOR COMPLETE RENOVATION AND REPLACEMENT OF OLD ASSETS'. 2.'ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN DELETING TH E DISALLOWANCE OF REFURBISHMENT EXPENSES IN THE NATUR E OF CIVIL WORKS AMOUNTING TO RS.24,24,34,541/TREATED BY THE AO AS CAPITAL EXPENDITURE, WITHOUT CONSIDERING THE FACT THAT THE ENTIRE EXPENDITURE HAS BEEN INCURRED FOR RENOVATION, EXPANSION AND MODERNIZATION OF THE AIRP ORT'. 3.'ON FACTS AND IN THE CIRCUMSTANCE OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN DELETING THE AD DITION OF RS.4,43,32,547/- MADE BY THE AO U/S. 40(A)(IA), WITHOUT APPRECIATING THAT THE ASSESSEE WAS LIABLE TO DEDUCT TAX TINDER VARIOUS SECTIONS I.E. 194J, 194C AND 195 BUT HAD FAILED TO DO SO'. M/S. MUMBAI INTERNATIONAL AIRPORT 3 4.'ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN DELETING TH E ADDITION OF RS.4,43,32,547/- MADE BY THE AO U/S. 40(A)(IA), WITHOUT APPRECIATING THAT THE ASSESSEE'S TAX AUDITORS HAD POINTED OUT THAT THE SAID AMOUNT IS DISALLOWABLE'. 5.'ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LD. CIT(A), ERRED IN DELETING DISALLOWANCE OF 25% DEPRECIATION ON FEES OF RS.150 CRORES, WITHOUT CONSIDERING THE FACT THAT THE ASSESSEE HAS NOT ACQUIRED ANY ABSOLUTE RIGHTS OVER THE AIRPORT, SO A S TO EQUATE IT WITH A LICENSE, BUT INSTEAD OF THE AAI HA S GRANTED THE ASSESSEE THE RIGHT TO PERFORM CERTAIN FUNCTIONS DURING THE CONTRACT PERIOD OF 30 YEARS AN D HENCE, THE ASSESSEE IS ENTITLED FOR DEDUCTION OF ON LY [LIE PROPORTIONATE AMOUNT I.E.. 1/30 TH OF RS.150 CRORE'. 6.'ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE CIT(A) ERRED IN DELETING THE DISALLOWANCE OF INTEREST OF RS.35,10,000/- (RS.39,00,000 - 10% DEPRECIATION THEREON 35,10,000/-) TREATED BY THE AO AS CAPITAL EXPENDITURE, WITHOUT CONSIDERING THE FACT T HAT THE ASSESSEE HAD FAILED TO SUBSTANTIATE THAT INTERE ST HAS BEEN PROPERLY CAPITALIZED WITH THE COST OF EACH ASS ET TILL THE DATE OF PUTTING IT TO USE AND HENCE THE AO WAS JUSTIFIED IN HOLDING THAT 50% DEPRECIATION ONLY IS ALLOWABLE ON PROPORTIONATE INTEREST ATTRIBUTABLE TO ASSETS INSTALLED DURING THE SECOND HALF OF THE PREV IOUS YEARS.' 7.'ON FACTS AND IN THE CIRCUMSTANCE OF THE CASE AND III LAW, THE CIT(A) ERRED IN DELETING THE DISALLOWA NCE OF LEGAL & PROFESSIONAL CHARGES OF RS.1,72,98,000/- (RS.1,92,00,000 10% DEPRECIATION THEREON =1,72,98,000/-), WITHOUT CONSIDERING THE FACT THAT THE AO WAS JUSTIFIED IN ALLOCATING / APPORTIONING 10% O F THE SAID TOTAL EXPENDITURE OF RS. 19,20,00,000/- TO CAP ITAL WORK IN PROGRESS AND ALLOWING DEPRECIATION THEREON' . 4. GROUND NO.1: IN THIS GROUND, THE REVENUE HAS CONTESTED THE ACTION OF LD. CIT(A) IN DELETING THE DISALLOWAN CE OF RS.74,01,325/- INCURRED BY THE ASSESSEE ON THE STRE NGTHENING M/S. MUMBAI INTERNATIONAL AIRPORT 4 OF PERIMETER ROAD WHICH WAS TREATED BY THE AO AS CA PITAL EXPENDITURE. 4.1. THE BRIEF BACKGROUND OF THE ISSUE IS THAT AS NOTED IN THE ASSESSMENT ORDER, DURING THE YEAR UNDER CONSIDERATI ON, THE ASSESSEE COMPANY WAS ENGAGED IN THE BUSINESS OF PRO VIDING SERVICE OF AN AIRPORT OPERATOR. THE ASSESSEE COMPAN Y HAD TAKEN OVER THE OPERATION OF MUMBAI AIRPORT I.E. CHH ATTRAPATI SHIVAJI INTERNATIONAL AIRPORT W.E.F. 03.05.2006. DU RING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS NOTED BY TH E AO THAT ASSESSEE HAD CLAIMED DEDUCTION OF RS.74,01,325/- AS REVENUE EXPENDITURE INCURRED TOWARDS OPERATION AND MANAGEME NT OF THE AIRPORT. IT WAS SUBMITTED BY THE ASSESSEE THAT THE SAID EXPENDITURE WAS INCURRED TOWARDS STRENGTHENING OF T HE PERIMETER ROAD OF THE AIRPORT PREMISES. THE AO OBSE RVED THAT IMPUGNED EXPENSES WERE ACTUALLY PART OF CAPITAL WOR K IN PROGRESS AND THAT WORK DONE ON PERIMETER ROAD WAS M EANT FOR COMPLETE RENOVATION OF THE OLD ASSETS AND THEREFORE IT CANNOT BE TREATED AS REVENUE EXPENDITURE. IT WAS ALSO OBSE RVED THAT ASSESSEE SHOULD NOT HAVE ADOPTED DIFFERENT POSITION S FOR THE INCOME TAX PURPOSES AND FOR ACCOUNTING PURPOSES. IN VIEW OF ALL THESE REASONS, THIS AMOUNT WAS DISALLOWED. 4.2. BEING AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A) WHEREIN DETAILED SUBMISSIONS WERE FILED. THE SUBMISSIONS MADE BY THE ASSESSEE CAN BE SUMMARIZED AS UNDER: I. THE EXPENDITURE OF RS.74,01,325/- ON STRENGTHENI NG OF PERIMETER ROAD WAS TO MAINTAIN, PRESERVE AN EXISTIN G ASSET, M/S. MUMBAI INTERNATIONAL AIRPORT 5 II. NO NEW ASSET HAS BEEN CREATED, III. NO ADVANTAGE OF ENDURING NATURE HAS BEEN OBTAI NED, IV. THE EXPENDITURE HAS BEEN INCURRED TO UPKEEP, PRESERVE AND MAINTAIN THE EXISTING ASSETS, V. THE ASSET WAS ALREADY IN USE EARLIER BUT BECAUSE OF ITS WEAR AND TEAR WITH THE PASSAGE OF TIME NEEDED REPAI RS, VI. THE QUESTION OF ALLOWABILITY OF A PARTICULAR EX PENDITURE EITHER AS CAPITAL OR REVENUE HAS TO BE JUDGED INDEPENDENTLY AND ITS CAPITALIZATION IN THE BOOKS O F ACCOUNT HAS NO BEARING ON THE CLAIM OF THE SAID EXPENDITURE AS REVENUE, VII. ONE OF TERMS AND CONDITIONS OF THE OMDA IS IN RESPECT OF MAINTENANCE OF THE ASSETS OF THE AIRPORT AND FOR ITS OVERALL UPKEEP. 4.3. LD. CIT(A) CONSIDERED THE ORDER OF THE AO AS WELL AS DETAILED SUBMISSIONS MADE BY THE ASSESSEE AND DECID ED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING IT TO BE REVENUE EXPENDITURE. IT WAS HELD BY THE LD. CIT(A) THAT THE IMPUGNED EXPENSES RELATED TO REPAIR OF THE PERIMETER ROAD WHICH WAS ONLY FOR MAINTAINING AN EXISTING ASSET AND DID NOT RESULT INTO CREATION OF A NEW ASSET. 4.4. BEING AGGRIEVED, THE REVENUE BROUGHT THE MATTER BE FORE THE TRIBUNAL. DURING THE COURSE OF HEARING, BOTH TH E PARTIES UNANIMOUSLY SUBMITTED THAT IDENTICAL ISSUE IN A.Y. 2007-08 HAD REACHED BEFORE THE TRIBUNAL AND THERE IS NO DIS TINCTION IN FACTS OR LEGAL POSITION AND THEREFORE, THE DECISION OF THE TRIBUNAL IN EARLIER YEAR CAN BE APPLIED IN THIS YEA R ALSO. M/S. MUMBAI INTERNATIONAL AIRPORT 6 4.5. WE HAVE GONE THROUGH THE ORDERS PASSED BY THE LOWE R AUTHORITIES AS WELL AS DECISIONS OF THE TRIBUNAL FO R THE EARLIER YEARS. IT IS NOTED THAT IN A.Y. 2007-08 ALSO THE AS SESSEE HAD MADE CLAIM OF THE TRIBUNAL EXPENSES ON RENOVATION O N PERIMETER ROAD OF THE AIRPORT PREMISES AND CLAIM WA S MADE IN THE SIMILAR FASHION BY CAPITALIZING SAME IN THE BOO KS OF ACCOUNT, BUT CLAIMED THE SAME AS REVENUE EXPENDITUR E IN THE INCOME TAX RETURN. THE TRIBUNAL VIDE ITS ORDER DATE D 14.02.2014 IN ITA NO.7111/MUM/2011 DECIDED THIS ISS UE IN FAVOUR OF THE ASSESSEE BY HOLDING THAT THESE EXPENS ES ARE REVENUE IN NATURE AND CANNOT BE TREATED AS CAPITAL IN NATURE MERELY BECAUSE THE ASSESSEE IN ITS BOOKS OF ACCOUNT HAD GIVEN TREATMENT OF IT AS CAPITAL IN NATURE. THE RELEVANT PART OF OBSERVATIONS OF THE TRIBUNAL REPRODUCED BELOW: WE HAVE CAREFULLY CONSIDERED THE ORDERS OF AUTHOR ITIES BELOW AND THE SUBMISSION OF LD. REPRESENTATIVES OF THE PARTIES. WE OBSERVE THAT THE AUTHORITIES BELOW HAVE CONSIDERED THE SAID EXPENDITURE AS CAPITAL MAINLY F OR THE REASONS THAT THE ASSESSEE ITSELF HAS CATEGORIZED TH AT EXPENDITURE IN ITS BOOKS OF ACCOUNT AS CAPITAL IN N ATURE. IN DETERMINING WHETHER THE EXPENDITURE IS A CAPITAL EXPENDITURE OR REVENUE EXPENDITURE, ONE HAS TO TAKE INTO CONSIDERATION THE FACTS AND NATURE OF EXPENDITURE T O DECIDE WHETHER IT IS MADE FOR THE INITIATION OF BUSINESS O R EXTENSION OF BUSINESS OR SUBSTANTIALLY REPLACEMENT OF EXISTING EQUIPMENT AND TREATMENT GIVEN IN BOOKS OF ACCOUNTS COULD NOT DECIDE THE NATURE OF EXPENDITURE . THE EXPENDITURE WOULD BE CAPITAL IF THE EXPENDITURE HAS BEEN INCURRED TO CREATE NEW ASSETS. HOWEVER, IT WILL BE REVENUE IN NATURE, IF INCURRED MERELY IN FACILITATING ASSES SEES OPERATION OR ENABLE ASSESSEES BUSINESS TO BE CARRI ED ON EFFECTIVELY, WHILE LEAVING CAPITAL UNTOUCHED. THE S IMILAR VIEW IS TAKEN BY THE HONBLE APEX COURT IN THE CASE OF CIT V/S ASSOCIATED CEMENT COMPANIES LTD. (1988) 172 ITR 257 (SC). IF THE EXPENDITURE INCURRED DOES NOT BRIN G INTO M/S. MUMBAI INTERNATIONAL AIRPORT 7 EXISTENCE ANY NEW ASSETS BUT ONLY FACILITATE OPERAT ION TO ENSURE THAT THE EXISTING RUNWAY IS MAINTAINED PROPE RLY ENSURING SAFETY OF THE AIRCRAFT OR PASSENGER AND AL SO AIRPORT PREMISES AND NO NEW ASSET HAS COME INTO EXISTENCE THE EXPENDITURE IS REVENUE IN NATURE. WE ARE OF THE CONSIDERED VIEW THAT IT CANNOT BE SAID THAT BY INCURRING THE EXPENDITURE DETAILS GIVEN HEREINABOVE , A NEW ASSET HAS COME INTO EXISTENCE GIVING RISE TO THE AS SESSEE OF ENDURING BENEFITS. THERE IS NO DISPUTE TO THE FACT THAT THE SAID RUNWAY /AIRPORT PREMISES DOES NOT BELONG TO ASSESSEE BUT BELONG TO AAI AND THE ASSESSEE IS RE QUIRED TO MAINTAIN THE SAME UNDER OMDA. WE ARE OF THE CONSIDERED VIEW THAT THE SAID EXPENDITURE HAS BEEN INCURRED BY ASSESSEE ONLY FOR THE PURPOSE OF CARRYI NG OUT ITS ONE OF THE OBJECT TO RENOVATE AND/OR REPAIR EXI STING RUNWAY. THE HONBLE BOMBAY HIGH COURT IN THE CASE O F NEW SHORROCK SPG. & MFG. CO. LTD. V/S CIT (1956) 30 ITR 338 (BOM.) HAS HELD THAT THE THE EXPRESSION CURRE NT REPAIRS MEANS EXPENDITURE ON BUILDING, MACHINERY, PLANT OR FURNITURE WHICH IS NOT FOR THE PURPOSE OF RENEWA L OR RESTORATION BUT WHICH IS ONLY FOR THE PURPOSE OF PR ESERVING AND MAINTAINING AN ALREADY EXISTING ASSET WHICH DOE S NOT BRING NEW ASSET INTO EXISTENCE OR DOES NOT GIVE THE ASSESSEE NEW OR DIFFERENT ADVANTAGE. WE OBSERVE THA T THE SAID EXPENDITURE HAS BEEN INCURRED ONLY FOR RESURFA CING THE LAYER OF THE RUNWAY AND TO PUT NEW TILES TO REP LACE FLOORS. THEREFORE, IT CANNOT BE SAID THAT EXPENDITU RE IS IN THE NATURE OF CAPITAL AS IT DOES NOT BRING INTO EXI STENCE ANY NEW ASSET, LEAVING ASIDE THE FACT THAT THE SAID RUN WAY /PREMISES IS NOT OWNED BY ASSESSEE. NO DOUBT, THE ASSESSEE IS TO REDESIGN, UPGRADE, MODERNIZE AND ALS O TO OPERATE AND MAINTAIN AIRPORT BUT THE EXPENDITURE UN DER CONSIDERATION HAS BEEN INCURRED ONLY TO ENSURE THAT THE EXISTING ASSETS CONTINUED TO BE USED FOR USE SAFELY AND AS PER NORMS TO ENABLE ASSESSEE TO RUN ITS ACTIVITY. H ENCE, WE ARE OF THE CONSIDERED VIEW THAT THE SAID EXPENDITUR E IS INCURRED TO FACILITATE OF CARRYING ON BY THE ASSESS EE ITS MAIN BUSINESS FOR WHICH THE ASSESSEE HAS BEEN ENGAG ED AND PENDING THE EXPANSION OF THE AIRPORT ETC. HENCE , WE HOLD THAT THE SAID EXPENDITURE IS REVENUE IN NATURE AND CANNOT BE SAID TO BE CAPITAL IN NATURE IRRESPECTIVE OF THE FACT THAT THE ASSESSEE IN ITS BOOKS OF ACCOUNT HAS GIVEN M/S. MUMBAI INTERNATIONAL AIRPORT 8 TREATMENT OF IT AS CAPITAL IN NATURE. WE MAY STATE THAT THE ASSESSEE WILL NOT BE ENTITLED FOR DEPRECIATION THER EON AS IT IS HELD TO BE REVENUE IN NATURE. HENCE, GROUND NO.1 OF THE APPEAL TAKEN BY ASSESSEE IS ALLOWED. 4.6. DURING THE COURSE OF HEARING BEFORE US NO DISTINCTI ON HAS BEEN MADE OUT ON FACTS OR LAW BY THE EITHER PARTY. RATHER, IT WAS FAIRLY AGREED THAT ISSUE IS COVERED WITH EARLIE R YEARS DECISION. WE ALSO FIND THAT FACTS ARE SAME. THE NAT URE OF EXPENSES IS ALSO SAME. THEREFORE, RESPECTFULLY FOLL OWING THE DECISIONS OF THE TRIBUNAL FOR A.Y. 2007-08, THE IMP UGNED EXPENSES ARE HELD TO BE ALLOWABLE AS REVENUE EXPEND ITURE. THUS, NO INTERFERENCE IS CALLED FOR IN THE DECISION OF THE LD. CIT(A) AND THEREFORE, SAME IS UPHELD IN VIEW OF DET AILED AND WELL REASONED FINDINGS OF THE TRIBUNAL FOR A.Y. 200 7-08. THUS, GROUND NO.1 IS DISMISSED. 5. GROUND 2 : IN THIS GROUND, THE REVENUE HAS CHALLENGED THE ACTION OF THE LD.CIT(A) IN DELETING THE DISALLOWANC E OF REFURBISHMENT EXPENSES IN THE NATURE OF CIVIL WORKS AMOUNTING TO RS.24,24,34,541/- WHICH WAS TREATED BY THE AO AS CAPITAL EXPENDITURE. 5.1. IT WAS NOTED BY THE AO DURING THE COURSE OF ASSESS MENT PROCEEDINGS THAT THE ASSESSEE HAD CLAIMED DEDUCTION OF AFORESAID EXPENSES AS REVENUE EXPENSES ON ACCOUNT O F REFURBISHMENT EXPENSES OF TERMINAL 1A AND 2C OF THE AIRPORT. IT WAS FURTHER NOTED THAT IN THE RETURN OF INCOME I T WAS STATED BY THE ASSESSEE THAT THOUGH THESE EXPENSES WERE CAP ITALISED IN THE COMPANYS BOOKS OF ACCOUNT, HOWEVER, IN THE RET URN OF INCOME, THESE EXPENSES HAVE BEEN CLAIMED AS REVENUE EXPENSES. IT WAS EXPLAINED BY THE ASSESSEE THAT TH ESE EXPENSES WERE IN THE NATURE OF CIVIL WORKS UNDERTAK EN TO M/S. MUMBAI INTERNATIONAL AIRPORT 9 IMPROVE THE AESTHETICS OF THESE TERMINALS. THE ASS ESSEE SUBMITTED DETAILED EXPLANATION TO JUSTIFY THE SAME AS REVENUE EXPENSES BUT THE AO WAS NOT SATISFIED AND DISALLOWE D THE CLAIM. BEING AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE CIT(A) WHEREIN DETAILED SUBMISSIONS WERE FILED. LD . CIT(A) ACCEPTED THE SUBMISSIONS OF THE ASSESSEE AND DECIDE D THIS ISSUE IN FAVOUR OF THE ASSESSEE BY TREATING THESE E XPENSES AS REVENUE EXPENSES AND, THEREFORE, DISALLOWANCE MADE BY THE AO WAS DELETED. THUS, AGGRIEVED, THE REVENUE IS BEFOR E US. 5.2. IT HAS BEEN SUBMITTED BY THE LD. DR THAT THE ORDER PASSED BY LD. CIT(A), WHILE DECIDING THIS ISSUE IN FAVOUR OF THE ASSESSEE IS HIGHLY CRYPTIC AND UNREASONED AND, THER EFORE, IN ABSENCE OF PROPER REASONING ON THE PART OF THE LD.C IT(A), THIS ISSUE DESERVES TO GO BACK TO THE FILE OF LOWER AUTH ORITIES FOR DE NOVO ADJUDICATION. 5.3. PER CONTRA, THE LD. COUNSEL OF THE ASSESSEE SUBMIT TED THAT THE FINDINGS OF THE LD. CIT(A) ARE NOT CRYPTIC , IF THE FINAL CONCLUSION OF THE LD.CIT(A) IS READ ALONG WITH THE ANALYSIS MADE BY HIM IN HIS ORDER AT PAGES 40-41. IT WAS TH US SUBMITTED THAT LAST PART OF THE ORDER AVAILABLE ON PAGE 421 OF LD. CIT(A)S ORDER SHOULD BE READ ALONG WITH EARLIE R PAGES CONTAINING DETAILED DISCUSSION ON THIS ISSUE. IT W AS FURTHER SUBMITTED THAT THIS ISSUE WAS RAISED BY THE AO IN A .Y. 2007- 08 ALSO WHEREIN IT HAS BEEN FINALLY DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE. RELIANCE WAS ALSO PLACED O N THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CA SE OF CIT VS CHOWGULE & CO 214 ITR 523 (BOM) AND HONBLE RAJA STHAN HIGH COURT IN THE CASE OF CIT VS HINDUSTAN ZINC LTD 322 ITR M/S. MUMBAI INTERNATIONAL AIRPORT 10 478 (RAJ). LD. COUNSEL ALSO RELIED UPON VARIOUS JU DGMENTS DISCUSSED IN THE WRITTEN SUBMISSIONS FILED BEFORE T HE LD. CIT(A) WHICH HAVE BEEN NARRATED BY THE LD.CIT(A) IN HIS ORDER. IT WAS FURTHER SUBMITTED THAT ORIGINAL RETURN IN TH IS CASE WAS FILED ON 30-09-2008 AND THE REVISED RETURN WAS FILE D ON 31-03- 2010. THUS, REVISED RETURN WAS FILED WITHIN THE TI ME LIMIT ALLOWED AS PER LAW. THE REVISED RETURN WAS ACCEPTE D BY THE AO AND, THEREFORE, THE CLAIM WAS MADE BY THE ASSESSEE IN ACCORDANCE WITH LAW AND THUS, THE LD. CIT(A) HAS RI GHTLY ALLOWED THE SAME AFTER CONSIDERING THE ENTIRE FACTS AND EVIDENCES ON RECORD, AND IN ANY CASE THIS ISSUE WAS COVERED IN FAVOUR OF THE ASSESSEE ON THE BASIS OF JUDGEMENT OF THE TRIBUNAL FOR A.Y. 2007-08. 