Appeal Details
Counselvise Citation
[2022] 106 COUNSELVISE.COM (IT) 5742 (ITAT-CUTTACK)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
6 year(s) 1 month(s) 28 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
18-09-2022
Appeal Filed By
Department
Order Result
PartlyAllowed
Bench Allotted
DB
Assessment Year
2011-2012
Appeal Filed On
21-07-2016
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL, BEFORE AND ARUN KHODPIA, ACCOUNTANT MEMBER ITA No ITA No. ITA No. DCIT, Circle Bhubaneswar (Appellant ITA No. ITA No. C.O.No.22/CTK/2016(in ITA No.288/CTK/16) ITA No. ITA No.64/CTT/2017: Asst.year: 2009 ITA No.130/CTK/2019: Asst.Year: 2013 ITA No.131/CTC/2019: Asst.Year: 2014 Odisha Power Generation Corporation Ltd.,7 Fortune Towers, Chandrasekharpur, Bhubaneswar PAN/GIR No. (Appellant Assessee by IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE S/SHRI GEORGE MATHAN, JUDICIAL AND ARUN KHODPIA, ACCOUNTANT MEMBER ITA No.114/CTK/2014: Assessment Year ITA No.288/CTK/2016: Assessment Year : ITA No.175/CTK/2016: Assessment Year : DCIT, Circle-1(1), Bhubaneswar Vs. Odisha Power Generation Corporation Ltd., Fortune Towers, Chandrasekharpur, Bhubaneswar PAN/GIR No. (Appellant) .. ( Respondent ITA No.84/CTK/2014: Assessment Year : 2010 ITA No.267/CTK/2016: Assessment Year : C.O.No.22/CTK/2016(in ITA No.288/CTK/16) ITA No.173/CTK/2016: Assessment Year : ITA No.64/CTT/2017: Asst.year: 2009 ITA No.130/CTK/2019: Asst.Year: 2013 ITA No.131/CTC/2019: Asst.Year: 2014 Odisha Power Generation Corporation Ltd.,7 th floor, Fortune Towers, Chandrasekharpur, Bhubaneswar Vs. DCIT, Circle Bhubaneswar PAN/GIR No.AAACO 4759 R (Appellant) .. ( Respondent Assessee by : S/Shri Dilip Kr. Mohanty/Pradyumna Kumar Sahu ARs Revenue by : Shri M.K.Gautam, CIT Date of Hearing : 19 /9 Date of Pronouncement : 19/9 O R D E R Page1 | 52 IN THE INCOME TAX APPELLATE TRIBUNAL, JUDICIAL MEMBER AND ARUN KHODPIA, ACCOUNTANT MEMBER Assessment Year : 2010-11 : Assessment Year : 2011-12 : Assessment Year : 2012-13 Odisha Power Generation Corporation Ltd.,7 th floor, Fortune Towers, Chandrasekharpur, Bhubaneswar PAN/GIR No.AAACO 4759 R Respondent) /CTK/2014: Assessment Year : 2010-11 : Assessment Year : 2011-12 C.O.No.22/CTK/2016(in ITA No.288/CTK/16) : Assessment Year : 2012-13 ITA No.64/CTT/2017: Asst.year: 2009-10 ITA No.130/CTK/2019: Asst.Year: 2013-14 ITA No.131/CTC/2019: Asst.Year: 2014-15 Circle-1(1), Bhubaneswar Respondent) /Pradyumna Kumar Sahu, : Shri M.K.Gautam, CIT DR 9/2022 9/2022 OPGC Page2 | 52 Per Bench These are cross appeals filed by the revenue and assessee against the separate orders of the ld CIT(A)-1, Bhubaneswar for the assessment years 2010- to 2012-13. The assessee has also filed cross objection for the assessment year 2011-12 and also appeals for the assessment years 2009- 10, 2013-14 & 2014-15, respectively. 2. Shri M.K.Gautam, ld CIT DR appeared for the revenue and S/Shri Dillip Kumar Mohanty and Pradyumna Kumar Sahu, ARs appeared for the assessee. 3. The assessee has filed a consolidated chart for all the assessment years in appeal, which is extracted below: Assessee’s appeals Sr .N o Disallowed exp. ITA No.64/CTK/1 7 2009-10 ITANo. No.84/C/14 2010-11 ITA No.267/C/16 2011-12 ITA No.173/C/16 2012-13 ITA No. 130/C/19 2013-14 ITA No. 131/C/19 2014-15 1 Provision for unascertained liability (Per.management system) 2,20,00,000 1,07,70,000 - - - - 2. Provision for Mis.exp. - 27,146 - - - - 3. Peripheral development exp. - 20,40,540 74,84,413 80,94,164 42,85,040 67,76,451 4. Community development & welfare exp. - 13,56,980 11,91,862 34,56,438 37,68,948 1,11,155 6. Prior period adjustments - 69,91,618 61,16,336 67,54,639 - - OPGC Page3 | 52 Department’s appeals Sr. No. Allowed expenses ITA No.114/C/14 Asst.Yr. 10-11 ITA No.288/C/16 Asst.yr.11-12 ITA No.175/C/16 Asst.Yr.12-13 1 Prior period & prepaid exp. 1,15,00,000 62,41,000 - 2. Club expenses 8,764 - - 3. Shortage of coal 8,70,575 - - 4. Peripheral dev. Expenses 1,05,18,000 - - 5. Community development & welfare expenses 34,30,487 96,94,000 - 6. Mini Hydel Projects 77,02,924 94,42,063 99,87,943 7. Non-deduction of tax on payment of int. to PFC 1,27,92,070 52,94,212 4. In respect of appeals filed by the department as well as appeals filed by the assessee, ld CIT DR filed written submissions, which are extracted below: “Departmental appeal a) The first ground of appeal pertains to disallowance of prior period expenses and pre-paid expenses of Rs. 1,15,00,000/-. The findings of Id. CIT(A) are erroneous for the following reasons: i.) There was a remark to that extent by the Auditors in the Tax Audit Report (Form 3CD). It was alleged by the Id. AR of the assessee company that it was practically not possible to identify such expenditures from the voluminous vouchers, head of account in the general ledger. ii.) It is difficult to comprehend as to how such an information could be submitted to the A.O. in AY 2009-10 in similar circumstances and what prevented the assessee company (being a State Govt, undertaking) to submit the same in the year under reference. OPGC Page4 | 52 iii.) In any case, the A.O. had not called for vouchers to be furnished before him except the details. iv.) The A.O. was not left with any alternative but to estimate the same. It is a settled law that prior period expenses should have been claimed in the respective years. What is the evidence that these liabilities have crystallized in the year under reference. v.) There is no evidence on record to suggest that such expenses were already covered in prior period adjustment of Rs.4,91,20,000/- (rectified to Rs.69,91,618/-). Also the Id. CIT(A) is silent about the claim of pre-paid expenses. vi.) This issue has been fully by the Id. CIT(A) for AY 2012-13 on pages 13 to 15 of the appellate order dated 13.03.2015. b) The second ground of appeal pertains to club expenses of Rs.8764/- . The findings of Id. CIT(A) are erroneous for the following reasons: i.) There was a remark to that extent by the Auditors in the Tax Audit Report (clause 17(d) of Form 3CD) that membership fees was paid to Bhubaneswar Club for MD as well as DGM (Finance). ii.) There is no documentary evidence that such expenses were incidental to the business carried out by the assessee company. The assessee is a state govt, undertaking and sells power only to GRIDCO. In such eventuality, there is no way that these expenses could have enhanced business prospects of the assessee company. The finding of Id. CIT(A) that it was a small amount hence same was for business purpose, is totally irrelevant since the allowability of an expenditure does not depend on its quantum. iii.) Even if the expenses are not personal in nature, then also the A.O. was justified in making such disallowance as these were paid for non-business purposes. c) The third ground of appeal pertains to provision of Rs.8,70,575/- made for shortage of coal. The findings of Id. CIT(A) are erroneous for the following reasons: i.) If the quantity had been physically verified then what was the need for making a provision in the books of account on last day of the accounting period. It is a settled law that provisions can't be allowed as deduction under the Income Tax provisions. ii.) The coal was being continuously purchased throughout the year. Nothing stopped the assessee company from claiming such an expenditure on actual verification. Apparently there is no reason as OPGC Page5 | 52 to why provision was made by passing journal entries on the last day of the accounting period i.e. 31.03.2010. iii.) Due to above reasons, the A.O. was prompted to hold that liability had not crystallized in the year under reference and provision had been made with uncertainty. d) The fourth ground of appeal pertains to the action of Id. CIT(A) in restricting the disallowance on account of peripheral development expenses to Rs.20,40,540/- instead of Rs.1,05,18,000/- made by the A.O. The findings of Id. CIT(A) are erroneous for the following reasons: i.) The A.O. was aggrieved with the fact that supporting evidences were not filed by the Id. AR of the assessee company in support of peripheral development expenses. For AY 2011-12, only bifurcation of PDE (Peripheral development expenses) of Rs.74,83,412/- was filed before the A.O. and Id. CIT(A) without any bills and vouchers. Further many expenses (omnibus heads) such as Advertising expenses, Bathing Ghat expenses, Celebrations, Gifts, Hoarding expenses, Public hearing expenses, Puja gruh expenses and misc. expenses had no nexus with PDE. h.) As per State Govt, notification dated 15.01.2004, the amount should be spent through the District Committee with Collector as head for development of health, education, Communication, irrigation and agriculture. It should be within a radius of 50 km from the Scheduled Area. iii.) Actually the Peripheral Development expenditure should have been incurred on the advice of RPDAC (Rehabilitation Periphery Development Advisory Committee) vide notification dated 01.07.2011. But it was not the case here. iv.) Such expenditure should be incidental to business and has to be justified by commercial expediency. v.) There should be a direct nexus between the expenditure and business activities carried on by the assessee company. vi.) The Id. CIT(A) allowed relief to the assessee company on irrelevant grounds that a business could not function in isolation from its social environment. vii.) As seen from the order of Id. CIT(A) for AY 2012-13, this issue was decided in the favour of Revenue by the decision of Hon'ble Cuttack IT AT in assessee's own case vide order ITA No.271/CTK/2010 dated 25.05.2012 for AY 2004-05 to the extent it was paid to District Collector (DC), Bolangir, in ITA No.554/CTK/2012 dated 22.10.2014 for AY 2007-08 on the ground that it was not incurred in respect of area where industrial activity was being carried out and it was not incurred wholly & exclusively for its business, in ITA NO.626/CTK/2012 dated 22.10.2014 for AY 2008-09 on the ground that it was not incurred in respect of area where industrial OPGC Page6 | 52 activity was being carried out and it was not incurred wholly & exclusively for its business and in ITA NO.145/CTK/2013 dated 22.10.2014 for AY 2009-10 restricting the said disallowance to Rs.25,41,312/-. Hence there is binding precedent. viii.) This issue has been decided in the favour of the Revenue by the Hon'ble Bangalore ITAT in the case of NMDC Ltd. vs. DCIT (86 taxmann.com 55) wherein it was held in paragraph-5.3 as under: "5.3 We have heard the rival submissions and perused the material on record. The issue in this ground of appeal is whether the expenditure incurred towards corporate social responsibility can be allowed as an expenditure. Before adverting to the facts of the present case, it is pertinent to note that the Companies Act, 2013 has prescribed corporate responsibility to incur the expenditure in case of certain companies making the profits. These provisions are applicable for the FY. 2014-15. The relevant provisions on Corporate Social Responsibility under the Companies Act, 2013 are extracted as under: "Sec. 135. Corporate Social Responsibility: (1) Every company having net worth of rupees five hundred crore or more, or turnover of rupees one thousand crore or more or a net profit of rupees five crore or more during any financial year shall constitute a Corporate Social Responsibility Committee of the Board consisting of three or more directors, out of which at least one director shall be an independent director. (2) The Board's report under sub-section (3) of section 134 shall disclose the composition of the Corporate Social Responsibility Committee. (3) The Corporate Social Responsibility Committee shall,— (a) formulate and recommend to the Board, a Corporate Social Responsibility Policy which shall indicate the activities to be undertaken by the company as specified in Schedule VII; {b) recommend the amount of expenditure to be incurred on the activities referred to in clause (a); and (c) monitor the Corporate Social Responsibility Policy of the company from time to time. (4) The Board of every company referred to in sub-section (1) shall,— (a) after taking into account the recommendations made by the Corporate Social Responsibility Committee, approve the Corporate Social Responsibility Policy for the company and disclose contents of such Policy in its report and also place it on the company's website, if any, in such manner as may be prescribed; and {b) ensure that the activities as are included in Corporate Social Responsibility Policy of the company are undertaken by the company. OPGC Page7 | 52 (5) The Board of every company referred to in sub-section (1), shall ensure that the company spends, in every financial year, at least two per cent, of the average net profits of the company made during the three immediately preceding financial years, in pursuance of its Corporate Social Responsibility Policy: Provided that the company shall give preference to the local area and areas around it where it operates, for spending the amount earmarked for Corporate Social Responsibility activities: Provided further that if the company fails to spend such amount, the Board shall, in its report made under clause (o) of sub-section (3) of section 134, specify the reasons for not spending the amount. Explanation—For the purposes of this section "average net profit" shall be calculated in accordance with the provisions of section 198". The Explanation-2 to Section 37(1) of the Income Tax Act was inserted by Finance Act, 2014 w.e.f. 01-04-2015 clarifying that the expenditure incurred on the corporate social responsibility u/s. 135 of the Companies Act, 2013 shall not be deemed to be expenditure of assessee for the purpose of business. Now adverting to the facts of the present case, we are concerned with the AY. 2012-13, for which the provisions of the Companies Act, 2013 are not applicable. It does not mean that there is a bar on the part of corporates to incur any expenditure on social responsibility. But the question now is whether this expenditure can be considered as business expenditure wholly and exclusively incurred for the purpose of business under the provisions of Section 37(1) of the Act. In order to claim deduction u/s. 37(1), the condition to be satisfied are that the item of expenditure should not be an item of expenditure prescribed in Section 32 and 36 and should not be in the nature of capital expenditure or personal expenditure of the assessee. It should be laid out wholly and exclusively for the purpose of business or profession. Needless to mention that all the three conditions are required to be cumulatively satisfied. In the present case, there is no dispute as regards the satisfaction of the first two conditions mentioned supra. The bone of contention is only regarding satisfaction of the condition that the expenditure was incurred wholly and exclusively for the purpose of business. It is also settled principle of law that there is no need to establish necessity of such expenditure. But the onus lies on the assessee to prove that the expenditure was incurred wholly for the purpose of business. Once the assessee discharge this onus, the assessee would be entitled for deduction u/s. 37(1) of the Act. In the present case, from the explanation furnished before the AO, it is manifest that the assessee was only harping that the expenditure was incurred towards corporate social responsibility. We do not discern any attempt made by the appellant to discharge the onus that this expenditure was incurred out of business expediency. In fact, no details of the OPGC Page8 | 52 expenditure incurred were filed before the lower authorities. Even before us also the Ld. AR made no attempt to discharge onus, who was simply harping on that expenditure was incurred for the purpose of business. Thus, no factual foundation was laid by the assessee to establish that this expenditure was incurred for the purpose of business. Mere bald assertion that expenditure was incurred for promoting the business cannot be accepted without establishing the nexus between the expenditure and business. Even before us, the Ld. AR for the appellant had failed miserably to establish this onus nor any attempt was made by him to establish business expediency for incurring this expenditure. He merely submitted that he filed details of the expenditure incurred before the CIT (A) and for the reasons best known to him, had chosen not to file before us by way of Paper Book in conformity with the Rules of the Tribunal. Reliance placed by Ld. AR on the decision of the Co- ordinate Bench in assessee's own case also is misplaced. On mere perusal of the orders of the Co-ordinate Bench decisions, the decision of the Co-ordinate Bench in assessee's own case, it is clear that the nature of expenditure is different and in the same assessment year in the Revenue's appeal, the Co-ordinate Bench merely followed the earlier decision of the Co-ordinate Bench of the Tribunal in assessee's own case without referring to any factual nature of the expenditure. Neither of the parties to the appeal had brought to the notice of this Tribunal that the assessee company also filed an appeal challenging the findings of the Ld. CIT(A) that part of the Corporate Social Responsibility expenditure which was in the nature of capital is disallowed. The submission of the Ld.AR that this expenditure was incurred in consideration of Government granting license for mining cannot be accepted as this kind of contracts are against public policy and are void u/s. 23 of the Contract Act. Therefore, it can be said that this expenditure was incurred voluntarily there was no business expediency and therefore, it amounts to application of income voluntarily towards charity which cannot be allowed as a deduction. Reliance in this regard can be placed on the decision of the Addl. CIT vs. Badrinarayan Shrinarayan Akodiya [1975] 101 ITR 817 (MP) and cannot be allowed as deduction. Therefore, the entire expenditure incurred on corporate responsibility cannot be allowed as deduction. While coming to this conclusion, we also draw our support from the decision of the Co-ordinate Bench of Bangalore in the case of Kanhaiyalal Dudheria vs. Jt. CIT [2017] 165 ITD 14/82 taxmann.com 134, wherein one of us (Accountant Member) is the Author and in that case, involving identical fact situation and it was held that on failure of assessee to discharge onus of proving that expenditure was incurred for the purpose of business, it amounts to application of income voluntarily towards charity which cannot be allowed as deduction. Thus, therefore, this ground of appeal is dismissed". e) The fifth ground of appeal pertains to the action of ld. CIT(A) in restricting the disallowance on account of community development and welfare expenses to Rs.13,56,980/- instead of Rs.34,30,487/- made by the A.O. The findings of ld. CIT(A) are erroneous for the following reasons: OPGC Page9 | 52 i.) The A.O. had examined the ledger account of community development and welfare expenses and held that socio-cultural activities, festival celebrations and township cleaning expenses could not be allowed as deduction u/s.37(1) of the Act. ii.) There is nothing on record to show that these expenses were carried out of business expediency. iii.) The pooja expenses can't be allowed in view of judgement of Hon'ble Karnataka High Court in the case of Sanghameshwar Coffee Estate Ltd. vs. State of Karnataka (28 Taxman 41) wherein it was held in pargraph-10 that company is only a juristic person and it can't claim to profess, practice or follow any religion or faith. The reliance was also placed on the judgement of Hon'ble Mumbai High Court in the case of Kolhapur Sugar Mills Ltd. (119 ITR 387) in this regard. Similar view was taken by Hon'ble Nagpur Tribunal in the case of Maharashtra Metal Powers Ltd. (102 ITD 214). iv.) As regards the community development & weiafare expenses, this issue is covered in the favour of Revenue by the judgement of Hon'ble Karnataka High Court in the case of CIT vs. Wipro Ltd. (41 taxmann.com 190) wherein it was held in paragraphs-13 to 18 as under: "13. We have perused the impugned order as well as the orders of the first appellate authority and of the AO and so also the other materials placed before the Court. The respondent assessee did not place any materials to show what was the exact nature of expenditure, incurred for community development, to be allowed under Section 37(1) of the Act. The only basis on which the expenditure claimed was that the factory is situated in backward area and they have incurred the expenditure, as indicated in paragraph 10, to discharge their social responsibility. In support, the respondent assessee placed reliance upon the judgment of the Madras High Court in CIT v. Madras Refineries Ltd. [2004] 266 ITR 170/138 Taxman 261. 14. Mr. Rajesh Chander, learned counsel for the respondcnt-assessee, at the outset, invited our attention to the very same judgment of the Madras High Court and submitted that the concept of business is not static and it has evolved over a period of time to include within its fold the concrete expression of care and concern for the society at large and the people of the locality in which the business is located in particular. He submitted that the respondent-assessee being a good corporate citizen, in order to bring goodwill of the local citizen and so also to maintain good relations with the regulatory agencies and the society at large and thereby creating an atmosphere in which the business can succeed in a greater measure with the aid of such goodwill incurred the aforesaid expenditure. In support of his contention, he OPGC Page10 | 52 also pressed into service the test of commercial expediency. He submitted that in applying the test of commercial expediency for determining whether an expenditure was wholly and exclusively laid out for the purpose of the assessee's business, reasonableness of the expenditure has to be judged from the point of view of the businessman and not of the revenue. In support of this contention, he placed reliance upon the judgment of the Supreme Court in CIT v. Walchand & Co. (P.) Ltd. [1967] 65 ITR 381, Eastern Investments Ltd. v. CIT [1951] 20 ITR 1 (SC) and J.K. Woollen Mfrs. v. CIT [1969] 72 ITR 612 (SC). 15. The principle laid down by the Supreme Court in all the three judgments is similar. These judgments state that in applying the test of commercial expediency for determining whether an expenditure was wholly and exclusively laid out for the purpose of the assessee's business, reasonableness of the expenditure has to be judged from the point of view of the businessman and not of the income-tax department. It is, of course, open to the appellate Tribunal to come to a conclusion either that the alleged payment is not real or it is not incurred by the assessee or in the character of a trader or it is not laid out wholly and exclusively for the purposes of the business of the assessee and to disallow it. Having regard to what has been laid down by the Supreme Court, learned counsel for the parties have fairly stated that the expenditure over a charity in any case would, not stand to the test of commercial expediency. 16. It is in this backdrop, we have perused the orders passed by the AOs in this appeal and in ITA Nos.67/07 and 68/07. Though in the present appeal OTA No. 13 3/07) there is no whisper regarding the exact nature of the expenditure incurred for community development by the assessee, the AO in ITA No.68/08 has made reference to the nature of expenditure incurred under this head by the respondent-assessee. From the order of AO in ITA 68/07, it appears that the contributions were made to various religious functions, charitable institutions, social clubs and certain acts of charity such as donating a borewell to the Municipality, etc. The respondent assessee has not placed any other materials on record in support of their claim of expenditure over community development, in other two appeals, so to apply the test of commercial expediency. 