ACIT, New Delhi V. M/s Delhi Metro Rail Corp. Ltd., New Delhi

ITA 3491/DEL/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 82109 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 5 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 29-09-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 31-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR SUDHA KUMARI
• Keywords: Depreciation; Capital receipt; Revenue expenditure; Capital expenditure
• Section: 43B; 143(3); 147; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B , NEW DELHI BEFORE SH. S. V. MEHROTRA , AM AND SH. H. S. SIDHU , JM ITA NO. 3491 /DEL/2013 : ASSTT. YEAR : 2004 - 05 ACIT, CIRCLE 10( 1) NEW DELHI VS M/S DELHI METRO RAIL CORP. LTD. 3 RD FLOOR, METOR BHAWAN, FIRE BRIGADE LANE, BARAKHAMBA ROAD, NEW DELHI - 110001 (APPELLANT) (RESPONDENT) PAN NO. A A ACD3254A A SSESSEE BY : SMT. INDRA BANSAL, CA REVENUE BY : DR. SUDHA K UMARI, CIT DR DATE OF HEARIN G : 1.10 . 2014 DATE O F PRONOUNCEMENT : 14. 11 . 2014 ORDER P ER S. V. MEHROTRA , AM: THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) - XVII , NEW DELHI DATED 28. 3 .2 013 FOR THE ASSESSMENT YEAR 200 4 - 05 . 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS OPERATING METRO RAIL IN DELHI AND IS ALSO IMPARTING CONSULTANCY SERVICES . IT HAD FILED ITS RETURN OF INCOME ON 29.10.2004 DECLARING A LOSS OF RS. 184,41,98,010/ - . THE ASSESSMENT WAS COMPLE TED U/S 143(3) ON 26.12.2006 ACCEPTING THE LOSS AS SHOWN IN THE RETURN OF INCOME. THE ASSESSING OFFICER REOPENED THE ASSESSMENT U/S 147 ON 16.12.2009 AND THE ORDER U/S 143(3)/147 WAS ITA NO. 3491 /DEL/2013 DELHI ME TRO RAIL CORP. LTD. 2 PASSED ON 13.12.2010 DECLARING THE LOSS AT RS. 172,31,30,259/ - AFTER MAKI NG FOLLOWING ADDITIONS: - DISALLOWANCE OF DEPRECIATION CLAIMED ON NBCC BUILDING AS DISCUSSED IN PARA - 8 ABOVE 12969934/ - DISALLOWANCE OF DEPRECIATION CLAIMED ON CAPITAL EXPENDITURE INCURRED ON ASSET OWNED BY D.V.B AS DISCUSSED IN PARA - 9 ABOVE 13756398/ - A DDITION ON A/C OF MISC. INCOME INCLUDING INTEREST ON ADVANCE NOT OFFERED FOR TAXATION AS DISCUSSED IN PARA - 10 ABOVE 92959567/ - ADDITION ON A/C OF EXCESS PROVISION OF LEAVE ENCASHMENT NOT OFFERED FOR TAXATION AS DISCUSSED IN PARA - 11 ABOVE 2281852 3. THE LD. CIT(A) ALLOWED THE ASSESSEE S APPEAL. BEING AGGRIEVED WITH THE ORDER OF LD. CIT(A) THE DEPARTMENT IS IN APPEAL US AND HAS TAKEN FOLLOWING GROUNDS OF APPEAL: - I) WHETHER THE LD. CIT(A) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW WAS JUSTI FIED IN DELETING THE ADDITION OF RS. 12069934/ - MADE ON ACCOUNT