5.4. WE HAVE GONE THROUGH THE ORDERS OF THE LOWER AUTHO RITIES AND SUBMISSIONS MADE BY BOTH THE SIDES. IT IS NOTE D THAT THE PRIMARY REASON GIVEN BY THE AO FOR DISALLOWANCE WAS THAT SINCE THE ASSESSEE HAS MADE THIS CLAIM BY FILING RE VISED RETURN OF INCOME, THEREFORE, IT SHOWS THAT IT WAS AN AFTER THOUGHT CLAIM ON THE PART OF THE ASSESSEE. IT WAS FURTHER OBJECT ED TO BY THE AO THAT THE ASSESSEE SHOULD NOT HAVE ADOPTED DIFFER ENT STANDS FOR INCOME-TAX PURPOSES AND FOR ACCOUNTING PURPOSES . IT WAS ALSO OBSERVED BY THE AO THAT SINCE THE ASSESSEE WAS RESPONSIBLE ONLY FOR THE DEVELOPMENT OF NEW AIRPORT THEREFORE, MOST OF THE EXPENSES INCURRED UNDER THIS HEAD WERE CAPITAL IN NATURE. 5.5. PER CONTRA, THE JUSTIFICATION GIVEN BY THE ASSESSE E WAS THAT THE EXPENDITURE WAS MADE TO MEET THE AESTHETIC S OF THE EXISTING OPERATING TERMINALS. FURTHER, THE EXPENDI TURE WAS TO M/S. MUMBAI INTERNATIONAL AIRPORT 11 MAINTAIN AND PRESERVE AN EXISTING ASSET AND NO NEW ASSET WAS CREATED. IT HAS ALSO BEEN CONTENDED THAT NO ADVANT AGE OF ENDURING NATURE HAS BEEN OBTAINED BY THE ASSESSEE A ND MORE SO, WHEN THE PREMISES IN QUESTION DID NOT BELONG TO THE ASSESSEE. THE ASSET WAS ALREADY IN USE, BUT BECAUS E OF ITS WEAR AND TEAR WITH PAUCITY OF TIME IT NEEDED REPAIR S. IT WAS ALSO STRONGLY CONTENDED THAT THE ISSUE OF CHARACTER IZATION OF AN EXPENSE AS REVENUE EXPENDITURE OR CAPITAL EXPENDITU RE HAS TO BE DONE INDEPENDENTLY, IRRESPECTIVE OF ITS TREATMEN T IN ITS BOOKS OF ACCOUNT OF THE ASSESSEE. FURTHER, SINCE O NE OF THE TERMS OF THE AGREEMENT UNDER WHICH THE ASSESSEE WAS OPERATING WAS IN RESPECT OF MAINTENANCE OF THE ASSE TS OF THE AIRPORT AND FOR ITS OVERALL UPKEEP, THEREFORE, THE ASSESSEE WAS COMMITTED TO INCUR THESE EXPENSES ON REGULAR BASIS AND, THEREFORE, THIS CANNOT BE TREATED AS CAPITAL EXPEND ITURE. 5.6. IT IS NOTED THAT WITH REGARD TO SIMILAR ISSUE DECID ED BY THE TRIBUNAL IN A.Y.2007-08, WE HAVE ALREADY DECIDED TH E ISSUE IN FAVOUR OF THE ASSESSEE BY RESPECTFULLY FOLLOWING TH E ORDER OF THE TRIBUNAL IN THE CASE OF RELIANCE PORTS TERMINALS LT D IN ITA NOS.1743,1744 AND 1745/MUM/2007 ORDER DATED 26-11- 2007. THE DETAILS OF EXPENDITURE ALLOWED BY THE TR IBUNAL IN A.Y. 2007-08 HAVE BEEN GIVEN AT PAGE 25 OF THE ORDE R OF THE TRIBUNAL FOR A.Y. 2007-08. ON THE OTHER HAND, THE DETAILS OF EXPENSES AND THE HEADS UNDER WHICH THESE EXPENSES I N THE IMPUGNED YEAR HAVE BEEN INCURRED HAVE BEEN EXTRACTE D BY THE LD. CIT(A) ON PAGE 26 OF THE ORDER PASSED BY THE LD .CIT(A). IT IS NOTED THAT THE EXPENSES INCURRED ARE OF SIMILAR NATURE AND PATTERN. THE OTHER CONDITIONS I.E. NO CREATION OF NEW ASSET AND M/S. MUMBAI INTERNATIONAL AIRPORT 12 NO BENEFIT OF ENDURING NATURE ALSO REMAIN THE SAME. THIS FACT IS NOT DISPUTED THAT THE CONCERNED PREMISES OR BUIL DING OR THE STRUCTURES DID NOT BELONG TO THE ASSESSEE COMPANY. SINCE THE TRIBUNAL HAS ALREADY TAKEN A VIEW BY HOLDING THE SA ME AS REVENUE EXPENDITURE, RESPECTFULLY FOLLOWING THE SAM E, THE EXPENSES UNDER CONSIDERATION SHOULD ALSO BE HELD AS REVENUE EXPENSES. THUS, WE FIND THAT LD. CIT(A) HAS RIGHTL Y HELD THESE EXPENSES AS REVENUE EXPENDITURE. THUS, RESPECTFULL Y FOLLOWING THE ORDER OF THE TRIBUNAL FOR A.Y.2007-08, NO INTER FERENCE IS REQUIRED IN THE ORDER OF THE LD. CIT(A) AND THE SAM E IS UPHELD. GROUND NO.2 IS DISMISSED. 6. GROUNDS 3 & 4 : IN THIS GROUND, THE REVENUE HAS CHALLENGED THE ACTION OF LD.CIT(A) IN DELETING THE ADDITION OF RS 4,43,32,547 MADE BY THE AO U/S 40(A)(IA) FOR THE RE ASON THAT THE ASSESSEE FAILED TO DEDUCT TAX AT SOURCE UNDER V ARIOUS SECTIONS, I.E. SECTION 194J, SECTION 194C AS WELL A S SECTION 195. 6.1. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A O OBSERVED FROM THE TAX AUDIT REPORT THAT AUDITORS HA D IDENTIFIED VARIOUS ITEMS OF INADMISSIBLE EXPENDITURE U/S 40(A) (IA) OF THE ACT. ONE OF THE ITEMS IDENTIFIED FOR THE DISALLOWA NCE WAS PROVISION FOR EXPENDITURE OF RS.4,43,32,547/- ON WH ICH TAX WAS NOT DEDUCTED AT SOURCE BY THE ASSESSEE. THE AS SESSEE WAS ASKED TO FURNISH ITEM-WISE DETAILS OF SUCH PROVISIO NS WITH ACTUAL DATE OF PAYMENT. THE ASSESSEE FURNISHED LIS T OF SUCH EXPENSES AS WELL AS EXPLANATION FOR NON DEDUCTION O F TAX AT SOURCE. BUT THE AO IN THE ASSESSMENT ORDER HELD TH AT THE ENTIRE EXPENDITURE WAS LIABLE FOR DEDUCTION OF TAX AT SOURCE M/S. MUMBAI INTERNATIONAL AIRPORT 13 UNDER VARIOUS SECTIONS, VIZ. 194C, 194J AND 195, AN D SINCE THE ASSESSEE FAILED IN DEDUCTING TAX AT SOURCE, THE AO DISALLOWED THE PROVISION FOR THE EXPENDITURE. 6.2. BEING AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). THE ASSESSEE FILED DETAILED WRITTEN SUBMIS SIONS BEFORE LD. CIT(A) WHEREIN IT WAS INTER-ALIA SUBMITTED THAT THESE EXPENSES WERE PROVIDED FOR IN THE BOOK OF ACCOUNT O N BEST ESTIMATE BASIS. NO INVOICES WERE RAISED, QUANTUM O F EXPENDITURE WAS NOT DEFINITELY ASCERTAINED, AND THE REFORE AMOUNT OF EXPENSES WAS CLAIMED ON MOST CONSERVATIVE BASIS. SINCE INVOICES WERE NOT RAISED, NEITHER ANY CREDITS NOR ANY PAYMENTS WERE MADE IN THE NAME OF ANY PARTICULAR VE NDOR, THEREFORE, PROVISIONS OF SECTION 40(A)(IA) OF THE A CT WERE NOT APPLICABLE SINCE TAX WAS NOT REQUIRED TO BE DEDUCT ED ON THE AMOUNT OF THIS PROVISIONAL EXPENDITURE. THE ASSESS EE ALSO FILED DETAILED WRITTEN SUBMISSION STATING THAT SINC E LIABILITIES HAD BEEN NOT BEEN PROPERLY IDENTIFIED, PROVISIONS O F TDS WERE NOT APPLICABLE AND THUS, NO TDS WAS MADE. LD. CIT( A) ACCEPTED THE SUBMISSIONS OF THE ASSESSEE AND DELETE D THE DISALLOWANCE MADE BY THE AO. BEING AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 6.3. IT HAS BEEN CONTENDED BEFORE US BY THE LD. DR THAT THE LD. CIT(A) WHILE ADJUDICATING THIS ISSUE HAS NEITHE R APPLIED HIS MIND NOR MADE ANY ANALYSIS OF THE FACTS AND PROVISI ONS OF THE ACT AND THE DISALLOWANCE WAS DELETED BY PASSING A H IGHLY BRIEF AND CRYPTIC ORDER IN JUST 6-7 LINES. NO PROPER REA SONING HAS BEEN GIVEN NOR HAS ANY DETAILS WITH REGARD TO AFORE SAID EXPENSES BEEN DISCUSSED BY THE LD. CIT(A) IN HIS OR DER. M/S. MUMBAI INTERNATIONAL AIRPORT 14 THEREFORE, THIS ISSUE SHOULD BE SENT BACK TO THE FI LE OF THE LD. CIT(A) FOR PROPER ANALYSIS AND ADJUDICATION. 6.4. PER CONTRA, THE LD. COUNSEL SUBMITTED THAT THESE EXPENSES WERE ON ACCOUNT OF YEAR-END PROVISIONS A ND DETAILS WERE SUBMITTED TO THE AO SHOWING HEAD-WISE PROVISIO NS. IN SUBSEQUENT YEARS, WHENEVER THE AMOUNT WAS PAID, TDS WAS DEDUCTED AND PROVISION WAS REVERSED. IT WAS ALSO S UBMITTED THAT EVERY YEAR SIMILAR PRACTICE IS FOLLOWED. IN A .Y. 2007-08 ALSO SIMILAR PRACTICE WAS FOLLOWED BUT NO DISALLOWA NCE WAS MADE. 6.5. WE HAVE GONE THROUGH THE SUBMISSIONS MADE BY BOTH THE SIDES. THE CASE OF THE ASSESSEE IS THAT THE IMPUGN ED AMOUNTS REPRESENTED MERE PROVISIONS AND, THEREFORE, THESE C OULD NOT HAVE BEEN PROPERLY QUANTIFIED AND FURTHER, EVEN NAM ES OF THE PAYEES WERE NOT CLEAR. THEREFORE, NO TDS COULD BE DEDUCTED IN THE YEAR UNDER CONSIDERATION. 6.6. IT IS NOTED FROM THE PERUSAL OF THE ORDER OF THE L D. CIT(A) THAT HE HAS SIMPLY ACCEPTED THE CLAIM OF THE ASSESS EE BY STATING THAT THE ASSESSEE HAD MADE ONLY PROVISION A ND THE LD. COUNSEL OF THE ASSESSEE HAD SUBMITTED THAT IN THE N EXT YEAR WHEN PAYMENTS WERE MADE AGAINST THE PROVISIONS , TD S WAS DEDUCTED AND THUS DISALLOWANCE MADE BY THE AO WAS A LSO DELETED. WE FIND THAT, UNFORTUNATELY, THE ORDER OF THE LD. CIT(A) ON THIS ISSUE IS DEVOID OF FACTUAL ANALYSIS OR PROPER REASONING. LD. CIT(A) HAS NOT EVEN DISCUSSED THE D ETAILS OF THE EXPENSES FOR WHICH PROVISION WAS MADE BY THE ASSESS EE WHICH HAS BEEN DISALLOWED BY THE AO. NOTHING HAS BEEN DI SCUSSED ABOUT THE NATURE OF THE EXPENSES, POSITION OF CRYST ALLISATION OF M/S. MUMBAI INTERNATIONAL AIRPORT 15 THESE EXPENSES, AVAILABILITY OF PARTICULARS OF THE PAYEES, ETC. IT HAS BEEN OBSERVED IN THE ORDER BY LD. CIT(A) THAT W HENEVER PAYMENTS ARE ACTUALLY MADE AGAINST THESE PROVISIONS , TDS IS DEDUCTED AS WAS STATED BY THE LD. COUNSEL. BUT, WH AT ARE THE PRECISE FACTS IN THIS REGARD HAS NOT BEEN DISCUSSED IN THE ORDER. NO DETAILS ARE AVAILABLE OR DISCUSSED BY TH E LD.CIT(A) REGARDING VARIOUS ASPECTS, E.G. WHEN THESE EXPENSES WERE ACTUALLY INCURRED, IN WHOSE NAME THESE ARE FINALLY CREDITED, WHO ARE THE ACTUAL PAYEES, WHEN THE PAYMENTS WERE M ADE ACTUALLY AND WHETHER THE TDS WAS DEDUCTED AT THE TI ME OF MAKING OF PAYMENTS OR NOT? NOTHING HAS BEEN BROUGH T OUT ON RECORD TO ENSURE THAT FINALLY THERE WAS NO REVENUE LEAKAGE AND FULL COMPLIANCE OF THE TDS PROVISIONS WAS MADE ULTI MATELY. WE FIND THAT ORDER OF LD. CIT(A) IS DEVOID OF ANY F ACTUAL NARRATION AND, THEREFORE, WE FIND IT APPROPRIATE TO SEND THIS ISSUE BACK TO THE FILE OF THE CIT(A) FOR COMPLETE F ACTUAL ANALYSIS AND THEREAFTER APPLYING THE CORRECT POSITION OF LAW . LD. CIT(A) SHALL PROVIDE ADEQUATE OPPORTUNITY OF HEARING TO TH E ASSESSEE. THE ASSESSEE SHALL ALSO EXTEND REQUISITE COOPERATIO N TO THE LD. CIT(A) BY FILING NECESSARY DETAILS / EVIDENCES SO A S TO BRING COMPLETE FACTS ON RECORD. WITH THESE DIRECTIONS, T HIS GROUND MAY BE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 7. GROUND 5 : IN THIS GROUND, THE REVENUE HAS CHALLENGED THE ACTION OF LD. CIT(A) IN DELETING THE DISALLOWANCE O F 25% DEPRECIATION ON UPFRONT FEES OF RS.150 CRORES WITHO UT CONSIDERING THE FACT THAT DURING THE COURSE OF ASSE SSMENT PROCEEDINGS IT WAS NOTED BY THE AO THAT IN THE DEPR ECIATION SCHEDULE ATTACHED TO THE TAX AUDIT REPORT IT WAS OB SERVED THAT M/S. MUMBAI INTERNATIONAL AIRPORT 16 ASSESSEE HAD TREATED UPFRONT FEE PAID TO THE AIRPOR T AUTHORITY OF INDIA IN TERMS OF THE AGREEMENT AS AN INTANGIBL E ASSET AND CLAIMED DEPRECIATION OF RS.28,12,50,000 ON THE OPEN ING WDV OF RS.112.50 CRORES. 7.1. IT WAS NOTED BY THE AO THAT IN THE ASSESSMENT YEAR 2007- 08 ALSO SIMILAR CLAIM WAS MADE WHICH WAS DISALLOWED BY THE AO, AND THUS HE MADE SIMILAR DISALLOWANCE IN THE PR ESENT YEAR ALSO. 7.2. BEING AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A) WHEREIN EXHAUSTIVE SUBMISSIONS WERE MADE, AN D THE LD.CIT(A) FOUND THAT SIMILAR ISSUE HAS BEEN ALLOWED BY HIM IN FAVOUR OF THE ASSESSEE COMPANY IN A.Y. 2007-08 AND THEREFORE, FOLLOWING THE ORDER FOR A.Y. 2007-08, THE CLAIM OF THE ASSESSEE WAS ALLOWED. 7.3. DURING THE COURSE OF HEARING BEFORE US, COMMON POI NT STATED BY BOTH THE PARITIES WAS THAT THIS ISSUE STA NDS COVERED WITH THE ORDER OF THE TRIBUNAL FOR A.Y. 2007-08, AN D NO DISTINCTION WAS MADE OUT ON FACTS OR LAW. 7.4. WE HAVE GONE THROUGH THE ORDERS OF THE LOWER AUTHO RITIES AS WELL AS THE ORDER OF THE TRIBUNAL FOR A.Y. 2007- 08 AND FIND THAT THE TRIBUNAL HAS ALREADY DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE VIDE ITS ORDER DATED 14-02-2014 WITH T HE FOLLOWING OBSERVATIONS: WE HAVE CAREFULLY CONSIDERED THE ORDERS OF AUTHORI TIES BELOW AND SUBMISSIONS MADE BY LD. REPRESENTATIVES O F THE PARTIES. WE HAVE ALSO CONSIDERED THE RELEVANT A RTICLES OF 'OMDA' AND THE CASES RELIED UPON BY THE PARTIES BEFORE THE AUTHORITIES-BELOW (SUPRA) AS WELL AS THE CASES REFERRED BEFORE US. 10.1 THE ASSESSEE IS A JOINT VENTURE COMPANY. IT HA S ENTERED INTO AN AGREEMENT WITH 'AAI' AND UNDER THE M/S. MUMBAI INTERNATIONAL AIRPORT 17 AGREEMENT I.E. 'OMDA', THE ASSESSEE HAS BEEN GRANTE D EXCLUSIVE RIGHT , AND AUTHORITY TO UNDERTAKE SOME OF THE FUNCTIONS OF 'AAI' BEING FUNCTIONS OF OPERATION, MAINTENANCE; DEVELOPMENT, DESIGN, CONSTRUCTION, UP GRADATION, MODERNIZATION, FINANCE AND MANAGEMENT OF AIRPORT FOR AN INITIAL TERM OF 30 YEARS, WHICH IS E XTENDABLE FOR A FURTHER PERIOD OF 30 YEARS ON THE SAME TERMS AND CONDITIONS AS APPLICABLE FOR THE INITIAL PERIOD, AS PER ARTICLE 18.1 OF 'OMDA'. UNDER THE TERMS AND CONDITIONS OF O MDA', THE ASSESSEE PAID A SUM OF RS.150 CRORES TO 'AAI' A S UPFRONT FEE M DESCRIBED UNDER ARTICLE 11.1.1 OF CHA PTER-XI OF 'OMDA' WHICH IS REPRODUCED AS UNDER: '11.1.1 UPFRONT FEE THE JVC SHALL PAY TO THE AAI AN UPFRONT FEE (THE 'UPFRONT FEE') OF RS150 CRORES (RUPEES ONE HUNDRED AND FIFTY CRORES ONLY) ON OR BEFORE THE EFFECTIVE DATE. IT IS MUTUAL LY AGREED THAT THIS UPFRONT FEE IS NON-REFUNDABLE (EXCEPT ON ACCOUNT OF TERMINATION OF THIS AGREEMENT IN ACCORDANCE WITH ARTICLE 3.3 HEREOF AND PAYABLE ONLY ONCE DURING THE TERM OF THIS AGREEMENT' BESIDES, ABOVE PAYMENT, THE ASSESSEE IS ALSO TO PAY ANNUAL FEES AS PER ARTICLE 21.1.2.1 FOR EACH YEAR D URING THE TERMS OF THE AGREEMENT. BY VIRTUE OF ABOVE ONE- TIME PAYMENT OF UPFRONT FEE OF RS.150 CRORES, THE ASSESS EE HAS BEEN GIVEN EXCLUSIVE RIGHT AND AUTHORITY TO COLLECT PAYMENT OF VARIOUS NATURE FROM THE USERS OF AIRPORT PREMISE S AS PER ARTICLE 2.1.2(III) OF CHAPTER-II, SUBJECT TO THE RE GULATIONS PRESCRIBED UNDER CHAPTER XII. THE QUESTION ARISES AS TO WHETHER THE ASSESSEE HAS GOT THE LEASE RIGHT OR LIC ENSE BY MAKING THIS ONE-TIME PAYMENT OF RS.150 CRORES TO 'A AI' AS UPFRONT FEE. 10.2 THAT THE AO HAS STATED THAT THE ASSESSEE HAS G OT LEASE HOLD RIGHTS FOR A PERIOD OF 30 YEARS AND WHER EAS THE ASSESSEE HAS CONTENDED THAT THE ASSESSEE HAS GOT A LICENSE FOR A PERIOD OF 30 YEARS AND AS SUCH IT IS AN INTANGIBLE ASSETS ' . THUS, THE ASSESSEE IS ENTITLED FOR DEPRECIATION AS PER SECTION 32(1)(II) OF THE ACT. W E OBSERVE THAT THE SAID AMOUNT OF RS.150 CRORES PAID BY ASSES SEE IS NON-REFUNDABLE. THE ASSESSEE HAS GOT THE PRIVILEGE UNDER OMDA' TO COLLECT CHARGES OF THE NATURE AS MENTIONED IN THE AGREEMENT ENTERED INTO I.E. 'OMDA' FROM THE USERS O F AIRPORT PREMISES. WE OBSERVE THAT IT IS NOT A CASE WHERE M/S. MUMBAI INTERNATIONAL AIRPORT 18 THE ASSESSEE HAS GOT THE TRANSFER OF A RIGHT TO ENJ OY THE AIRPORT PREMISES. THE ASSESSEE ONLY GOT A LICENSE O R RIGHT TO DO SOMETHING AT THE AIRPORT PREMISES. THE HON'BL E APEX COURT HAS HELD IN THE CASE OF B. M. LAL (SUPRA) THA T THE TRANSACTION IS A LEASE, IF IT GRANTS THE INTEREST I N THE LAND AND WHEREAS IT IS A LICENSE IF IT GIVES A PERSONAL PRIVILEGE WITH NO INTEREST IN THE LAND. WE ARE OF THE CONSIDE RED VIEW THAT THE ASSESSEE HAS GOT THE ECONOMIC /COMMERCIAL RIGHT UNDER THE SAID AGREEMENT TO COLLECT CHARGES FROM TH E USERS OF THE AIRPORT PREMISES WHICH IS SIMILAR TO GRANT O F A LICENSE TO THE ASSESSEE. THIS CASE IS SIMILAR TO TH E CASE OF TECHNOSHARES AND STOCKS LTD AND OTHERS (SUPRA), WHE REIN THE HON'BLE APEX COURT HAS HELD THAT A RIGHT GIVEN TO MEMBER OF STOCK-EXCHANGE TO CARRY ON THE BUSINESS A T THE PREMISES OF THE STOCK-EXCHANGE IS A BUSINESS OR COMMERCIAL RIGHT WHICH IS AKIN TO LICENSE IN TERMS OF SECTION 32(1)(II) OF THE ACT, THEREFORE, ELIGIBLE F OR DEPRECIATION. THEIR LORDSHIPS HAVE HELD THAT RIGHT TO PARTICIPATE IN THE MARKET IS AN ECONOMIC AND MONEY VALUE, ITSELF SATISFIES THE TEST OF BEING A LICENSE. THERE IS NO DISPUTE TO THE FACT THAT THE SAID PAYMENT OF RS.150 CRORES PAID TO 'AAI' HAS NOT RESULTED TO THE ASSESSEE IN T HE ACQUISITION OF ANY 'TANGIBLE ASSETS' LIKE BUILDING, MACHINERY, PLANTS OR FURNITURE, THEREFORE THE SAID PAYMENT OF RS.150 CRORES HAS NOT RESULTED INTO ACQUISITION OF TANGIBLE ASSETS'. THUS, THE ASSESSEE HAS ONLY ACQUI RED RIGHT TO COLLECT CHARGES FROM THE USERS OF THE AIRP ORT PREEMIES, WHICH IS A BUSINESS OR COMMERCIAL RIGHT I N THE FORM OF LICENSE AND THEREFORE IT IS AN INTANGIBLE A SSETS' AS PER SECTION 32(1)(II) OF THE ACT. THE HON'BLE DELHI HIGH COURT IN THE CASE OF HINDUSTAN COCA COLA BEVERAGES PVT LT D (SUPRA) HAS ALSO HELD THAT THE ASSETS WHICH ARE INC LUDED IN THE DEFINITION OF 'INTANGIBLE ASSETS' INCLUDE, ALON G WITH OTHER THINGS, ANY OTHER BUSINESS OR COMMERCIAL RIGH TS OF SIMILAR NATURE. IN THIS REGARD, IT IS RELEVANT TO S TATE THAT THE DECISION OF DELHI HIGH COURT IN THE CASE OF ONGC VI DESH LTD (SUPRA) HAS HELD THAT THE ASSESSEE WHO WAS ASSI GNED THE RIGHTS TO PARTICIPATE IN OIL EXPLORATION IN RUS SIA THROUGH A CONSORTIUM FOR A PERIOD OF 25 YEARS AND PAID THE TOTAL CONSIDERATION FOR OBTAINING 20% MEMBERSHIP IN THE CONSORTIUM, AMOUNTING TO RS. 155.9 CRORES, WAS TREA TED TO ACQUIRE A LICENSE, BEING INTANGIBLE ASSETS, AND THU S M/S. MUMBAI INTERNATIONAL AIRPORT 19 ASSESSEE WAS ENTITLED TO CLAIM DEPRECIATION U/S 32(1)(II) OF THE ACT. THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF ASHOKA INFO (P) LTD (SUPRA) HAS ALSO HELD THAT THE EXPENDITURE INCURRED ON CONSTRUCTION OF HIGHWAY IS ELIGIBLE FOR DEPRECIATION @25%, AS THIS EXPENDITURE HAS GIVE N RISE TO AN 'INTANGIBLE ASSETS' IN THE HANDS OF THE ASSES SEE. IN VIEW OF ABOVE DECISIONS AND THE FACTS OF THE CASE, WE HOLD THAT THE LD. CIT(A) HAS RIGHTLY HELD THAT THE PAYME NT OF UPFRONT FEE OF RS.150 CRORES PAID BY ASSESSEE TO 'A AI' HAS CREATED CAPITAL ASSETS IN THE FORM OF LICENSE TO DE VELOP AND MODERNIZE THE AIRPORT AND COLLECT CHARGES AS PER TE RMS AND CONDITIONS AS PRESCRIBED UNDER THE AGREEMENT ENTERE D INTO WHICH IS AN 'INTANGIBLE ASSETS' TO THE ASSESSEE. TH US ASSESSEE IS ENTITLED FOR DEPRECIATION. 10.3 HENCE, THE DISALLOWANCE OF RS.22.50 CRORES MAD E BY AO HAS RIGHTLY BEEN DELETED BY LD. CIT(A) BY DIRECT ING THE AO TO ALLOW DEPRECIATION AT THE RATE OF 25% ON THE SAID PAYMENT OF UPFRONT FEE OF RS.150 CRORES. THUS, GROU ND NO.1 TAKEN BY DEPARTMENT IS REJECTED. 7.5. THUS, IT IS NOTED FROM THE ABOVE THAT THE TRIBUNAL HAS HELD THAT THE AMOUNT PAID ON ACCOUNT OF UPFRONT FEE IS IN THE NATURE OF AN INTANGIBLE ASSET ELIGIBLE FOR DEPREC IATION AND ACCORDINGLY ALLOWED THE CLAIM OF DEPRECIATION UPON THE SAME. THE ASSESSEE HAS CLAIMED DEPRECIATION IN THE IMPUGN ED YEAR ON THE WDV OF THE SAME ASSET. THEREFORE, WE FIND T HAT NO DIFFERENT DECISION CAN BE TAKEN IN THE YEAR UNDER CONSIDERATION, MORE SO, WHEN NO DISTINCTION HAS BEE N MADE ON FACTS OR LAW, THEREFORE, RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL, THE CLAIM OF DEPRECIATION ON THE UPFRONT FEE IS ALLOWED. THIS GROUND IS REJECTED. M/S. MUMBAI INTERNATIONAL AIRPORT 20 8. GROUND 6: IN THIS GROUND, THE REVENUE HAS CHALLENGED THE ACTION OF THE LD. CIT(A) IN DELETING THE DISALLOWAN CE OF INTEREST OF RS.35,10,000 WHICH WAS TREATED BY THE ASSESSING OFFICER AS CAPITAL EXPENDITURE. 8.1. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WA S NOTED BY THE ASSESSING OFFICER THAT CERTAIN LOANS W ERE RAISED BY THE ASSESSEE FROM THE IDBI, UTI AND OTHER BANKS TO FINANCE THE CAPEX REQUIREMENT FOR UPGRADATION AND MODERNISA TION OF THE MUMBAI AIRPORT UNDER A COMMON LOAN AGREEMENT SI GNED BY THE ASSESSEE WITH THE CONSORTIUM BANKS. IT WAS HELD BY THE ASSESSING OFFICER THAT SINCE THE LOAN DISBURSEMENTS WERE ENVISAGED TO FUND THE CAPITAL ASSET, THE INTEREST C OMPONENT OF THE LOAN WAS TO BE CAPITALISED WITH THE COST OF THE ASSET TILL THESE WERE PUT TO USE FOR THE BUSINESS OF THE ASSES SEE IN TERMS OF EXPLANATION (8) TO SECTION 43(1) OF THE ACT. AC CORDINGLY, THE ASSESSING OFFICER MADE SOME WORKING AND DISALLOWED A SUM OF RS 35,10,000/- AFTER DEDUCTING BENEFIT OF DEPRECIAT ION OF RS.3,90,000/- OUT OF TOTAL INTEREST OF RS.39,00,000 0/-. 8.2. BEING AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A) AND ALSO FILED EXHAUSTIVE SUBMISSIONS SUPPO RTED WITH VARIOUS EVIDENCES FOR JUSTIFYING THE CLAIM OF INTER EST AND FOR DISPUTING THE DISALLOWANCE MADE BY THE ASSESSING O FFICER. LD. CIT(A) WAS SATISFIED WITH THE SUBMISSIONS OF THE AS SESSEE AND DELETED THE DISALLOWANCE. BEING AGGRIEVED, REVENUE IS BEFORE US. 8.3. DURING THE COURSE OF HEARING BEFORE US, THE LD. CI T-DR VEHEMENTLY CONTESTED THE ORDER OF LD. CIT(A) AND SU BMITTED THAT LD.CIT(A) HAS PASSED A VERY CRYPTIC ORDER ON T HIS ISSUE. M/S. MUMBAI INTERNATIONAL AIRPORT 21 NO PROPER REASONING HAS BEEN GIVEN WHILE ALLOWING T HE RELIEF AND SUBMISSIONS MADE BY THE ASSESSEE HAVE BEEN BLIN DLY ACCEPTED WHILE DECIDING THIS GROUND. 8.4. PER CONTRA, THE LD. COUNSEL OF THE ASSESSEE SUBMIT TED THAT EXHAUSTIVE DETAILS WERE SUBMITTED BUT NOTHING WRONG HAS BEEN POINTED OUT THEREIN BY THE LD.CIT(A) OR BY THE LD. CIT-DR AND, THEREFORE, THE ORDER OF THE LD.CIT(A) ON THIS ISSUE SHOULD BE UPHELD. OUR ATTENTION WAS ALSO DRAWN UPON THE D ETAILS AND EVIDENCES SUBMITTED BEFORE THE ASSESSING OFFICER. 8.5. WE HAVE GONE THROUGH THE ORDER OF THE LOWER AUTHOR ITIES AS WELL AS THE SUBMISSIONS MADE BEFORE US BY BOTH T HE SIDES. IT IS NOTED THAT THE LD. CIT(A) HAS PASSED VERY BRI EF ORDER WITHOUT GIVING PROPER REASONING WHILE ALLOWING THE RELIEF BY OBSERVING AS UNDER:- I HAVE CONSIDERED THE ABOVE SUBMISSIONS AND ALSO T HE FURTHER SUBMISSION OF THE LD. COUNSEL THAT ONCE TH E ASSET IS PUT TO USE INTEREST IS TO BE ALLOWED AS A DEDUCTION AS CLEARLY STATED IN THE PROVISO TO SECT ION 36(1)(III) IT SAYS THAT ONCE THE ASSET IS PUT TO USE THE INTEREST HAS TO BE ALLOWED-WHICH IS SO IN THE PRESE NT CASE. HENCE, THE SAME IS ALLOWED AND A.O. IS DIRECTED TO DELETE THIS DISALLOWANCE SUBJECT TO INTEREST OF RS.1,80,294 BEING DISALLOWED SUO MOTO, OFFERED FOR TAXATION BY THE APPELLANT RELATING TO INTEREST ON LATE PAYMENT OF TDS AND PROFESSIONAL TAX. SUBJECT TO TH E ABOVE, THIS GROUND OF APPEAL IS PARTLY ALLOWED. 8.6. THUS, FROM THE ABOVE IT, IS NOTED THAT SUBMISSIONS AND DETAILS SUBMITTED BY THE ASSESSEE HAVE NOT BEEN ANA LYSED BY THE LD. CIT(A) IN THE LIGHT OF AOS ALLEGATIONS AND DOUBTS NARRATED IN THE ASSESSMENT ORDER. WITH THE ASSISTA NCE OF THE PARTIES, IT WAS ALSO NOTICED BY US THAT THE ASSESSE E HAD SUBMITTED SOME DETAILS BEFORE THE ASSESSING OFFICER VIDE LETTER M/S. MUMBAI INTERNATIONAL AIRPORT 22 DATED 06-12-2010. BUT NO DISCUSSION, WHATSOEVER, H AD BEEN MADE BY THE LD. CIT(A) WHILE ALLOWING RELIEF. WE, THEREFORE, FIND IT APPROPRIATE TO SEND THIS ISSUE BACK TO THE FILE OF THE LD. CIT(A) WITH THE DIRECTION TO DECIDE THIS ISSUE IN A SPEAKING MANNER AFTER ANALYSING THE DETAILS AND EVIDENCES SU BMITTED BY THE ASSESSEE AND AFTER GIVING ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE TO EXPLAIN ITS CASE AND FURNISH FUR THER DETAILS / EVIDENCES AS MAY BE CONSIDERED APPROPRIATE BY THE A SSESSEE. THUS, WITH THESE DIRECTIONS, THIS ISSUE IS SENT BAC K TO THE FILE OF THE LD. CIT(A). THIS GROUND MAY BE TREATED AS A LLOWED FOR STATISTICAL PURPOSES. 9. GROUND 7: IN THIS GROUND, THE REVENUE HAS CHALLENGED THE ACTION OF THE LD. CIT(A) IN DELETING THE DISALLOWAN CE OF LEGAL AND PROFESSIONAL CHARGES OF RS.1,72,98,000/-. 9.1. THE BRIEF BACKGROUND OF THIS ISSUE IS THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS OBSERVED BY THE ASSESSING OFFICER THAT THAT THE ASSESSEE HAD NOT MA DE PROPER ALLOCATION OF INDIRECT EXPENSES BETWEEN CAPITAL AND REVENUE HEADS AND THEREFORE IN ASSESSMENT YEAR 2007-08 THE ASSESSMENT WAS COMPLETED BY MAKING AN ALLOCATION OF 75% OF INDIRECT EXPENSES TO THE CAPITAL HEADS AS IT WAS FI RST YEAR OF OPERATION DURING WHICH ASSESSEE HAD EMBARKED UPON M ASSIVE INVESTMENTS IN CAPITAL OUTLAYS FOR MODERNISATION AN D DEVELOPMENT OF THE AIRPORT. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE FURNISHED REPLY BEFORE THE ASSESSING OFFICER VIDE LETTER DATED 20-12-2010 FURN ISHING A STATEMENT CONTAINING ITEM-WISE DETAILS OF APPORTION MENT OF INDIRECT EXPENSES AFTER MAKING ANALYSIS OF THE DETA ILS M/S. MUMBAI INTERNATIONAL AIRPORT 23 FURNISHED BY THE ASSESSEE. THE ASSESSING OFFICER W AS OF THE OPINION THAT THE ASSESSEE HAD OMITTED TO APPORTION EXPENSES INCURRED ON LEGAL AND PROFESSIONAL CHARGES AMOUNTIN G TO RS.19.22 CRORES. AS PER THE ASSESSING OFFICER, A P ORTION OF THESE EXPENSES WAS PRIMA FACIE ALLOCABLE TO CAPITAL WORK-IN- PROGRESS. THUS, AFTER DEDUCTING A SUM OF RS.19,22, 000 (I.E. DEPRECIATION @10%, THE ASSESSING OFFICER ALLOCATED BALANCE AMOUNT OF RS.1,72,98,000 TOWARDS CAPITAL EXPENSES O UT OF THE TOTAL LEGAL AND PROFESSIONAL CHARGES CLAIMED BY THE ASSESSEE. 9.2. BEING AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE LD. CIT(A). THE ASSESSEE MADE DETAILED SUBMISSIONS, AN D ACCEPTING THE SAME, LD. CIT(A) DELETED THE DISALLOW ANCE MADE BY THE ASSESSING OFFICER. 9.3. BEING AGGRIEVED, THE REVENUE IS BEFORE US. DURING THE COURSE OF HEARING, IT WAS VEHEMENTLY ARGUED BY THE LD. DR THAT ON THIS ISSUE ALSO, THE LD. CIT(A) HAS DECIDED THE ISSUE IN A HIGHLY CRYPTIC AND NON-SPEAKING MANNER AND NO PRO PER REASONING HAS BEEN GIVEN WHILE ALLOWING RELIEF TO T HE ASSESSEE. 9.4. PER CONTRA, THE LD. COUNSEL OF THE ASSESSEE SUBMIT TED THAT COMPLETE DETAILS WERE FILED BEFORE THE ASSESSI NG OFFICER SHOWING PROPER BREAK-UP OF REVENUE AND CAPITAL EXPE NDITURE AND NOTHING WRONG HAS BEEN POINTED OUT THEREIN. 9.5. WE HAVE GONE THROUGH THE SUBMISSIONS MADE BEFORE U S AS WELL AS BEFORE THE LOWER AUTHORITIES. IT IS NOTED THAT ON THIS ISSUE ALSO, LD. CIT(A) HAS NOT GIVEN PROPER REASONI NG AND ORDER PASSED BY HIM IS CRYPTIC. HE ALLOWED THE RELIEF BY MERELY OBSERVING AS UNDER:- I HAVE CONSIDERED THE ABOVE SUBMISSIONS AND IN VIE W OF THE FACTS BROUGHT ON RECORD WHICH CLEARLY SHOW TH AT THE M/S. MUMBAI INTERNATIONAL AIRPORT 24 LEGAL AND PROFESSIONAL CHARGES WHICH REFER TO THE CURRENT YEAR ARE CLEARLY AN ALLOWABLE EXPENSES U/S 37(1) OF THE I.T ACT AND THEREFORE, THIS IS AN ALLOWABLE EXPENSE. HE NCE, THIS GROUND OF APPEAL IS ALLOWED AND A.O. IS DIRECT ED TO DELETE THIS DISALLOWANCE / ADDITION. 9.6. THUS, FROM THE ABOVE SAID PARAGRAPH OF LD. CIT(A) S ORDER, IT IS NOTED THAT HE HAS NOT GIVEN PROPER REASONING WHILE ALLOWING RELIEF TO THE ASSESSEE. THE DETAILS SUBMI TTED BY THE ASSESSEE HAVE NOT BEEN DISCUSSED BY THE LD. CIT(A). HE HAS MADE A SWEEPING AND GENERAL REMARK THAT THE DETAILS SUBMITTED BY THE ASSESSEE SHOW THAT LEGAL AND PROFE SSIONAL CHARGES ARE CLEARLY ALLOWABLE EXPENSES U/S 37(1) OF THE ACT. HE HAS NOT DISCUSSED THE DETAILS OF THE LEGAL AND P ROFESSIONAL CHARGES AND WHETHER THESE HAVE BEEN INCURRED ON ACC OUNT OF REVENUE OR CAPITAL FIELD. THEREFORE, UNDER THESE CIRCUMSTANCES, WE SEND THIS ISSUE BACK TO THE FILE OF THE LD. CIT(A) WITH THE SAME DIRECTIONS AS HAVE BEEN GIVEN WITH REGARD TO GROUND 6 ABOVE. THIS GROUND MAY BE TREATED AS A LLOWED FOR STATISTICAL PURPOSES. 10. AS A RESULT, APPEAL OF THE REVENUE IS PARTLY ALLOW ED. 11. NOW WE SHALL TAKE UP ASSESSEES APPEAL IN ITA N O. 2760/UM/2012: THE ASSESSEE COMPANY HAS FILED THE APPEAL BEFORE US ON THE FOLLOWING GROUNDS: GROUND NO. 1: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE LEARNED ASSESSING OFFICER OF MAKING A DISALLOWANCE OF RS. 50,20,500/- U/S. 14A R.W.R. 8D OF THE INCOME TAX ACT, 1961. THE APPELLANT PRAYS THAT THE SAME MAY PLEASE BE DELETED. GROUND NO. 2: M/S. MUMBAI INTERNATIONAL AIRPORT 25 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF THE PROVISION FOR LEAVE ENCASHMENT OF RS.13,782,831/MADE ON THE BASIS OF AN ACTUARIAL VALUATION BY RELYING ON THE DECISION OF CALCUTTA HIGH COURT IN THE CASE OF EXIDE INDUSTRIES LTD. V UNION OF INDIA (292 ITR 470). THE APPELLANT PRAYS T HAT THE SAME MAY BE ALLOWED. GROUND NO. 3: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN CONFIRMING THE STAND OF A.O. THAT THE PASSENGER SERVICE FEE - SECURITY COMPONENT [PSF(SC)] OF RS.1,32,58,59,023/- FORMS PART OF THE TAXABLE INCOME OF THE APPELLANT. THE APPELLANT PRAYS THAT PSF (SC) IS NOT THE INCOME OF THE APPELLANT. HENCE, THE ADDITION ON THIS ACCOUNT MAY PLEASE BE DELETED. GROUND NO. 4: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN RESTRICTING THE DEPRECIATION ALLOWANCE TO 10% AS APPLICABLE TO BUILDINGS INSTEAD OF 15% AS APPLICABLE TO PLANT AND MACHINERY, ON THE EXPENDITURE INCURRED BY THE APPELLANT ON TAXIWAYS , TAXI TRACK AND PARKING BAYS. 12. GROUND 1 : IN THIS GROUND, THE ASSESSEE HAS CHALLENGED THE ACTION OF LD.CIT(A) IN CONFIRMING THE ACTION OF ASSESSING OFFICER IN MAKING DISALLOWING RS.60,20,500 U/S 14 R .W.R 8D OF THE ACT. 12.1. THE BRIEF BACKGROUND AND FACTS OF THIS ISSUE IS TH AT IN THE RETURN FILED BY THE ASSESSEE, VOLUNTARY DISALLO WANCE OF RS.1,62,580 WAS MADE ON ACCOUNT OF EXPENSES WHICH C AN BE ATTRIBUTED FOR EARNING THE EXEMPT INCOME. DURING T HE COURSE OF ASSESSMENT PROCEEDINGS, THE AO ASKED THE ASSESSE E TO JUSTIFY THE VOLUNTARY DISALLOWANCE. IN RESPONSE, T HE ASSESSEE SUBMITTED WORKING FOR ARRIVING AT THE AFORESAID FIG URE BEFORE THE AO, BUT THE AO WAS OF THE VIEW THAT THE WORKING GIVEN BY M/S. MUMBAI INTERNATIONAL AIRPORT 26 THE ASSESSEE WAS NOT ACCEPTABLE AND, THEREFORE, HE STRAIGHT AWAY RESORTED TO PROVISIONS OF RULE 8D(2)(III) OF T HE ACT FOR MAKING FURTHER DISALLOWANCE IN EXCESS OF VOLUNTARY DISCLOSURE MADE BY THE ASSESSEE. 12.2. IT WAS SUBMITTED DURING THE COURSE OF HEARING BEFO RE US THAT THIS ISSUE IS NOW COVERED IN FAVOUR OF THE ASS ESSEE BY THE DECISION OF KOLKATTA BENCH OF ITAT IN THE CASE OF D CIT VS ASHISH JHUNJHUNWALLA (ITA 1809/KOL/2012 DATED 14-05 - 2013), AUTHORED BY ONE OF US, I.E. HONBLE JM. IT WAS ALSO BROUGHT TO OUR NOTICE THAT THE SAID JUDGEMENT OF TH E TRIBUNAL HAS BEEN CONFIRMED BY A DETAILED ORDER OF HONBLE C ALCUTTA HIGH COURT DATED 08-01-2014 (G.A. NO.2990 OF 2013 A ND ITA NO.157 OF 2013. IN ADDITION TO THE ABOVE, THE LD. COUNSEL RELIED UPON THE FOLLOWING JUDGMENTS IN SUPPORT OF H IS ARGUMENTS: I. ORDER OF THE TRIBUNAL IN THE CASE OF REI AGRO LT D IN ITA NO.1811/KOL/2012 II. DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS REI AGRO LTD IN GA NO.3022 OF 2013 III. ORDER OF THE TRIBUNAL IN THE CASE OF GLOBAL CA LCIUM PVT LTD VS DCIT IN ITA NOS. 2255/CHENNAI/13 IV. ORDER OF THE TRIBUNAL IN KALYANI STEELS LTD VS. ADDL CIT IN ITA NO.1733/PN/12 V. ORDER OF THE TRIBUNAL IN 3DPLM ASOFTWARE SOLUTIO NS LTD VS ITO AND VICE VERSA IN ITA NO.5736/MUM/12 12.3. PER CONTRA, THE LD. CIT-DR RELIED UPON THE ORDERS OF THE LOWER AUTHORITIES. M/S. MUMBAI INTERNATIONAL AIRPORT 27 12.4. WE HAVE GONE THROUGH THE FACTS AND CIRCUMSTANCES O F THE CASE, SUBMISSIONS MADE BY BOTH THE PARTIES AS W ELL AS THE JUDGEMENTS PLACED BEFORE US. WE HAVE NOTED AT THE O UTSET THAT THE ASSESSEE HAS MAINLY MADE INVESTMENTS IN THE MUT UAL FUNDS AND TOTAL NUMBER OF TRANSACTIONS DONE DURING THE YEAR WAS 19. IN VIEW OF THE SAME, ASSESSEE MADE VOLUNTA RY DISALLOWANCE OF RS.1,62,500/-. IN SUPPORT OF IT, F OLLOWING WORKING WAS SUBMITTED BY THE ASSESSEE BEFORE THE LO WER AUTHORITIES: 1. IN CASE OF INVESTMENTS DONE FROM OPERATIONS SURPLUS FUNDS, INTEREST COST IS CONSIDERED TO BE NIL. 2. PAYROLL COSTS ARE AS FOLLOWS: AVP FINANCE - 5% OF HIS CTC FOR 8 MONTHS, AS INVESTMENT ACTIVITY DONE FROM AUGUST,2008 1,00,000 MGR.(FIN) 5% OF HIS CTC FOR 8 MONTHS AS HE HAS BEEN APPOINTED SINCE JANUARY,2008 12,500 TOTAL A 1,12,500 3. OTHER ADMINISTRATIVE COSTS ARE APP. 50,000 TOTAL B 1,62,500 IT IS NOTED FROM THE PERUSAL OF THE ASSESSMENT ORDE R THAT THE AO DID NOT RECORD ANY SATISFACTION ABOUT THE CORREC TNESS OF THE CLAIM OR OTHERWISE HAVING REGARD TO THE ACCOUNTS OF THE ASSESSEE. WE FIND THAT THIS ISSUE IS NO MORE RES INTEGRA. IN THE CASE OF ASHISH JHUNJHUNWALLA (SUPRA) AUTHORED BY ON E OF US, I.E. HONBLE JM, HONBLE KOLKATTA BENCH OF THE TRIB UNAL AFTER M/S. MUMBAI INTERNATIONAL AIRPORT 28 CONSIDERING UMPTEEN NUMBER OF JUDGEMENTS AVAILABLE ON THIS ISSUE, HELD AS UNDER :- 6. WE FIND FROM THE FACTS OF THE ABOVE CASE THAT T HE AO HAS NOT EXAMINED THE ACCOUNTS OF THE ASSESSEE AND T HERE IS NO SATISFACTION RECORDED BY THE AO ABOUT THE COR RECTNESS OF THE CLAIM OF THE ASSESSEE AND WITHOUT THE SAME H E INVOKED RULE 8D OF THE RULES. WHILE REJECTING THE C LAIM OF THE ASSESSEE WITH REGARD TO EXPENDITURE OR NO EXPEN DITURE, AS THE CASE MAY BE, IN RELATION TO EXEMPTED INCOME, THE AO HAS TO INDICATE COGENT REASONS FOR THE SAME. FROM T HE FACTS OF THE PRESENT CASE IT IS NOTICED THAT THE AO HAS N OT CONSIDERED THE CLAIM OF THE ASSESSEE AND STRAIGHT A WAY EMBARKED UPON COMPUTING DISALLOWANCE UNDER RULE 8D OF THE RULES ON PRESUMING THE AVERAGE VALUE OF INVESTM ENT AT % OF THE TOTAL VALUE. IN VIEW OF THE ABOVE AND RES PECTFULLY FOLLOWING THE COORDINATE BENCH DECISION IN THE CASE OF J. K. INVESTORS (BOMBAY) LTD., SUPRA, WE UPHOLD THE ORDER OF CIT(A). THIS APPEAL OF REVENUE IS DISMISSED. 12.5. SUBSEQUENTLY, AFORESAID JUDGMENT HAS BEEN APPROVED BY THE HONBLE CALCUTTA HIGH COURT IN THESE VERY WORDS BY PASSING A DETAILED ORDER WHICH HAS BEEN MENTIONED A BOVE. IN ADDITION TO THAT IT IS NOTED BY US THAT SIMILAR VIE W HAS BEEN TAKEN IN THE OTHER JUDGEMENTS CITED BY THE LD. COUN SEL AS MENTIONED BY US IN EARLIER PART OF OUR ORDER. NO C ONTRARY JUDGMENT WAS BROUGHT TO OUR NOTICE. THUS, WE FIND T HAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THESE JUDGMENTS AND, THEREFORE, RESPECTFULLY FOLLOWING THE SAME, DI SALLOWANCE MADE BY THE AO WITHOUT ASSUMING JURISDICTION AS PER LAW FOR INVOKING PROVISIONS OF RULE 8D(2)(III) IS DIRECTED TO BE DELETED. 13. GROUND 2 : IN THIS GROUND, THE ASSESSEE HAS CHALLENGED THE ACTION OF THE LD.CIT(A) IN CONFIRMIN G THE DISALLOWANCE MADE BY THE AO ON ACCOUNT OF PROVISION FOR LEAVE ENCASHMENT OF RS.1,37,82,831/- MADE BY THE ASSESSEE ON THE BASIS OF ACTUARIAL VALUATION. M/S. MUMBAI INTERNATIONAL AIRPORT 29 13.1. THE BRIEF FACTS OF THE CASE ARE THAT IN THE ASSESS MENT ORDER, THE AO MADE ADDITION OF THE AFORESAID AMOUNT ON ACCOUNT OF PROVISION FOR LEAVE ENCASHMENT DEBITED T O THE PROFIT & LOSS ACCOUNT ON THE GROUND THAT THE DECISION OF C ALCUTTA HIGH COURT IN THE CASE OF EXCEL INDUSTRIES VS UOI 2 92 ITR 470 (CAL) HAS BEEN STAYED BY THE HONBLE SUPREME COURT AND, THEREFORE, AS ON THAT DATE, THE EXPENSES WERE NOT A LLOWABLE. 13.2. BEFORE THE LD. CIT(A), THE ASSESSEE CHALLENGED THI S DISALLOWANCE. BUT LD. CIT(A) DECIDED THE ISSUE AGA INST THE ASSESSEE. 13.3. DURING THE COURSE OF HEARING, THE LD. COUNSEL OF T HE ASSESSEE FAIRLY SUBMITTED THAT THIS ISSUE SHOULD GO BACK AND IT SHOULD BE DECIDED ON THE BASIS OF JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF EXCEL INDUSTRIES LTD ( SUPRA). IT WAS ALSO SUBMITTED THAT THE AMOUNT ACTUALLY PAID SH OULD BE ALLOWED. 13.4. PER CONTRA, THE LD. CIT-DR DID NOT RAISE ANY OBJEC TION AND SUBMITTED THAT PROPER APPRECIATION OF FACTS HAV E NOT BEEN DONE IN THIS CASE AND HE WOULD HAVE NO OBJECTION IF THIS ISSUE IS SENT BACK TO THE FILE OF THE AO. 13.5. WE HAVE GONE THROUGH THE ORDERS PASSED BY LOWER AUTHORITIES ON THIS ISSUE. IT IS NOTED THAT NONE O F THE AUTHORITIES HAVE NARRATED PROPER FACTS AS TO WHETHE R THE TOTAL AMOUNT DEBITED UNDER THIS HEAD WAS ON ACCOUNT OF PR OVISION OR SOME PART OF IT WAS PAID ALSO. FURTHER, IT IS A LSO NOT COMING OUT WHETHER PROVISION FOR LEAVE ENCASHMENT HAS BEEN MADE ON THE BASIS OF ACTUARIAL BASIS OR NOT. IN OUR VIEW, THIS ISSUE NEEDS TO GO BACK FOR PROPER VERIFICATION OF FACTS, AND THEREFORE, M/S. MUMBAI INTERNATIONAL AIRPORT 30 WE SEND THIS ISSUE BACK TO THE FILE OF THE AO FOR P ROPER ADJUDICATION AFTER CONSIDERING ALL THE FACTS AND TH E JUDGMENTS IN THIS REGARD FOR WHICH THE AO SHALL GIVE ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. THE ASSESSEE SHALL SUB MIT REQUISITE DETAILS AND DOCUMENTARY EVIDENCES TO BRING COMPLETE FACTS ON RECORD AND PLACE ALL THE JUDGEMENTS AS MAY BE CONSI DERED APPROPRIATE AS PER LAW AND FACTS. THE AO SHALL DEC IDE THIS ISSUE AFRESH AFTER TAKING INTO ACCOUNT ALL THE MATE RIAL HELD ON RECORD AND ALL THE JUDGEMENTS AS AVAILABLE AT THAT TIME ON THIS ISSUE. THIS GROUND MAY BE TREATED AS ALLOWED FOR S TATISTICAL PURPOSE. 14. GROUND 3 : IN THIS GROUND, THE ASSESSEE HAS CHALLENGED THE ACTION OF LD. CIT(A) IN CONFIRMING THE ACTION O F AO IN HOLDING THAT THE AMOUNT OF PASSENGER SERVICE FEE SECURITY COMPONENT (PSF SC) OF RS.132.59 CRORES RECEIVED B Y THE ASSESSEE FORMS PART OF TAXABLE INCOME OF THE ASSESS EE COMPANY. 14.1. THE BRIEF BACKGROUND OF THE ISSUE INVOLVED IS THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTED BY THE AO FROM NOTE NO.11 OF THE COMPUTATION OF INCOME FILED BY THE ASSESSEE ALONG WITH RETURN THAT ASSESSEE HAD COLLEC TED PSFSC AS PER RULE 88 OF AIRCRAFT RULES, 1937. THE AO NOTE D THAT THE ASSESSEE HAD COLLECTED AN AGGREGATE AMOUNT OF RS.18 0.27 CRORES ON ACCOUNT OF PSF-SC OUT OF WHICH SOME AMOUN T HAS BEEN DISBURSED FOR SECURITY PURPOSES, AND THERE WAS LEFT SURPLUS OF RS.132.59 CRORES UNDER THIS HEAD. ACCOR DING TO THE AO, THE SAME SHOULD HAVE BEEN OFFERED TO TAX. IN R ESPONSE, THE ASSESSEE SUBMITTED THAT THIS AMOUNT WAS RECEIVE D IN M/S. MUMBAI INTERNATIONAL AIRPORT 31 FIDUCIARY CAPACITY ONLY AND WAS NOT IN THE NATURE O F INCOME AND, THEREFORE, THE SAME SHOULD NOT BE BROUGHT TO T AX. BUT THE AO WAS NOT SATISFIED WITH THE STAND OF THE ASSE SSEE, AND THEREFORE, HE FURTHER ANALYSED THE INSTRUCTION ISSU ED BY MOCA (GOVERNMENT OF INDIA) DT 19-01-2009 AS WELL AS CLAR IFICATION DATED 30-06-2008 ISSUED BY THE CBDT TO MOCA, AND MA DE AN OPINION THAT THE RECEIPTS ON ACCOUNT OF PSF SC WE RE TAXABLE AS INCOME IN THE HANDS OF AIRPORT OPERATOR AND CONF RONTED THE SAME TO THE ASSESSEE. UNDER THESE CIRCUMSTANCES, TH E ASSESSEE VIDE LETTER DATED 20-12-2010 SUBMITTED THA T THOUGH THE AFORESAID AMOUNT DID NOT CONSTITUTE ASSESSEES INCOME IN VIEW OF DOCTRINE OF DIVERSION OF INCOME BY OVERRID ING TITLE, AND SINCE THE IMPUGNED AMOUNTS WAS COLLECTED IN FIDUCIA RY CAPACITY AND THE RETURN OF INCOME WAS FILED ACCOR DINGLY BY NOT INCLUDING THE SAID AMOUNT AS PART OF ITS INCOME , BUT IN VIEW OF THE INSTRUCTION OF MOCA (GOVERNMENT OF INDI A) DATED 15-11-2010, THE ASSESSEE WAS CONSTRAINED TO OFFER T HE SAME AS PART OF ITS TAXABLE INCOME AND PAY TAXES THEREON. UNDER THESE CIRCUMSTANCES, THE AO BROUGHT TO TAX THE IMPUGNED A MOUNT AS PART OF INCOME OF THE ASSESSEE AMOUNTING TO RS.1 32.59 CRORES. 14.2. HOWEVER SINCE THE ASSESSEE WAS NOT SATISFIED WITH THE ASSESSMENT ORDER, IT CONTESTED THE ISSUE OF TAXABIL ITY OF THE AFORESAID AMOUNT BEFORE THE LD. CIT(A) AND MADE EXH AUSTIVE SUBMISSIONS CHALLENGING THE TAXABILITY OF THE IMPUG NED AMOUNT AS PART OF ITS TAXABLE INCOME MAINLY ON THE GROUND THAT THE AFORESAID AMOUNT HAD NO ATTRIBUTES OF INCO ME AS FAR AS TAXABILITY OF THE SAME WAS CONCERNED IN THE HAND S OF THE M/S. MUMBAI INTERNATIONAL AIRPORT 32 ASSESSEE COMPANY. BUT LD. CIT(A) DID NOT AGREE WIT H THE SUBMISSIONS OF THE ASSESSEE MAINLY FOR THE REASON T HAT MOCA (GOVERNMENT OF INDIA) HAD ISSUED GUIDELINES CLARIFY ING THAT PSFSC WAS TAXABLE IN THE HANDS OF THE ASSESSEE NOTWITHSTANDING THAT THE AFORESAID RECEIPT WAS FIDU CIARY IN NATURE IN THE HANDS OF THE ASSESSEE. 14.3. BEING AGGRIEVED WITH THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS BEFORE US. DURING THE COURSE OF HEARING BEFORE US, THE LD. COUNSEL OF THE ASSESSEE MADE EXHAUSTIVE ARG UMENTS TO IMPRESS UPON THE POINT THAT THE IMPUGNED AMOUNT COL LECTED BY THE ASSESSEE FROM THE PASSENGERS ON BEHALF OF MI NISTRY OF CIVIL AVIATION, GOVERNMENT OF INDIA (MOCA, FOR SHOR T) WAS NOT IN THE NATURE OF INCOME AND THUS NOT TAXABLE IN THE HANDS OF THE ASSESSEE. IT WAS THUS SUMMARISED THAT THE IMPU GNED AMOUNT WAS NOT INCOME OF THE ASSESSEE IN VIEW OF WE LL ESTABLISHED DOCTRINE OF DIVERSION OF INCOME BY OVE RRIDING TITLE. IN SUPPORT OF HIS ARGUMENT, THE LD. COUNSEL RELIED UPON THE FOLLOWING JUDGEMENTS: 1. CIT VS SALEM CO-OPERATIVE SUGAR MILLS LTD (229 ITR 285)(MAD) 2. SIDDHESHWAR SAHAKARI SAKHAR KARKHANA LTD VS CIT (270 ITR 1)(SC) 3. CIT VS BIJLI COTTON MILLS (P) LTD (116 ITR 60)(SC) IT WAS FURTHER SUBMITTED THAT IN ANY CASE, OPINION EXPRESSED BY CBDT OR BY MOCA IS NOT BINDING UPON THE APPELLAT E AUTHORITIES INCLUDING THE TRIBUNAL. IF AS PER THE INCOME-TAX LAW, THE IMPUGNED AMOUNT IS NOT IN THE NATURE OF IN COME, THEN IT CANNOT BE BROUGHT TO TAX AS INCOME IN THE HANDS OF THE M/S. MUMBAI INTERNATIONAL AIRPORT 33 ASSESSEE. IN THIS REGARD RELIANCE HAS BEEN PLACED ON THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS HERO CYCLES PVT LTD 228 ITR 463 (SC) AND THE DECISI ON OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF BANQUE NAT IONAL DE PARIS VS CIT 237 ITR 518 (BOM). FURTHER, IT WAS AL SO ARGUED THAT THERE IS NO ESTOPPEL AGAINST THE LAW. IF A RE CEIPT IS NOT TAXABLE INCOME UNDER THE INCOME-TAX LAW, THEN, IT C ANNOT BE BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE NOR CAN TAX BE COLLECTED BY THE REVENUE WITHOUT THE AUTHORITY OF L AW NOTWITHSTANDING THAT THE ASSESSEE MIGHT HAVE OFFERE D IT FOR TAXATION ON WITHOUT PREJUDICE BASIS. RELIANCE IN T HIS REGARD WAS PLACED ON THE FOLLOWING JUDGMENTS: 1. MAYANK PODDAR (HUF) VS WTO - 262 ITR 633 (CAL) 2. NIRMALA L MEHTA VSCIT 269 ITR 1 (BOM) 3. BALMUKUND ACHARYA VS DCIT 310 ITR 310 (BOM) LASTLY, IT WAS SUBMITTED BY THE LD. COUNSEL THAT IN THIS CASE THE IMPUGNED RECEIPT CANNOT BE BROUGHT TO TAX AS IN COME IN ANYBODYS HANDS, AS THERE IS NO SURPLUS OR PROFIT W HICH CAN BE CHARACTERISED AS INCOME. WHATEVER AMOUNT IS LEFT A T THE END OF THE YEAR, IT IS ALREADY EARMARKED OR DEDUCTED FO R MEETING SECURITY EXPENSES. THERE IS NO DISCRETION TO USE T HE AMOUNT LEFT FOR ANY OTHER PURPOSES. HE TOOK US THROUGH VA RIOUS CLAUSES OF THE AGREEMENT AND OTHER DOCUMENTARY EVID ENCES TO IMPRESS UPON HIS POINT THAT THE IMPUGNED AMOUNT WAS NOT AVAILABLE TO THE ASSESSEE FOR ITS OWN USE. IT WAS LASTLY ARGUED THAT ALL THE AUTHORITIES INCLUDING AO, CIT(A), CBDT AND MOCA GROSSLY ERRED BY RELYING UPON THE JUDGEMENT OF HON BLE SUPREME COURT IN THE CASE OF CHOWRINGHEE SALES BURE AU VS M/S. MUMBAI INTERNATIONAL AIRPORT 34 CIT 87 ITR 542 (SC) TO HOLD THE IMPUGNED AMOUNT AS TAXABLE RECEIPT IN THE HANDS OF THE RECIPIENT. HE SUBMITTE D DETAILED ANALYSIS CARVING OUT THE DISTINCTION BETWEEN FACTS OF AFORESAID JUDGEMENT AND FACTS OF ASSESSEES CASE. HE EMPHASI SED THAT RELIANCE ON THE SAID JUDGEMENT IS OUT OF CONTEXT AN D MISPLACED. 14.4. PER CONTRA, THE LD. CIT-DR SUBMITTED THAT AFTER DE TAILED DISCUSSION DURING THE ASSESSMENT PROCEEDINGS, THE A SSESSEE HIMSELF OFFERED THIS AMOUNT FOR TAX AND ALSO SUBMIT TED THAT IN THIS CASE THE CBDT AND MOCA HAVE ALREADY EXPRESSED THEIR OPINION VIDE THEIR NOTIFICATION THAT THE IMPUGNED A MOUNT IS TAXABLE IN THE HANDS OF THE ASSESSEE COMPANY. HE S UBMITTED THAT OFFICE MEMORANDUM ISSUED BY CBDT CANNOT BE CHALLENGED IN THE COURT OF LAW. 14.5. IN THE REJOINDER, THE LD. COUNSEL REITERATED HIS SUBMISSIONS AND ALSO RELIED UPON THE JUDGMENT OF HO NBLE SUPREME COURT IN THE CASE OF UCO BANK 237 ITR 889 ( SC) AND ALSO SUBMITTED THAT ASSESSEE IS NOT RENDERING ANY S ECURITY SERVICES BUT ONLY ACTING AS A CONDUIT BY COLLECTING THE IMPUGNED AMOUNT ON BEHALF OF THE GOVERNMENT AND DISBURSING IT FOR SECURITY PURPOSES STRICTLY IN ACC ORDANCE WITH THE RULES, REGULATIONS AND GUIDELINES OF THE CONCE RNED AUTHORITY AND THEREFORE, UNDER THESE CIRCUMSTANCES, THE IMPUGNED AMOUNT COULD NOT HAVE BEEN BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE AND THEREFORE, THE ADDITION MADE BY THE AO SHOULD BE DELETED. 14.6. WE HAVE GONE THROUGH THE ORDERS PASSED BY LOWER AUTHORITIES, SUBMISSIONS MADE AND DOCUMENTARY EVIDE NCES M/S. MUMBAI INTERNATIONAL AIRPORT 35 PRODUCED BEFORE US BY BOTH THE SIDES AS WELL AS JUD GEMENTS RELIED UPON BY BOTH SIDES. IN OUR CONSIDERED OPINI ON, WE HAVE BEEN CALLED UPON TO DECIDE THE FOLLOWING THREE ISSU ES TO DECIDE THIS GROUND: (1) WHETHER, THE AMOUNT OF PSF-SC COLLECTED BY THE ASSESSEE WILL BE TAXABLE IN THE HANDS OF THE ASSESS EE MERELY BECAUSE THE SAME HAS BEEN OFFERED TO TAX BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS IRRESPECTIVE OF CORRECT POSITION OF ITS TAXABILITY IN ACCORDANCE WITH LAW? (2) WHETHER, OFFICE MEMORANDUM / CLARIFICATIONS ISSUED BY THE CBDT OR MOCA OBSERVING THAT THE AFORESAID AMOUNT IS TAXABLE IN THE HANDS OF THE ASSESSEE HAVE BEEN ISSUED AFTER CONSIDERING PROVISIONS OF INCOME- TAX ACT AND WHETHER THE OPINION EXPRESSED THEREIN IS BINDING UPON THE APPELLATE AUTHORITIES INCLUDING TH E INCOME-TAX APPELLATE TRIBUNAL? (3) WHETHER, THE IMPUGNED AMOUNT OF PSF-SC COLLECTED BY THE ASSESSEE COMPANY ON BEHALF OF MOCA AS PER THE RELEVANT REGULATIONS FOR THE PURPOSES OF MEETING SECURITY EXPENSES CAN BE CHARACTERISED AS INCOME IN THE HANDS OF THE ASSESSEE COMPANY AND MADE LIABLE T O TAX IN ITS HANDS AS PER PROVISIONS OF INCOME TAX AC T, 1961? 14.7. HAVING HEARD BOTH THE PARTIES, WE HAVE PONDERED OV ER ALL THE THREE ISSUES AND FEW OTHER ALLIED ISSUES WH ICH WERE GERMANE TO THE ISSUES BEFORE US AND NECESSARY FOR D ECIDING M/S. MUMBAI INTERNATIONAL AIRPORT 36 THESE GROUNDS, AND ALL THESE ISSUES ARE DECIDED HER EUNDER ONE BY ONE. 14.8. WITH REGARD TO THE FIRST ISSUE, THE BRIEF FACTS AN D BACKGROUND BROUGHT BEFORE US ARE THAT IN PURSUANCE TO PROCESS OF PRIVATISATION OF AIRPORTS IN INDIA, THE ASSESSEE COMPANY HAD ENTERED INTO AN AGREEMENT IN THE NATURE OF OMDA WITH AIRPORT AUTHORITY OF INDIA TO OPERATE, MA INTAIN, DEVELOP, DESIGN, CONSTRUCT, UPGRADE, MODERNISE, FIN ANCE AND MANAGE THE CHHATRAPATI SHIVAJI INTERNATIONAL AIRPOR T AT MUMBAI (HEREINAFTER CALLED AIRPORT, IN SHORT). A S PER RULE 88 OF THE AIRCRAFT RULES, 1937, THE ASSESSEE WAS ENTIT LED TO COLLECT A FEE TERMED AS PASSENGER SERVICES FEE (PSF) FROM ALL THE PASSENGERS EMBARKING AT THE AIRPORT. THE SAID FEE WAS INITIALLY COLLECTED BY THE CONCERNED AIRLINE AND THEN HANDED OVER TO THE ASSESSEE COMPANY FOR THE SAKE OF ADMINISTRATIVE CON VENIENCE. AS PER TERMS, THE PSF WAS CHARGEABLE @ RS.200 PER P ASSENGER, OUT OF WHICH RS.70/- (I.E. 35% OF PSF) WAS FOR USE OF ASSESSEE COMPANY FOR PASSENGER FACILITATION SERVICES AND THE BALANCE AMOUNT OF RS.130/- (I.E. 65% OF PSF) WAS TO BE UTIL ISED FOR PAYMENT TO SECURITY AGENCY DESIGNATED BY THE CENTRA L GOVERNMENT FOR PROVIDING SECURITY SERVICES AT AIRPO RT AND THE SAID COMPONENT WAS CALLED AS PASSENGER SERVICE FEE- SECURITY COMPONENT (IN SHORT REFERRED TO AS PSF-SC). THE SA ID PORTION I.E. RS.130/- (65% OF PSF) WAS DEPOSITED IN AN ESC ROW ACCOUNT PENDING UTILISATION. 14.9. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE INCLUDED PASSENGER FACILITATION COMPONENT OF PSF (I .E. RS.70/- BEING 35% OF PSF) AS INCOME OF THE ASSESSEE COMPANY . BUT M/S. MUMBAI INTERNATIONAL AIRPORT 37 THE BALANCE AMOUNT OF RS.130/- (I.E. 65%) PORTION W AS KEPT IN SEPARATE ESCROW ACCOUNT FOR WHICH SEPARATE BOOKS OF ACCOUNT WERE MAINTAINED IN ACCORDANCE WITH THE STANDARD OPE RATING PROCEDURE (SOP) FORMULATED BY MOCA AND, THEREFORE, THE SAME WAS NOT INCLUDED IN THE INCOME OF THE ASSESSEE COMP ANY. THE ASSESSEE COMPANY DID NOT INCLUDE REVENUE PERTAINING TO PSF- SC AS WELL AS THE CORRESPONDING EXPENSES IN THE FIN ANCIAL STATEMENTS OF THE ASSESSEE COMPANY. DURING THE COU RSE OF ASSESSMENT PROCEEDINGS, THE AO CONFRONTED TO THE AS SESSEE, AN OFFICE MEMORANDUM ISSUED BY CBDT TO MOCA AND CLARIFICATION FROM MOCA WHEREIN IT WAS STATED THAT PSF SC WAS ALSO TAXABLE IN THE HANDS OF ASSESSEE AND TAX W AS TO BE RECOVERED FROM THE SAID FUNDS. UNDER THESE CIRCUMS TANCES, THE ASSESSEE FINALLY STATED THAT THE SAID AMOUNT MA Y BE INCLUDED IN ITS TAXABLE INCOME. THE AO ACCORDINGLY MADE ADDITION IN THE INCOME OF THE ASSESSEE. BEING AGGRI EVED, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A) WHEREIN ADDITION WAS CONFIRMED. STILL AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE TRIBUNAL. DURING THE COURSE OF HEARING BEFORE U S, THE PRELIMINARY OBJECTION OF THE LD. CIT-DR WAS THAT TH E ASSESSEE ONCE HAVING TAKEN A STAND DURING THE COURSE OF ASSE SSMENT PROCEEDINGS THAT THE AFORESAID AMOUNT WAS TAXABLE, CANNOT NOW TURN BACK AND CANNOT CLAIM IT TO BE NOT TAXABLE . ON THE OTHER HAND, THE ASSESSEES COUNSEL MAINTAINS THAT T HE SAID AMOUNT WAS NOT INCLUDED AS PART OF ITS INCOME IN TH E RETURN FILED ORIGINALLY AND ONLY DURING THE COURSE OF ASSE SSMENT PROCEEDINGS, BECAUSE OF THE PRESSURE MADE BY THE AS SESSING OFFICER BY SHOWING LETTERS OF CBDT AND MOCA, THE SA ID M/S. MUMBAI INTERNATIONAL AIRPORT 38 AMOUNT WAS OFFERED FOR TAX. BUT THE ASSESSMENT SHO ULD BE DONE STRICTLY IN ACCORDANCE WITH LAW AND MERE ACQUI ESCENCE OF THE ASSESSEE EXPRESSED DURING THE COURSE OF ASSESSM ENT PROCEEDINGS WOULD NOT ALTER THE TRUE POSITION OF LA W AND WOULD NOT MAKE THE AFORESAID AMOUNT AS LIABLE TO BE TAXED IN THE HANDS OF THE ASSESSEE, IF THE SAME IS ACTUALLY NOT LIABLE TO BE TAXED AS PER THE PROVISIONS OF THE INCOME-TAX ACT. 14.10. WE HAVE ANALYSED THIS ISSUE. IT IS WELL SETTLED P OSITION OF LAW THAT AN AMOUNT CAN BE BROUGHT TO TAX IN THE HANDS OF AN ASSESSEE ONLY IN ACCORDANCE WITH THE PROVISIONS OF INCOME- TAX ACT. THIS FUNDAMENTAL POSITION HAS BEEN WELL E XPLAINED AND WELL SETTLED IN MANY JUDGEMENTS. IT IS WELL SE TTLED THAT THERE IS NO ESTOPPEL AGAINST LAW. NO TAX CAN BE CO LLECTED EXCEPT WITH THE AUTHORITY OF LAW AS PER CLEAR MANDA TE OF ARTICLE 265 OF CONSTITUTION OF INDIA. IF THE TAXES ARE TO BE COLLECTED DEPENDING UPON CONSENT/CONCURRENCE OF THE TAXPAYERS OR OTHERWISE, THEN IT WILL LEAD TO CHAOTIC SITUATION A ND ADMINISTRATION OF TAX WOULD BECOME IMPOSSIBLE. THE REFORE, IF AN AMOUNT IS TAXABLE UNDER THE LAW, ASSESSEE IS BOU ND TO PAY TAX THEREON AND IF AN AMOUNT IS NOT TAXABLE UNDER T HE INCOME- TAX LAW, THEN THE TAX CANNOT BE RECOVERED FROM THE ASSESSEE WITHOUT AUTHORITY OF LAW MERELY BECAUSE ASSESSEE OF FERED THE SAME TO TAX DURING THE COURSE OF ASSESSMENT PROCEED INGS. LAW IN THIS REGARD IS WELL SETTLED NOW, AND TO BEGIN WI TH, REFERENCE IS MADE ON THE LANDMARK JUDGMENT OF HONBLE DELHI H IGH COURT IN THE CASE OF CIT VS BHARAT GENERAL REINSURANCE CO LTD 81 ITR 303 (DEL.) RELEVANT PORTION FROM IT IS REPRODUCED BELOW: M/S. MUMBAI INTERNATIONAL AIRPORT 39 IT WAS TRUE THAT THE ASSESSEE ITSELF HAD INCLUDED THAT DIVIDEND INCOME IN ITS RETURN FOR THE YEAR IN QUEST ION, BUT THERE WAS NO ESTOPPEL IN THE INCOME-TAX ACT AND THE ASSESSEE HAVING ITSELF CHALLENGED THE VALIDITY OF T AXING THE DIVIDEND DURING THE YEAR OF ASSESSMENT IN QUESTION, IT MUST BE TAKEN THAT IT HAD RESILED FROM THE POSITION WHICH IT HAD WRONGLY TAKEN WHILE FILING THE RETURN. QUITE APART FROM IT, IT WAS INCUMBENT ON THE INCOME-TAX DEPARTMENT TO FIND OUT WHETHER A PARTICULAR INCOME WAS ASSESSABLE IN THE PARTICULAR YEAR OR NOT. MEREL Y BECAUSE THE ASSESSEE WRONGLY INCLUDED THE INCOME IN ITS RETURN FOR A PARTICULAR YEAR, IT COULD NOT CONF ER JURISDICTION ON THE DEPARTMENT TO TAX THAT INCOME I N THAT YEAR EVEN THOUGH LEGALLY SUCH INCOME DID NOT PERTAIN TO THAT YEAR. THEREFORE THE INCOME FROM DIVIDEND WAS NOT ASSESSABLE DURING THE ASSESSMENT YEAR 1958- 59, BUT IT WAS ASSESSABLE IN THE ASSESSMENT YEAR 1953-5 4. IT COULD NOT, THEREFORE, BE TAXED IN THE ASSESSMENT YE AR 1958-59. 14.11. OUR VIEW IS FURTHER FORTIFIED IN VIEW OF JUDGMENT OF HONBLE GUJRAT HIGH COURT IN THE CASE OF CIT VS KEISER-E- HIND MILLS CO. LTD 128 ITR 486 (GUJ.) IN WHICH THEIR LORDSHIPS HAVE RELIED UPON CIRCULAR OF THE BOARD WH EREIN A DUTY HAS BEEN CAST UPON THE REVENUE OFFICIALS TO GU IDE THE ASSESSEE FOR MAKING CLAIMS AS PERMISSIBLE UNDER THE LAW. RELEVANT PORTION IS REPRODUCED BELOW: IN VIEW OF THE CIRCULAR NO. 14(XI-35) OF 1955 DATE D 11-4- 1955, IT WAS CLEAR THAT FOR THE PURPOSE OF THE CIRC ULAR, WHAT SHOULD BE THE GUIDING FACTOR WAS WHETHER THE PROCEE DINGS OR OTHER PARTICULARS BEFORE THE INCOME-TAX OFFICER AT THE STAGE OF ORIGINAL ASSESSMENT DISCLOSED ANY GROUNDS FOR RELIEF UNDER SECTION 2(5) ( A ) ( III ) OF THE FINANCE ACT OF 1964 OR OF THE FINANCE ACT OF 1965, EVEN THOUGH NO CLAIM WAS MADE FOR THAT RELIEF BY THE ASSESSEE AT THE STAGE O F THOSE PROCEEDINGS BEFORE HIM. EVEN IF THERE IS A DEVIATION ON A POINT OF LAW, SO FAR AS THE CIRCULAR OF THE BOARD IS CONCERNED, THAT CIRCULAR W ILL BE BINDING ON ALL OFFICERS CONCERNED WITH THE EXECUTIO N OF THE M/S. MUMBAI INTERNATIONAL AIRPORT 40 ACT AND THEY MUST CARRY OUT THEIR DUTIES IN THE LIG HT OF THE CIRCULAR. IN VIEW OF THIS CLEAR POSITION REGARDING THE EFFECT OF THE CIRCULAR, IT WAS OBVIOUS THAT IN THE INSTANT CASE I T WAS INCUMBENT ON THE INCOME-TAX OFFICER TO ADVISE THE A SSESSEE TO CLAIM RELIEF UNDER SECTION 2(5)( A )( III ) IF THE PROCEEDING OR ANY OTHER PARTICULARS BEFORE HIM AT THE STAGE OF TH E ORIGINAL ASSESSMENT INDICATED THAT THE ASSESSEE WAS ENTITLED TO SUCH RELIEF UNDER THE PROVISIONS OF THE RELEVANT FI NANCE ACT, 1965, SO FAR AS THE ORDER UNDER REFERENCE WAS CONCERNED...... 14.12. FURTHER REFERENCE IS PLACED UPON ANOTHER JUDGMENT IN THE CASE OF S.R. KOSHTI 276 ITR 165 (GUJ) IN WHICH RELIEF WAS GRANTED TO ASSESSEE WITH FOLLOWING OBSERVATIONS: THE AUTHORITIES UNDER THE ACT ARE UNDER AN OBLIGAT ION TO ACT IN ACCORDANCE WITH LAW. TAX CAN BE COLLECTED ON LY AS PROVIDED UNDER THE ACT. IF AN ASSESSEE, UNDER A MIS TAKE, MISCONCEPTION OR ON NOT BEING PROPERLY INSTRUCTED, IS OVER- ASSESSED, THE AUTHORITIES UNDER THE ACT ARE REQUIRE D TO ASSIST HIM AND ENSURE THAT ONLY LEGITIMATE TAXES DU E ARE COLLECTED. [PARA 20] 14.13. IN THE CASE OF CIT VS LUCKNOW PUBLIC EDUCATIONAL SOCIETY 318 ITR 223 , IT WAS OBSERVED BY HONBLE ALLAHABAD HIGH COURT THAT THE INCOME TAX DEPARTMENT SHOULD NO T TAKE UNDUE ADVANTAGE OF THE IGNORANCE OF THE ASSESSEE IN VIEW OF BOARDS CIRCULAR NO. 14(XL-35)/1955, DATED 11-4-19 55. 14.14. IN THE CASE OF NIRMALA L MEHTA VS CIT 269 ITR 1, HONBLE BOMBAY HIGH COURT, RELYING UPON ARTICLE 265 OF CONSTITUTION OF INDIA HELD THAT ACQUIESCENCE CANNOT TAKE AWAY FROM THE TAXPAYER, THE RELIEF HE IS ENTITLED WHERE TAX IS LEVIED OR COLLECTED WITHOUT AUTHORITY OF LAW AND, THEREFORE, MERELY BECAUSE THE TAXPAYER OFFERED A RECEIPT TO TAX, THAT CANNOT TAKE AWAY ITS RIGHT IN CONTENDING THAT THE SAID AMOUNT W AS NOT CHARGEABLE TO TAX. M/S. MUMBAI INTERNATIONAL AIRPORT 41 14.15. IN THE CASE OF BALMUKUND ACHARYA VS DCIT 310 ITR 310 (BOM) , HONBLE BOMBAY HIGH COURT OBSERVED THAT THE APEX COURT AND VARIOUS HIGH COURTS HAVE RULED THAT AUTHORITIES UNDER THE INCOME-TAX LAW ARE UNDER AN O BLIGATION TO ACT IN ACCORDANCE WITH LAW. TAX CAN BE COLLECTE D ONLY AS PROVIDED UNDER THE ACT. IF AN ASSESSEE, UNDER A MI STAKE, MISCONCEPTION OR NOT BEING PROPERLY INSTRUCTED IS O VER ASSESSED, THE AUTHORITIES UNDER THE ACT ARE REQUIRE D TO ASSIST HIM AND ENSURE THAT ONLY LEGITIMATE TAX DUES ARE CO LLECTED. IF ANY ITEM OF RECEIPT IS NOT TAXABLE UNDER THE ACT, T HEN TAX CANNOT BE LEVIED APPLYING THE DOCTRINE OF ESTOPPEL. THE HONBLE HIGH COURT CONSIDERED THE AFORESAID JUDGEME NTS WHILE EXPRESSING ITS OPINION. 14.16. IN THE CASE OF MAYANK PODDAR (HUF) VS WTO 262 ITR 633 (CAL) , IT WAS OBSERVED BY THE HONBLE HIGH COURT THAT THERE IS NO ESTOPPEL AGAINST STATUTE. THUS, IF AN ASSESSEE UNDER MISUNDERSTANDING, ADMISSION OR MISS-APPRECIAT ION OFFERED AN AMOUNT TO TAX, THEN THE SAME WOULD NOT B E TAXABLE MERELY BECAUSE OF WRONG UNDERSTANDING OF LAW BY THE ASSESSEE OR BECAUSE OF HIS ADMISSION OR MISS-APPRECIATION OF LAW AND FACTS. IT WAS ALSO OBSERVED THAT THERE CAN ALSO NO T BE ANY WAIVER OF LEGAL RIGHT BY THE ASSESSEE. 14.17. THUS, IN VIEW OF THE AFORESAID LEGAL DISCUSSION AN D FACTS OF THIS CASE AS DISCUSSED ABOVE, IT IS HELD T HAT THE AMOUNT IN QUESTION CANNOT BE TAXED IN THE HANDS OF THE ASSESSEE MERELY BECAUSE THE SAME WAS OFFERED TO TAX DURING THE COURSE OF ASSESSMENT PROCEEDINGS UNDER CERTAIN CIRCUMSTANCES. UNDER THESE CIRCUMSTANCES, WE NEED TO M/S. MUMBAI INTERNATIONAL AIRPORT 42 EXAMINE AND DETERMINE WHETHER THE IMPUGNED AMOUNT O F PSF- SC COLLECTED BY THE ASSESSEE COMPANY IS ACTUALLY TA XABLE IN THE HANDS OF THE ASSESSEE AS PER THE PROVISIONS OF INCOME-TAX ACT, 1961. 14.18. THE AFORESAID DISCUSSION TAKES US TO THE SECOND ISSUE WHEREIN WE HAVE BEEN CALLED UPON TO DECIDE ABOUT TH E BINDING LEGAL FORCE OF THE OPINION EXPRESSED BY CBDT AND MO CA VIDE THEIR OFFICE MEMORANDUM/ INSTRUCTIONS FOR DETERMINI NG TAXABILITY OF THE IMPUGNED AMOUNT. IT IS ADMITTED FACT ON RECORD THAT THE ASSESSEE COMPANY COLLECTED PSF-SC I N VIEW OF THE ORDER ISSUED BY MOCA VIDE ITS ORDER DATED 09 TH MAY, 2006. THE TERMS OF THE ORDER HAVE BEEN MODIFIED / AMENDED FROM TIME TO TIME AS PER THE REQUIREMENTS. ONE SUCH ORD ER ISSUED BY MOCA WAS ISSUED ON 20 TH JUNE, 2007. SUBSEQUENTLY, CBDT ISSUED AN OFFICE MEMORANDUM DATED 30/06/2008 I N PURSUANCE TO THE REQUEST MADE BY THE CONCERNED OFFI CIALS OF MOCA REGARDING TAXABILITY OF PSFSC, WHEREIN IT HAS BEEN OBSERVED THAT SINCE THE ASSESSEE COMPANY WAS COLLEC TING THIS AMOUNT IN THE COURSE OF BUSINESS AND ASSESSEE WAS R ENDERING FACILITATION AND SECURITIES SERVICES WHETHER IN-HOU SE OR OUTSOURCED, THEREFORE, THE AMOUNT COLLECTED BY THE ASSESSEE IN THE FORM OF PSF-SC WAS IN THE NATURE OF INCOME OF T HE ASSESSEE AND LIABLE TO BE TAXED IN ITS HANDS. IN S UPPORT OF ITS VIEW, RELIANCE HAS BEEN PLACED BY THE BOARD ON THE JUDGEMENT OF HONBLE SUPREME COURT IN THE CASE OF CHOWRINGHEE SALES BUREAU VS CIT 87 ITR 547 (SC) WITH A VIEW TO FORTIFY ITS OPINION. SUBSEQUENTLY, MINISTRY OF CIVIL AVIATION S OFFICE ISSUED AN ORDER DATED 19-01-2009 LAYING DOWN ACCOUN TING / M/S. MUMBAI INTERNATIONAL AIRPORT 43 AUDIT PROCEDURE IN RESPECT OF PSFSC. IT WAS INTEN DED TO ACT AS STANDARD OPERATING PROCEDURE (SOP) FOR ACCOUNTIN G / AUDIT OF PSFSC BY THE AIRPORT OPERATOR. IN THE AFORESAI D DOCUMENT, THE WHOLE PROCEDURE WAS DULY EXPLAINED HOW THE AMOU NT HAS TO BE COLLECTED AND TO BE KEPT IN ESCROW ACCOUNT AN D TO BE DISBURSED FOR THE PURPOSE OF SECURITY. RELYING UPO N THE OFFICE MEMORANDUM ISSUED BY THE CBDT DATED 30-06-2008, IT WAS MENTIONED THEREIN THAT THE TAX COMPONENT MAY BE CHA RGED TO THE PSFSC ACCOUNT IN PROPORTION TO ITS LIABILITY O N STAND- ALONE BASIS. THE ASSESSEE WAS OF THE OPINION THAT THE AFORESAID AMOUNT WAS NOT TAXABLE IN THE HANDS OF TH E ASSESSEE COMPANY, AND THEREFORE, WHILE FILING THE RETURN THE SAME WAS NOT INCLUDED IN THE TAXABLE INCOME BY THE ASSESSEE. BUT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO WAS OF THE OPINION THAT THE SAID AMOUNT WAS TAXABLE IN THE HANDS OF THE ASSESSEE IN VIEW OF OFFICE MEMORANDUM OF CBDT D ATED 30- 06-2008 AND INSTRUCTIONS DATED 19-01-2009 ISSUED BY MOCA. WITH A VIEW TO CLARIFY THE SITUATION, REPRESENTATIO N WAS MADE BEFORE THE CBDT AS WELL AS MOCA. IN RESPONSE, MOCA ISSUED A LETTER DATED 15-11-2010 WHEREIN IT WAS STATED THA T THE MATTER WAS EXAMINED WITH THE MINISTRY OF FINANCE AN D ACCORDINGLY IT IS CLARIFIED THAT THE WHOLE AMOUNT O F PSF SC INCLUDING SECURITY COMPONENT WAS REVENUE RECEIPT, A ND THUS IT WAS TAXABLE UNDER THE INCOME-TAX ACT. 14.19. THE ASSESSEE CHALLENGED BEFORE US, THE VALIDITY AN D BINDING FORCE OF THE AFORESAID OFFICE MEMORANDUM IS SUED BY THE CBDT AND CLARIFICATION RECEIVED BY MOCA. IT HA S BEEN NOTED BY US FIRSTLY THAT IN NONE OF THESE DOCUMENTS , THERE M/S. MUMBAI INTERNATIONAL AIRPORT 44 SEEMS TO HAVE BEEN MADE ANY APPLICATION OF MIND BY THE CONCERNED AUTHORITIES WHILE EXPRESSING THEIR OPINIO N. NONE OF THE AUTHORITIES HAVE CONSIDERED THE ASPECT THAT THE IMPUGNED AMOUNT WAS COLLECTED IN THE FIDUCIARY CAPACITY BY T HE ASSESSEE. NONE OF THE AUTHORITIES HAVE STATED THAT UNDER WHAT PROVISIONS OF LAW, THE AFORESAID AMOUNT CAN BE BROU GHT TO TAX IN THE HANDS OF THE ASSESSEE. THE CBDT IN ITS OFFI CE MEMORANDUM HAS MADE A REFERENCE TO THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CHOWRINGHEE SA LES BUREAU (SUPRA). BUT FACTS OF THAT CASE HAVE NOT BE EN DISCUSSED. THE AFORESAID JUDGMENT HAS DIFFERENT FA CTS, WHEREIN, THE AMOUNT OF SALES-TAX WAS RECEIVED BY TH E SAID ASSESSEE AND DEPOSITED IN ITS BANK ACCOUNT. THE FU NDS GOT MIXED IN ASSESSEES ACCOUNTS. THUS, IN CASE OF NON PAYMENT BY THE SAID ASSESSEE, THE SAME BECAME INCOME OF THE SELLER (THE SAID ASSESSEE), WHEREAS THE FACTS ARE TOTALLY DIFFERENT IN THE CASE BEFORE US. THE AMOUNT HERE WAS COLLECTED PURELY IN FIDUCIARY CAPACITY AND THE SAME WAS DEPOSITED IN ES CROW ACCOUNT ON WHICH ASSESSEE HAD NO CONTROL AT ALL; TH E ASSESSEE HAD NO DISCRETION AT ALL UPON ITS USAGE. NO REASON ING HAS BEEN MADE OUT BY THE CBDT WHILE ISSUING ITS OPINION AS TO HOW THE SAID JUDGMENT WAS APPLICABLE ON THE FACTS O F THIS CASE. IT IS NOTED BY US THAT AFORESAID JUDGMENT CAME UP F OR CONSIDERATION BEFORE MANY COURTS WHEREIN ITS TRUE M EANING AND SCOPE OF ITS APPLICABILITY WAS EXPLAINED TIME T O TIME. IN ONE SUCH MATTER HAVING SIMILAR FACTS AS TO THE ASSE SSEE BEFORE US, HONBLE ALLAHABAD HIGH COURT EXPLAINED CORRECT APPLICATION OF AFORESAID JUDGMENT IN THE CASE OF CIT VS. SITA M/S. MUMBAI INTERNATIONAL AIRPORT 45 RAM SRI KISHAN DAS 141 ITR 685 (ALL) . IN THIS CASE, THE FACTS WERE THAT SAID ASSESSEE WAS A COMMISSION AGENT AND WAS ACCOUNTABLE FOR THE RECOVERY (CALLED AS MARKET FEE) WHICH HE MADE FROM THE SELLERS OF AGRICULTURAL PRODUCE IN TE RMS OF KRISHI UTPADAN MANDI RULES FRAMED UNDER THE U.P. KR ISHI UTPADAN MANDI ADHINIYAM, 1964. THE REVENUE TREATED THE AMOUNT SO COLLECTED BY THE AGENT AS PART OF ITS TAX ABLE INCOME BEING A TRADING RECEIPT IN VIEW OF JUDGMENT OF HON BLE SUPREME COURT IN THE CASE OF CHOWRINGHEE SALES BUREAU VS CI T 87 ITR 547 (SC), SUPRA. AFTER ANALYSING THE FACTS OF THE C ASE, IT WAS HELD BY THE HONBLE COURT THAT THE MARKET FEE REALI SED BY THE COMMISSION AGENT DOES NOT FORM PART OF HIS TRADING RECEIPT AS HE (THE COMMISSION AGENT) HELD THIS AMOUNT ONLY AS A TRUSTEE FOR AND ON BEHALF OF THE MARKET COMMITTEE. HONBLE COURT APPLIED THE JUDGMENT OF HONBLE SUPREME COURT IN TH E CASE OF CIT VS. SITALDAS TIRATHDAS 41 ITR 367 (SC) AND DISTINGUISHED THAT OF CHOWRINGHEE SALES BUREAU P. LTD. VS. CIT , SUPRA. 14.20 . THUS, AT THE OUTSET, IT IS CLEARLY VISIBLE THAT B OTH THE AUTHORITIES EXPRESSED THEIR OPINIONS WITHOUT PROPER APPLICATION OF MIND AND WITHOUT EXAMINING THE NATUR E OF IMPUGNED RECEIPT WITHIN THE FRAMEWORK OF PROVISIONS OF INCOME-TAX ACT, 1961. 14.21. APART FROM THAT, THE BINDING EFFECT OF OFFICE MEMORANDUM ISSUED BY CBDT, CLARIFICATION ISSUED BY MOCA IS ALSO UNDER QUESTION. IT HAS BEEN ARGUED THAT IT HAS BEEN HELD BY HONBLE SUPREME COURT MANY TIMES THAT CIRCU LARS ISSUED BY THE BOARD ARE BINDING UPON THE AUTHORITIE S WORKING M/S. MUMBAI INTERNATIONAL AIRPORT 46 UNDER IT, VIZ. THE AO, ETC. BUT THESE ARE NOT BINDI NG UPON THE APPELLATE AUTHORITIES INCLUDING INCOME TAX APPELLAT E TRIBUNAL. WE HAVE EXAMINED THIS ASPECT ALSO CAREFULLY. IT IS NOTED THAT AS PER SECTION 119 OF THE ACT, THE CBDT HAS BEEN EM POWERED BY THE LEGISLATURE TO ISSUE ORDERS, INSTRUCTIONS OR DIRECTIONS TO ALL THE INCOME-TAX AUTHORITIES WORKING UNDER IT FOR PROPER ADMINISTRATION OF THE I.T. ACT. AND IT HAS ALSO BE EN PROVIDED THAT THIS SHALL BE BINDING UPON THE INCOME-TAX AUTH ORITIES. BUT IT IS FURTHER NOTED THAT A PROVISO HAS BEEN ADD ED TO SUB SECTION (1) OF SECTION 119 WHICH SAYS THAT NO SUCH ORDERS, INSTRUCTIONS OR DIRECTIONS SHALL BE ISSUED:- (A) SO AS TO REQUIRE ANY INCOME-TAX AUTHORITY TO MAKE A PARTICULAR ASSES SMENT OR TO DISPOSE A PARTICULAR CASE IN A PARTICULAR MANNER ; OR (B) SO AS TO INTERFERE WITH THE DISCRETION OF THE COMMISSI ONER (APPEALS) IN EXERCISE OF HIS APPELLATE FUNCTIONS . IT IS CLEAR FROM THE PERUSAL OF AFORESAID PROVISO THAT NEITHER THE BOARD HAS POWER TO DECIDE THE TAXABILITY OF A PARTICULAR RECEIPT NOR HAS IT GOT ANY POWER TO INTERFERE WITH THE APPELLAT E FUNCTIONS OF COMMISSIONER (APPEALS), WHICH IS JUDICIAL IN NATURE . THUS, IN VIEW OF THE AFORESAID LEGAL SCENARIO COUPLED WITH F ACTS OF THIS CASE AS DISCUSSED ABOVE, WE HAVE STRONG DOUBTS IF A T ALL THE BOARD COULD HAVE ISSUED ANY INSTRUCTIONS TO DECIDE THE TAXABILITY OF AMOUNT COLLECTED BY THE ASSESSEE COMP ANY ON ACCOUNT OF PSF SC IN A PURELY FIDUCIARY CAPACITY. THIS TASK OF DETERMINATION OF TAXABILITY HAS BEEN LEFT BY THE LE GISLATURE UPON THE SHOULDERS OF THE DESIGNATED AO, WHO IS OBL IGED UNDER THE LAW TO DETERMINE THE SAME STRICTLY IN ACCORDANC E WITH THE PROVISIONS OF THE INCOME-TAX ACT, 1961. M/S. MUMBAI INTERNATIONAL AIRPORT 47 14.22. FURTHER, AFORESAID CLARIFICATION ISSUED BY THE BOA RD IN THIS CASE IS ACTUALLY AN OFFICE MEMORANDUM. IT I S AN INTER- DEPARTMENTAL COMMUNICATION. IN OUR VIEW, OFFICE MEMORANDUM WOULD NOT CARRY THE LEGAL FORCE OF BINDI NG EFFECT. FURTHER, IT HAS BEEN PROVIDED IN SECTION 119 THAT O RDERS, INSTRUCTIONS AND DIRECTIONS SHALL BE BINDING UPON T HE INCOME- TAX AUTHORITIES. IT IS NOTED THAT INCOME-TAX APPEL LATE TRIBUNAL DOES NOT FALL UNDER THE LIST OF INCOME-TAX AUTHORIT IES AS HAS BEEN PROVIDED IN SECTION 116 OF THE ACT. THUS, THE SE ORDERS, INSTRUCTIONS AND DIRECTIONS SHALL NOT BE BINDING UP ON THE INCOME-TAX APPELLATE TRIBUNAL. FURTHER IT IS NOTED THAT THESE HAVE BEEN HELD TO BE NOT BINDING UPON THE CIT(A) AS STATED ABOVE. THEREFORE, THERE IS NO QUESTION OF THERE BE ING ANY BINDING EFFECT UPON THE INCOME-TAX APPELLATE TRIBUN AL OF ANY SUCH COMMUNICATION ISSUED BY THE BOARD. 14.23. IT IS NOTED BY US THAT THIS ISSUE IS NOT RES INTEGRA, AS IT HAS BEEN SETTLED BY HONBLE JURISDICTIONAL HIGH COU RT AND HONBLE SUPREME COURT IN MANY CASES. IT WAS HELD B Y HONBLE BOMBAY HIGH COURT IN THE CASE OF BANQUE NATIONALE DE PARIS VS CIT (SUPRA) THAT CIRCULARS CANNOT OVERRIDE OR DETRACT FROM THE PROVISIONS OF THE ACT IN AS MUCH AS SECTIO N 119 OF THE ACT HAS EMPOWERED THE CBDT TO ISSUE ORDERS, INSTRUC TIONS OR DIRECTIONS FOR THE PROPER ADMINISTRATION OF THE ACT . HONBLE HIGH COURT HAS TAKEN INTO CONSIDERATION VARIOUS EAR LIER JUDGMENTS OF HONBLE SUPREME COURT ON THIS ISSUE. SIMILARLY, THE HONBLE SUPREME COURT IN THE CASE OF CIT VS HERO CYCLES PVT LTD (SUPRA) HELD THAT CIRCULARS CAN BIND THE INCOME-TAX OFFICER BUT WILL NOT BIND THE APPELLATE AUTHORITY OR M/S. MUMBAI INTERNATIONAL AIRPORT 48 THE TRIBUNAL OR THE COURT OR EVEN THE ASSESSEE. IT IS FURTHER NOTED THAT LAW IN THIS REGARD WAS FURTHER ANALYSED BY HONBLE SUPREME COURT IN THE CASE OF UCO BANK (SUPRA) . IT WAS OBSERVED BY THE HONBLE SUPREME COURT THAT CBDT HAS POWER TO TONE DOWN THE RIGOUR OF THE LAW AND ENSURE ENFOR CEMENT OF ITS PROVISIONS OF ISSUING CIRCULARS. THE BOARD HAS BEEN GIVEN FOR THE PURPOSE OF JUST, PROPER AND EFFICIENT MANAG EMENT OF WORK OF ASSESSMENT. HOWEVER, THESE ARE NOT MEANT F OR CONTRADICTING OR NULLIFYING ANY PROVISION OF THE ST ATUTE. RELYING UPON ITS EARLIER JUDGEMENT COMPRISING OF THREE JUDG ES IN THE CASE OF KESHAVJI RAVJI & CO VS CIT 183 ITR 1 (SC) , IT WAS INTER-ALIA OBSERVED THAT BOARD CANNOT PRE-EMPT JUDICIAL INTERPRETATION AND THE SCOPE AND AMBIT OF A PROVISI ON OF THE ACT. ALSO, A CIRCULAR CANNOT IMPOSE ON THE TAXPAYE R A BURDEN HIGHER THAN WHAT THE ACT ITSELF ON A TRUE INTERPRET ATION, ENVISAGES. THE TASK OF INTERPRETATION OF THE LAW I S EXCLUSIVELY THE DOMAIN OF THE COURTS. HOWEVER, THE BOARD HAS T HE STATUTORY POWER U/S 119 TO TONE DOWN THE RIGOUR OF THE LAW FOR THE BENEFIT OF THE ASSESSEE BY ISSUING CIRCULARS TO ENSURE PROPER ADMINISTRATION OF THE FISCAL STATUTE AND SUC H CIRCULARS WOULD BE BINDING ON THE AUTHORITIES ENSHRINED IN TH E ACT. 14.24. THUS, TAKING GUIDANCE FROM THE AFORESAID LEGAL DISCUSSION AS HAS BEEN CLARIFIED BY THE HONBLE JUR ISDICTIONAL HIGH COURT AS WELL AS BY HONBLE SUPREME COURT, IT IS CLEAR THAT THE OFFICE MEMORANDUM ISSUED BY CBDT TO MOCA C ANNOT HOLD AN AMOUNT AS TAXABLE, IF THE SAME IS OTHERWISE NOT TAXABLE AS PER THE PROVISIONS OF THE INCOME-TAX ACT , 1961. FURTHER, AS FAR AS THE CLARIFICATION ISSUED BY MOCA IS M/S. MUMBAI INTERNATIONAL AIRPORT 49 CONCERNED, IT IS NOTED THAT THE ROLE OF MOCA WAS CO NFINED TO ISSUING STANDARD OPERATING PROCEDURES AND OTHER GUI DELINES TO THE AIRPORT OPERATORS TO ENSURE THAT FUNDS COLLE CTED BY THE ASSESSEE COMPANY IN THE FIDUCIARY CAPACITY ON BEHAL F OF MOCA ARE PROPERLY KEPT AND DISBURSED FOR THE DESIGNATED PURPOSES ONLY. IT HAS NO JURISDICTION TO DETERMINE THE TAXA BILITY OF THE IMPUGNED AMOUNT. IT CLEARLY HAD NO JURISDICTION IN HOLDING THE SAME AS TAXABLE AND, THEREFORE, TO THAT EXTENT ITS ORDER / CLARIFICATION HAS NO AUTHORITY IN THE EYES OF LAW A ND THE SAME HAS BEEN RIGHTLY IGNORED BY THE ASSESSEE AS WELL AS BY THE APPELLATE COURTS WHILE DETERMINING THE TAXABILITY O F THE IMPUGNED AMOUNT. 14.25. THUS, THE AFORESAID DISCUSSION TAKE US TO THE THIRD ISSUE WHEREIN WE HAVE BEEN CALLED UPON TO DECIDE WHETHER THE IMPUGNED AMOUNT OF PSF-SC COLLECTED BY THE ASSESSEE COMPANY ON BEHALF OF MOCA AS PER THE RELEVANT REGUL ATIONS FOR THE PURPOSES OF MEETING SECURITY EXPENSES CAN BE CHARACTERISED AS INCOME IN THE HANDS OF THE ASSESSE E COMPANY AND MADE LIABLE TO TAX IN ITS HANDS. 14.26. THE BRIEF FACTS RELATED TO THE ISSUE HAVE ALREADY BEEN NARRATED BY US IN EARLIER PART OF OUR ORDER AND JUS T TO RECAPITULATE THE RELEVANT PART OF IT, THE LICENSEE OF AN AIRPORT IN TERMS OF PROVISIONS OF RULE 88 OF AIRCRAFT RULE, 19 37, IS RESPONSIBLE FOR COLLECTING A FEE FROM EMBARKING PAS SENGERS REFERRED TO AS PASSENGER SERVICE FEE (PSF) @ RS.200 /- PER TICKET. PORTION OF PSF BEING 35% WAS ON ACCOUNT OF PROVIDING PASSENGER FACILITATION AND WAS TO BE RETAINED BY TH E AIRPORT OPERATOR FOR PROVIDING PASSENGER RELATED SERVICES A ND THE M/S. MUMBAI INTERNATIONAL AIRPORT 50 BALANCE 65% OF PSF REPRESENTS SECURITY COMPONENT TO BE UTILISED FOR PAYMENT OF SECURITY AGENCY, I.E. CISF, WHO IS DESIGNATED BY THE MINISTRY OF HOME AFFAIRS FOR PROV IDING SECURITY SERVICES. THE ASSESSEE HAD INCLUDED AFORE SAID 35% PORTION IN ITS INCOME BUT DID NOT INCLUDE PSF-SECUR ITY COMPONENT IN ITS INCOME WHILE FILING THE RETURN OF INCOME. THE DISPUTE BEFORE US IS WITH REGARD TO THIS PSF SC. FURTHER FACTS BROUGHT OUT BEFORE US ARE THAT THE ASSESSEE H AD COLLECTED DURING THE YEAR, TOTAL AMOUNT OF RS.180.27 CRORES O N ACCOUNT OF PSF SC FROM THE PASSENGERS EMBARKING AT CHHAT RAPATI SHIVAJI INTERNATIONAL AIRPORT, MUMBAI. AFTER METIN G OUT SECURITY DEPLOYMENT COST AND VARIOUS OTHER RELATED (ALLIED) EXPENSES, THE NET SURPLUS WORKED OUT AT RS.133,13,4 7,580 AND AFTER ADJUSTMENT OF DEPRECIATION AS PER COMPANI ES ACT AND INCOME-TAX ACT, IT WAS COMPUTED AT RS.132,58,59 ,023. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO CONCLUDED THAT THE AFORESAID AMOUNT IS PART OF TAXA BLE INCOME OF THE ASSESSEE. THE LD. CIT(A) HAD CONFIRMED THE ACTION OF THE AO. THE ASSESSEE HAS CONTENDED BEFORE US THAT THE AFORESAID AMOUNT IS NOT LIABLE TO BE INCLUDED IN THE INCOME O F THE ASSESSEE. DETAILED ARGUMENTS MADE BY THE LD. COUNS EL OF THE ASSESSEE HAVE ALREADY BEEN NARRATED BY US IN EARLIE R PART OF OUR ORDER AND THESE ARE NOT BEING DISCUSSED HERE AG AIN FOR THE SAKE OF BREVITY. 14.27. WE HAVE GONE THROUGH THE ASSESSMENT ORDER AS WELL AS THE ORDER OF LD. CIT(A). PERUSAL OF THE ORDERS OF AO AS WELL AS LD. CIT(A) REVEALS THAT NONE OF THE AUTHORITIES HAV E MADE INDEPENDENT APPLICATION OF MIND TO INDEPENDENTLY DE TERMINE M/S. MUMBAI INTERNATIONAL AIRPORT 51 WHETHER THE IMPUGNED AMOUNT COULD HAVE BEEN CHARACT ERISED AS INCOME IN THE HANDS OF THE ASSESSEE. RELEVANT P ART OF ORDER OF LD. CIT(A) IS REPRODUCED HEREUNDER, FOR THE SAKE OF READY REFERENCE:- I HAVE CONSIDERED THE SUBMISSIONS AND ARGUMENTS OF THE APPELLANT. IT IS UNDISPUTED THAT THE MINISTRY OF CI VIL AVIATION HAD ALREADY ISSUED ITS GUIDELINES AND INST RUCTIONS TO THE ASSESSEE ON 19.01.2009, THEREBY CLARIFYING T HE TAXABILITY ASPECT OF PSF(SC) IN THE HANDS OF THE AS SESSEE NOTWITHSTANDING THE ASSESSEE'S RESISTANCE AND BELIE F THAT SUCH RECEIPTS ARE FIDUCIARY IN NATURE AND NOT TAXAB LE. FURTHER, THE MINISTRY OF CIVIL AVIATION REAFFIRMED ITS DECISION ONCE AGAIN VIDE INSTRUCTION DATED 15.11.20 10. THEREFORE, THE APPELLANT HAD ERRONEOUSLY RESISTED F ROM OFFERING THE RECEIPTS ON ACCOUNT OF PSF(SC) TO TAX PURELY ON THE BASIS OF ITS OWN BELIEF THAT PSF(SC) RECEIPTS A RE FIDUCIARY IN NATURE, THEREBY IGNORING THE MANDATORY INSTRUCTIONS ISSUED BY THE MINISTRY OF CIVIL AVIATI ON FROM TIME TO TIME UNDER WHICH, THE ASSESSEE FUNCTIONS AS AN AIRPORT OPERATOR-THE RECEIPTS BEING FIDUCIARY IN NA TURE, AND THE MANDATORY INSTRUCTIONS ISSUED BY THE MINISTRY O F CIVIL AVIATION FROM TIME TO TIME UNDER WHICH, THE ASSESSE E FUNCTIONS AS AN AIRPORT OPERATOR MAKE IT TAXABLE. W HEN CONFRONTED BY THE SECOND RECONFIRMATION BY THE MINI STRY OF CIVIL AVIATION ON 15.11.2010, THE APPELLANT HAD NO OTHER OPTION, BUT TO OFFER THE RECEIPTS TO TAX FOR A.Y. 2 008-09. THUS, AS STATED BY THE APPELLANT ON MERITS AND IN L AW THAT ALTHOUGH THE RECEIPTS OF PSF (SC) IN THE HANDS OF T HE APPELLANT DO NOT PARTAKE THE CHARACTER OF INCOME AN D BY THE 'DOCTRINE OF OVERRIDING TITLE' AS THEY ARE TO B E UTILIZED FOR SECURITY PURPOSES-THE ISSUE BEING HIGHLY DEBATA BLE AND A LEGAL DIFFERENCE OF OPINION BEING THERE THE SAME HAS BEEN OFFERED FOR TAXATION. HENCE I CONFIRM THIS ADDITION BY THE A.O. AND THUS, THIS GROUND OF APPEAL IS DISMISSED. 14.28. IT IS NOTED BY US THAT BOTH OF THE AUTHORITIES GOT INFLUENCED AND SWAYED AWAY WITH THE OPINION EXPRESS ED BY THE CBDT/MOCA AND ADMISSION MADE BY THE ASSESSEE UNDER CERTAIN CIRCUMSTANCES EMERGED DURING THE COURSE OF M/S. MUMBAI INTERNATIONAL AIRPORT 52 ASSESSMENT PROCEEDINGS. THUS, BOTH THE AUTHORITIES ABSTAINED FROM EFFECTIVELY AND INDEPENDENTLY ADJUDICATING THE TAXABILITY OF THIS AMOUNT AS PER OF LAW IN THE HANDS OF THE AS SESSEE. SINCE RELATED MATERIAL AND ALL THE FACTS ARE BEFORE US, WE SHALL DETERMINE CHARACTERISATION AND TAXABILITY OF THE IM PUGNED AMOUNT IN THE HANDS OF ASSESSEE-COMPANY PURELY AS P ER LAW APPLICABLE ON THE FACTS OF THIS CASE. 14.29. IT IS NOTED BY US THAT RULE 88 OF AIRCRAFT RULE, 1 937 PROVIDES AS UNDER: 88. PASSENGER SERVICE FEE THE LICENSEE IS ENTITLED TO COLLECT FEES TO BE CALLED AS PASSENGER SERVICE FEE FROM THE EMBARKING PASSENGERS AT SUCH RATE AS THE CENTRAL GOVERNMENT MAY SPECIFY AND IS ALSO LIABLE TO PAY FO R SECURITY COMPONENT TO ANY SECURITY AGENCY DESIGNATE D BY THE CENTRAL GOVERNMENT FOR PROVIDING THE SECURITY S ERVICE. PROVIDED THAT IN RESPECT OF A MAJOR AIRPORT SUCH RA TE SHALL BE AS DETERMINED UNDER CLAUSE (C) OF SUB-SECTION (1 ) OF SECTION 13 OF THE AIRPORTS ECONOMIC REGULATORY AUTH ORITY OF INDIA ACT, 2008 14.30. IN PURSUANCE TO THE AFORESAID RULE, AN ORDER DATED 09 TH MAY, 2006 WAS ISSUED BY CONCERNED OFFICIAL OF MOCA WHICH READS AS UNDER:- ORDER SUBJECT: COLLECTION OF PASSENGER SERVICE FEE (PSF) AT. GREENFIELD / PRIVATE AIRPORTS - REGARDING CONSEQUENT TO ALLOWING PRIVATE COMPANIES, JOINT VEN TURE. COMPANIES TO OWN AND OPERATE AIRPORTS IN THE COUNTR Y, THE MANNER AND MODE OF COLLECTION OF PASSENGER SERVICE FEE (PSF) AT AIRPORTS HAVE BEEN ENGAGING THE ATTENTION OF THE GOVERNMENT FOR SOME TIME. THE MATTER HAS BEEN DELIBERATED WITH AIRPORTS AUTHORITY OF INDIA AND OT HER AIRPORT OPERATORS AND IT HAS NOW BEEN DECIDED THAT: - I. CISF WILL BE DEPLOYED AS PER THE ASSESSMENT OF BCAS AT AIRPORTS OPERATED BY JVCS OR PRIVATE OPERATORS ALSO. M/S. MUMBAI INTERNATIONAL AIRPORT 53 II. PASSENGER SERVICE FEE (PSF) AT AIRPORTS WOULD HE COLLECTED BY THE RESPECTIVE AIRPORT OPERATOR, WHICH COULD BE AM, JVC, OR A PRIVATE OPERATOR. III. THE AMOUNT OF PSF TO BE COLLECTED WILL HE FIXED BY THE MINISTRY OF CIVIL AVIATION. THE AMOUNT WILL CONTINU E TO BE RS.200/- PER PASSENGER TILL FURTHER ORDERS. THE AIRPORT OPERATOR WOULD RETAIN RS.70/- TOWARDS PASSENGER FACILITATION. AN ESCROW ACCOUNT WOULD BE OPENED WHENEVER THE AIRPORT OPERATOR IS A JVC OR PRIVATE OPERATOR. THIS ACCOUNT WILL BE OPERATED BY THE AIRPORT OPERATOR (NOT BY AM). RS.130/- OF TH E PSF COLLECTED PER PASSENGER BY SUCH AIRPORT OPERATO R WOULD BE DEPOSITED IN THE ESCROW ACCOUNT BY THE AIRPORT OPERATOR FOR PAYMENTS TO BE MADE TO CISF. THE ESCROW ACCOUNT WOULD BE SUBJECT TO GOVERNMENT AUDIT OF CAG. IV. IN CASE ANY AMOUNT REMAINS, THIS WILL BE TRANSFERRED TO AAI BY THE AIRPORT OPERATOR THROUGH A PROCESS OF MUTUAL CONSULTATION FOR PAYMEN T TO CISF DEPLOYED FOR SECURITY PURPOSES AT OTHER AIRPORTS. IN CASE OF A DISPUTE, THE MATTER MAY BE REFERRED TO THE MINISTRY , OF CIVIL AVIATION WHOSE DECISION WILL BE TREATED AS FINAL AND BINDING ON BO TH PARTIES. 2. THE NEW PROCEDURE WILL BE EFFECTIVE FROM 01 .042006. 3. THIS ISSUES WITH THE APPROVAL OF THE MINIST ER OF STATE FOR CIVIL AVIATION (INDEPENDENT CHARGE). 14.31. SUBSEQUENTLY ANOTHER ORDER WAS PASSED BY MOCA DATED 20 TH JUNE, 2007 WHEREIN IT WAS INTER ALIA CLARIFIED THA T SECURITY COMPONENT OF PSF WAS NOT REGULAR REVENUE O F THE AIRPORT OPERATOR AND THE AFORESAID AMOUNT WILL BE U TILISED AT THE AIRPORT CONCERNED ONLY TO MEET SECURITY RELATED EXPENSES OF THAT AIRPORT. RELEVANT PART OF THE ORDER IS REPROD UCED BELOW:- ORDER SUB: COLLECTION OF PASSENGER SERVICE FEE (PSF) AT GREENFIELD / PRIVATE AIRPORTS REGARDING. M/S. MUMBAI INTERNATIONAL AIRPORT 54 IN THIS MINISTRY'S ORDER OF EVEN NO. DATED 09.05.20 06 ON THE SUBJECT NOTED ABOVE , THE FOLLOWING MODIFICATIONS MAY BE MADE- (A) CLAUSE (III) IS MODIFIED AS UNDER- THE AMOUNT OF PSF TO BE COLLECTED WILL BE FIXED BY THE MINISTRY OF CIVIL AVIATION . HOWEVER, AFTER AIRPORTS ECONOMIC REGULATORY AUTHORITY (AERA) BECOMES FUNCTIONAL, PSF WILL BE FIXED BY AERA. THE AMOUNT WILL CONTINUE TO BE RS.200/- . PER EMBARKING PASSENGER TILL FURTHER ORDERS' . (B) CLAUSE (VI) IS MODIFIED AS UNDER- SECURITY COMPONENT OF PSF, IN SHORT PSF (SC) IS NOT A REGULAR REVENUE INCOME OF AN AIRPORT-OPERATOR. PSF (SC) COLLECTED AT AN AIRPORT-OPERATOR BY A JVC OR A PRIVATE- OPERATOR WILL BE UTILIZED AT AIRPORT CONCERNED ONLY TO MEET THE SECURITY RELATED EXPENSES OF THAT AIRPORT. HOWEVER, AAI WILL BE CONSIDERED AS A SINGLE LICENSEE IN RESPECT OF IT S AIRPORTS FOR THIS PURPOSE WITH LIBERTY TO POOL THE PSF(SC) COLLE CTIONS FROM SUCH AIRPORTS AND USE THE SAME FOR MEETING THE SECU RITY RELATED EXPENSES AT ANY OF ITS AIRPORT'. THIS ISSUES WITH THE APPROVAL OF THE MINISTER OF ST ATE FOR CIVIL AVIATION (INDEPENDENT CHARGE). 14.32. THUS, AFORESAID RULES AND ORDERS ISSUED BY MOCA CLEARLY STIPULATES THAT SECURITY COMPONENT OF PASSE NGER SERVICE FEE WAS MEANT EXCLUSIVELY TO BE UTILISED AT THE AIR PORT CONCERNED, ONLY TO MEET SECURITY RELATED EXPENSES O F THAT AIRPORT. THE SECURITY AGENCY DESIGNATED IN THIS RE GARD WAS CISF. IT IS FURTHER NOTED THAT THE FUNDS SO COLLEC TED WERE TO BE DEPOSITED IN AN ESCROW ACCOUNT WHICH WAS SUBJECT TO THE GOVERNMENT AUDIT OF CAG. FURTHER, IN CASE OF ANY A MOUNT WAS LEFT IN THE SAID ACCOUNT, IT WAS TO BE MANDATORILY TRANSFERRED TO AIRPORT AUTHORITY OF INDIA BY THE AIRPORT OPERATOR. THUS, FROM THE ABOVE SAID FACTS AND CIRCUMSTANCES OF THE CASE AND TERMS AND CONDITIONS IT IS CLEAR THAT THE SAID AMOUNT WAS COLLECTED M/S. MUMBAI INTERNATIONAL AIRPORT 55 BY THE ASSESSEE ON BEHALF OF MOCA TO BE DISBURSED F OR SECURITY PURPOSES TO CISF DEPLOYED BY THE MINISTRY OF HOME A FFAIRS. THE AMOUNT WAS COLLECTED AND RETAINED PURELY IN FID UCIARY CAPACITY. THE ASSESSEE HAD NO DISCRETION OR FREEDO M AT ALL TO UTILISE THE AFORESAID AMOUNT FOR ANY OTHER PURPOSES OTHER THAN THE DESIGNATED PURPOSE OF MEETING SECURITY EXPENSES . SO MUCH SO, EVEN THE SURPLUS LEFT IF ANY, WAS NOT AT THE DISPOSAL OF THE ASSESSEE COMPANY BUT WAS TO BE MANDATORILY TRANSFERRED TO THE ACCOUNT OF AIRPORT AUTHORITY OF INDIA AS PER THE PRESCRIBED PROCEDURE. UNDER THESE CIRCUMSTANCE S, IT IS CLEAR THAT ASSESSEE MERELY ACTED AS A CONDUIT OR A TRUSTEE FOR COLLECTION AND DISPOSAL OF THE IMPUGNED AMOUNT OF P SF-SC. UNDER THESE CIRCUMSTANCES, THE AFORESAID AMOUNT COU LD NOT HAVE BEEN CHARACTERISED AS INCOME U/S 2(24), SECT ION 5 OR ANY OTHER PROVISIONS OF THE INCOME-TAX ACT, 1961. 14.33. IT IS NOTED THAT SUBSEQUENTLY MOCA ISSUED ANOTHER ORDER DATED 19-01-2009 CONTAINING STANDARD OPERATIN G PROCEDURES FOR ACCOUNTING / AUDIT OF PASSENGER SERV ICE FEE (SECURITY COMPONENT) BY THE AIRPORT OPERATORS. THE AFORESAID ORDER CONTAINED WHOLE PROCEDURE IN DETAIL FOR COLLE CTION AND DISBURSEMENT OF THE SAID AMOUNT. RELEVANT PORTION OF THE SAME IS REPRODUCED HEREUNDER, FOR THE SAKE OF BETTE R CLARITY ON FACTS RELATED TO CONDITIONS ATTACHED WITH REGARD TO COLLECTION AND DISBURSEMENT OF THE AFORESAID AMOUNT: 2. NATURE OF SECURITY COMPONENT OF PSF: 2.1 AVIATION SECURITY IS AN ACTIVITY RESERVED FOR T HE GOVERNMENT OF INDIA. FORCE DEPLOYMENT AT THE AIRPOR TS, SECURITY REQUIREMENTS INCLUDING THE REQUIREMENT OF CAPITAL ITEMS AND SPECIFICATIONS THEREOF ARE LAID DOWN BY T HE GOVERNMENT/BUREAU OF CIVIL AVIATION SECURITY (BCAS) . AS M/S. MUMBAI INTERNATIONAL AIRPORT 56 STATED ABOVE, PSF IS LEVIED UNDER RULE 88 OF THE AI RCRAFT RULES, 1937 AND COVERS SECURITY COMPONENT AS WELL A S FACILITATION. WHILE THE FEE IS COLLECTED BY THE LIC ENSE OF THE AIRPORTS, I.E., THE AIRPORT OPERATOR, THROUGH THE A IRLINES, THE SECURITY COMPONENT THEREOF, WHICH CONSTITUTES 65% O F THE TOTAL AMOUNT, CAN BE USED ONLY IN TERMS OF DIRECTIO NS ISSUED BY THE GOVERNMENT/ BCAS, FROM TIME TO TIME. THE AMOUNT COLLECTED BY THE AIRPORT OPERATOR, WHICH IS KEPT SEPARATELY IN AN ESCROW ACCOUNT, IS THUS HELD IN FI DUCIARY CAPACITY. 2.2. SINCE THE AMOUNT IS HELD BY THE AIRPORT OPERAT OR IN FIDUCIARY CAPACITY FOR THE GOVERNMENT, THE ACCOUNTS THEREOF WOULD HAVE TO BE MAINTAINED SEPARATELY IN ACCORDANC E WITH THE PROCEDURE LAID DOWN BY THE GOVERNMENT AND HAVE TO BE OFFERED FOR AUDIT BY THE COMPTROLLER & AUDITO RY GENERAL OF INDIA (CAG). 3. ESCROW ACCOUNT OPERATING PROCEDURE: 3.1 FOR PSF (SC) A SEPARATE ESCROW ACCOUNT SHALL BE OPENED BY JVC/PRIVATE OPERATOR, WITH A SCHEDULE NATIONALIZED BANK. 3.2 AN ESCROW ACCOUNT AGREEMENT WILL BE ENTERED WIT H THE ESCROW BANKER BY THE JVC/PRIVATE OPERATOR. 3.3 THE FORMAT OF ESCROW AGREEMENT WILL INCLUDE DET AILS SUCH AS, DEFINITIONS FOR ESTABLISHMENT OF ESCROW AC COUNT AND DECLARATION OF TRUST, THE ESCROW ACCOUNT PROVIS IONS, TERM AND TERMINATION, REPRESENTATIONS AND WARRANTIE S OF ESCROW BANK AND JVC/PRIVATE OPERATOR AND MISCELLANE OUS PROVISIONS. 3.4 PARTIES TO THE ESCROW AGREEMENT WOULD CONSIST O F JVC/PRIVATE OPERATOR AND ESCROW BANK. HOWEVER, THE ESCROW ACCOUNT AGREEMENT WILL HAVE A CLAUSE BY WHIC H THE MOCA WILL HAVE SUPERVENING POWER TO DIRECT THE ESCROW BANK ON THE ISSUES REGARDING OPERATION AS WE LL AS WITHDRAWALS FROM ESCROW ACCOUNT. 3.5 ESCROW ACCOUNT SHALL BE MAINTAINED, CONTROLLED AND OPERATED BY ESCROW BANK UNDER THE ESCROW AGREEMENT AS UNDER: I) PSF (SC) ACCOUNT: JVC/PRIVATE OPERATOR SHALL DEP OSIT IMMEDIATELY ALL PSF (SC) COLLECTIONS INTO THE PSF ( SC) ACCOUNT. II) WITHDRAWAL FROM PSF (SC) ACCOUNT: THE ESCROW BA NK SHALL ALLOW WITHDRAWAL BY JVC/PRIVATE OPERATORS OF M/S. MUMBAI INTERNATIONAL AIRPORT 57 AMOUNTS DEPOSITED INTO THE PSF (SC) ACCOUNT ONLY TO WARDS THE FOLLOWING PURPOSES, IN THE ORDER OF PRIORITY BY DESCENDING UNDER: A. TO PAY AMOUNTS TOWARDS TAXES, INCLUDING INCOME T AX ON PSF(SC) INCOME AS PER PROVISIONS OF INCOME TAX ACT, 1961, SERVICE TAX OR ANY OTHER STATUTORY DOES. B. TO PAY FOR SECURITY RELATED EXPENSES TO CENTRAL INDUSTRIAL SECURITY FORCE (CISF). C. TO PAY OTHER SECURITY RELATED EXPENSES IN TERMS OF MOCA ORDER DATED 20.6.2007 OR ANY OTHER DECISION OF MOCA/BCAS OR ANY OTHER GOVERNMENT AGENCY, FROM TIME TO TIME. III) DEPLOYMENT OF SURPLUS: ANY SURPLUS STANDING AT THE CREDIT OF THE ESCROW ACCOUNT SHOULD BE DEPLOYED BY THE ESCROW BANK IN ITS OWN DEPOSIT ACCOUNT. ON MATURITY OR OTHERWISE, THE PROCEEDS, SHALL BE CREDITED IN ESCRO W ACCOUNT. 14.34. THE PERUSAL OF THE ABOVE ORDER CONTAINING SOP MAKE S IT CLEAR THAT THE AMOUNT COLLECTED BY THE AIRPORT O PERATOR IS TO BE KEPT SEPARATELY IN ESCROW ACCOUNT AND THE SAME IS HELD BY THE AIRPORT OPERATOR IN FIDUCIARY CAPACITY. IT BEC OMES FURTHER CLEAR THAT THE AMOUNT OF ANY SURPLUS LEFT IN THE SA ID ACCOUNT COULD NOT HAVE BEEN UTILISED FOR ANY PURPOSE OTHER THAN SECURITY RELATED EXPENSES. UNDER THESE CIRCUMSTANC ES, IT WAS CLEARLY NOT HAVING ANY CHARACTERISTICS OF INCOME IN THE HANDS OF THE ASSESSEE COMPANY. THE SAID SOP ALSO CONTAIN ED CERTAIN GUIDELINES WITH RESPECT TO TAXABILITY OF THE IMPUGN ED AMOUNT. IN OUR VIEW, MOCA IS NOT THE DESIGNATED AUTHORITY T O DETERMINE THE TAXABILITY OF THE SAID AMOUNT AS HAS ALSO BEEN DISCUSSED BY US IN DETAIL IN EARLIER PART OF OUR OR DER AND, THEREFORE, TO THAT EXTENT, THE OBSERVATIONS OR GUID ELINES ISSUED BY MOCA EXCEED ITS JURISDICTION AND, THEREFORE, THE SE WERE NOT BINDING UPON THE ASSESSEE. THE ASSESSEE WAS, OF CO URSE, M/S. MUMBAI INTERNATIONAL AIRPORT 58 BOUND BY REMAINING POSITION OF THE GUIDELINES AS PE R CONCERNED RULES & REGULATIONS. 14.35. IT HAS FURTHER BEEN ARGUED BEFORE US THAT THE IMPU GNED AMOUNT WOULD NOT BE INCOME IN THE HANDS OF THE ASSE SSEE COMPANY IN VIEW OF THE DOCTRINE OF DIVERSION OF INCOME BY OVERRIDING TITLE . FEW JUDGMENTS HAVE BEEN RELIED UPON BEFORE US IN SUPPORT OF THIS ARGUMENT, AS MENTIONED ABOVE IN THE EARLIER PART OF OUR ORDER. IT HAS BEEN VEHEMEN TLY ARGUED BY THE LD. COUNSEL OF THE ASSESSEE THAT THE IMPUGNED A MOUNT COULD NOT HAVE BEEN BROUGHT TO TAX IN VIEW OF DIVER SION OF INCOME AT THE SOURCE. 14.36. PER CONTRA, THE STAND OF THE REVENUE HAS BEEN THAT THE AMOUNT HAS BEEN DISBURSED ON ACCOUNT OF SECURITY ARRANGEMENTS, AND THEREFORE IT AMOUNTS TO APPLICAT ION OF INCOME AND NOT DIVERSION OF INCOME. 14.37. WE HAVE CAREFULLY ANALYSED LEGAL INTRICACIES AND NUANCES INVOLVED HERE IN THIS CASE. LAW IN THIS RE GARD WAS CLARIFIED AND HONBLE SUPREME COURT WAY BACK IN ITS LANDMARK JUDGMENT IN THE CASE OF CIT VS SITALDAS TIRATHDAS 41 ITR 367 (SC) WHICH IS STILL FOLLOWED IN MANY OTHER JUDGMENTS BY VARIOUS COURTS ALL OVER THE COUNTRY. THE RELEVANT PART OF THE JUDGMENT LAYING DOWN AN ACID TEST TO DECIDE SUCH IS SUES IS REPRODUCED HEREUNDER: IN OUR OPINION, THE TRUE TEST IS WHETHER THE AMOUN T SOUGHT TO BE DEDUCTED, IN TRUTH, NEVER REACHED THE ASSESSEE AS HIS INCOME. OBLIGATIONS, NO DOUBT, THER E ARE IN EVERY CASE, BUT IT IS THE NATURE OF THE OBLIGATI ON WHICH IS THE DECISIVE FACT. THERE IS A DIFFERENCE BETWEEN AN AMOUNT WHICH A PERSON IS OBLIGED TO APPLY OUT OF HI S INCOME AND AN AMOUNT WHICH BY THE NATURE OF THE OBLIGATION CANNOT BE SAID TO BE A PART OF THE INCOM E OF M/S. MUMBAI INTERNATIONAL AIRPORT 59 THE ASSESSEE. WHERE BY THE OBLIGATION INCOME IS DIVERTED BEFORE IT REACHES THE ASSESSEE, IT IS DEDU CTIBLE; BUT WHERE THE INCOME IS REQUIRED TO BE APPLIED TO DISCHARGE AN OBLIGATION AFTER SUCH INCOME REACHES T HE ASSESSEE, THE SAME CONSEQUENCE, IN LAW, DOES NOT FOLLOW. IT IS THE FIRST KIND OF PAYMENT WHICH CAN T RULY BE EXCUSED AND NOT THE SECOND. THE SECOND PAYMENT IS MERELY AN OBLIGATION TO PAY ANOTHER A PORTION OF ON E'S OWN INCOME, WHICH HAS BEEN RECEIVED AND IS SINCE APPLIED. THE FIRST IS A CASE IN WHICH THE INCOME NE VER REACHES THE ASSESSEE, WHO EVEN IF HE WERE TO COLLEC T IT DOES SO, NOT AS PART OF HIS INCOME, BUT FOR AND ON BEHALF OF THE PERSON TO WHOM IT IS PAYABLE. 14.38. SUBSEQUENTLY, IN MANY JUDGMENTS, VARIOUS COURTS HA VE, FROM TIME TO TIME, ANALYSED THE LAW IN THIS REGARD AND SUGGESTED VARIOUS TESTS TO FIND OUT WHETHER IN A GI VE FACTS IT WAS A CASE OF DIVERSION OR APPLICATION OF INCOM E. WE FIND THAT THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF U.P. BHUMI SUDHAR NIGAM VS CIT 280 ITR 197 (ALL) FORMULATED A SET OF FOUR TESTS TO FIND OUT WHETHER IN A GIVEN SI TUATION, IT WOULD BE A CASE OF DIVERSION OF INCOME BY OVERRIDIN G TITLE OR NOT. THE HONBLE COURT, AFTER ANALYSING VARIOUS OT HER JUDGMENTS SUGGESTED FOLLOWING PRINCIPLES:- (I) IF A THIRD PERSON BECOMES ENTITLED TO RECEIVE AN AMOUNT UNDER AN OBLIGATION OF AN ASSESSEE EVEN BEFO RE HE COULD CLAIM TO RECEIVE IT AS HIS INCOME, THERE W OULD BE A DIVERSION OF INCOME BY OVERRIDING TITLE BUT WH EN AFTER RECEIPT OF THE INCOME BY THE ASSESSEE, THE SA ME IS PASSED ON TO A THIRD PERSON IN DISCHARGE OF THE OBLIGATION OF THE ASSESSEE, IT WILL BE A CASE OF APPLICATION OF INCOME BY THE ASSESSEE AND NOT OF DIVERSION OF INCOME BY OVERRIDING TITLE. M/S. MUMBAI INTERNATIONAL AIRPORT 60 (II) IF INCOME DOES NOT RESULT AT ALL, THERE CANNOT BE A TAX, EVEN THOUGH IN BOOK-KEEPING, AN ENTRY IS MADE ABOUT THE HYPOTHETICAL INCOME WHICH DOES NOT MATERIALISE. (III) THE EXISTENCE OR ABSENCE OF ENTRIES IN HIS BOOKS O F ACCOUNT CANNOT BE DECISIVE OR CONCLUSIVE IN THE MAT TER. (IV) THE CONCEPT OF REAL INCOME MUST BE APPLIED IN APPROPRIATE CASES BUT WITH CIRCUMSPECTION AND MUST NOT BE CALLED IN AID TO DEFEAT THE FUNDAMENTAL PRIN CIPLE OF LAW OF INCOME-TAX AS DEVELOPED. 14.39. TURNING BACK TO THE FACTS OF THE CASE BEFORE US, I F WE APPLY THE AFORESAID PRINCIPLES, WE WILL FIND THAT T HE IMPUGNED AMOUNT CANNOT BE TREATED AS TAXABLE INCOME IN THE H ANDS OF THE ASSESSEE. IF WE APPLY THE FIRST PRINCIPLE, WE FIND THAT AS SOON AS THE AMOUNT WAS COLLECTED FROM THE PASSENGER S @ RS.200/- PER TICKET, A PORTION OF IT, I.E. RS.130/- PER TICKET BECAME PAYABLE TO CISF AND/OR ANY OTHER AGENCY DESI GNATED FOR THE PURPOSES OF SECURITY AT THE AIRPORT. THE S AME WAS LIABLE TO BE DEPOSITED IN A SEPARATE ESCROW ACCOUNT AND THE ASSESSEE HAD NO RIGHT, WHATSOEVER, IN THE SAME ACCO UNT. THE AFORESAID AMOUNT WAS AXED OR SLICED AT ITS VERY SOU RCE. THE AMOUNT WAS PERMITTED OR DIRECTED TO BE COLLECTED FR OM THE PASSENGERS WITH THIS CLEAR UNDERSTANDING AND PRIOR STIPULATION THAT 65% OF THE SAME IS MEANT FOR SECURITY AGENCIES . THUS, THE ASSESSEE MERELY ACTED AS A COLLECTION AGENT. THUS, APPLYING THE FIRST PRINCIPLE, THE IMPUGNED AMOUNT WOULD FALL IN THE CATEGORY OF DIVERSION OF INCOME. M/S. MUMBAI INTERNATIONAL AIRPORT 61 14.40. AS FAR AS THE OTHER THREE PRINCIPLES ARE CONCERNED , THE CRUX OF THESE THREE PRINCIPLES IS TO FIND OUT WHETH ER THE ASSESSEE HAD, IN SUBSTANCE, EARNED ANY INCOME. IN OTHER WORDS, THESE THREE PRINCIPLES SUGGEST APPLICATION O F THE CONCEPT OF REAL INCOME, WHICH SUGGESTS THAT UNLES S THE INCOME HAS BEEN EARNED BY A PERSON IN REAL SENSE, THE SAME CANNOT BE HELD AS TAXABLE INCOME. THERE HAS TO BE FIRST INCO ME AND ONLY THEN ITS TAXABILITY COULD BE DETERMINED. IT IS NOT ED BY US THAT IN THE FACTS BEFORE US, NO PORTION OF THE AMOUNT CO LLECTED ON BEHALF OF AAI / MOCA IS REPORTED TO HAVE BEEN RETAI NED BY THE ASSESSEE AS ITS INCOME IN AS MUCH AS NOTHING BELONG ED TO IT. THUS, THE IMPUGNED AMOUNT IS CLEARLY NOT TAXABLE IN THE HANDS OF THE ASSESSEE. 14.41. IT IS FURTHER NOTED BY US THAT IN MANY CASES, WHER EIN UNDER SOME REQUIREMENT OF LAW IF THE AMOUNTS WERE TRANSFERRED TO THE DESIGNATED FUND, THEN IN SUCH CA SES THE COURTS HAVE HELD IT TO BE A CASE OF DIVERSION O F INCOME BY OVERRIDING TITLE. IN A MATTER BEFORE HONBLE BOMBAY HIGH COURT IN THE CASE OF SOMAIYA ORGANO CHEMICALS LTD VS CIT 216 ITR 291 (BOM), THE FACTS WERE THAT A PORTION OF THE SALES PRICE WAS TRANSFERRED TO A SEPARATE FUND FOR BUILDI NG UP ADEQUATE STORAGE FACILITIES UNDER A STATUTORY OBLIG ATION, IT WAS HELD TO BE DIVERTED AT SOURCE BY OVERRIDING TITLE C OULD NOT FORM PART OF ASSESSEES INCOME. 14.42. LD. COUNSEL HAD ALSO RELIED UPON BEFORE US THE JUDGMENT OF HONBLE MADRAS HIGH COURT IN THE CASE O F CIT VS SALEM CO-OPERATIVE SUGAR MILLS LTD (SUPRA). THE FACTS IN THIS CASE WERE THAT THE SAID ASSESSEE WAS A COOPERA TIVE M/S. MUMBAI INTERNATIONAL AIRPORT 62 SOCIETY, CARRYING ON BUSINESS OF MANUFACTURING AND SALE OF SUGAR AND IN TERMS OF MOLASSES CONTROL (AMENDMENT) ORDER DATED 06-02-1972, TRANSFERRED A SUM IN CONFORMITY W ITH THE STATUTORY OBLIGATION CAST BY THE ABOVE ORDER AND CLAIMED IT AS DEDUCTION IN THE COMPUTATION OF ITS TOTAL INCOME FO R THE ASSESSMENT YEAR 1975-76, WHICH WAS DISPUTED BY THE REVENUE BUT ALLOWED BY THE TRIBUNAL. HONBLE HIGH COURT AF FIRMED TRIBUNALS ORDER AND OBSERVED THAT EVEN BEFORE COLL ECTION OF THE AMOUNT AS DIRECTED BY THE CENTRAL GOVERNMENT UNDER THE MOLASSES CONTROL ('AMENDMENT) ORDER, THE ASSESSEE W AS DIRECTED TO KEEP THIS AMOUNT UNDER A SEPARATE ACCOUNT UNDER THE HEAD MOLASSES STORAGE FUND'. THOUGH, THE ASSESSEE COLLECTED THIS AMOUNT UNDER THE STATUTORY OBLIGATIO N, IT DID NOT BELONG TO THE ASSESSEE, BUT TO THE MOLASSES STORAGE FUND. THE ASSESSEE COULD NOT UTILISE THE AMOUNT LYING IN THE SAID FUND FOR ANY OTHER PURPOSE. THE AMOUNT WAS TO BE UTILISED FO R THE PURPOSE OF CONSTRUCTING A STORAGE TANK IN ACCORDANC E WITH THE SPECIFICATIONS GIVEN BY THE CENTRAL GOVERNMENT. IF THE ASSESSEE HAD FAILED TO COLLECT SUCH AMOUNT AS DIREC TED BY THE MOLASSES CONTROL (AMENDMENT) ORDER, THE CENTRAL GOV ERNMENT WOULD CONSTRUCT A MOLASSES STORAGE TANK AND RECOUP THE CONSTRUCTION CHARGES FROM THE ASSESSEE. IT WAS HELD THAT THERE WAS DIVERSION OF TITLE AT THE SOURCE OF THE INCOME COLLECTED UNDER THE DIRECTIONS GIVEN UNDER THE MOLASSES CONTR OL (AMENDMENT) ORDER. THE SUM IN QUESTION WAS HELD TO BE NOT INCLUDIBLE IN THE ASSESSEES TOTAL INCOME. 14.43. SIMILAR VIEW WAS ULTIMATELY UPHELD BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS NEW MORRISSON SUGAR M/S. MUMBAI INTERNATIONAL AIRPORT 63 MILLS LTD 269 ITR 397 (SC) AND CIT VS AM BUR COOPERATIVE SUGAR MILLS LTD 269 ITR 398 (SC) WHEREIN IT WAS HELD THAT THE AMOUNT SET APART TOWARDS MOLASSES RESERVE FUND CONSTITUTED DIVERSION OF INCOME BY OVERRIDING TITLE , AND THEREFORE, IT WAS HELD TO BE EXCLUDIBLE FROM ASSESS EES TOTAL INCOME. SIMILARLY, IN THE CASE OF CIT VS BIJLI COTTON MILLS PVT LTD 116 ITR 60 (SC), THE HONBLE SUPREME COURT HELD THAT WHEN RIGHT FROM THE INCEPTION, AMOUNT OF DHARMADA WAS COLLECTED AND HELD BY THE ASSESSEE COMPANY UNDER AN OBLIGATION TO SPEND FOR CHARITABLE PURPOSES ONLY, T HEN THOSE AMOUNTS WERE NOT ITS TRADING RECEIPTS AND WAS NOT T AXABLE AS BUSINESS INCOME. 14.44. BEFORE PARTING WITH, WE HAVE ALSO ANALYSED THE FAC TS ABOUT UTILIZATION OF THE IMPUGNED AMOUNT. THE ESCRO W ACCOUNT MAINTAINED BY THE ASSESSEE IS SIMPLY A POOL CREATED BY THE MOCA THROUGH ASSESSEE FOR MEETING SECURITY E XPENSES. UNDER THESE CIRCUMSTANCES, IF AT ALL ANY INCOME CAN BE COMPUTED, THAT WOULD BE POSSIBLE ONLY IF ANY SURPLU S ARISES, WHICH IS NOT POSSIBLE TO HAPPEN SINCE ENTIRE AMOUNT COLLECTED BY ASSESSEE COMPANY IS DEPOSITED IN ESCROW ACCOUNT WHICH IS EARMARKED WHOLLY AND EXCLUSIVELY FOR MEETING SECURI TY EXPENSES. THERE IS NO FLEXIBILITY FOR USING THE FU NDS ELSEWHERE. IF AT ALL ANY AMOUNT IS LEFT UNSPENT FROM THIS ACCO UNT, THEN, THE SAME IS TO BE TRANSFERRED TO THE ACCOUNT OF AIR PORT AUTHORITY OF INDIA FOR MEETING SECURITY EXPENSES. WE HAD DIRECTED THE ASSESSEE AS WELL AS THE LD. CIT-DR TO EXAMINE REQUISITE FACTS AND INFORM US WHETHER THERE WAS SUR PLUS OR DEFICIT IN THE ESCROW ACCOUNT FINALLY. THE INFORMA TION PROVIDED M/S. MUMBAI INTERNATIONAL AIRPORT 64 BY THE ASSESSING OFFICER, THROUGH LD. CIT-DR, VIDE HIS LETTER DATED 06-09-2016 REVEALS THAT UPTO THE ASSESSMENT Y EAR 2013-14 THOUGH THERE WAS SURPLUS IN THE SAID ACCOUN T, BUT FROM A.Y. 2014-15 ONWARDS, THERE WAS HUGE DEFICIT, MEANING THEREBY, THE EXPENDITURE WAS MORE THAN THE AMOUNT O F COLLECTION. AS PER THE TERMS OF SOP ISSUED BY MOCA , IF ULTIMATELY THERE WAS SOME DEFICIT, THEN IT WAS REQU IRED TO BE FUNDED BY GOVERNMENT OF INDIA, AND IF THERE WAS EVE R ANY SURPLUS (I.E. UNSPENT AMOUNT), IT WAS TO BE TRANSFE RRED TO THE ACCOUNT OF AIRPORT AUTHORITY OF INDIA (AAI). THUS, VIEWED FROM THIS ANGLE ALSO, THERE WAS NO QUESTION OF THERE BEI NG ANY INCOME IN THIS EXERCISE, MUCH LESS, ANY INCOME, WHI CH COULD BE CHARACTERISED AS TAXABLE INCOME IN THE HANDS OF THE ASSESSEE COMPANY. THUS, WE HAVE NO HESITATION IN H OLDING THAT THE AFORESAID AMOUNT IS NOT TAXABLE AS INCOME IN THE HANDS OF THE ASSESSEE COMPANY. THE AO IS DIRECTED TO RE- COMPUTE THE INCOME OF THE ASSESSEE ACCORDINGLY. TH E AO HAS ALSO THE LIBERTY TO EXAMINE THAT NO PORTION OF AMOU NT COLLECTED BY THE ASSESSEE ON ACCOUNT OF PSF-SC IS UTILISED BY THE ASSESSEE FOR ITS OWN PURPOSES OR FOR ANY PURPOSES W HICH ARE NOT PERMITTED BY MOCA/OTHER COMPETENT AUTHORITIES. IN CASE ANY VIOLATION IS DONE BY THE ASSESSEE IN THIS REGAR D, THEN THE AO WILL BE AT HIS LIBERTY TO TREAT THE AMOUNT SO MISAPPROPRIATED AS INCOME OF THE ASSESSEE BUT TO TH AT EXTENT ONLY. FURTHER, IF ANY REFUND IS RECEIVED BY THE ASS ESSEE ON ACCOUNT OF TDS DEDUCTED ON THIS COMPONENT, I.E. ON PSF-SC, THEN THE SAME SHALL ALSO BE DEPOSITED BY THE ASSESS EE IN THE ESCROW ACCOUNT, AS WAS FAIRLY AGREED BY THE LD. COU NSEL M/S. MUMBAI INTERNATIONAL AIRPORT 65 DURING THE COURSE OF HEARING BEFORE US, FAILING WHI CH IT WOULD BE TREATED AS INCOME OF THE ASSESSEE, TO THAT EXTEN T ONLY. WE DIRECT ACCORDINGLY. THIS GROUND IS ALLOWED SUBJECT TO DIRECTIONS GIVEN ABOVE. 15. GROUND 4 : IN THIS GROUND, THE ASSESSEE HAS CHALLENGED THE ACTION OF THE LD. CIT(A) IN RESTRICTING THE DEP RECIATION ALLOWANCE TO 10% AS APPLICABLE TO BUILDINGS AS AGAI NST CLAIM OF 15% MADE BY THE ASSESSEE AS APPLICABLE TO PLANT AND MACHINERY, ON THE AMOUNT OF EXPENDITURE INCURRED BY THE ASSESSEE ON TAXIWAYS, TAXIING TRACK AND PARKING WAY S. 15.1. THE BRIEF BACKGROUND OF THIS ISSUE IS THAT DURING THE IMPUGNED FINANCIAL YEAR, THE ASSESSEE HAD SPENT AN AGGREGATE AMOUNT OF RS.17.52 CRORES FOR MAKING TAXIWAYS AND A PRONS ON WHICH IT HAD CLAIMED DEPRECIATION UNDER BLOCK OF BU ILDING @10%. BUT DURING THE COURSE OF ASSESSMENT PROCEEDI NGS, THE ASSESSEE CLAIMED THAT DEPRECIATION ON THESE ASSETS SHOULD BE PROVIDED AT 15% BY TREATING THE SAME AS PLANT AND M ACHINERY AND NOT AS BUILDING. THE ASSESSEE ALSO RELIED UPON , IN ITS FAVOUR, VARIOUS JUDGMENTS. BUT THE AO WAS NOT SATI SFIED WITH THE CLAIM OF THE ASSESSEE, AND THEREFORE, HE REJECT ED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT TAXI WAYS AND AP RONS ARE NOTHING BUT CONCRETE STRUCTURES PROVIDING PARKING W AYS AND OTHER LOGISTICS FACILITIES TO THE AIRCRAFT, WHEN TH EY ARE PARKED IN BETWEEN THEIR FLIGHTS AND, THEREFORE, THESE ARE PAR T AND PARCEL OF LARGER MEANING OF THE WORD BUILDING USED IN TH E INCOME-TAX ACT. IN HIS VIEW, THESE STRUCTURES ARE EASILY IDEN TIFIABLE WITH BUILDING AND CANNOT BE EQUATED WITH A PLANT. UNDER THESE M/S. MUMBAI INTERNATIONAL AIRPORT 66 CIRCUMSTANCES, HE DID NOT ALLOW THE ASSESSEES CLAI M MADE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 15.2. IN THE APPEAL BEFORE THE LD. CIT(A), THE ASSESSEE MADE DETAILED SUBMISSIONS AND PROVIDED DETAILED BREAK-UP OF AGGREGATE EXPENDITURE OF RS.17.52 CRORES INCURRED O N THESE STRUCTURES. THE ASSESSEE ALSO PLACED RELIANCE ON M ANY JUDGMENTS IN ITS FAVOUR. THE CIT(A) WAS NOT SATISF IED WITH THE SUBMISSION OF THE ASSESSEE AND REJECTED THE CLAIM O F THE ASSESSEE BY RELYING UPON HIS EARLIER ORDER FOR A.Y. 2007-08. 15.3. DURING THE COURSE OF HEARING BEFORE US, IT WAS POI NTED OUT BY THE LD. COUNSEL THAT CIT(A)S ORDER FOR A.Y. 2007-08 HAD REACHED UPTO THE TRIBUNAL, WHEREIN THE TRIBUNAL HAD ALLOWED THE CLAIM OF THE ASSESSEE BY HOLDING THAT T HE ASSESSEE IS ELIGIBLE FOR DEPRECIATION @15% APPLICABLE TO PLA NT AND MACHINERY ON THESE STRUCTURES. 15.4. PER CONTRA, THE LD. DR RELIED UPON THE ORDERS OF L OWER AUTHORITIES AND DID NOT MAKE ANY DISTINCTION IN FAC TS BETWEEN THE ASSESSMENT YEARS 2007-08 AND 2008-09. 15.5. WE HAVE GONE THROUGH THE ORDERS PASSED BY LOWER AUTHORITIES. FROM THE DETAILS BROUGHT BEFORE US, I T IS NOTICED BY US THAT THE ASSESSEE HAD INCURRED AN AGGREGATE A MOUNT OF RS.17.52 CRORES ON TAXI WAYS, APRONS AND RUNWAYS. IT IS NOTED THAT SIMILAR EXPENDITURE WAS INCURRED BY THE ASSESS EE IN A.Y. 2007-08 AND DEPRECIATION AS APPLICABLE TO PLANT & M ACHINERY WAS CLAIMED BUT THE SAME WAS DENIED BY THE AO AS WE LL AS BY THE CIT(A). THE MATTER REACHED UPTO THE TRIBUNAL A ND TRIBUNAL, VIDE ITS ORDER DATED 14-03-3024 IN ITA NO.7111/MUM/2011 HELD AS UNDER:- M/S. MUMBAI INTERNATIONAL AIRPORT 67 31. WE OBSERVE THAT THE ASSESSEE IN THE RETURN FILE D HAS TREATED THE ASSET AS OF PART OF BUILDING AND CLAIME D DEPRECIATION AT THE RATE OF 10%. AO HAS ACCEPTED TH E CLAIM OF ASSESSEE. HOWEVER, WHILE FILING THE APPEAL BEFOR E THE FIRST APPELLATE AUTHORITY, THE ASSESSEE CONTENDED T HAT THE SAID ASSET IS IN THE FORM OF PLANT AND MACHINERY AN D THEREFORE, THE ASSESSEE IS ENTITLE FOR DEPRECIATION AT THE RATE OF 15%, THE RATE AS APPLICABLE TO PLANT AND MA CHINERY AND NOT AT THE RATE OF 10%. THE LD. CIT(A) DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND HAS STATED THAT ASSESSEE, IN ITS COMPUTATION OF INCOME HAS ITSELF CONSIDERED THE SAID ASSET TO BE A BUILDING AND IT H AS ONLY BY WAY OF NOTE AN ALTERNATIVE CLAIM HAS BEEN MADE S TATING THAT TAXIWAYS, APRONS, HANGAR, PARKING BAYS AND BRI DGES ARE PART OF PLANT ON WHICH ASSESSEE IS ENTITLE FOR DEPRECIATION AT THE RATE OF 15%. 32. THE LD. CIT(A) HAS HELD THAT THE IMPUGNED ASSET S WHICH ARE BASICALLY STRUCTURES AND ARE IN THE NATUR E OF PLACES WHICH ARE USED BY AIRCRAFTS FOR TAXING, PARK ING. ACCORDINGLY THEY ARE NOT IN THE NATURE OF PLANT. HE NCE, ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 33. DURING THE COURSE OF HEARING, LD. AR REITERATED THE SUBMISSIONS AS MADE BEFORE THE FIRST APPELLATE AUTH ORITY AND STATED THAT APRONS, TAXIWAYS AND RUNWAY ARE NOT ONLY THE STRUCTURES BUT THEY ARE STRUCTURES FOR SPECIFIC PURPOSES WHICH CAN BE CONSIDERED AS TOOLS FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. LD AR REFERRED THE DECISI ON OF THE MUMBAI BENCH OF TRIBUNAL IN THE CASE OF NATIONA L AIRPORTS AUTHORITY OF INDIA V/S CIT [2011] 134 ITD 34 (DELHI), WHEREIN IT WAS HELD THAT THE TERMINAL PLAC E USED FOR REGULATION OF AIR TRAFFIC AND COMMUNICATIONAL A ND NAVIGATIONAL CONTROL ARE PART OF TOOL OF BUSINESS O F THE ASSESSEE AND THEREFORE THEY CONSTITUTE PART OF THE PLANT. THUS THE ASSESSEE IS ACCORDINGLY ENTITLED FOR DEPRE CIATION AS APPLICABLE ON PLANT AND MACHINERY. THE LD. AR REFERRED THE DECISION OF THE HONBLE APE X COURT IN THE CASE OF CIT V/S DR. B. VENKATA RAO (2000) 24 3 ITR 81(SC) AND SUBMITTED THAT IN THE CASE OF AN OPERATI ON THEATRE IN THE HOSPITAL, IT HAS BEEN HELD TO BE A P ART OF PLANT AND NOT A PART OF BUILDING. LD. AR REFERRED T HE DECISION OF THE HONBLE APEX COURT IN THE CASE OF C IT V/S KARNATAKA POWER CORPN. (2000) 247 ITR 268 (SC) AND M/S. MUMBAI INTERNATIONAL AIRPORT 68 SUBMITTED THAT THE POWER GENERATING STATION BUILDIN G IS HELD TO BE A PLANT. HE SUBMITTED THAT SUCH STRUCTUR ES ARE SPECIFIC FOR THE PURPOSE OF BUSINESS OF THE ASSESSE E AND THE ASSESSEE IS ENTITLED FOR DEPRECIATION AT RATE A S APPLICABLE TO PLANT AND MACHINERY. 34. ON THE OTHER HAND, LD. DR SUPPORTED THE ORDERS OF AUTHORITIES BELOW. HE SUBMITTED THAT ASSESSEE ITSEL F HAS CLAIMED DEPRECIATION AT THE RATE OF 10% IN THE RETU RN AS APPLICABLE TO BUILDING. 35. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF AUTH ORITIES BELOW AND SUBMISSIONS OF LD. REPRESENTATIVES OF THE PARTIES. THERE IS NO DISPUTE TO THE FACTS THAT RUNW AY, TAXIWAY ARE NECESSARY PART OF AIRPORT OPERATION AND ARE SPECIFIC PART OF INFRASTRUCTURE FOR USE OF AIRCRAFT S. THESE ARE NOT MERELY CONCRETE STRUCTURES. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V/S MAZAGAON DOCK LTD (199 1) 191 ITR 460(BOM) HAS HELD THAT DRY DOCK AND WET DOC K CREATED FOR SHIPS ARE TO BE TREATED AS PLANT AND NO T BUILDING. THE HONBLE APEX COURT HAS HELD IN THE CA SE OF KARNATAKA POWER CORPN. (SUPRA) THAT POWER GENERATIN G STATION BUILDING IS NOT A SIMPLY CONCRETE STRUCTURE BUT A SPECIALLY DESIGNED BUILDING AND IS TO BE TREATED AS PART OF PLANT. SIMILARLY, THE HONBLE APEX COURT HAS HELD I N THE CASE OF DR. B. VENKATA RAO (SUPRA) THAT THE OPERATI ON THEATRE IN AN HOSPITAL BUILDING IS NOT SIMPLY A CON CRETE STRUCTURE BUT 30 NECESSARILY A PART FOR RUNNING OF THE HOSPITAL AND THE ASSESSEE IS ENTITLED TO CLAIM DEPR ECIATION AS APPLICABLE TO PLANT AND MACHINERY. IF WE APPLY T HE ABOVE, DECISIONS TO THE FACTS OF THE CASE BEFORE US , WE ARE OF THE CONSIDERED VIEW THAT TAXIWAYS AND APRONS, PA RKING BAYS CANNOT BE SAID TO BE MERELY CONCRETE STRUCTURE S BUT ARE NECESSARY TOOLS FOR OPERATING/USING THE AIRPORT . HENCE, THE SAME ARE TO BE CONSIDERED AS PART OF PLANT AND MACHINERY. THEREFORE, WE HOLD THAT ASSESSEE IS ENTI TLED FOR DEPRECIATION AT THE RATE AS APPLICABLE ON PLANT AND MACHINERY IN RESPECT OF TAXIWAYS, APRONS, PARKING B AYS ETC. HENCE, GROUND NO.2 OF THE APPEAL TAKEN BY ASSE SSEE IS ALLOWED. 15.6. THUS, FROM THE PERUSAL OF THE ABOVE, IT IS NOTED T HAT THE TRIBUNAL HAS ALLOWED THE CLAIM OF DEPRECIATION @15% AS M/S. MUMBAI INTERNATIONAL AIRPORT 69 APPLICABLE TO PLANT & MACHINERY. NO DISTINCTION HA S BEEN MADE BY THE LD. DR ON FACTS OR ON LEGAL POSITION. THEREFORE, RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL FO R A.Y. 2007- 08, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE , AND THEREFORE, THE CLAIM OF DEPRECIATION @15% IS DIRECT ED TO BE ALLOWED. THIS GROUND MAY BE TREATED AS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH NOVEMBER, 2016. SD/- (MAHAVIR SINGH ) SD/- (ASHWANI TANEJA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED: 30/11/2016 CTX? P.S/. .. !'#$%&%'# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT, MUMBAI. 4. / CIT(A)- , MUMBAI 5. #$% &' , &' ) , / DR, ITAT, MUMBAI 6. %*+ , / GUARD FILE. / BY ORDER, # //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI