DCIT, CHENNAI V. Lanco Tanjore Power Co Ltd. (Formerly Aban Power Company Ltd.), CHENNAI

ITA 312/CHNY/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68641 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 05-08-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 19-02-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N MADHAVAN
• Keywords: Depreciation; Opportunity of being heard; Earning of tax free income
• Section: 14A; 115JB

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL C BENCH, CHENNAI. BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER & SHRI V. DURGA RAO, JUDICIAL MEMBER ITA NO. 312/MDS/2013 ASSESSMENT YEAR 2008-09 THE DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE II(4), 121, M.G. ROAD, CHENNAI 34. VS. M/S. LANCO TANJORE POWER CO. LTD. (FORMERLY ABAN POWER COMPANY LTD.), NO. 25, G.N. CHETTY ROAD, T. NAGAR, CHENNAI 600 017. [PAN : AACCA4297N] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI N. MADHAVAN, JCIT RESPONDENT BY : SHRI SAROJ KUMAR PARIDA, ADVOCATE DATE OF HEARING : 05.08.2013 DATE OF PRONOUNCEMENT : 21.08.2013 O R D E R PER V. DURGA RAO, JUDICIAL MEMBER : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) III, CHENNAI D ATED 27.11.2012 RELEVANT TO THE ASSESSMENT 2008-09. 2. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE HAS TAKEN SECURED LOAN OF ` .224,44,90,718/-. IT HAS DEBITED INTEREST OF ` .24,40,69,750/- ON LOANS. IT HAS ALSO MADE INVESTME NTS IN MUTUAL FUNDS TO THE EXTENT OF ` .34,67,49,186/- DURING THE PREVIOUS YEAR. THE ASSESSING OFFICER HAS ASKED THE ASSESSEE TO EXPLAIN WHY DISALLOWANCE BE I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.3 33 312 1212 12/M/ /M/ /M/ /M/13 1313 13 2 NOT MADE UNDER SECTION 14A. THE ASSESSEE REPLIED TH AT THE BORROWINGS SHOWN IN BOOKS ARE RELATED TO PURCHASE OF PLANT AND MACHINERY AND THE INTEREST ON BORROWINGS ARE NOT RELATED WITH THE INV ESTMENTS DEFINED UNDER SECTION 14A, THE CURRENT INVESTMENTS SHOWN ARE MADE FROM THE PAYMENTS RECEIVED FROM TNEB FOR THE SALE OF ELECTRICAL ENERG Y AND THEY HAVE NO EXEMPT INCOME DURING THE YEAR AS PER THE PROVISIONS OF SECTION 14A AND AS SUCH THIS SECTION HAS NO APPLICATION. HOWEVER, THE ASSESSING OFFICER HAS NOT ACCEPTED THE SUBMISSIONS OF THE ASSESSEE AND BY APP LYING SECTION 14A R.W. RULE 8D DISALLOWED ` .89,24,289/-. 3. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFOR E THE LD. CIT(APPEALS) AND THE LD. CIT(APPEALS) DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. 4. ON BEING AGGRIEVED, THE REVENUE IS IN APPEAL BE FORE THE TRIBUNAL. 5. AT THE TIME OF HEARING, BOTH PARTIES HAVE AGREE D THAT THE VERY SIMILAR ISSUE HAS BEEN DECIDED BY THE TRIBUNAL IN ASSESSEE S OWN CASE FOR THE ASSESSMENT YEAR 2009-10 IN I.T.A. NO. 1322/MDS/2012 VIDE ORDER DATED 24.09.2012 AND THE TRIBUNAL HAS REMITTED THE ISSUE BACK TO THE ASSESSING OFFICER FOR CONSIDERATION AFRESH, BEING THE FACTS O F THE PRESENT ASSESSMENT YEAR IS ALSO SIMILAR, IT WAS PRAYED THAT THE ISSUE MAY BE REMITTED BACK TO THE ASSESSING OFFICER. IN VIEW OF THE ABOVE SUBMISSIONS OF BOTH PARTIES, WE FIND APPROPRIATE TO REMIT THE MATTER BACK TO THE ASSESSI NG OFFICER TO DECIDE THE I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.3 33 312 1212 12/M/ /M/ /M/ /M/13 1313 13 3 ISSUE IN THE LIGHT OF TRIBUNALS DECISION IN ASSESS EES OWN CASE FOR THE ASSESSMENT YEAR 2009-10. IN THE ASSESSMENT YEAR 200 9-10, THE TRIBUNAL HAS OBSERVED AS UNDER: 26. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVA L SUBMISSIONS. AS PER THE ASSESSEE, ITS INVESTMENTS WERE ALL IN MU TUAL FUNDS, WHICH WERE BASED ON DEBTS. SURPLUS DUE TO APPRECIATION N AV, ON SALE OF SUCH MUTUAL FUND UNITS WERE OFFERED BY IT AS CAPITAL GAI NS. THERE IS NO DOUBT THAT AS ON THE END OF THE RELEVANT PREVIOUS YEAR, T HERE WERE NO INVESTMENTS IN THE BOOKS OF THE ASSESSEE. WHATEVER INVESTMENT IT HAD MADE, HAD COME DOWN TO 0 BY THE END OF THE RELEVA NT PREVIOUS YEAR. IF THE CLAIM OF THE ASSESSEE THAT INVESTMENTS WERE MAD E IN DEBT ORIENTED MUTUAL FUNDS, IS CORRECT, AND IF THE GAINS ARISING ON SALE THEREOF HAD BEEN OFFERED TO TAX, THEN OF COURSE, IN OUR OPINION , SUCH INVESTMENTS COULD NOT BE TREATED AS GIVING RISE TO TAX-FREE INC OME. SECTION 14A WILL HAVE NO APPLICABILITY. IN OUR OPINION WHETHER THE INVESTMENTS WERE ONLY IN DEBT ORIENTED MUTUAL FUNDS WHICH YIELDED NO INCOME OTHER THAN CAPITAL GAINS, NEEDS TO BE VERIFIED AND ONLY IF THI S IS PROVED TO BE CORRECT, APPLICATION OF SECTION 14A CAN BE RULED OU T. WE, THEREFORE, SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND REMIT THE ISSUE BACK TO THE FILE OF THE A.O. FOR CONSIDERATION AFRESH, IN ACCORDANCE WITH LAW. 6. IN VIEW OF THE ABOVE, WE SET ASIDE THE ORDER PA SSED BY THE LD. CIT(APPEALS) AND REMIT THE MATTER BACK TO THE ASSES SING OFFICER FOR FRESH CONSIDERATION IN ACCORDANCE WITH LAW AFTER ALLOWING SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 7. THE NEXT ISSUE IN GROUND NO. 3 RELATING TO BOOK PROFIT UNDER SECTION 115JB OF THE ACT. 8. FACTS ARE IN BRIEF THAT THE ASSESSEE HAS SHOWN BOOK PROFITS UNDER SECTION 115JB AS PER RETURN AT ` .80,38,36,779/-. THE ASSESSING OFFICER MADE DISALLOWANCE UNDER SECTION 14A TO THE TUNE OF ` .89,24,289/- AND ASSESSED I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.3 33 312 1212 12/M/ /M/ /M/ /M/13 1313 13 4 BOOK PROFITS AS ` .81,27,61,068/-. THE ASSESSEE HAS SUBMITTED THAT TH E PROVISIONS OF SECTION 14A CANNOT BE IMPORTED INTO, WHILE COMPUTING BOOK PROFIT UNDER SECTION 115JB OF THE ACT IN AS MUCH AS CLAUSE (F) OF EXPLANATION TO SECTION 115JB REFERS TO THE AMOUNT DEBITED TO TH E PROFIT AND LOSS ACCOUNT WHICH CAN BE ADDED TO THE BOOK PROFIT WHILE COMPUTI NG THE BOOK PROFIT UNDER SECTION 115JB OF THE ACT. HOWEVER, THE ASSESSING OF FICER HAS NOT ACCEPTED THE SUBMISSIONS OF THE ASSESSEE AND ADDED THE AMOUN T OF ` . 89,24,289/- TO THE BOOK PROFIT UNDER SECTION 115JB. 9. ON BEING AGGRIEVED, THE ASSESSEE CARRIED THE MA TTER IN APPEAL BEFORE THE LD. CIT(APPEALS) AND IT WAS SUBMITTED BEFORE TH E LD. CIT(APPEALS) THAT THE ISSUE IN THIS APPEAL IS COVERED BY THE DECISION S OF THE ITAT DELHI BENCH IN THE CASE OF GOETZE (INDIA) LTD. V. CIT (2009) 32 SOT 101(DEL) AND IN THE CASE OF QUIPPO TELECOM INFRASTRUCTURE LTD. V. ACIT IN I.T.A. NO. 4931/DEL/2010 VIDE ORDER DATED 18.02.2011 AND SUBMI TTED THAT SECTION 14A IS NOT APPLICABLE FOR COMPUTATION OF BOOK PROFIT UN DER SECTION 115JB. THE LD. CIT(APPEALS), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DELETED THE ADDITION MADE BY THE ASSESSING OFFICER BY OBSERVING AS UNDER: 5.1 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSION OF THE LD. AR. I HAVE ALSO GONE THROUGH THE DECISIONS RELIED ON BY THE AR. THE AO HAS MADE AN ADDITION OF RS.89, 24,289/- ON ACCOUNT OF ALLEGED EXPENDITURE INCURRED TO EARN EXE MPT INCOME WHILE COMPUTING BOOK PROFIT U/S.115JB OF THE ACT. A SIMIL AR ISSUE WAS CONSIDERED BY THE HON'BLE ITAT, DELHI BENCH IN THE CASE OF GOETZE (INDIA) LTD V. CIT (2009) (32 SOT 101) FOR AY. 2000 -01. IT WAS HELD BY THE ITAT I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.3 33 312 1212 12/M/ /M/ /M/ /M/13 1313 13 5 'UNDER CLAUSE (F) OF THE EXPLANATION TO SECTION 115 JA, THE AMOUNT OF EXPENDITURE RELATABLE TO ANY INCOME TO WHICH ANY OF THE PROVISIONS OF CHAPTER 11/ APPLY HAS TO BE ADDED TO THE BOOK PROFIT. UNDER THE PROVISION CONTAINED IN SECTION 14 A, NO DEDUCTION IS TO BE ALLOWED IN RESPECT OF EXPENDITUR E INCURRED BY THE ASSESSEE IN RELATION TO INCOME WHICH DOES NOT F ORM PART OF THE TOTAL INCOME UNDER THIS ACT. SINCE THE ISSUE OF EXP ENDITURE RELATED TO DIVIDEND INCOME, A MATTER FALLING UNDER CHAPTER III, IT WAS CLEAR ON PERUSAL OF THESE TWO PROVISIONS THAT THEY ARE SIMILAR IN NATURE. CLAUSE (F) USES THE WORDS 'EXPENDITURE RELA TABLE TO ANY INCOME', WHILE SECTION 14A USES THE WORDS 'EXPENDIT URE INCURRED BY THE ASSESSEE IN RELATION TO INCOME'. THESE WORDS HAVE THE SAME MEANING. FURTHER, SECTION 14A CONTAINS TWO MORE SU B-SECTIONS, SUB-SECTION (2) AND SUB-SECTION (3), WHICH DO NOT FIND A PLACE IN CLAUSE (F). THEREFORE, INSOFAR AS COMPUTATION OF AD JUSTED BOOK PROFIT IS CONCERNED, PROVISIONS OF SUB-SECTION (2) AND SUB-SECTION (3) OF SECTION 14A CANNOT BE IMPORTED INTO CLAUSE ( F) OF THE EXPLANATION TO SECTION 115JA.' THE SAME WAS FOLLOWED BY ITAT, DELHI IN THE CASE OF M/S.QUIPPO TELECOM INFRASTRUCTURE LTD IN ITA NO.4931/DEL/2010 FOR THE ASSESSMENT YEAR 2007-08 WHILE DECIDING THE ISSUE OF ADDITION O F ALLEGED EXPENDITURE INCURRED TO EARN EXEMPT INCOME WHILE COMPUTING THE BOOK PROFIT U/S.115JB OF THE ACT. FURTHER, IN THE INSTANT CASE, AS HAS BEEN HELD ABOVE IN PARA 4.2, NO DISALLOWANCE U/S 14A IS MADE. CONSE QUENTLY, NO ADJUSTMENT U/S 115JB ON THIS ACCOUNT SHOULD BE MADE . THE RATIO OF THE ABOVE DECISIONS ARE FULLY APPLICABLE TO THE FACTS O F THE APPELLANT. RESPECTFULLY FOLLOWING THE SAME, THE DISALLOWANCE M ADE BY THE AO WHILE COMPUTING BOOK PROFIT U/S115JB OF THE ACT IS DELETE D AND THIS GROUND IS ALLOWED. 10. ON BEING AGGRIEVED, THE REVENUE CARRIED THE MA TTER IN APPEAL BEFORE THE TRIBUNAL. 11. AT THE TIME OF HEARING, THE LD. COUNSEL FOR TH E ASSESSEE HAS SUBMITTED THAT THE ISSUE RAISED BY THE REVENUE IS SQUARELY CO VERED BY THE DECISION OF THE ITAT DELHI BENCH IN THE CASE OF GOETZE (INDIA) LTD. V. CIT (2009) 32 I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.3 33 312 1212 12/M/ /M/ /M/ /M/13 1313 13 6 SOT 101(DEL) AND IN THE CASE OF QUIPPO TELECOM INFR ASTRUCTURE LTD. V. ACIT IN I.T.A. NO. 4931/DEL/2010 FOR THE ASSESSMENT YEAR 2007-08. 12. ON THE OTHER HAND, THE LD. DR HAS SUPPORTED TH E ORDER PASSED BY THE ASSESSING OFFICER. 13. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIAL ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE CASE O F THE REVENUE IS THAT WHETHER ADDITION TO THE BOOK PROFIT SHALL BE MADE O N ACCOUNT OF ALLEGED EXPENDITURE INCURRED TO EARN EXEMPT INCOME WHILE CO MPUTING THE INCOME UNDER SECTION 115JB OF THE ACT. IN THE CASE OF GOE TZE (INDIA) LTD. V. CIT (SUPRA), THE DELHI BENCH OF ITAT HAS OBSERVED AS UN DER: 4.6 WE HAVE CONSIDERED THE FACTS OF THE CASE AND R IVAL SUBMISSIONS. WE MAY AT THE OUTSET CONSIDER THE PROVISIONS CONTAI NED IN C1. (F) OF THE EXPLN. TO S. 115JA AND SUB-S. (1) OF S. 14A OF THE ACT. UNDER THE AFORESAID C1. (F), THE AMOUNT OF EXPENDITURE RELATA BLE TO ANY INCOME TO WHICH ANY OF THE PROVISIONS OF CHAPTER III APPLIES HAS TO BE ADDED TO THE BOOK PROFIT. UNDER THE PROVISION CONTAINED IN S . 14A, NO DEDUCTION IS TO BE ALLOWED IN RESPECT OF EXPENDITURE INCURRED BY THE ASSESSEE IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THIS ACT. SINCE WE ARE DEALING WITH THE ISSUE OF EX PENDITURE RELATING TO DIVIDEND INCOME, A MATTER FALLING UNDER CHAPTER III , IT BECOMES CLEAR ON PERUSAL OF THESE TWO PROVISIONS THAT THEY ARE SI MILAR IN NATURE. CLAUSE (F) USES THE WORDS 'EXPENDITURE RELATABLE TO ANY INCOME', WHILE S. 14A USES THE WORDS 'EXPENDITURE INCURRED BY THE ASSESSEE IN RELATION TO INCOME'. THESE WORDS HAVE THE SAME MEANING. WE M AY ALSO ADD HERE THAT S. 14A CONTAINS TWO MORE SUB-SECTIONS, SU B-S. (2) AND SUB-S. (3), WHICH DO NOT FIND A PLACE IN THE CL. (F). THER EFORE, INSOFAR AS COMPUTATION OF ADJUSTED BOOK PROFIT IS CONCERNED, P ROVISIONS OF SUB-S. (2) AND SUB-S. (3) OF S. 14A CANNOT BE IMPORTED INT O C1.(F). I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.3 33 312 1212 12/M/ /M/ /M/ /M/13 1313 13 7 4.7 WE MAY ALSO DEAL WITH THE ARGUMENTS OF THE RIV AL PARTIES WHICH, ACCORDING TO US, HAVE NO BEARING IN DECIDING THIS I SSUE. ONE OF THE ARGUMENTS OF THE LEARNED COUNSEL WAS THAT THE EXPEN DITURE DISALLOWED BY THE LEARNED CIT(A) WAS MORE THAN THE DIVIDEND IN COME. WE FIND THAT THIS ARGUMENT IS INCONSEQUENTIAL FOR THE REASON THA T EXPENDITURE INCURRED IN EARNING AN INCOME MAY AT TIMES BE MORE THAN THE INCOME ITSELF, SAY, IN CASE OF AN INDUSTRIAL COMPANY IN TH E FIRST YEAR OF ITS OPERATION WHEN LARGE AMOUNT OF DEPRECIATION IS CLAI MED FOR DEDUCTION OR WHEN LARGE AMOUNT OF ADVERTISEMENT EXPENDITURE I S INCURRED, SUCH CASES MAY RESULT INTO LOSS, WHICH CAN ALSO HAPPEN I N THE CASE OF DIVIDEND INCOME WHERE EXPENDITURE BY WAY OF INTERES T ON BORROWED CAPITAL FOR INVESTMENT AND OTHER EXPENSES MAY EXCEE D THE DIVIDEND INCOME. ONE OF THE ARGUMENTS OF THE LEARNED DEPARTM ENTAL REPRESENTATIVE WAS THAT THE DISALLOWANCE WORKED OUT ON THE BASIS OF THE ORDER OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE C ASE OF AFORESAID DAGA CAPITAL MANAGEMENT (P) LTD. (SUPRA) WILL BE MO RE THAN THE DISALLOWANCE MADE BY THE LEARNED CIT. THE ORDER IN THE CASE OF DAGA CAPITAL MANAGEMENT (P) LTD. (SUPRA) HEAVILY RELIED ON THE RULES FRAMED UNDER SUB-S. (2) OF S. 14A, WHICH IS NOT APPLICABLE WHILE INTERPRETING CL. (F) OF THE EXPLANATION. 14. IN THE CASE OF QUIPPO TELECOM INFRASTRUCTURE L TD. V. ACIT (SUPRA), THE TRIBUNAL HAS OBSERVED THAT NO ADDITION TO THE BOOK PROFIT SHALL BE MADE ON ACCOUNT OF ALLEGED EXPENDITURE INCURRED TO EARN EXE MPT INCOME WHILE COMPUTING THE INCOME UNDER SECTION 115JB OF THE ACT . THEREFORE, WE, RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINA TE BENCH OF DELHI ITAT IN THE CASE OF GOETZE (INDIA) LTD. V. CIT (SUPRA) AND QUIPPO TELECOM INFRASTRUCTURE LTD. V. ACIT (SUPRA), WE DISMISS TH E GROUND RAISED BY THE REVENUE. 15. THE NEXT ISSUE RELATES TO PROVISIONS FOR OPERA TION AND MAINTENANCE TO THE TUNE OF ` .1,70,41,715/-. I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.3 33 312 1212 12/M/ /M/ /M/ /M/13 1313 13 8 16. FACTS ARE IN BRIEF THAT THE ASSESSEE HAD ENTER ED INTO TWO AGREEMENTS WITH M/S GE INC. USA FOR LONG-TERM OPERATIONS AND M AINTENANCE OF ITS PLANT AND SUPPLY OF SPARES FOR PREVENTIVE MAINTENANCE AND UNPLANNED BREAK DOWN. THE AMOUNT PAYABLE UNDER THE AGREEMENTS HAVE BEEN DEBITED TO THE PROFIT AND LOSS ACCOUNT BASED ON ACTUAL FACTORED HI RE HOURS OF GAS TURBINE ON THE BASIS OF AVERAGE FACTORED HOUR COST INCLUDING C USTOMS DUTY APPLICABLE AT THE PREVAILING RATE. THE ASSESSING OFFICER, AFTER P ERUSING THE AGREEMENT, HAS OBSERVED THAT THE PAYMENTS DUE TOWARDS MAINTENANCE AND SUPPLY OF SPARE PARTS ARE CLEARLY DETERMINABLE WITHOUT THERE BEING ANY NEED FOR A PROVISION. HE FURTHER OBSERVED THAT THE ASSESSEE HAS FAILED TO FURNISH ANY SATISFACTORY EXPLANATION AS TO WHY IT HAS MADE PROVISION FOR OPE RATION AND MAINTENANCE AND WHETHER SUCH PROVISIONS ARE MADE FOR WHAT PERIO D OF TIME AND SO ON. IN THE ABSENCE OF SATISFACTORY EXPLANATION THAT THE E XPENDITURE WAS DEBITED ON THE BASIS OF ACTUAL AND THAT THE PROVISIONS MADE WA S IN RELATION TO OPERATION AND MAINTENANCE WITH REFERENCE TO FACTORS WHICH COU LD BE ASCERTAINED WITH REASONABLE ACCURACY AND HE HELD THAT THE PROVISIONS MADE BY THE ASSESSEE ARE TO BE TREATED AS ADHOC AND EXCESSIVE IN NATURE. THEY WERE ALSO WITHOUT REFERENCE TO THE ACTUAL AND HELD THAT THE PROVISION MADE BY THE ASSESSEE IS INADMISSIBLE AND ADDED TO THE TOTAL INCOME. 17. IN APPEAL, THE LD. CIT(APPEALS) DELETED THE AD DITION MADE BY THE ASSESSING OFFICER. I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.3 33 312 1212 12/M/ /M/ /M/ /M/13 1313 13 9 18. ON BEING AGGRIEVED, THE REVENUE IS IN APPEAL B EFORE THE TRIBUNAL. 19. AT THE TIME OF HEARING, BOTH PARTIES HAVE SUBM ITTED THAT IN SIMILAR SET OF FACTS IN THE ASSESSMENT YEAR 2009-10 IN I.T.A. N O. 1322/MDS/2012 VIDE ORDER DATED 24.09.2012 AND THE TRIBUNAL HAS REMITTE D THE ISSUE BACK TO THE ASSESSING OFFICER FOR AFRESH CONSIDERATION AND THER EFORE, THE SAME MAY BE FOLLOWED. 20. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIAL S ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE HA VE ALSO PERUSED THE ORDER OF THE TRIBUNAL FOR THE ASSESSMENT YEAR 2009- 10, WHEREIN THE TRIBUNAL HAS HELD AS UNDER: 17. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVA L SUBMISSIONS. IT IS NOT DISPUTED THAT ASSESSEE WAS HAVING TWO CONTRACTS WIT H M/S GE INC. USA. ONE WAS FOR LONG TERM MAINTENANCE OF ITS MAIN PLANT, SE COND WAS FOR SUPPLY OF SPARE PARTS FOR PREVENTIVE MAINTENANCE AND BREAK DO WN. AS PER THE A.O., THE PROVISION MADE BY THE ASSESSEE FOR CLEARING THE LIA BILITY AS PER THESE AGREEMENTS, WAS PURELY ON AN AD HOC BASIS AND NOT B ASED ON ANY SCIENTIFIC WORK OUT. THE A.O. IN PARAS 7.6 AND 7.7 OF HIS ORD ER HAS CLEARLY GIVEN WHY HE CONSIDERED THE PROVISION TO BE AD HOC. THESE PARAS ARE REPRODUCED HEREUNDER:- 7.6 UNDER THESE CIRCUMSTANCES, PROVISIONS MADE BY T HE ASSESSEE HAS TO BE TREATED AS ADHOC AND EXCESSIVE IN NATURE WITHOUT RE FERENCE TO THE ACTUALS. THE SAID INFERENCE IS FURTHERED STRENGTHENED BY A DATA PRESE NTED IN THE FOLLOWING TABLE: PARTICULARS OPENING BALANCE CURRENT YEAR PROVISION CURRENT YEAR PAYMENTS CLOSING BALANCE ESCALATION PAYABLE 47,09,987 7474322.64 NIL 1218430 9.64 INCENTIVE PAYABLE 1,49,92,486 9281486.19 2452730.00 21821242.19 ADDER PROVISION (10768436) 35693144.88 NIL 24924708 .88 ADDER LTSA DUTY PROVISION 35616842 19312695.50 NIL 54929537.50 ADDER DUTY PAID (39117657) NIL 9582766.00 (48700423 .00) LTMA MOB ADVANCE (3503399) 334359.00 NIL (3169040.0 0) LTMA/LTSA QTRLY PROVISIONS 65252 32526710.80 32595 670.00 (3707.20) TOTAL 1995075.00 104622719.00 44631166.00 61986.628 I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.3 33 312 1212 12/M/ /M/ /M/ /M/13 1313 13 10 7.7 THE ASSESSEE HAS ALSO GIVEN BREAK UP FOR PROVIS IONS MADE FOR THE RELEVANT PREVIOUS YEARS WHICH IS EXTRACTED AS UNDER: LTMA AND LTSA PROVISION VS. PAYMENT STATUS FOR THE VARIOUS FINANCIAL YEARS FROM 2006-07 TO 2010-11 FINANCIAL YEAR OPENING BALANCE PROVISION MADE AMOUNT UTILISED CLOSING BALANCE 2006-07 20690619 33068186 NIL 53758805 2007-08 53758805 48400870 85118500 17041175 2008-09 17041175 104622719 59677266 61986628 2009-10 61986628 80660363 77639698 65007293 2010-11 65007293 84313843 131969974 17351162 AS AGAINST THIS, CLAIM OF THE ASSESSEE IS THAT PROV ISIONS WERE MADE EXACTLY IN ACCORDANCE WITH AGREEMENTS, BASED ON ACTUAL FACTORE D FIRE HOURS OF GAS TURBINE AND AVERAGE FACTORED COST. WITHOUT DOUBT, THE AMOUNTS WHETHER CLAIMED AS PROVISION OR OUTSTANDING, IF WORKED OUT STRICTLY IN ACCORDANCE WITH AGREEMENTS, HAS TO BE ALLOWED. THIS IS BECAUSE ASS ESSEE IS LEGALLY BOUND TO PAY TO M/S GE INC. USA THE AMOUNTS DUE TO IT AS PER THE AGREEMENTS. ACTUAL DATE OF PAYMENT IS IRRELEVANT. THOUGH ASSESSEE HAS ARGUED THAT THE PROVISIONING DONE BY IT WAS IN ACCORDANCE WITH SUCH AGREEMENTS, THE TABLE EXTRACTED ABOVE, DOES NOT SUBSTANTIATE SUCH CONTENT ION. WE ARE, THEREFORE, OF THE OPINION THAT THE MATTER REQUIRES RE-VISIT BY TH E A.O. WE SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND REMIT THE ISSUE BAC K TO ASSESSING OFFICER FOR VERIFYING THE PROVISIONING DONE BY ASSESSEE VIS--V IS THE AGREEMENTS ENTERED WITH M/S GE INC. USA. IF IT IS STRICTLY IN ACCORDA NCE WITH AGREEMENTS, THE AMOUNT SHOWN AS PROVISION HAS TO BE ALLOWED. AMOUN TS IN EXCESS OF WHAT IS PAYABLE AS PER THE AGREEMENTS, CAN BE DISALLOWED. 18. IN THE RESULT, WE SET ASIDE THE ORDERS OF AUTHO RITIES BELOW ON THIS ASPECT AND REMIT THE ISSUE BACK TO THE FILE OF A.O. FOR CONSIDERATION AFRESH, IN ACCORDANCE WITH LAW. 21. IN VIEW OF THE ABOVE, WE SET ASIDE THE ORDER PASSED BY THE LD. CIT(APPEALS) AND REMIT THE MATTER BACK TO THE ASSES SING OFFICER FOR FRESH CONSIDERATION IN ACCORDANCE WITH LAW AFTER ALLOWING SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.3 33 312 1212 12/M/ /M/ /M/ /M/13 1313 13 11 22. IN THE RESULT, THE APPEAL OF THE REVENUE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON WEDNESDAY, THE 21 ST OF AUGUST, 2013 AT CHENNAI. SD/- SD/- (N.S. SAINI) ACCOUNTANT MEMBER (V. DURGA RAO) JUDICIAL MEMBER CHENNAI, DATED, THE 21.08.2013 VM/- TO: THE ASSESSEE/A.O./CIT(A)/CIT/D.R.