17. From plain reading of the order of the AO and so also the order of the appellate authority in ITA No.68/07, it appears to us that the expenses contributed for religious functions, charitable institutions, social clubs and charity such as donating a borewell to the municipality, etc. would not fall within the expenditure contemplated under Section 37(1) of the Act. Section 37(1) of the Act states that any expenditure not being expenditure of the nature described in Sections 30 to 36 and not being in the nature of capital expenditure or personal expenses of the assessee, laid out or expended wholly and exclusively for the purposes of the business or profession shall be allowed in computing the income chargeable under the head "Profits and gains of business or profession". It is not the case of OPGC Page11 | 52 assessee that the expenditure incurred by them is covered by Sections 30 to 36 of the Act, and even if that was so the question of allowing the expenditure under Section 37(1) of the Act would not arise. 18. In our opinion, the expenditure towards the religious funds, charitable institutions, social clubs or for charity do not stand to the test of commercial expediency. In any case, the expenditure under these heads cannot be stated to be exclusively for the purposes of business of the respondent assessee and to allow it. That apart, the respondent assessee has failed to place any material, in support of their case so as to claim the aforementioned expenditure under this head as contemplated by Section 37(1) of the Act as being commercial expediency. In the circumstances, we answer the question in favour of the revenue and against the asseessee. The order of the Tribunal is accordingly set aside to this extent". f) The sixth ground of appeal pertains to disallowance of expenses of Rs.77,02,924/- on Mini Hydel Plants (MHP) when no corresponding income was shown in the books of account. The findings of Id. CIT(A) are erroneous for the following reasons: i.) The A.O. was aggrieved with the fact that no revenue was shown in the books of account though the power had been sold to GRIDCO. Thus income had already accrued to the assessee company since it was following mercantile system of accounting. ii.) As per matching principles, the assessee company had claimed the entire expenses but no income (already accrued) was shown in the books of account. iii.) It is difficult to comprehend that though draft PPA (power purchase agreement) had been sent to GRIDCO for their approval but it took almost 5 to 6 years to approve the same. iv.) It is a case where accrued income has been deferred to subsequent years but expenses so incurred during the year have been claimed in the books of account. v.) The findings of Id. CIT(A) that as a public sector undertaking, the assessee company was bound to follow laid down rules & procedures but nothing stopped it from charging the earlier price paid by GR1DCO. It does not inspire confidence that in the guise of public sector undertaking, the assessee company can over-ride accounting principles and Income Tax laws relating to accrual of income. g) The seventh ground of appeal pertains to disallowance of Rs.l,27,92,070/-u/s.40(a)(ia) of the Act in respect of interest payment to Power Finance Corporation (PFC) without TDS. Though this issue is covered OPGC Page12 | 52 by the Notification No.211/2006 dated 18.08.2006 u/s.l94A(3)(iii)(f) yet it was incumbent on the Id. CIT(A) to allow an opportunity to the A.O. before deleting the disallowance. Thus there is violation of principles of natural justice & Rule-46A. Assessee's appeal a) The Prior Period expenses/adjustment disallowed by the A.O. and as confirmed by the Id. CIT(A) is on strong footing for the following reasons: i.) The expenditure claimed by the assessee in this year is not allowable on the matching concept. ii.) it must be shown with documentary evidences that the assessee received the bills of the parties during the year itself and therefore these liabilities had crystallized during the year, consequently obligation to pay by the assessee arose in this year. iii.) When the income relating to one year cannot be assessed to tax in any other year. Under the same principle, the expenditure relating to one year cannot be claimed in any other year. Both the principles shall have exception, if it is expressly provided by the Act. iv.) For AY 2011-12, the Id. CIT(A) has given a categorical finding in para- 6.2 on page-15 of the appellate order that out of total prior period expenses of Rs.62,41,000/-, the assessee company could show that only liability of Rs.52,051/- in respect of water tax and Rs.72,643/- in respect of sales tax had crystallized in the year under reference. Thus substantial amount of Rs.61,16,336/- remained unproved. v.) As seen from the order of Id. CIT(A) for AY 2012-13 (page-13 of appellate order), this issue was decided in the favour of Revenue by the decision of Hon'ble Cuttack ITAT in assessee's own case vide order ITA NO.636/CTK/2012 dated 22.10.2014 for AY 2008-09. vi.) The Hon'ble Delhi ITAT in the case of DCIT vs. Cosmo Films Ltd. (139 ITD 628) held in paragraphs-40 to 42 as under: "40. Ground No. 3 is against the disallowance of prior period expenses. In this ground, the assessee has challenged the confirmation of the addition of Rs.7,33,260/- of prior period expenses. The learned AR submitted that the assessee has submitted all the relevant details in respect of these expenses. These were the short provision for expenses and reliance was placed on the decision of Oil & Natural Gas Corpn. Ltd. vs. Dy. CIT [2002] 83 ITD 151 (Delhi) (SB). It was also submitted that these expenses related to prior period is actually quantified/crystallized in the year relevant to OPGC Page13 | 52 assessment year 2006-07, therefore, it is deductible expenses. He also relied on the unreported decision of Hon'ble Delhi High Court in the case of CIT vs. Vishnu Industrial Gases P. Ltd. in IT Reference No. 229/1988 vide order dated 6th May, 2008 where the Hon'ble High Court has held that the situation does not seem to have changed over the last fifty years and the revenue continues to agitate the question whether tax is leviable in a particular year or in some other year and the Hon'ble Court has held that this is hardly a question that should require us to exercise our minds particularly since there is no doubt that the tax has been paid and the rate of tax remains the same for both the assessment years. He pleaded that the tax rates were the same in those years, therefore, in view of the aforesaid decision of Hon'ble Delhi High Court, no addition is called for. 41. On the other hand, the learned DR submitted that the assessee has failed to establish that these expenses pertaining to prior period expenses were actually quantified and crystallized during the relevant previous year and since the assessee is following the mercantile system of accounting, therefore, these cannot be allowed in this year. 42. We have heard both the sides. We have considered the case laws relied upon and after considering these facts, we find that the assessee has failed to establish that these expenses were actually crystallized during the year under consideration. Since the assessee was following the mercantile system of accounting the assessee has to establish that these liabilities pertaining to the previous year were actually crystallized during the year under consideration. Since the assessee has failed to do so we sustain the order of the CIT(A) in this ground. Accordingly, the ground is rejected". vii.) The Hon'ble Jaipur Tribunal in the case of JCL Eiectromet (P.) Ltd. (83 taxmann.com 250) held in paragraph-13 that the onus is on the assessee company to prove that the liabilities have crystallized in the year under reference. viii.) The Hon'ble Mumbai Tribunal in the case of Lupin Labs Ltd. vs. ACIT (70 taxmann.com 8) held in paragraph-2 that it is necessary for the assessee company to place evidences on record that invoices for expenses were received in the current year or before filing of return of income. ix.) The Hon'ble Chandigarh IT AT in the case of P. K. Overseas vs. ITO (1 SOT 427) held in para-10 that the expenditure pertaining to the previous year having been booked in the year under appeal, it was for the assessee to establish the circumstances justifying non-booking of the expenditure in the relevant previous year. However, in the interest of justice, it would be appropriate to allow final opportunity to the assessee to furnish evidence before the Assessing Officer to establish that the claim could not be settled in the earlier years for the reasons beyond the control OPGC Page14 | 52 of the assessee. If the assessee established the claim that the brokerage was settled only in the year under appeal because of peculiar reasons and circumstances beyond the control of the assessee, the claim would be allowed in the year of settlement of the claim. The Assessing Officer, therefore, should decide this issue afresh in accordance with law after giving reasonable opportunity to the assessee. b) The disallowance of provision for variable pay (Under Performance Incentive Scheme) of Rs.2,20,00,000/- for AY 2008-09 and confirmed by Id. CIT(A) is on strong footing for the following reasons: i.) It has been made on estimated basis. ii.) The liability was neither final nor confirmed/ascertained. iii.) It was in the nature of an ad-hoc provision and could not be allowed u/s.37(l)of the Act. iv.) In the case of Housing Urban Development Corporation Ltd. vs. Addl CIT (101 taxmann.com 403), the assessee had claimed deduction on account of ad hoc provision of salary amounting to Rs. 1,60,00,000. This deduction was claimed by the assessee on account of provision for revision of pay in the books of account. This claim for deduction was made by the assessee in the light of Pay Revision Committee appointed by Govt, of India, the report of which was pending. The AO disallowed this claim, holding that the expenditure was purely a provision against unascertained liability and said provision could not be claimed as expenditure for the year under reference. The A.O. held that neither the liability in question had accrued nor crystallized during the year under consideration. The CIT(A) after careful consideration of the issue in question, also held that the implementation of the said report in respect of public sector undertaking and State Govt. Employees has been carried out only after September, 2008 beyond the close of the instant financial year relevant to A.Y. 2007-08 and accordingly, the provision of such revision of pay amounting to Rs. 1,60,00,000/- was unascertained liability which was not eligible for deduction for the year under consideration. The accounts for the year under consideration were from 01.04.2006 to 31.3.2007 and got closed on 31.3.2007. The "Provision" was an "an adhoc provision". Additionally, no payment of the same was made before 31.3.2007. All proposals were made in the month of October 2007 after the close of the accounting year. As per the recommendations of the Central Sixth Pay Commission, the assessee should have claimed such expenses of revised pay of its employees only in the assessment year 2009-10 and 2010-11. The pay revision finally took place vide Office Memorandum dated 26.11.2008 in No.2(70)/08-DPE(WC) of Ministry of Heavy Industries & Public Enterprises, after considering the report of the aforesaid Pay Revision Committee. The observations of the Hon'ble Delhi Tribunal in paragraph-3.1 held as under: OPGC Page15 | 52 "3.1 In the facts of the case before us, we have already noticed that that the Pay Revision Committee had not completed its deliberations before the end of the FY 2006-07 and was yet to submit its report at the time when the FY 2006-07 came to an end; and furthermore, that the pay revision was finally implemented in pursuance of aforesaid Office Memorandum dated 26.11.2008 in No.2(70)/08-DPE(WC) of Ministry of Heavy Industries & Public Enterprises. Under these facts and circumstances, we conclude that the liability for Rs. 1,60,00,000 deduction for which was claimed by the assessee on account of ad hoc provision for pay revision, had not accrued during the relevant FY i.e. 2006-07 (AY 2007-08). Merely because Pay Revision Committee was constituted during the year, it cannot be said that liability towards pay revision had accrued during the year, when we consider the facts that the Pay Revision Committee had not completed its deliberations before the end of the FY 2006-07 and was yet to submit its report at the time when the FY 2006-07 came to an end; and furthermore, that the pay revision was finally implemented in pursuance of aforesaid Office Memorandum dated 26.11.2008 in No.2(70)/08-DPE(WC) of Ministry of Heavy Industries & Public Enterprises. During FY 2006-07 (AY 2007-08), there was neither any statutory liability nor any legally enforceable liability against the assessee in respect of the assessee's claim for Rs. 1,60,00,000 deduction for which was claimed by the Assessee on account of ad hoc provision for pay revision. In fact, there was no such liability at all. Even if there was a liability, it was purely a contingent liability which is not deductible for income tax purposes. 3.2 We have given anxious consideration to the submission made by the Ld. AR of the assessee that if this claim is not allowed in this year, it will cause hardship to the assessee because the aforesaid claim of Rs. 1,60,00,000/- towards ad hoc provision on account of pay revision has not been claimed by the Assessee in the subsequent years. However, in view of Sir Kikabhai Premchand vs. CIT [1953] 24 ITR 506 (SO, ITO vs. Murlidhar Bhagwan Das [19641 52 ITR 335 (SO, CIT vs. British Paints India Ltd. 11991] 54 Taxman 499/188 ITR 44 (SO and CIT vs. Basant Rai Takhat Singh [1933] 1 ITR 197 (PC), it is well settled that each year is separate and self-contained period, Income Tax is annual in its structure and organization. Thus, each previous year is a distinct unit of time for the purposes of assessment. The profits made; and the liabilities or losses made before or after the relevant previous year are immaterial in assessing income of a particular year; unless in accordance with proviso to Section 4(1) of IT. Act, there is statutory provision to the contrary. Moreover, it was held in CIT vs. Kasturi & Sons Ltd. [1999] 103 Taxman 342/237 ITR 24 (SO; Federation of Andhra Pradesh Chambers of Commerce & Industry vs. State of AP [2001J 115 Taxman 143/247 ITR 36 (SO; CIT vs. R.J. Trivedi & Sons [1990] 53 Taxman 485/183 ITR 420 (MP); Greatway (P.) Ltd. vs. Asstt. CIT [1992] 64 Taxman 421/U993J 199 ITR 391 (Punj. & Har.); BM Parmar vs. CIT [1999] 102 Taxman 552/235 ITR 679 (Punj. & Har.); Modipon vs. CIT [2000] 113 Taxman 44/[2001] 247 ITR 40 (Delhi); CIT vs. M.S.S. Rajan [2002] 120 Taxman 680/[2001] 252 ITR 126 (Mad.); CWT vs. OPGC Page16 | 52 Tulsi Dass [2002] 123 Taxman 790/256 ITR 73 (Raj.); Vivek Jain vs. Asstt. CIT [2011] 14 taxmann.com 146/202 Taxman 499/337 ITR 74 (AP) that the courts or the Tribunal cannot extend relief when the legislative intent is otherwise. It was held in Smt. Tarulata Shyam v. CIT [1977] 108 ITR 345 (SC) that once it is shown that the case of the assessee comes within the letter of the law, he must be taxed, however, great the hardship may appear to the judicial mind. Moreover, it was held in State Bank of Travancore vs. CIT [1986] 24 Taxman 337/158 ITR 102 (SO that considerations of hardship, injustice or anomalies do not play any useful role in construing taxing statutes unless there be some real ambiguity. Also, the observation that "In a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to tax. Nothing is to be read in, nothing is to be implied." was approved by Hon'ble Supreme Court in CIT vs. Ajax Products Ltd. [1965] 55 ITR 741 (SC) and CIT vs. Shahzada Nand & Sons 11966] 60 ITR 392 (SC). In view of the foregoing, the contention of the Assessee; that if this claim is not allowed in this year, it will cause hardship to the Assessee because the aforesaid claim of Rs. 1,60,00,000/- towards ad-hoc provision on account of pay revision has not been claimed by the assessee in the subsequent years; does not merit any favourable consideration. A claim wTongly made by an assessee in an earlier year cannot be allowed in that year, merely because the assessee did not make the claim correctly in a subsequent year. During the pendency of a dispute as to the year in which a claim of the assessee is to be allowed; a prudent assessee can make the claim in other year(s), on protective basis, subject to final outcome of such a dispute, by explaining such a protective claim in other year(s). The assessee, having failed to make protective claim in subsequent year(s) in which it was lawfully allowable, cannot force the claim in an earlier year in which it was not lawfully allowable. However, the assessee is free to exercise its legal options in respect of the subsequent year(s) in which the claim was lawfully allowable; such as u/s. 264 of I.T. ACT with particular reference to Proviso to Section 264(3) of I.T. Act. As the present appeal before us pertains to AY 2007-08; by way of abundant caution, we clarify, however, that we presently decline to give any directions to Revenue for any subsequent year; and that all questions of law, fact, and mixed questions are left open in case the assessee exercises. 3.3 Therefore, in the facts and circumstances of this case, as discussed earlier; and respectfully following Bharat Earth Movers case (supra), Indian Molasses Co. (P.) Ltd.'s case (supra), Indian Smelting & Refining Co. Ltd.'s case (supra), Standard Mills Co. Ltd.'s case (supra) and Morarji Goculdas Spg. & Wvg. Co. Ltd.'s case (supra); and moreover, in view of the foregoing discussion, we dismiss the first ground of appeal filed by the assessee and confirm the impugned order of the Ld. CIT (A) on this issue, sustaining the disallowance of Rs. 1,60,00,000/- on account of ad hoc provision for pay revision". OPGC Page17 | 52 v.) In the case of Bharat Electronics Ltd. vs. DCIT (59 ITD 116), the assessee was a Government company. It claimed allowance of the amount of executive wages payable. This was provision for revision of executive wages made in the accounts which also included certain amount relating to prior period. It was contended by the assessee that the provision had been made on the basis of the Cabinet Note dated 26.09.1989. The Assessing Officer, however, observed that till the last date of the accounting period i.e. 31.03.1990 no Cabinet approval was actually received which was given in the next year when the amount was actually paid. In fact, on the basis of 'Cabinet Note' dated 26.09.1989 and the letter dated 04.04.1990 of Bureau of Public Enterprises, Ministry of Industry, the assessee had submitted its own proposals suggesting certain pay-scales for its employees by communication dated 30.04.1990. The proposal was approved with some alterations by the Ministry of Defence as per its communication dated 22.02.1991, addressed to the assessee. The Assessing Officer, thus, held that the amount was nothing but of the nature of contingent liability as on 31.03.1990 since the revision was based on the Cabinet approval which did not take place during the course of accounting year 1989-90. He, therefore, disallowed the expenditure. On appeal, the Commissioner (Appeals) affirmed the view of the Assessing Officer. On appeal, the Hon'ble Bangalore ITAT held that a liability which had not actually accrued but was only a contingent liability could not be allowed The contingent liability when at a future point of time, becomes an actual and accrued liability, would, however, be allowable at that future point of time. In the instant case, the claim of the assessee was merely based on certain expectations and not on the basis of any definite material There was no doubt about the fact that a talk about revision in the pay-scales of the executives of the Government companies was very much in the air and it was also a certainty that there would be some upward revision in such pay-scales, inasmuch as the economy had already shown an inflationary trend. However, how much could be the upward revision in such pay-scales and from which date such revised pay-scales would be effective, was very much a matter of speculation, and was subject to the finalization of the proposals in this regard and according to final approval by the Government of India to a definite proposal in that regard. The approval of the Government of India may not be a statutory requirement in the instant case but at the same time, for all practical purposes, the said approval was very much necessary for giving effect to a proposal for upward revision of the pay scales. The draft note for the Cabinet, as prepared by the Ministry of Industry, Bureau of Public Enterprises, dated 26.09.1989 was merely a secret note prepared in the Government Department. Para 5 of the said note referred to an earlier Cabinet Note dated 23.06.1989 submitted on the HPPC Report containing one of the proposals for consideration of the Cabinet to revise the pay-scales of executives with a view to maintain the relativity between the emoluments of the executives and workers leaving the DA issue to be decided by the Government on the recommendations of the tripartite DA committee. It was clearly stated there in that the Cabinet had not taken any decision on that proposal. OPGC Page18 | 52 Further, none of the revised scales proposed in the said note ultimately corresponded to the actual scales under the revised pay structure as approved by the government. The aforesaid secret Note also expressed the hope that the pay revision of the officers could take effect from 01.01.1987 and be effective for a period of five years. Finally, it was stated that inasmuch as there were wide variations amongst the public sector enterprises in the various allowances and perks available to the executives, the issue of allowances and the perks could be examined by a working group consisting of senior Government Officers and selected chief executives of PSEs. It was furthermore stated towards the end that pending the examination by that group there should not be any upward revision of these allowances and perks. It was thus clear from the above discussion that the draft Note dated 26.09.1989 only contained tentative proposal sand there could be no question of any finality about revision of the pay-scales including the allowances and perks of the employees of the assessee simply on the basis of that Note. The communication dated 04.04.1990 by the Ministry of Industry did nothing but invited concrete proposals along with comments, etc., from the respective public enterprises. Therefore, in no way it could be said that that communication brought about actual revision of the pay scales. Finally, however, the revision of pay scales was declared under the communication dated 22.02.1991 by the Ministry of Defence wherein the pay scales prescribed were somewhat different from those suggested in the earlier proposal. Hence, the liability accrued and became an ascertained liability lo the assessee only on 22.02.1991 when the said communication was made and not before that, what was taken into consideration in the accounts of the assessee was merely a provision based on certain proposals put forward by the assessee. It was, therefore, to be held that the entire liability of assessee did accrue on 22.02.1991. So far as the year under consideration was concerned, no portion of the liability could be allowed as the liability was merely of the nature of a contingent liability till the end of the relevant accounting period. vi.) The Hon'ble Madras High Court in the case of CIT vs. Forbes Campbell Finance Ltd. (352 ITR 602) on similar facts confirmed the disallowance of a provision made in respect of service charges. It was held that it was not made on scientific basis. It was an ad-hoc provision and major amount remained unpaid after 2 years from the end of relevant previous year. Hence it was held that same could not be allowed.” ITA No.114/CTK/2014: Asst.Year: 2010-2011 5. The appeal of the revenue in ITA No.114/CTK/2014 is directed against the order dated 1.1.2014 of the ld CIT(A)-1, Bhubaneswar for the assessment year 2010-2011 in Appeal No.0288/12/13. OPGC Page19 | 52 6. The revenue has raised the following grounds: “1. On the facts and in the circumstances of the case, the Ld. CIT(A) is not justified in law as well as in facts in deleting the addition of Rs. 1,15,00,000/- made by the AO on account of prior period expenses, when the expenses neither pertained to the relevant year nor crystalized during that year. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) is not justified in law as well as in facts in deleting the addition made by the AO on account of Club expenses of Rs.8,764/-, when the same is not incidental to the business of the assessee. 3. On the facts and in the circumstances of the case, the Ld. CIT(A) is not justified in law as well as in facts in deleting the addition of Rs.8,70,575/- made by the AO against provision for shortage of coal. 4. On the facts and in the circumstances of the case, the Ld. CIT(A) is not justified in law as well as in facts in restricting the addition to Rs.20,40,540/- in place of Rs. 1,05,18,000/- made by the AO towards peripheral development expenses, when the same is not incidental to the business of the assessee. 5. On the facts and in the circumstances of the case, the Ld. CIT(A) is not justified in law as well as in facts in restricting the addition to Rs. 13,56,980/- in place of Rs.34,30,487/- made by the AO against Community Development Et Welfare expenses, when the same is not incidental to the business of the assessee. 6. On the facts and in the circumstances of the case, the Ld. CIT(A) is not justified in law as well as in facts in deleting the addition of Rs.77,02,924/- made by the AO on account of expenses in Mini Hydel Projects when the corresponding income was not shown. 7. On the facts and in the circumstances of the case, the Ld. CIT(A) is not justified in law as well as in facts in deleting the addition of Rs. 1,27,92,070/- made by the AO u/s.40(a)(ia) of the Act for non- deduction of tax on payment of interest to PFC without giving an opportunity to the AO.” OPGC Page20 | 52 7. The first ground is against the action of the ld CIT(A) in deleting the addition of Rs.1,15,00,000/- on account of prior period and prepaid expenses. 8. It was submitted by ld CIT DR that the assessee had not produced the details in respect of prior period and prepaid expenses before the Assessing Officer and consequently, the Assessing Officer had made estimated disallowance of Rs.1,15,00,000/- under the same head. It was the submission that the ld CIT(A) had deleted the addition by holding that for the assessment year 2009-10, he had already confirmed the disallowance of Rs.4,91,20,000/- and consequently, this amount of Rs.1,15,00,000/- was subsumed into Rs.4,91,20,000/-. It was submitted that the assessee being a public sector undertaking, it was the requirement that the assessee maintains vouchers in proper forms. 9. In reply, ld AR submitted that under similar circumstances, in respect of issue of prior period expenses for the assessment year 2005-06 in ITA No.115/CTIK/2014 and in ITA No.122/CTC/14 order dated 25.2.2020, the Co-ordinate Bench of this Tribunal in the case of Orissa Hydro Power Corporation had restored the issue to the file of the Assessing officer for examination of genuineness and crystalisation of the expenses in the financial year under consideration. It was the submission that he had no objection if the issue is restored to the file of the AO for re-adjudication after granting the assessee adequate opportunity of being heard and on the OPGC Page21 | 52 basis of evidence produced to allow expenses in the years to which it relates. Ld CIT DR submitted that he had no objection if the issue is restored to the file of the AO for re-adjudication after granting the assessee adequate opportunity of being heard and on the basis of evidence to allow the expenses in the years in which it relates. 10. We have considered the rival submissions. In respect of issue of Prior period and prepaid expenses, the issue is required to remit to the file of the Assessing Officer for re-adjudication after granting the assessee adequate opportunity of being heard. The Assessing Officer shall after verification of the said expenses allow the same in the year in which it relates. Ground No.1 of appeal of the revenue is partly allowed for statistical purposes. 11. The second ground is against the action of the ld CIT(A) in allowing the club expenses of Rs.8764/- paid to Bhubaneswar Club. 12. It was the submission of ld CIT DR that this expense was though admittedly small but not for the purpose of business as the assessee is a State Government Undertaking and it was dealing with one client being GRIDCO. There was no requirement of the assessee to spend this amount and the same being not in the nature of business expenditure; the same is liable to be disallowed. He submitted that the order of the ld CIT(A) be reversed. OPGC Page22 | 52 13. In reply, ld AR submitted that this was one of the expenditure which was incurred at the club when the management of both GRIDCO and the assessee had met for discussion. 14. We have considered the rival submissions. At the outset, it must be understood that the said membership is not a personal membership but is a membership of the assessee company. Therefore, the authorized member of the assessee company can use the said membership. The fact that the expenditures have been incurred by the company it goes to show that the expenses were incurred for the purpose of the company only. The assessee company also has strong internal audit system and we are sure that such internal audit would not have permitted personal expenditure into the company expenditures. This being so, we are of the view that said expenditure is allowable. Ground No.2 of the revenue stands dismissed. 15. The next issue is against the action of the ld CIT(A) in allowing the provision of shortage of coal of Rs.8,70,575/-. 16. Ld CIT DR submitted that the assessee has claimed the provision of shortage of coal for an amount of Rs.8,63,413/- vide Voucher No.3012 and amount of Rs.7,162/- vide voucher No.3414 totaling to Rs.8,70,575/-. It was the submission that this was a journal entry passed on the last date of the financial year. It was the submission that the assessee received the coal through Railway Wagons and if there is any shortage on physical OPGC Page23 | 52 verification, the claiim of the shortage should have been made in the relevant months or the dates on which shortage was found. There was no reason for the shortage to be claimed during the end of the financial year. It was the submission that the ld CIT(A) had wrongly deleted the said disallowance. 17. In reply, ld AR submitted that on physical verification, the shortage was found and the same has been claimed. 18. We have considered the rival submissions. A perusal of the order of the ld CIT(A) shows that the amount claimed is not a provision but on account of shortage of coal after physical verification and consequently, he has allowed the same. Just because the assessee has done the physical verification on the last date of the financial year and has claimed the shortage, does not mean that the shortage was on account of transportation of coal. It could also have been on account of consumption of coal in the course of production of electricity. This would obviously be found only at the end of the financial year, when the physical stock is re- verified. The factum of the shortage of coal is not disputed. The total purchases of coal during the year is nearly Rs.184 crores. This being so, we find no error in the order of the ld CIT(A) in deleting the said disallowance. Ground No.3 of the revenue is dismissed. OPGC Page24 | 52 19. The next issue is against the action of the ld CIT(A) in deleting the disallowance of Rs.1,05,18,000/- in regard to peripheral development expenses. 20. It was submitted by ld CIT DR that the expenses have not been routed through the Rehabilitation Periphery Development Advisory Committee(RPDAC). It was the submission that the amount had to be spent through the district committee, which has also not been done. He submitted that the expense was not done within 50 kmgs range of the business establishment of the assessee. It was further submitted that there was no direct nexus with the business activity of the appellant nor there was any business expediency. It was the submission that necessary vouchers had not been produced before the AO. Ld CIT DR placed reliance on the decision of the Co-ordinate Bench of Hyderabad Bench of this Tribunal in the case of NMDC Ltd DCIT, 86 taxmann.com 55 (Bang) wherein, it has been held that the said expenditure was not allowable as no attempt had been made by the assessee to discharge the onus that the said expenditure was incurred out of business expediency. He further placed reliance on the decision of this Tribunal in the assessee’s own case for the assessment year 2007-08, 2008-09 & 2009-10 in ITA No.544/CTK/12, ITA No.612/CTK/12 and ITA No.77/CTK/2013 order dated 22.10.2014 as also the decision in assessee’s own case for the assessment year 2004-05 in ITA No.271/CTK/10 dated 25.5.2012 to submit that the expenditures have not OPGC Page25 | 52 been incurred within 50 kms range of the assessee business activity and consequently, it was his submission that the order of the ld CIT(A) was liable to be reversed. It was further submitted that the total disallowance made by the AO was to an extent of Rs.1,05,18,000/- but the ld CIT(A) restricted the disallowance to Rs.20,40,540/-. He disallowed the expenditure mentioned in para 9.2 for the assessment year 2010-11. It was the submission that against the confirmation of disallowance to the extent of Rs.20,40,540/-, the assessee is also in appeal . 21. In reply, ld AR placed before us the decision of the Co-ordinate Bench of Raipur ITAT in the case of Jindal Power Ltd in ITA No.99/BLP/12 dated 23.6.2016, wherein also the corporate social responsibility (CSR) has been explained in detail and it has been held that the expenditure is allowable. Ld AR further submitted that the financial assistance of Rs.1,10,000/- to red cross which was disallowed by the ld CIT(A) was liable to be considered under ‘Health” and the ‘Sport Expenses” of Rs.37,000/- was liable to be considered under both “Education” and “Health”. He also placed before us break-up of CSR expenses at pages 71 to 76 of PB. It was the submission that all vouchers had been produced before the AO. 22. We have considered the rival submissions. A perusal of the assessment order shows that the Assessing Officer has disallowed the said expenses under CSR on the ground that though the assessee has claimed that the said expenses are directly related to business but had been able to OPGC Page26 | 52 support the same with supporting vouchers. Ld CIT DR has drawn conclusion from the said sentence that evidences have been produced. A perusal of the said sentence clearly shows that the Assessing Officer has doubted the said expenditure because no supporting evidence to show that the said expenses related to the business of the assessee was produced and not incurring of the expenditure. A perusal of the disallowance as confirmed by the ld CIT(A) also clearly shows that the financial assistance to red cross is clearly under the five heads mentioned in the CSR most specifically under the head “Health”. In respect of the sports expenses, the said expenses are allowable under the head of “Health” as also the “Education”. There is a saying “All work and no play make Jack a dull boy”. A perusal of the chart shown by the assessee at pages 71-76 also clearly shows that the expenses have been incurred at Jharsuguda and around Jharsuguda. Thus, it is clearly within 50 kms range of the assessee’s business premises. This being so, we are of the view that the findings of the Co-ordinate Bench of this Tribunal in assessee’s case for the assessment years 2007-08, 2008-09 and 2009-10 nor the decision of the Co-ordinate Bench of this Tribunal for the assessment year 2005-06, wherein, the disallowance has been confirmed on account of incurrence of expenditure beyond 50 kms range would apply to the facts in the present case. Consequently, ground No.4 of the revenue stands dismissed and Ground raised by the assessee stands partly allowed insofar as the OPGC Page27 | 52 disallowance as made by the ld CIT(A) is to be reduced by the disallowance of financial assistance to Red cross of Rs.1,10,000/- and sports expenses of Rs.37,000/-. Consequently, Ground of the assessee is partly allowed. 23. The next issue is against the action of the ld CIT(A) in regard to community development expenses in allowing township cleaning expenses of Rs.34,30,487/- disallowed by the AO. It was the submission that against the confirmation of the disallowance under community development & welfare expenses and other festival celebration, the assessee is in appeal. 24. It was submitted by ld CIT DR that the socio cultural activities was in relation to certain function conducted by the assessee in respect of Pandit Jawaharlal Nehru and other luminary person’s birthday. It was the submission that the assessee is a Government entity and the said expenses had no connection with them. 25. Ld A.R. submitted that these were necessary expenditures and has been incurred. 26. We have considered the rival submissions., The assessee has not been able to justify the incurring of the community socio cultural activities expenses to an extent of Rs.2,14,505/-. This being so, the findings of the AO and ld CIT(A) confirming the disallowance stands upheld. OPGC Page28 | 52 27. Coming to the issue of township cleaning expenses of Rs.20,73,507/- , it was submitted by ld CIT DR that the said expenses were not related to the company but on account of arranging some contractor for cleaning of the township around the business premises of the assessee. It was the submission that same is not liable to be allowed as it had no relationship with the actual business of the assessee. 28. Ld AR submitted that the township cleaning expenses was incurred to arrange a contractor for keeping the township of the assessee clean. It was where the employees of the assessee stay and whose quarters have been allotted there. It was the submission that the premises belong to the assessee and the expenses were for keeping the assets of the assessee clean and safe. 29. We have considered the rival submissions. Admittedly, the said expense has been incurred on the assets belonging to the assessee. This being so, it is a business expenditure and the same is liable to be allowed. Consequently, we find no error in the order of the ld CIT(A) in deleting the disallowance. Hence, this part of the ground of the revenue stands dismissed. 30. Coming to the issue of festival celebration expenses of Rs.11,42,475/-, it was submitted by ld CIT DR that the assessee had claimed the same to be in the nature of staff welfare expenses incurred on OPGC Page29 | 52 various pujas and other religious activities. It was the submission that the assessee is a juristic person, it does not have any religion and it is not expected to profess or conduct any religious activities. It was the submission that the said expenses had rightly been disallowed by the AO and ld CIT(A). He has placed reliance on the decision of Hon’ble Karnakata High Court in the case of Sanghameshwar Cofee Estate ltd vs State of Karnataka, 28 Taxman 41 (Kar) as also the decision of the decision of the Co-ordinate Bench of this Tribunal Nagpur Bench in the case of Assistant Commissioner Of Income tax vs Maharashtra Metal Powers Ltd. 102 ITD 214 (Nag) as also the decision of Hon’ble Bombay High Court in the case of Kolhapur Sugar Mills Ltd. vs Commissioner Of Income- Tax, 119 ITR 387 (Bom) to support his claim that when the wages are paid to the labourers as well as bonus to them, there is no necessity for incurring any religious expenses under the head “welfare expenses”. 31. Ld AR submitted that said expenditure has been held to be allowable by the Hon’ble Delhi High Court in the case of Mohan Meakens ltd., 189 Taxman 377 (Del) as also the decision of Hon’ble Madras High Court in the case of Madura Coats Ltd, reported in MANU/TN/2608/2009, wherein, it has been held that the expenditure incurred on Puja, Hawan and Kirtan was a welfare measure of the employees and the same was allowable. He also relied on the decision of Hon’ble Supreme Court in the case of CIT vs Nestles ltd., 296 ITR 682 (SC) for this proposition. It was the submission OPGC Page30 | 52 that the disallowance of Rs.11,42,475/- as made by the AO and confirmed by the ld CIT(A) may be deleted. 32. We have considered the rival submissions. A satisfied employee is an asset to an organisation. One can feed a person, he would be happy for a day. Give a person work, he will be comfortable as long as he has a job. But to know that his employer would also look after some of his spiritual needs give for the wellbeing of an employee. There are psychological impact on an employee in respect of religious activities conducted by the employer for the benefit of an employee. For example, many companies permit and also assist to conduct Biswakarma Puja, wherein, tools are kept in Puja. Ganesh Puja is considered to be auspicious for the removal of obstacles many a times. When such small but necessary welfare measures are not done, in the event of an unfortunate incident, the employee thinks that it could be because he had not performed this puja and so also the religious activities, that this has happened. This creates impact on the employee very badly. This is why business undertakes such welfare measures in the form of assisting and conducting pujas and other religious activities. True, the company is a juristic person and it has no religious fervour but the company functions properly because of its manpower. This being so, we are of the view that the puja expenses incurred by the assessee is in the nature of welfare measures in respect of employees and this is allowable expenses. Further, though ld CIT DR has placed three OPGC Page31 | 52 decisions upholding the disallowance of such welfare expenses and the assessee has placed three decisions in respect of allowance of expenses, following the principles laid down by the Hon’ble Supreme Court in the case of CIT vs. Vegetables Products Ltd., 88 ITR 192 (SC), the view favourable to the assessee is being followed and the AO is directed to allow the said expenses. Consequently, Ground raised by the assessee in respect of claim of Rs.11,42,475/- under the festival celebration expenses stands allowed and the disallowance of expenditure in relation to Community socio cultural activity expenses of Rs.2,14,505/- stands confirmed. 33. The next issue raised by the revenue is in regard to deletion of disallowance of 77,02,924/- under the head Income from Hydel Projects. 34. It was submitted by ld CIT DR that the Assessing Officer at para 9 of his order observed that the assessee was generating 0.346 MW of energy from Mini Hydel projects and the energy had been sold to GRIDO. However, as there was no power purchase agreement with GRIDCO in regard to Mini Hydel Projects, the assessee had not received any payment for the same. However, as the assessee has claimed expenses, on the principles of matching expenses, the Assessing officer had disallowed the expenses because no income was received. It was the submission that the ld CIT (A) had allowed the claim of the assessee on the ground that the expenses had been incurred by the assessee but the assessee could not recognise the income in the absence of power purchase agreement and in OPGC Page32 | 52 the absence of finalisation of tarrif rate. It was the prayer that as and when the income is received by the assessee, same should be brought to tax proportionately in the assessment years when the expenses have been claimed. It was the prayer that the matching principles of income to expenditure should be applied. 35. In reply, ld AR submitted that the power purchase agreement is yet to be signed with GRIDCO. It was the submission that OERC has fixed the tarrif during the financial year 2018-19 relevant to assessment year 2019- 20 and the assessee has immediately offered the entire income to tax during the assessment year 2019-2020. It was the prayer that the order of the ld CIT(A) may be confirmed. 36. We have considered the rival submissions. The fact remains that the assessee has incurred expenses of its Mini Hydel Projects. The electricity generated from the said Mini Hydel Projects cannot be stored and it has to put in Grid. Once it is put to Grid, it is obviously consumed. The assessee sells power to GRIDO, who is owner of the Grid. GRIDCO cannot pay the assessee tariff unless the rate is fixed by OERC and the agreement has been entered into for the power purchase. As has been specifically clarified by the ld AR that OERC has fixed the rate during the assessment year 2019- 20 and the assessee has offered the income during the assessment year 2019-20. As the assessee cannot store the electricity generated from the Mini Hydel Projects, it cannot be said that the matching principles can be OPGC Page33 | 52 applied to the expenses incurred as against the income earned. This being so, we are of the view that the order of the ld CIT(A) is on right footing and does not call for any interference on this issue. This ground of the revenue is dismissed. 37. The next issue is against the action of the ld CIT(A) in deleting the disallowance made by the AO in respect of non-deduction of TDS on the payment of interest to PFC. 38. It was fairly agreed by both the sides that the issue was fairly covered in favour of the assessee by the Notification of CBDT in No.211/2006 dated 18.8.2006, wherein, in exercise of the power conferred under section 194A(3)(iii)(f), the Central Government notifies the Power Finance Corporation Limited, New Delhi for non-deduction of TDS. As the issue is covered by the said notification of CBDT and as it is noticed that the ld CIT(A) has deleted the disallowance by following the Notification (supra), we find no error in the order of the ld CIT(A), which call for any interference. Consequently, this ground of the revenue stands dismissed. 39. In the result, the appeal of the revenue for Asst.Year 2010-2011 is partly allowed. Assessee’s Appeal for A.Y. 2009-10. ITA No.64/CTK/17 OPGC Page34 | 52 40. This is an appeal filed by the assessee against the order dated 9.11.2016 of the ld CIT(A)-1, Bhubaneswar in Appeal No.0026/15-16 for the assessment year 2009-10. 41. The only issue in this appeal is against the action of the ld CIT(A) in confirming the disallowance of the provision for unascertained liability being the performance management system (PMS) of Rs.2,20,00,000//-. 42. It was the submission of ld AR that Performance management system was granted to the employee as a variable pay. It was computed on the basis of weight age of past performance of 25%, qualification of 20% and potential assessment through assessment centre of 40% and the committee evaluation of 15%. It was submitted that for the assessment year 2009-10 is the first year in which the incentive was introduced. The incentive was quantified and the same was paid in the immediately subsequent year. It was the submission that only in assessment year 2009- 10 and 2010-11, there has been disallowance on the ground that such quantification is a provision. It was further submission that for none of the subsequent assessment years, there has been any disallowance under this head. It was the submission that if any amount has not been paid to any employee in whose name, the incentive has been quantified, then that amount has been offered to tax in the immediately subsequent assessment year. It was the prayer that such incentive quantified at a scientific basis is liable to be disallowed. It was the submission that the quantification has OPGC Page35 | 52 been done on scientific basis in line with the principles laid down by the Hon’ble Supreme Court of Rotork Control India P Ltd. v. CIT (314 ITR 62) (SC). It was his submission that same was liable to be allowed in view of the decision of Full Bench of Hon’ble Supreme Court in the case of Bharat Earth Movers Vs. CIT, (2000)245 ITR 428(SC) . 43. In reply, ld CIT DR submitted that the notes to the account being Schedule -20 to profit and loss account showed the amount was in the nature of provision and the said provision was pending finalisation of modality for payment in respect of computation of the performance bonus or performance incentives. It was the submission that the said amount was a provision for unforeseen and unascertained expenses, whose computation modalities has not been finalised. It was submitted that the computation modality had not been produced before the AO or the ld CIT(A). It was the submission that certain amounts are also reversed during the immediately succeeding assessment year and clearly showed that the computation was not scientific. It was the submission that the methodology of computation being the modality shown at pages 13 to 23 of APB were not before the AO or ld CIT(A). It was the submission that the paper book submitted before this Bench is not certified. The Co-ordinate Bench of Bangalore ITAT had in the case of Bharat Electronics Ltd vs DCIT (1996) 59 ITD 116 (Bang) held that the provision for wages payable on account of expected revision of pay scales of executives which became an accomplished fact on issue of OPGC Page36 | 52 approval letter from the Government was held to be contingent liability,. He placed reliance on the decision of Hon’ble Madras High Court in the case of CIT vs Forbes Campbell Finance Ltd., (2014) 44 taxmann.com 342 (Madras), wherein, it was held that the warranty provision was not made on scientific data but only on adhoc basis and same was not deductible. It was further submission that each assessment year is separate and self contained unit and profit of subsequent assessment years could be adjusted against the income from the relevant assessment year. For this proposition, he relied on the decision of Hon’ble Supreme Court in the case of in Kikabhai Premchand v. CIT, [1953] 24 ITR 506. It was also the submission that the assessee has not shown whether during the subsequent assessment year, the issue has been considered by the AO insofar as no questionnaire by the AO for this year on this issue of incentive has been placed before the Tribunal. It was the submission that the res-judicata does not apply to the Income tax proceedings. He placed reliance on the decision of Hon’ble Supreme Court in the case of Commissioner Of Income-Tax, West vs Brij Lal Lohia And Mahabir Prasad, 84 ITR 273 (SC) as also the decision in the case of New Jehangir Vakil Mills Co. Ltd. v. CIT [1963] 49 ITR 137 (SC). It was the submission that the disallowance made by the AO and confirmed by the ld CIT(A) is liable to be deleted. OPGC Page37 | 52 44. We have considered the rival submissions. At the outset, it is an admitted fact that this amount which has been claimed as a provision during the relevant assessment year has been paid in the immediately succeeding assessment year. The minor portion of the said amount which was not paid has been offered to tax. Now the question arises as to whether the said amount is a contingent liability and clearly a provision and whether the liability has been computed on a scientific basis. A perusal of the decision of the Hon’ble Madras High Court in the case of Forbes Campbell Finance Ltd (supra) relied on by ld CIT DR would not apply to the facts of the present case as in that case 60% of the provision remained unpaid even after two years. In those circumstances, the Hon’ble Madras High Court took the view that the calculation was unscientific. Out of amount of Rs.2,20,00,000/- during the relevant assessment year, the assessee has reversed an amount of Rs.36,00,000/- during the immediately succeeding assessment year and the balance full amount has been paid. A perusal of the computation as has been placed before us, shows that the 4 th portion of the computation being 15% is on the basis of committee evaluation. This committee evaluation is a variable. The past performance is a settled matter and therefore, it is not variable, qualification is a settled matter and it will not be variable. Computation through assessment is comparison between the assessee’s self proposal and the actual attainment, which is also not variable. Thus, out of 100% only 15% is at most a OPGC Page38 | 52 variable if at all. Thus, it cannot be said that the computation of the incentive is totally unscientific neither can be said that the computation is purely unscientific because of the variable 15% being from committee evaluation. The scientific portion being substantially higher, we have to assume that the computation is scientific one. Further perusal of the decision of the Hon’ble Supreme Court in the case of Bharat Earth Movers (supra) provides that if a business liability has definitely arisen in the accounting year, the deduction should be allowed although the liability may have to be quantified and discharged at a future date. The incentive computation primarily has definitely arisen during the year because it is performance based incentive. 85% of the performance incentive is also clearly computable. 15% is variable depending on the committee evaluation could be a delayed position. It is only quantification of 15% that could vary. Therefore, we are of the view that in view of the principles laid down by the Hon’ble Supreme Court in the case Bharat Earthmovers (supra), the performance incentive is an allowable expenditure and the AO is directed to allow the claim of performance incentive as paid by the assessee. Consequently, this ground of the assessee is allowed. 45. In the result, appeal of the assessee for A.Y. 2009-10 is allowed ITA No.84/CTK/2014: Asst.Year; 2010-11. OPGC Page39 | 52 46. This appeal is filed by the assessee against the order of the ld CIT(A)-1, Bhubaneswar dated 1.1.2014 in appeal No.0288/12-13 for the assessment year 2010-2011. 47. Ground Nos.1, 8 & 9 are general in nature, therefore, the same do not require any separate adjudication. 48. In regard to the ground No.2 being provision for miscellaneous expenses for an amount of Rs.27,146/-, the same has been withdrawn by the ld. AR of the assessee during the course of hearing. Consequently, this issue is held against the assessee as withdrawn. 49. Ground No.3 is with regard to Peripheral Development Expenses. This ground is identical to the issue taken in ground No.4 in revenue’s appeal for A.Y.2010-2011 in ITA No.114/CTK/2014, wherein we have partly allowed the same. Consequently, this ground raised by the assessee is partly allowed. 50. Ground No.4 is with regard to community development & welfare expenses, which has also been partly allowed while adjudicating ground No.5 in revenue’s appeal being ITA No.114/CTK/2014. Consequently, this ground of assessee is partly allowed. 51. The next issue being ground No.5, is with regard to disallowance of prior period adjustments of Rs.69,91,618/-. It was submitted by the ld. AR that the said prior period adjustments were disallowed by the AO on the OPGC Page40 | 52 ground that the assessee was following hybrid system of accounting. The Hon’ble Kerala High Court in the case of Travancore Titanium Products Ltd. Vs. CIT, 265 ITR 526 (Ker) has held that the expenses incurred in the earlier years could not be taken in the current assessment year. It was submitted that the claim of prior period adjustments is related to the earlier assessment years. It was the prayer that he has no objection if the issue is restored back to the file of AO for verification and allow the expenses claimed under this head in the year to which it related. 52. In reply, ld. CIT-DR objected to restore the matter to the AO and submitted that in view of the decision of the Hon’ble Supreme Court in the case of Ashokji Chanduji Thakor Vs. Pr.CIT [2021] 130 taxmann.com 131 (SC), the Tribunal had a duty to give cogent reasons for setting aside the matter to the AO. It was submitted by the ld. CIT-DR that the assessee had not given the details before the ld. CIT(A) and now granting the assessee a fresh opportunity would be travesty of justice. 53. We have considered the rival submissions. 54. A perusal of the decision of the Hon’ble Supreme Court in the case of Ashokji Chanduji Thakor (supra) shows that the Hon’ble Supreme Court was alive to the fact that during the assessment proceedings the assessee has been non-cooperative. In the case of non-cooperative assessee, the Hon’ble Supreme Court has come down strongly to suggest that granting such OPGC Page41 | 52 assessee another opportunity and that too without assigning cogent and valid reasons by the Tribunal is not right. In the present case, the facts are totally different. The assessee has cooperated with the AO and the CIT(A). There was no non-cooperation on the part of the assessee in the present case. In fact, every query raised by the AO has been answered. Considering the voluminous documents to be produced and the shortage of time with the AO or granted to the assessee by the AO certain documents might not have been produced. A perusal of the assessment order shows that the AO has also not asked for the details but has taken a stand that the expenses is not allowable as it does not relate to the relevant assessment year. How can the AO take a stand that the expenses do not relate to the assessment year unless the details are before him. This question begs an answer. In these circumstances, in the interest of justice, the issue, in the light of the decision of the coordinate bench of the Tribunal in assessee’s own case in ITA No.626/CTK/2012, order dated 22.10.2014 for A.Y.2008-2009, is restored to the file of AO to readjudicate the same and to allow the expenditure in the year in which the expenditure is crystallised. This ground is allowed for statistical purposes. 55. In Ground No.6 of appeal, the assessee has challenged the confirmation of disallowance of Rs.1,07,70,000/- made towards unascertained liability of performance management system, which is similar ground raised by the assessee for the assessment year 2009-10 and we OPGC Page42 | 52 have held the issue in favour of the assessee. Consequently, on similar findings, this issue is held in favour of the assessee. Ground No.6 is allowed. 56. Thus, the appeal in ITA No.84/CTK/2014 is allowed partly for statistical purposes. ITA No.288/CTK/2016(Revenue’s appeal for A.Y.2011-12) CO No.22/CTK/2016 (Assessee’s Cross Objection for A.Y.2011-12) 57. The revenue has filed appeal against the order of the CIT(A)-1, Bhubaneswar, dated 12.04.2016 passed in I.T.Appeal No.0045/14-15 for the assessment year 2011-12. The assessee has also filed Cross Objection to the appeal of the revenue. 58. The revenue in its appeal has raised five grounds, out of which ground No.5 is general in nature, which does not require any adjudication. 59. Ground No.1 is in relation to deletion of addition of Rs.1,24,664/- on account of prior period expenses in revenue’s appeal and ground No.3 of the assessee’s cross objection relating to the prior period adjustment. This issue is similar to the ground No.1 raised in revenue’s appeal for A.Y.2010- 2011 in ITA No.114/CTK/2014, wherein we have restored the issue to the file of AO for verification and allowing the expenses in the year in which it relates to. With similar direction as given in ground No.1 in ITA OPGC Page43 | 52 No.114/CTK/2014, the issued raised in the present appeal is also restored to the file of AO. Thus, the ground No.1 of revenue’s appeal and ground No.3 raised by the assessee in its cross objection in regard to prior period adjustment is partly allowed for statistical purposes. 60. Ground No.2 is with regard to disallowance of Rs.11,91,862/-on account of community development & welfare expenses. This ground is similar to the ground raised by the revenue in its appeal for A.Y.2010-2011 in ITA No.114/CTK/2014, therefore, our observations made in the ground No.5 in ITA No.114/CTK/2014, would apply pari passu to this ground also. Consequently, ground No.2 in revenue’s appeal stands dismissed and the ground No.3 raised by the assessee in its cross objection to the extent of community development & welfare expenses stands partly allowed. 61. Ground No.3 is relating to deleting the addition of Rs.94,42,063/- made by the AO on account of expenses in Mini Hydel Projects. This issue is identical to the ground raised by the revenue for the assessment year 2010- 2011 in its appeal being ITA No.114/CTK/2014, wherein we have upheld the findings of the CIT(A) in deleting the addition made by the AO on the above head. Therefore, the issue being similar to the ground raised in the appeal of the revenue in ITA No.114/CTK/2014, also stands dismissed. 62. Ground No.4 is relating to deleting the addition of Rs.52,94,212/- made by the AO u/s.40(a)(ia) of the Act for non-deduction of tax on OPGC Page44 | 52 payment of interest to PFC. This issue is identical to the issue raised by the revenue in ITA No.114/CTK/2014 in ground No.7. On similar findings as it is noticed that the ld. CIT(A) has followed the Notification issued by the CBDT in Notification No.211/2006, dtd. 18.08.2006, wherein we do not see any error in the order of the ld. CIT(A) which calls for our interference. Consequently, the issue is held against the revenue. 63. In the cross objection filed by the assessee, we have already decided the ground No.3 consisting of issue of community development & welfare expenses and prior period adjustment, while adjudicating the appeal of the revenue, thereby we have partly allowed the issue for statistical purposes. Other grounds raised in the cross objections are in support of the order of the CIT(A). Consequently, the cross objection of the assessee is allowed partly for statistical purposes. 64. In the result, appeal of the revenue and cross objections of the assessee are allowed partly for statistical purposes. ITA No.175/CTK/2016 (AY : 2012-2013) 65. This is an appeal filed by the revenue against the order of the ld. CIT(A)-3, dated 28.01.2016 passed in I.T.Appeal No.0720/2014-15, for the assessment year 2012-2013. 66. In this appeal, the revenue has raised the sole ground with regard to the expenditure in relation to the Mini Hydel Projects. This issue is similar to OPGC Page45 | 52 the issued raised in the appeal for A.Y.2010-2011 in ITA No.114/CTK/2014, wherein we have already upheld the order of the ld. CIT(A) and dismissed the ground of the revenue. On identical findings, the issue in the present appeal is held against the revenue. It must also be mentioned here that the tax effect in this appeal is below the prescribed limit. On this ground also the present appeal of the revenue stands dismissed. Consequently, the appeal of the revenue is dismissed. 67. In the result, appeal of the revenue is dismissed. ITA No.267/CTK/2016 (AY:2011-2012) 68. This is an appeal filed by the assessee against the order of the ld. CIT(A)-1, Bhubaneswar, dated 12.04.2016 passed in I.T.Appeal No.0045/14-15 for the assessment year 2011-12. 69. Grounds No.1, 5 & 6 are general in nature, which do not require any separate adjudication. 70. Ground No.2 relates to addition of Rs.74,83,412/- made by the AO under the head Peripheral Development Expenses. We have already decided the grievance of the assessee while deciding the appeal of the revenue in ITA No.114/CTK/2014 for A.Y.2010-2011, wherein we have partly allowed the issue. Therefore, on identical findings given while deciding the appeal of the revenue in ITA No.114/CTK/2014, the issue raised in this appeal for A.Y.2011-2012 in Ground No.2 is hereby also partly allowed. OPGC Page46 | 52 71. Ground No.3 relates to community developments expenses. It was submitted by the ld. AR that the expenditure incurred under the above head are necessary, therefore, the same may kindly be allowed. This issue has already been decided while deciding the appeal of revenue and assessee for the assessment year 2010-2011. In view of the findings given in the said appeal, we are of the opinion that the amount claimed under the head community socio cultural activity of Rs.6000/- is not allowable and the same is hereby upheld. In regard to the expenses claimed under the head foundation day and national day celebration and other festival celebration, the same is allowed under the head community development & welfare expenses. Thus, this ground of assessee is partly allowed. 72. Ground No.4 relates to addition made under the head prior period expenses. This issue has already been decided while deciding the appeal of the revenue in ITA No.114/CTK/2014. With similar direction as given in ground No.1 in ITA No.114/CTK/2014, the issue raised in the present appeal is also restored to the file of AO. Thus, this ground of assessee is partly allowed for statistical purposes. 73. In the result, appeal of the assessee is allowed partly for statistical purposes. OPGC Page47 | 52 ITA No.173/CTK/2016 (AY : 2012-2013) 74. This is an appeal filed by the assessee against the order dated 28.01.2016 of the CIT(A)-3, Bhubaneswar, passed in IT.Appeal No.0720/2014-15, for the assessment year 2012-2013. 75. The assessee has raised six grounds of appeal out of which ground Nos.1, 5 & 6 are general in nature and do not require any adjudication. 76. Ground No.2 relates to Peripheral Development Expenses. On perusal of the ledger of the assessee company it shows that an amount of Rs.14,33,977/- is in relation to supply of contractor and amount of Rs.25,27,500/- is relating to reversal of Joint Venture, the same is not allowable under CSR and consequently, the same stands disallowed. Further an amount of Rs.5,86,006/- relating to renovation of District Police Training Hall and remuneration to training teacher, the same is allowable under CSR. An amount of Rs.24,78,000/- relating to a provision is not allowable. An amount of Rs.5,05,084/- is miscellaneous expenses under CSR, however, breakup of the same is not clear. Consequently, the same stands rejected. An amount of Rs.1,54,370/- which relates to hire charges of vehicle on CSR activities, is not allowable. Rs.1,29,199/- relating to health care expenses is allowable. An amount of Rs.1,50,000/- is in respect of financial support for celebration of Durga Puja and other activities, is also not allowable. Rs.15,90,035/- is in respect of deepening & renovation of pond is allowable. OPGC Page48 | 52 Rs.57,185/- claimed for day to day expenses on CSR & monthly charges data card, whose breakup is not clear, therefore, the same is not allowable. Rs.10,94,075/- is relating to construction of bathing ghat is allowable. Rs.3,76,785/- relates to expenses of development of vocational training center which falls under education, is allowable. Rs.12,71,298/- relates to construction of school boundary wall is also allowable. Rs.3,19,847/- relates to celebration expenses which is not permissible under CSR and the same is not allowable. Rs.1,00,954/- relates to cost of flex banner for hoarding, poster, banner, tent etc. is not allowable. Rs.3,95,135/- claimed for ash brick used for CSR work is allowable. Rs.2,20,000/- relates to advertisement is not allowable. The expenses claimed at Rs.2,37,000/- & Rs.3,75,000/- have not been shown for what purposes, therefore, the same are not allowable. Thus, this ground is partly allowed. 77. Ground No.3 relates to community development & welfare expenses. This issue has also been decided while deciding the appeal of the revenue in ITA No.114/CTK/2014. On similar finding given in the said appeal, this ground of appeal of the assessee is partly allowed in favour of the assessee. 78. Ground No.4 relates to addition made under the head prior period expenses. This issue has already been decided while deciding the appeal of the revenue in ITA No.114/CTK/2014. With similar direction as given in ground No.1 to ITA No.114/CTK/2014, the issue raised in the present OPGC Page49 | 52 appeal is also restored to the file of AO. Thus, this ground of assessee is partly allowed for statistical purposes. 79. In the result, appeal of the assessee is partly allowed for statistical purposes. ITA No.130/CTK/2019 (2013-2014) 80. The assessee has filed this appeal against the order dated 12.02.2019 by the CIT(A)-1, Bhubaneswar, passed in IT.Appeal No.0061/16-17, for the assessment year 2013-2014. 81. Ground Nos.1, 4 & 5 are general in nature, which do not require adjudication. 82. Ground No.2 relates to the Peripheral Development Expenses claimed to the extent of Rs.42,85,040/-. The breakup shows that Rs.12,000/- claimed for advertisement is not allowable. Rs.3,28,467/- claimed for celebration is not allowable. Rs.10,000/- claimed for compensation for loss of paddy is not allowable. Rs.2,81,934/- claimed for construction of boundary wall of SAM, is allowable. Rs.3,63,035/- claimed for financial support to school is allowable. Rs.72,351/- claimed for health camp is allowable. Rs.1,46,490/- claimed for maintenance of road is allowable. Rs.25,400/- claimed under the miscellaneous expenses under CSR is not allowable. Rs.38,400/- claimed towards printing of flex banner is not allowable. Rs.13,99,025/- which is a provisions is not allowable. OPGC Page50 | 52 Rs.38,276.64 claimed towards rectification is not allowable. Rs.3000/- claimed for registration fees is not allowable. Rs.33,500/- claimed towards remuneration for tailoring instructor, which falls under education, is allowable. Rs.8000/- claimed towards repairing of pond is allowable. Rs.99,202/- claimed towards sports expenditure is allowable. Rs.43,200/- claimed under the head supervision charges of periphery development work is allowable. Rs.13,13,439/- claimed towards supply of drinking water is allowable. Rs.64,320/- claimed towards tailoring training centre expenditure is allowable. Rs.5000/- claimed for vediography & photography expenditure is not allowable. Thus, this ground of assessee is partly allowed. 83. Ground No.3 is relating to expenditure claimed under the head Community Development & Welfare. This ground is identical to the ground decided in the appeal i.e. ITA No.114/CTK/2014 for A.Y.2010-2011. Our findings given in the said appeal on the same issue apply to this ground also. Consequently, this ground is partly allowed. 84. In the result, appeal of the assessee is partly allowed. ITA No.131/CTK/2019 (AY : 2014-2015) 85. This is an appeal filed by the assessee against the order passed by the ld. CIT(A)-1, Bhubaneswar, dated 12.02.2019 in I.T.Appeal No.0200/16- 17 for the assessment year 2014-2015. OPGC Page51 | 52 86. In this appeal the assessee has raised six grounds out of which ground Nos.1, 5 & 6 are general in nature, which do not require adjudication. 87. Ground No.2 relates to confirmation of disallowance under the head peripheral development expenses. A perusal of the breakup shows that there is celebration expenses of Rs.1,86,957/- which is not allowable. Rs.5,35,952/- claimed towards CSR activity expenses is also not allowable. Rs.17,39,856/- claimed towards drinking water is allowable. Rs.3,11,753/- claimed towards financial assistance given to school is not allowable. Rs.56,787/- claimed towards health camp is allowable. Rs.22,05,562/- claimed towards irrigation development work is allowable. Rs.2,45,424.45 claimed towards periphery development work is allowable. Rs.13,50,339/- claimed towards periphery school expenses is allowable. Rs.1,12,985/- claimed towards skill development is allowable. Rs.30,835/- claimed towards sports expenses is allowable. Thus, this ground of appeal of the assessee is partly allowed. 88. Ground No.3 is with regard to community development & welfare expenses. This is identical to the issue decided by us for the assessment year 2010-2011 while deciding the appeal of the assessee in ITA No.84/CTK/2014. Our findings therein would apply to this ground also. Consequently, this ground is partly allowed. OPGC Page52 | 52 89. Ground No.4 is with regard to charging of interest u/s.234C which is consequential in nature. 90. In the result, appeal of the assessee is partly allowed. Order dictated and pronounced in the open court on 19/9/2022. Sd/- sd/- (Arun Khodpia) (George Mathan) ACCOUNTANT MEMBER JUDICIAL MEMBER Cuttack; Dated 19/9/2022 B.K.Parida, SPS (OS) Copy of the Order forwarded to : By order Sr.Pvt.secretary ITAT, Cuttack 1. The Appellant/Assesse : Odisha Power Generation Corporation Ltd.,7 th floor, Fortune Towers, Chandrasekharpur, Bhubaneswar 2. The Respondent/Revenue: DCIT, Circle-1(1), Bhubaneswar 3. The CIT(A)-1, Bhubaneswar 4. Pr.CIT-, Bhubaneswar 5. DR, ITAT, Cuttack 6. Guard file. //True Copy//
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