OF DISALLOWANCE OF DEPRECIATION ON THE ASSET OWNED BY NBCC, NOT BY THE ASSESSEE COMPANY. II) WHETHER THE LD. CIT(A) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW WAS JUSTIFIED IN DE LETING OF DISALLOWANCE OF RS. 13756398/ - MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF DEPRECIATION ON INSTALLATION OF ELECTRIC SUB - STATION AT ISBT OWNED BY DELHI VIDYUT BOARD, NOT BY THE ASSESSEE COMPANY. III) WHETHER THE LD. CIT(A) UNDER THE FACTS AND CIR CUMSTANCES OF THE CASE AND IN LAW WAS JUSTIFIED IN DELETING THE ADDITION OF RS. 92959567/ - MADE BY THE AO ON ACCOUNT OF ITA NO. 3491 /DEL/2013 DELHI ME TRO RAIL CORP. LTD. 3 DISALLOWANCE OF MISC. INCOME WHICH WAS NOT OFFERED BY THE ASSESSEE FOR TAXATION. IV) WHETHER THE LD. CIT(A) UNDER THE FACTS AND CIRCUMST ANCES OF THE CASE AND IN LAW WAS JUSTIFIED IN DELETING THE ADDITION OF RS. 2281852/ - MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF EXCESS PROVISION OF LEAVE ENCASHMENT U/S 43B(F) OF THE I. T. ACT, 1961. 4. BRIEF FACTS APROPOS GROUND NO. 1 ARE THAT THE ASS ESSING OFFICER NOTICED THAT THE AUDITOR OF COMPANY QUALIFIED IN HIS REPORT FOR DEPRECIATION PROVIDED ON OFFICE SPACE ACQUIRED BY THE COMPANY FR O M NBCC PENDING EXECUTION OF LEASE AGREEMENT. HE CONCLUDED THAT IN THE ABSENCE OF LEASE AGREEMENT , THE DMRC HAD N O OWNERSHIP RIGHTS AND , AS SUCH , COULD NOT CLAIM DEPRECIATION OF BUILDING AND , THEREFORE, DISALLOWED DEPRECIATION OF RS. 1,20,69,954/ - . THE LD. CIT(A) FOLLOWING THE ORDER FOR ASSESSMENT YEAR 2003 - 04 ALLOWED THE ASSESSEE S CLAIM. 5. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND HAVE PERUSED THE RECORD OF THE CASE. THE ASSESSEE HAD SUBMITTED BEFORE ASSESSING OFFICER THAT THE DMRC HAD PURCHASED OFFICE SPACE IN NBCC BUILDING. MAJOR PART OF THE SPACE WAS DIRECTLY ACQUIRED FROM NBCC LTD. EXCEPT SOME PORTION AT 5 TH F LOOR WHICH WAS ACQUIRED FROM CRISIL. AS THE AGREEMENT BETWEEN L & DO, MINISTRY OF URBAN DEVELOPMENT AND NBCC LTD. WERE UNDER FIN ALIZATION , DMRC WAS UTILIZING THE SPACE FOR ITS OFFICIAL ACTIVITIES AND WAS THE OWNER FOR ALL PRACTICAL PURPOSE S . THE ASSESSEE RELIED ON THE DECISION OF HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS HINDUSTAN COLD STORAGE AND REFRIGE RAT ION P. LTD. 240 ITR ITA NO. 3491 /DEL/2013 DELHI ME TRO RAIL CORP. LTD. 4 191. THE ASSESSEE FURTHER RELIED ON 239 ITR 775 (SC), 227 ITR 68 (AP), 123 ITR 97, 103 ITR 455, 168 ITR 811 & 190 ITR 655. THE ASSESSEE S SUBMISSION WAS THAT PAYMENT FOR USING THE PROPE RTY HAD BEEN MADE AND THE ASSETS WERE FULLY USED BY ASSESSEE FOR ITS BUSINESS PURPOSE. THUS, THE SUBMISSION WAS THAT ALL THE RIGHTS EN J OYED BY AN OWNER WERE WITH THE ASSESSEE. THESE ARGUMENTS DID NOT FIND FAVOUR WITH THE ASSESSING OFFICER MERELY ON THE GROUND THAT NO EVIDENCE WAS ADDUCED IN SUPPORT OF THE CLAIM THAT FULL PRICE OF THE PROPERTY HAD BEEN PAID TO NBCC AND WHEN IT WAS PAID. HOWEVER, THE LD. CIT(A) IN HIS ORDER H AS REPRODU CED THE FINDINGS OF LD. CIT(A) FOR ASSESSMENT YEAR 2003 - 04 IN PARA 4 OF ITS ORDER WHEREIN INTER ALIA IT HAS BEEN OBSERVED AS UNDER: - AS PER THE ASSESSMENT ORDER, THE APPELLANT HAS PURCHASED OFFICE SPACE IN THE ABOVE BUILDING FROM NBCC AND SOME PORTION OF 5 TH FLOOR WAS ACQUIRED FROM CRISIL. THE AO FOUND THAT FORMAL SALE DEED WAS NOT EXECUTED IN FAVOUR OF THE APPELLANT AND FURTHER OBSERVED IN THE ASSESSMENT ORDER THAT THERE IS NO EVIDENCE SUBMITTED DURING THE ASSESSMENT PROCEEDING TO PROVE THAT FULL PRICE OF THIS PROPERTY WAS PAID TO NBCC. THE APPELLANTS S AR IN HER SUBMISSION DATED 12.10.2011 HAD STATED THAT FULL PRICE OF THE PROPERTY HAS BEEN PAID THOUGH THE OWNERSHIP IS YET TO BE IN THE NAME OF DMRC LTD. AS PER THE EVIDENCE SUBMITTED THE APPELLANT HAD INTI MATED THE EARLIER AO IN THE A. Y. 1997 - 98 VIDE LETTER DATED 24.8.1999 THAT THE BUILDING WAS PURCHASED AT A COST OF RS. 16.73 CRORES AND THE PAYMENT WAS MADE THROUGH CHEQUE NO. 108570 DATED 31.3.1997 TO LAND & DEVELOPMENT OFFICER, MINISTRY OF URBAN DEVELOPM ENT. THE EVIDENCE SUBMITTED INDICATES THAT MINISTRY OF URBAN DEVELOPMENT HAD ALLOTTED OFFICE SPACE TO DMRC LTD. IN THE COMPLEX CONSTRUCTED BY NBCC AND THE PAYMENT WAS MADE ITA NO. 3491 /DEL/2013 DELHI ME TRO RAIL CORP. LTD. 5 BY THE DMRC LTD. DIRECTLY TO THE GOVERNMENT OF INDIA TO BE ADJUSTED AGAINST THE VARI OUS DUES OUTSTANDING AGAINST NBCC FOR THE ALLOTMENT OF LAND FOR CONSTRUCTION FOR THE ABOVE COMPLEX. A LETTER NO. J - 13026/6/97 - LD D ATED 17.3.1997 OF MINISTRY OF URBAN AFFAIRS TO LAND DEVELOPMENT OFFICER INDICATES CLEARLY THAT LAND BELONGS TO THE GOVERNMENT AND NBCC WAS TO BE COMPENSATED ONLY FOR THE COST OF CONSTRUCTION. THE OFFICE SPACE OCCUPIED BY DMRC WAS EARMARKED FOR THE GOVERNMENT AND THE SAME WAS PROVIDED TO DMRC BY THE GOVERNMENT OF INDIA DUE TO DMRC S SOCIAL OBJECTIVES AND ALSO DUE TO THE FACT THAT DMRC IS A JOINT VENTURE OF GOVERNMENT OF INDIA. THE LETTER ALSO INDICATED THAT IT WAS THE RESPONSIBILITY OF LAND & DEVELOPMENT OFFICE TO COMPLETE THE FORMALITIES LIKE CONVEYANCE DEED ETC. THE EVIDENCE THEREFORE CLEARLY INDICATES THAT THE PREMISE WAS ALLOTT ED TO DMRC BY THE GOVERNMENT AND THE PAYMENT WAS ALSO MADE BY THE DMRC TO THE GOVERNMENT. THERE IS NO INDICATION THAT THE BUILDING BELONGED TO NBCC THOUGH IT WAS CALLED NBCC BUILDING. ON THE OTHER HAND, IT IS NOT VERY CLEAR FROM THE ASSESSMENT ORDER AS TO WHY THE APPELLANT IS NOT ENTITLED FOR DEPRECIATION ON THE BUILDING. THE APPELLANT S AR IN HER SUBMISSION HAD STATED THAT BY VIRTUE OF PROVISIONS OF SECTION 2(47)(V) OF THE I. T. ACT, 1961 REGARDING PART PERFORMANCE OF NATURE REFERRED IN SECTION 53A OF TRAN SFER OF PROPERTY ACT, THE APPELLANT IS ENTITLED FOR THE DEPRECATION AS IT HAD PAID THE PRICE TO THE GOVERNMENT OF INDIA AND IS ALSO OCCUPYING THE BUILDING FOR ITS BUSINESS. THE ONLY LACUNA IS THAT THE FORMAL DOCUMENTS REGARDING OWNERSHIP ARE YET TO BE SIGN ED. THE AO PRESUMED THAT THE BUILDING BELONGED TO NBCC WHILE THE EVIDENCE INDICATES THAT NBCC IS ONLY TO BE COMPENSATED FOR THE COST OF CONSTRUCTION. EVEN THIS COMPENSATION WAS PAID TO THE GOVERNMENT OF INDIA AND WAS TO BE ADJUSTED BY THE GOVERNMENT AGAINS T DUES OUTSTANDING AGAINST NBCC. THEREFORE, THE TRANSACTION WAS BETWEEN T HE DMRC AND GOVERNMENT WHICH IS ALSO A SHAREHOLDER OF DMRC. BASED ON THE ABOVE FACTS, THE APPELLANT IS ENTITLED FOR DEPRECIATION ON THE PRINCIPLES OF PART ITA NO. 3491 /DEL/2013 DELHI ME TRO RAIL CORP. LTD. 6 PERFORMANCE BY VIRTUE OF PRO VISIONS OF SECTION 2(47)(V) OF THE I. T. ACT, 1961. THEREFORE, THE APPELLANT SUCCEEDS IN GROUND NO. 4 AND THE DEPRECIATION DISALLOWED AMOUNTING TO RS. 1,34,11,037/ - IS HEREBY DELETED. 6. THE LD. COUNSEL FOR THE ASSESSEE POINTED OUT THAT THE DEPARTMENT HA S NOT FILED ANY APPEAL AGAINST THE FINDINGS OF LD. CIT(A) FOR ASSESSMENT YEAR 2003 - 04. THEREFORE, THE ONLY OBJECTION OF ASSESSING OFFICER REGARDING NO EVIDENCE BEING THERE IN RESPECT OF DETAILS OF PAYMENT DOES NOT SURVIVE. WE, THEREFORE, DO NOT FIND ANY IN FIRMITY IN THE ORDER OF CIT(A) BECAUSE BUILDING WAS OCCUPIED BY THE ASSESSEE AND FULL CONSIDERATION HAD BEEN PAID TO THE GOVERNMENT OF INDIA FOR THE ABOVE BUILDING. IN THE RESULT THIS GROUND IS DISMISSED. 7. BRIEF FACTS APROPOS GROUND NO. 2 ARE THAT FROM THE DETAILS OF ADDITIONS TO ASSETS FOR ASSESSMENT YEAR 2003 - 04 IN THE FIXED ASSETS AND SCHEDULE 3 , THE ASSESSING OFFICER NOTICED THAT THE SAME INCLUDED A SUM OF RS. 6,28,86, 36 2/ - INCURRED AS CAPITAL EXPENDITURE ON ASSETS NOT OWNED BY THE COMPANY BUT THE DE PRECIATION ON THIS CAPITAL EXPENDITURE WAS CLAIMED. AS PER FACTS ON RECORDS, T HIS PAYMENT WAS MADE TO DELHI VIDYUT BOARD FOR INSTALLATION OF ELECTRIC SUB - STATION AT ISBT FOR SMOOTH RUNNING OF TRAIN OPERATIONS AS COMPANY HAD INCURRED THE WHOLE EXPENDITURE F ROM ITS OWN SOURCE AND THE ASSETS WERE WHOLLY AND EXCLUSIVELY USED BY DMRC, THEREFORE, DEPRECIATION WAS CLAIMED. THE ASSESSING OFFICER DISALLOWED THE DEPRECIATION ON THE CAPITAL EXPENDITURE INCURRED BY THE ASSESSEE OBSERVING THAT THE ASSETS WERE OWNED BY T HE ITA NO. 3491 /DEL/2013 DELHI ME TRO RAIL CORP. LTD. 7 DVB. THE LD. CIT(A) ALLOWED THE ASSESSEE S CLAIM FOLLOWING THE ORDER FOR ASSESSMENT YEAR 2003 - 04 INTER ALIA OBSERVING THAT THE OPTION BEFORE THE AO, I N VIEW OF THE HON BLE DELHI HIGH COURT DECISION IN THE CASE OF CIT VS SAW PIPES LTD. 300 ITR 35 WAS TO EITHER ALLOW THE ENTIRE EXPENSES AS REVENUE EXPENDITURE OR TO GRANT DEPRECIATION AS CLAIMED BY THE ASSESSEE. HE , ACCORDINGLY , ALLOWED THE ASSESSEE S CLAIM FOR DEPRECIATION OF RS. 1,37,56,398/ - . 8. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AN D PERUSED THE RECORD. THE LD. COUNSEL POINTED OUT THAT FOR ASSESSMENT YEAR 2003 - 04 THE DEPARTMENT DID NOT P REFER ANY APPEAL BEFORE THE TRIBUNAL AND , THUS, ACCEPTED THE DECISION. WE FIND CONSIDERABLE FORCE IN THE ARGUMENT OF LD. COUNSEL FOR THE ASSESSEE. TH E FINDINGS OF LD. CIT(A) FOR ASSESSMENT YEAR 2003 - 04 ARE AS UNDER: - THE AO HAD DISALLOWED DEPRECIATION ON THE GROUND THAT ELECTRIC SUB - STATION WAS OWNED BY THE DELHI VIDYUT BOARD. THE APPELLANT S AR VIDE LETTER DATED 11.01.2012 HAD RAISED AN ALTERNATIVE P LEA THAT IF DEPRECIATION IS NOT ALL OWABLE ON ELECTRIC SUB - STATION THEN THE ENTIRE EXPENSE OF RS. 6,28,86,362/ - SHOULD BE ALLOWED AS REVENUE EXPENSES INCURRED DURING THE YEAR. THERE IS NO DOUBT THAT THE EXPENSE ON ELECTRIC SUB - STATION WAS INCURRED WHOLLY AN D EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. THEREFORE, AS POINTED OUT IN THE ALTERNATIVE PLEA, THE APPELLANT IS ENTITLED TO CLAIM THE ENTIRE EXPENSE AS REVENUE. THIS VIEW IS SUPPORTED BY THE HON BLE DELHI HIGH COURT S DECISION IN THE CASE OF CIT VS SAW PIPE LTD. REPORTED IN 300 ITR 35. IN THE ABOVE CASE OF SAW PIPES SERVICE LINES BELONGED TO THE ELECTRICITY BOARD AND THE EXPENDITURE WAS INCURRED BY THE APPELLANT BUT WAS HELD AS ITA NO. 3491 /DEL/2013 DELHI ME TRO RAIL CORP. LTD. 8 ALLOWABLE REVENUE EXPENDITURE BY THE HON BLE HIGH COURT. HOWEVER, THE APPELLANT C ONSIDERED THE EXPENSE TOWARDS ELECTRIC SUB - STATION AS CAPITAL IN NATURE IN THE RETURN OF INCOME FILED AND CLAIMED DEPRECIATION ON THE SAME ON THE GROUND THAT THE RIGHTS FOR OWNERSHIP OF THE SUB - STATION ARE WITH THE APPELLANT. CONSIDERING THE APPELLANT S AL TERNATIVE PLEA THIS GROUND OF APPEAL IS ALSO ALLOWED AND THE DISALLOWANCE OF DEPRECIATION OF RS. 78,60,797/ - IS HEREBY DELETED. 9. EVEN OTHERWISE IT IS NOT DISPUTED THAT THE EXPENDITURE ON ELECTRIC SUB - STATION WAS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. THEREFORE, AS RIGHTLY POINTED OUT OF CIT(A), THE ASSESSEE WAS ENTITLED FOR DEDUCTION OF ENTIRE EXPENDITURE, T HOUGH , IT CLAIMED ONLY DEPRECIATION TREATING THE EXPENDITURE IN CAPITAL FIELD . WE , ACCORDINGLY , CONFIRM THE ORDER OF CIT(A). IN THE RESULT THIS GROUND IS DISMISSED. 10. BRIEF FACTS APROPOS GROUND NO. 3 ARE THAT THE ASSESSIN G OFFICER NOTICED FROM SCHEDULE - 9 OF PROFIT AND LOSS ACCOUNT THAT INTEREST ON ADVANCE S OF RS. 9,29,59,5 67 / - WAS TRANSFERRED TO BALANCE SHEET AS CAPITAL WORK IN PROGRESS AND WAS NOT TAKEN INTO PROFIT AND LOSS ACCOUNT AS OTHER INCOME. HE NOTED THAT IN THE COMPUTATION OF TOTAL INCOME THE ASSESSEE HAD ADDED ALL OTHER HEADS OF INCOME MENTIONED IN SCHEDULE - 9 BUT DID NOT ADD BACK THE MISCELLANEOUS INCOME (INCLUDING I NTEREST O N ADVANCE FROM VENDORS) OF RS. 9,29,59,5 67 / - . HE , ACCORDINGLY , MADE AN ADDITION OF THIS AMOUNT TO THE TOTAL INCOME. BEFORE LD. CIT(A) , THE ASSESSEE HAD POINTED OUT THAT THE INTERES T ON ADVANCE PERTAINING TO CONSTRUCTION WORK HAD BEEN CAPITALIZED C ONSIDERING THE SAME AS CAPITAL RECEIPTS. THESE INTERESTS ON ITA NO. 3491 /DEL/2013 DELHI ME TRO RAIL CORP. LTD. 9 ADVANCES WERE REDUCED FROM PROJECT COST AND DEPRECIATION WAS CLAIMED ONLY ON BALANCE AMOUNT. LD. CIT(A) , TAKING NOTE OF THE FACT THAT THE ASSESSEE WAS CONSISTENTLY FOLLOWING THIS METHOD OF CAPITAL IZING IN TEREST ON ADVANCE AS IT PERTAINED TO THEIR CONSTRUCTION WORK , DELETED THE ADDITION MADE BY ASSESSING OFFICER. 11. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARITIES. SCHEDULE - 9 TO THE PROFIT AND LOSS ACCOUNT DEALS WITH OTHER INCOME EARNED BY THE ASSESSEE WHICH IS REPRODUCED HERE UNDER: - PARTICULARS FOR THE YEAR ENDED ON 31.3.2004 FOR THE YEAR ENDED ON 31.3.2003 DEFERRED GOVERNMENT GRANT 6,839,221 MISC. INCOME (INCLUDING INTEREST ON ADVANCE FROM VENDORS RS. 97,435,970 (PREVIOUS YEAR RS. 42, 185,477) 124,690,651 51,553,929 INTEREST ON DEPOSITS (TAX DEDUCTED AT SOURCE RS. 86,182,814 PREVIOUS YEAR RS. 149,034,985) 819,011,813 712,421,892 INTEREST ALLOWED IN INCOME - TAX 13,898,030 10,437,725 TOTAL 964,439,715 7 74,413,546 LESS: TRANSFERRED TO CWIP 932,708,631 772,802,937 NET 31,731,084 1,610,609 12. ADMITTEDLY THE SUM OF RS. 9,29,59,567/ - F OR M PART OF MISCELLANEOUS INCOME OF RS. 12,46,90,651/ - OF THE SCHEDULE REPRODUCED ABOVE. IT IS EVIDENT THAT ASSESSEE HAS TRANSFERRED THE INTEREST ON ADVANCE ITA NO. 3491 /DEL/2013 DELHI ME TRO RAIL CORP. LTD. 10 FROM VENDORS TO CAPITAL WORK IN PROGRESS TREATING THE SAID INTEREST AS PART OF CONSTRUCTION COST. LD. CIT(A) HAS INTER ALIA NOTED AS UNDER: - DURING THE RELEVANT ASSESSMENT YEAR, T HE APPE LLANT HAD CAPITALIZED TWO SECTORS OF THEIR CONSTRUCTION PROJECTS NAMELY VISHWAVIDYALA KASHMERE GATE SECTOR AND INDERLOK RITHALA SECTOR. IN THE SUBSEQUENT ASSESSMENT YEAR THE APPELLANT HAD CAPITALIZED TWO MORE SECTORS KASHMERE GAT E CENTRE SECRETARIAT SECTOR AND BARAKHAMBA DWARKA SECTOR. 13. ADMITTEDLY T HIS METHOD OF ACCOUNT ING HAS CONSISTENTLY BEEN FOLLOWED BY ASSESSEE. IT IS NOT DISPUTED THAT THE INTEREST ON ADVANCE PERTAINED TO CONSTRUCTION WORK. THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A). IN THE RESULT THIS GROUND IS DISMISSED. 14. BRIEF FACTS APROPOS GROUND NO. 4 ARE THAT THE ASSESSING OFFICER NOTICED FROM SCHEDULE - 8 TO THE FINAL ACCOUNT THAT THE ASSESSEE HAD MADE EXCESS PROVISION OF LEAVE ENCASHMENT OF RS. 2 2,81,852/ - (55,21,491 - 32,39,639) DURING THE YEAR. HE POINTED OUT THAT AS PER C L AUSE (F) OF SEC. 43B , ANY SUM PAYABLE BY AN EMPLOYER IN LIEU OF ANY LEAVE AT THE CREDIT OF ITS EMPLOYEES SHALL BE ALLOWED ONLY IN THE PREVIOUS YEAR IN WHICH SUCH SUM WAS ACTUAL LY PAID. SINCE THE SUM OF RS. 22,81,852/ - WAS NOT ACTUALLY PAID DURING THE PREVIOUS YEAR RELEV ANT TO ASSESSMENT YEAR 2004 - 05, THEREFORE, THE AMOUNT WAS ADDED BACK TO THE TOTAL INCOME ON ACCOUNT OF EXCESS PROVISION OF LEAVE ENCASHMENT. LD. CIT(A) DELETED TH E ADDITION , INTER ALIA , OBSERVING THAT ASSESSING OFFICER FAILED TO NOTE THAT ITA NO. 3491 /DEL/2013 DELHI ME TRO RAIL CORP. LTD. 11 THE ASSESSEE HAD NOT DEBITED THIS AMOUNT IN THEIR PROFIT AND LOSS ACCOUNT BUT INSTEAD CAPITALIZED THE EXPENSES. SINCE, THE ASSESSEE HAD NOT CLAIMED THIS AS AN ALLOWABLE DEDUCTION, THE PROVISION OF SEC. 43B HAD NO APPLICATION IN THE CASE OF LEAVE ENCASHMENT CAPITALIZED BY THE ASSESSEE. 15. HAVING HEARD BOTH THE PARTIES WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT(A) BECAUSE IT IS NOT CONTROVERTED BY DEPARTMENT THAT THE ASSE SSEE HAD CLAIMED THE DEDUCTION IN THE COMPUTATION MADE U/S 28. SECTION 43B COMES INT O PLAY ONLY WHEN DEDUCTION IS CLAIMED BY THE ASSESSEE IN ITS COMPUTATION U/S 28 THOUGH NOT PAID DURING THE YEAR. 16 . IN THE RESULT, THE REVENUE S APPEAL IS DISMISSED. THE ORDER IS PRONOUNC ED IN THE OPEN COURT ON 14 TH OF N OVEMBER 2014. SD/ - SD/ - ( H. S. SIDHU ) ( S. V. MEHROTRA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 14 /1 1 / 2014 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR