Kolkata Port Trust, Kolkata V. DCIT, Circle - 35, Kolkata, Kolkata

ITA 379/KOL/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1639 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 11 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2013
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 06-02-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 19-02-2010
• Court: TRIBUNAL
• Assessee Lawyers: N K PODDA R
• Keywords: Capital asset; Depreciation; Retrospective amendment; Cost of acquisition; Difference of opinion; Revised return; Revenue expenditure
• Section: 143(3); 80G; 32; 154

Judgement Text

, B , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA () BEFORE , /AND ! ' ! , ) [BEFORE SHRI PRAMOD KUMAR, AM & SHRI MAHAVIR SINGH, JM] # # # # / I.T.A NO. 375/KOL/2010 '$% &' '$% &' '$% &' '$% &'/ // / ASSESSMENT YEAR: 2003-04 & # # # # / I.T.A NO. 376/KOL/2010 '$% &' '$% &' '$% &' '$% &'/ // / ASSESSMENT YEAR: 2004-05 & # # # # / I.T.A NO. 377/KOL/2010 '$% &' '$% &' '$% &' '$% &'/ // / ASSESSMENT YEAR: 2005-06 & # # # # / I.T.A NO. 378/KOL/2010 '$% &' '$% &' '$% &' '$% &'/ // / ASSESSMENT YEAR: 2005-06 & # # # # / I.T.A NO. 379/KOL/2010 '$% &' '$% &' '$% &' '$% &'/ // / ASSESSMENT YEAR: 2003-04 KOLKATA PORT TRUST VS. DEPUTY COMMISSIONER OF INCOME-TAX, (PAN: AAAJK0361L) CIRCLE-35, KOLKATA ()* /APPELLANT ) (+)*/ RESPONDENT ) & # # # # / I.T.A NO. 98/KOL/2012 '$% &' '$% &' '$% &' '$% &'/ // / ASSESSMENT YEAR: 2004-05 & # # # # / I.T.A NO. 99/KOL/2012 '$% &' '$% &' '$% &' '$% &'/ // / ASSESSMENT YEAR: 2005-06 ASSISTANT COMMISSIONER OF INCOME-TAX, VS. KOLKATA PORT TRUST CIRCLE-35, KOLKATA. ()* /APPELLANT ) (+)*/ RESPONDENT ) & # # # # / I.T.A NO. 1041/KOL/2007 '$% &' '$% &' '$% &' '$% &'/ // / ASSESSMENT YEAR: 2003-04 KOLKATA PORT TRUST VS. ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-35, KOLKATA ()* /APPELLANT ) (+)*/ RESPONDENT ) DATE OF HEARING: 06.11.2012 2 ITA NOS. 375-379/K/2010 & ITA NOS.98-99/K/2012 & ITA NO.1041/K/2007 KOLKATA PORT TRUST A.Y. 2003-04 TO 2005-06 DATE OF PRONOUNCEMENT: 24.01.2013 FOR THE ASSESSEE: S/SHRI N. K. PODDAR & AMIT AGARWAL FOR THE REVENUE: SHRI SUJIT KUMAR , / ORDER PER MAHAVIR SINGH, JM ( ! ' ! ! ' ! ! ' ! ! ' !, , , , ) ALL THESE APPEALS BY ASSESSEE AND REVENUE ARE ARISI NG OUT OF SEPARATE ORDERS OF CIT(A)- XX, KOLKATA IN APPEAL NOS. 36/CIT(A)-XX/CIR-35/09-1 0/KOL, 42/CIT(A)-XX/CIR-35/09- 10/KOL, 43/CIT(A)-XX/CIR-35/09-10/KOL, 428/CIT(A) -XX/CIR-35/07-08/KOL, 413/CIT(A)- XX/CIR-35/09-10/KOL, 412/CIT(A)-XX/CIR-35/09-10/KOL & 91/CIT(A)-XXII/ACIT, CIRCLE- 35/05-06 DATED 09.12.2009, 10.12.2009, 14.12.200 9, 09.12.2009, 31.12.2011, 31.10.2011 & 26.03.2007. ASSESSMENTS WERE FRAMED BY DCIT/ACIT, C IRCLE-35, KOLKATA U/S. 252/143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO A S THE ACT) FOR ASSESSMENT YEARS MENTIONED ABOVE VIDE THEIR SEPARATE ORDERS DATED 20.12.2007, 10.02.2006, 12.01.2010 & 19.01.2010. 2. THE FIRST ISSUE IN ALL THESE APPEALS VIZ., ITA NOS. 375 TO 379/K/2010 AND I.T.A NO. 1041/KOL/2007 (BY ASSESSEE) AND ITA NOS. 98 & 99/K/ 2012 (BY REVENUE), EITHER ASSESSMENTS FRAMED U/S. 143(3) OF THE ACT OR RECTIFICATION CARR IED OUT U/S. 154 OF THE ACT OR ORDER U/S. 143(3) R.W.S. 251 OF THE ACT ARE UNDER CHALLENGE, IS AS RE GARDS TO ALLOWANCE OF DEPRECIATION ON THE ASSETS OF KOLKATA PORT TRUST (IN SHORT KPT) UNDER E XPLANATION (6) TO SECTION 43 OF THE ACT IN RESPECT OF ASSESSMENT YEARS 2003-04, 2004-05 AND 20 05-06. FOR THIS, ASSESSEE AS WELL AS REVENUE HAS RAISED COMMON GROUND IN ALL THE APPEALS AGAINST THE DISALLOWANCE/ALLOWANCE OF DEPRECIATION CLAIMED BY ASSESSEE, AND FOR THE SAKE OF BREVITY, WE REPRODUCE THE FOLLOWING RELEVANT GROUND FROM ITA NO. 1041/K/2007: 1. FOR THAT THE CIT(A) ERRED IN NOT ALLOWING THE D EPRECIATION CLAIMED BY THE APPELLANT ON THE ASSETS ACQUIRED PRIOR TO APRIL 1, 2002. THE REASONS GIVEN BY THE CIT(A) FOR NOT ALLOWING SUCH CLAIM FOR DEPRECIATION ARE ERRONEOUS BOTH ON FACTS AND IN LAW AND CANNOT BE SUSTAINED. 3. BRIEF BACKGROUND OF THE DISPUTE AND FACTS ARE TH AT THE ASSESSEE IS A PORT TRUST GOVERNED BY MAJOR PORT TRUSTS ACT, 1963 IS A LOCAL AUTHORITY WITHIN THE MEANING OF SECTION 3(31) OF THE GENERAL CLAUSES ACT, 1987. UPTO AY 2002-03 ASSESSE E PORT TRUSTS WAS ENJOYING TOTAL EXEMPTION FROM INCOME TAX IN RESPECT OF ALL ITS INC OME OTHERWISE CHARGEABLE TO INCOME TAX UNDER THE OTHER HEADS. BY FINANCE ACT, 2002 W.E.F. 01.04.2003 AN EXPLANATION WAS INSERTED U/S. 10(20) OF THE ACT WHEREBY A DEFINITION OF LOCA L AUTHORITY WAS ADDED IN THE STATUTE BOOK FOR 3 ITA NOS. 375-379/K/2010 & ITA NOS.98-99/K/2012 & ITA NO.1041/K/2007 KOLKATA PORT TRUST A.Y. 2003-04 TO 2005-06 THE PURPOSE OF SAID SECTION 10(20) OF THE ACT. IN VIEW OF THE RESTRICTED DEFINITION OF LOCAL AUTHORITY U/S. 10(20) OF THE ACT THE ASSESSEE PORT TRUSTS WENT OUT OF THE PURVIEW OF EXEMPTION AS AVAILABLE U/S. 10(20) OF THE ACT. THE ASSESSEE PORT TRUSTS FOR THE AY 2003-04 I.E. FOR THE FIRST TIME FILED ITS RETURN OF INCOME BUT PRIOR TO THAT I.E. UP TO AY 2002-03 IT DID NOT FILE ANY INCOME TAX RETURN. THE ASSESSEES RETURN FOR AY 20 03-04 WAS FILED ON 28.11.2003, WHICH WAS ACCOMPANIED BY ITS AUDITED ACCOUNTS FOR THE FY 2002 -03 AS WELL AS TAX AUDIT REPORT IN FORM NO. 3CD. THE ASSESSEE PORT TRUSTS CLAIMED DEPRECIA TION FOR THE FIRST TIME IN THE AGGREGATE SUM OF RS.201,21,64,960/- BASED ON ITS WRITTEN DOWN VALUE, AS CLAIMED, WORKED OUT IN ACCORDANCE WITH PROVISIONS OF SUB-SECTION (1) AND ( 6) OF SECTION 43 OF THE ACT. 4. BRIEF FACTS FROM AY 2003-04 WHICH IS THE VERY FI RST YEAR AND WHICH WILL RESOLVE ALL DISPUTES ON THIS ISSUE. BRIEF FACTS ARE THAT THE A SSESSEE FILED RETURN OF INCOME ON 28.11.2003 DISCLOSING TOTAL LOSS OF RS.146,78,95,230/-. THE A SSESSMENT WAS FRAMED U/S. 143(3) OF THE ACT AS THE ASSESSEE HAS CLAIMED DEPRECIATION OF RS.201, 21,64,960/- ON FIXED ASSETS COMPRISING DEPRECIATION OF RS.194,77,57,108/- ON OLD ASSETS AN D RS.6,44,07,852/- ON ASSETS ACQUIRED DURING THE YEAR UNDER CONSIDERATION. THE AO WHILE COMPLETING ASSESSMENT U/S. 143(3) OF THE ACT ALLOWED DEPRECIATION TO THE EXTENT OF RS.6,44,0 7,852/- IN RESPECT OF THOSE ASSETS WHICH WERE ACQUIRED DURING THE YEAR UNDER CONSIDERATION. BUT DID NOT ALLOW DEPRECIATION OF RS.194,77,57,108/- IN RESPECT OF OLD ASSETS ON THE GROUND THAT THE REQUIRED INFORMATION REGARDING DETAILS OF ACTUAL ASSETS OF WRITTEN DOWN VALUE AS ON 01.04.2002 WAS NOT FURNISHED BEFORE HIM. BUT THE ASSESSEES CLAIM BEFORE THE AO WAS THAT IT HAS CLAIMED DEPRECIATION ON THE BOOK VALUE I.E. WRITTEN DOWN VALUE AS ON 31.03.2002 AND CARRIED FORWARD WDV AS ON 01.04.2002. THE MATTER WAS CARRIED IN APPEAL BEFOR E THE APPELLATE AUTHORITIES OR THE MATTER AS AGITATED BEFORE THE AO U/S. 154 OF THE ACT, THIS IS SUE EMERGES IN THESE APPEALS. NOW BEFORE US ASSESSEE ARGUED THAT TILL THE FY ENDING 31.03.2002 RELEVANT TO AY 2002-03, THE ASSESSEE WAS TOTALLY EXEMPT AND ASSESSEE DID NOT FILE ANY INCOME TAX RETURNS FOR AND UP TO AY 2002-03. THE FIRST YEAR IN WHICH ASSESSEE FILED ITS RETURN OF IN COME WAS 2003-04 AND THEREAFTER IT WAS CONTINUOUSLY FILING RETURNS OF INCOME YEAR AFTER YE AR. THE ASSESSEE CLAIMED THAT ALONG WITH THE RETURN OF INCOME FOR AY 2003-04, WHICH WAS ACCOMPAN IED WITH ITS AUDITED ACCOUNTS FOR FY 2002-03 AS WELL AS TAX AUDIT REPORT IN FORM NO. 3CD PREPARED IN ACCORDANCE WITH THE REQUIREMENTS OF SECTION 44AB OF THE ACT. THE ASSES SEE CLAIMED DEPRECIATION FOR THE FIRST TIME IN AN AGGREGATE OF RS.201,21,64,960/- BASED ON ITS WDV WORKED OUT IN ACCORDANCE WITH THE PROVISIONS OF SUB SECTIONS (1) AND (6) OF SECTION 4 3 OF THE ACT ON THE BOOK VALUE OF THE ASSETS. ASSESSEE CLAIMED THAT ASSESSEE, A PORT TRUST, ALL A LONG WAS NEVER ASSESSED TO INCOME TAX UP TO 4 ITA NOS. 375-379/K/2010 & ITA NOS.98-99/K/2012 & ITA NO.1041/K/2007 KOLKATA PORT TRUST A.Y. 2003-04 TO 2005-06 AY 2002-03 BUT PREPARED ITS ACCOUNTS AND CARRIED FO RWARD THE ASSETS AND WDV OF THE ASSETS IN TERMS OF ACCOUNTING STANDARD AND HENCE, CLAIMED DEP RECIATION FOR AY 2003-04 IN RESPECT OF ALL ITS ASSETS HELD AS ON 01.04.2002 BASED UPON ORIGINA L COST EACH OF ITS DEPRECIABLE ASSETS. THE REVENUES CASE, ON THE OTHER HAND, IS THAT DEPRECIA TION FOR AND FROM AY 2003-04 SHOULD BE ALLOWED ONLY WITH REFERENCE TO WDV AS ON 01.04.2002 WHICH WDV SHOULD BE WORKED OUT AFTER DEDUCTING FROM ACTUAL COST OF THE RESPECTIVE DEPREC IABLE ASSETS, THE DEPRECIATION ON NOTIONAL BASIS, WHICH WOULD HAVE BEEN ALLOWED TO IT IN EACH OF THE EARLIER YEARS IF THE ASSESSEE TRUST HAD BEEN ASSESSED TO INCOME TAX IN EACH OF THE EARLIER YEARS YEAR AFTER YEAR. THE ASSESSEE FURTHER ARGUED THAT IT WAS ASSESSED TO INCOME TAX FOR THE F IRST TIME FOR AY 2003-04 AND THEREAFTER, BUT THE AO DID NOT ALLOW DEPRECIATION EVEN IN AY 2004-0 5 AND THEREAFTER. LD. COUNSEL FOR THE ASSESSEE BEFORE US STATED THAT DURING THE PENDENCY OF THESE APPEALS BEFORE CIT(A) OR ACTION OF RECTIFICATION U/S. 154 OF THE ACT BEFORE THE REVENU E AUTHORITIES AND NEW AMENDMENT BY THE FINANCE ACT 2008, A NEW EXPLANATION WAS INSERTED I. E. EXPLANATION (6) BELOW SECTION 43(6) OF THE ACT WITH RETROSPECTIVE EFFECT FROM 01.04.2003. LD. COUNSEL FOR THE ASSESSEE BEFORE US STATED THAT DURING THE COURSE OF HEARING OF APPEAL BEFORE CIT(A) I.E. APPEAL NO.165/CA- XX/CIR.35/07-08/KOL AGAINST THE ORIGINAL ASSESSMENT ORDER PASSED IN RESPECT OF AY 2004-05 THE RETROSPECTIVE AMENDMENT WAS ARGUED AND CIT(A) S ET ASIDE THE APPEAL TO VERIFY THE FOLLOWING: TAKING COGNIZANCE OF THIS AMENDMENT AND THE JUDGME NT OF THE HONBLE SUPREME COURT MENTIONED ABOVE, THE ASSESSING OFFICER IS DIR ECTED TO GRANT DEPRECIATION ON THE RE-COMPUTED WDV OF THE BLOCK OF ASSETS OF THE APPEL LANT FOR THE ASSESSMENT YEAR 2004- 05, WHICH IS TO BE ARRIVED AT AFTER APPLYING THE PR OVISIONS OF SECTION 43(6) READ WITH EXPLANATION 6 THEREOF AS UNDER: I. ASCERTAIN THE ASSETS IN USAGE FORMING PART OF TH E BLOCK OF ASSETS AS ON 01.04.2002; II. ADOPT THE BOOK VALUE OF THE SAID BLOCK OF ASSET S AS ON 01.04.2002 AS THE WDV OF THE BLOCK OF ASSETS AS ON 01.04.2002; III. AFTER ACCOUNTING FOR THE PURCHASES AND SALES E TC ARRIVE AT THE VALUE OF WDV OF BLOCK OF ASSETS ELIGIBLE FOR DEPRECIATION FOR ASSES SMENT YEAR 2003-04 IN TERMS OF SECTION 43(6)(C) OF THE ACT; IV. QUANTIFY THE TOTAL DEPRECIATION UNDER SECTION 3 2 OF THE ACT FOR ASSESSMENT YEAR 2003-04; V. THEREAFTER ARRIVE AT OPENING WDV OF THE BLOCK OF ASSETS AS ON 01.04.2003; VI. APPLYING THE PROVISIONS OF SECTION 43(6)(C) OF THE INCOME TAX ACT, 1961, ASCERTAIN THE WDV OF THE BLOCK OF ASSETS ENTITLED FOR DEPRECI ATION FOR ASSESSMENT YEAR 2004-05; VII QUANTIFY THE TOTAL DEPRECIATION ALLOWABLE FOR A SSESSMENT YEAR 2004-05, INCLUSIVE OF THE DEPRECIATION ALLOWED BY THE ASSESSING OFFICER; 5 ITA NOS. 375-379/K/2010 & ITA NOS.98-99/K/2012 & ITA NO.1041/K/2007 KOLKATA PORT TRUST A.Y. 2003-04 TO 2005-06 VIII. ALLOW THE ABOVE SAID TOTAL DEPRECIATION FOR A SSESSMENT YEAR 2004-05 IN PLACE OF THE DEPRECIATION ALREADY ALLOWED BY THE ASSESSING O FFICER IN THE COMPUTATION OF THE INCOME FROM BUSINESS OF THE APPELLANT; IX. DETERMINE THE WDV OF THE BLOCK OF ASSETS (INCLU SIVE OF THE OLD ASSETS) AS ON 31.03.2004 / 01.04.2004 RELEVANT FOR ASSESSMENT YEA R 2005-06. 5. DURING THE PENDENCY OF PROCEEDINGS IN VIEW OF DI RECTION OF CIT(A) FOR AY 2004-05, THE AO IN RESPECT OF AY 2003-04 INITIATED PROCEEDIN GS U/S. 154 OF THE ACT VIDE LETTER BEARING NO. CIR-35/KOL/154/08-09/71 DATED 12.05.2008 AND TH E FOLLOWING ARE THE OBSERVATION OF THE AO IN THE NOTICE: CONSEQUENT UPON AMENDMENT BY INSERTION OF EXPLANAT ION 6 IN THE SECTION 43(6) OF THE INCOME TAX ACT, RETROSPECTIVELY FROM 01.04.2003 I.E . A. Y. 2003-04, THE DEPRECIATION CLAIMED BY YOU, WOULD BECOME A MISTAKE APPARENT FRO M RECORD, AND THE SAME REQUIRES TO BE RECOMPUTED FROM A. Y. 2003-04 AND SUBSEQUENT A. Y. S IN VIEW OF ABSENCE OF DETAILED INFORMATION REGARDING ACQUISITION OF VARIO US OLD ASSETS AND TOTAL AMOUNT OF DEPRECIATION ON SUCH ASSETS PROVIDED IN THE BOOKS O F ACCOUNT. AS SUCH YOU ARE REQUESTED TO FURNISH THE DETAILED C ALCULATION OF THE DEPRECIATION CLAIMED FOR THE RELEVANT A. Y.S VIS-A-VIS THEIR DAT E AND COST OF ACQUISITION, DEPRECIATION PROVIDED IN RESPECT OF EACH ASSET / BLOCK OF ASSETS IN THE BOOKS YEAR WISE ETC. WITHIN 15 DAYS OF THE RECEIPT OF THIS LETTER. A FORMAL NOTICE UNDER SECTION 154 IS ANNEXED HEREWI TH. 6. THE ASSESSEE BEFORE THE AO IN RESPONSE TO THE AB OVE NOTICE FILED NECESSARY DETAILS THROUGH LETTERS DATED 15.12.2008 AND 22.12.2008 INC LUDING, INTER ALIA, THE AUDIT REPORT DATED 20.12.2008 CERTIFYING, INTER ALIA, THE BOOK VALUE OF THE DEPRECIABLE ASSETS HELD BY ASSESSEE AS ON 01.04.2002, 31.03.2002, 31.03.2003, 31.03.2004 A ND 31.03.2005 AS WELL AS DEPRECIATION TO BE ALLOWED THEREON HAVING REGARD, INTER ALIA, TO TH E NEW EXPLANATION (6) INSERTED U/S. 43(6) OF THE ACT BY THE FINANCE ACT, 2008 WITH RETROSPECTIVE EFFECT FROM 01.04.2003. THE ASSESSEE FILED THE FOLLOWING DETAILS OF DEPRECIATION ADMISSIBLE TO THE ASSESSEE IN RESPECT OF AY 2003-04 ONWARDS IN RESPECT OF DEPRECIABLE ASSETS HELD AS ON 01.04.2002: ASSESSMENT YEARS DEPRECIATION ON ASSTS HELD AS ON 01.04.2002 DEPRECIATION ON ASSETS NEWLY ADDED DURING THE YEAR TOTAL DEPRECIATION ADMISSIBLE FOR THE YEAR DEPRECIATION ALLOWED BY THE AO 2003-04 2004-05 2005-06 RS.135,95,65,727 RS. 98,71,69,163 RS. 76,65,52,952 RS. 7,52,23,365 RS. 8,83,74,105 RS. 6,93,23,585 RS.143,47,89,092 RS.107,55,43,268 RS. 83,58,76,537 RS. 6,44,07,852 RS. 7,54,86,913 RS. 7,20,56,094 * THE AO ALLOWED DEPRECIATION ONLY ON SUCCESSIVE NE W ADDITIONS MADE IN THE FINANCIAL YEARS 2002-03, 2003-04 & 2004-05 CORRESPONDING TO A SSESSMENT YEARS 2003-04, 2004-05 & 2005-06. 6 ITA NOS. 375-379/K/2010 & ITA NOS.98-99/K/2012 & ITA NO.1041/K/2007 KOLKATA PORT TRUST A.Y. 2003-04 TO 2005-06 7. THE AO ALSO REJECTED THE CLAIM OF ASSESSEE IN RE SPECT TO DEPRECIATION ON ASSETS HELD AS ON 01.04.2002. BEFORE US, LD. COUNSEL FOR THE ASSE SSEE STATED THAT IN THE PROCEEDINGS U/S. 154 OF THE ACT OR IN THE PROCEEDINGS U/S. 143(3) OF THE ACT OR IN THE PROCEEDINGS BEFORE CIT(A) THE ASSESSEE FILED COMPLETE DETAILS OF ASSETS, REGISTE RS MAINTAINED FOR ALL ITS ASSETS AND ALSO FILED NECESSARY DETAILS AND CLARIFICATION AS WERE ASKED F OR BY THE AUTHORITIES. 8. AS REGARDS TO THE ALLEGATION OF REVENUE THAT THE POLLUTION CONTROL EQUIPMENTS CLAIMED TO HAVE BEEN INSTALLED AT JETTY AND JETTY ITSELF, IS N OT IN EXISTENCE OR VALUE DESCRIBED IN ASSESSEES ACCOUNTS IS INCORRECT. ON THIS CHARGE THE BENCH RE QUIRED THE ASSETS TO BE VERIFIED DESPITE A CERTIFICATE FILED BY CHARTERED ENGINEER CERTIFIED A S UNDER: PRABIR DATTA, CONSULTANT CHARTERED MECHANICAL ENGINEER TO WHOM IT MAY CONCERN THIS IS TO CERTIFY THAT: I) I HAD INSPECTED THE DUST CONTROL ARRANGEMENT, INSTA LLED AT THE COAL HANDLING PLANT, HALDIA DOCK COMPLEX, KOLKATA PORT TRUST. THIS IS A DUST C OLLECTOR SYSTE3M TO CONTROL AIR POLLUTION IN AND AROUND THE WORKING AREA. II) I HAD INSPECTED THE POLLUTION CONTROL ARRANGEMENT, INSTALLED AT THE 2 ND OIL JETTY, HALDIA DOCK COMPLEX, KOLKATA PORT TRUST. IT IS A MECHANIC ALLY SKIMMED OIL AND GREASE REMOVAL SYSTEM TO CONTROL THE RIVERINE WATER POLLUTION. BOTH THE ABOVE SYSTEMS ARE POLLUTION CONTROL MEASUR ES ADOPTED BY HALDIA DOCK COMPLEX, KOLKATA PORT TRUST. WE PERSONALLY INSPECTED THE SITE OF PORT TRUST AT H ALDIA, AND FOUND THAT THE POLLUTION CONTROL SYSTEM IS INSTALLED I.E. DUST CONTROL ARRANGEMENTS WHICH COLLECT DUST TO CONTROL AIR POLLUTION IN AND AROUND THE WORKING AREA. WE FURTHER INSPECTED THE JETTY WHERE WASTE OIL FROM THE SHIP IS TRANSPORTED AND POLLUTANT PARTS ARE REMOVED AND POL LUTION CONTROL ARRANGEMENT IS INSTALLED ON SECOND OIL JETTY AT HALIDA DOCK COMPLEX. IT IS A M ECHANICALLY SKIMMED OIL AND GREASE REMOVAL SYSTEM TO CONTROL THE RIVERINE WATER POLLUTION. HE NCE, THERE IS NO DISPUTE THAT THERE IS NO ASSET IN RESPECT TO AIR POLLUTION AND JETTY FOR REMOVAL O F OIL CONTENTS RIVERINE WATER. 9. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE CIT(A) VIDE HIS ORDER DATED 30.06 .2008 FOR AY 2004-05 HAS DIRECTED THE AO TO ALLOW DEPRECIATION AFTER CONSIDERING STEP WISE W ORKING FILED BY ASSESSEE IN ACCORDANCE WITH AMENDED LAW. THE RELEVANT FINDINGS OF CIT(A) ARE R EPRODUCED ABOVE IN THIS ORDER AT PARA 4. 7 ITA NOS. 375-379/K/2010 & ITA NOS.98-99/K/2012 & ITA NO.1041/K/2007 KOLKATA PORT TRUST A.Y. 2003-04 TO 2005-06 EVEN FOR AY 2005-06 THE CIT(A) HAS ALSO DIRECTED SI MILARLY VIDE HIS ORDER DATED 14.12.2009 AND REVENUE HAS FILED NO APPEAL AGAINST ANY OF THE ABOVE STATED TWO APPELLATE ORDERS. SIMILARLY, CIT(A) VIDE ORDER DATED 31.10.2011 FOR A Y 2004-05 AND 2005-06 HAS SIMILARLY DIRECTED THE AO. THE ASSESSEE HAS FILED STEP WISE WORKING IN THE FORM OF AUDIT REPORT DATED 20.01.2010 GIVEN BY A CHARTERED ACCOUNTANT FIRM WHI CH IS EVEN NOW BEFORE US AT PAGES 271 TO 785 OF THE PAPER BOOK VOLUMES 2 AND 3 IN RESPECT OF ITA NO.1041/K/2007. THESE DOCUMENTS WERE EVEN FILED BEFORE THE AO. NOW AS THE SUBSEQUE NT AMENDMENT CARRIED OUT BY THE FINANCE ACT, 2008 BY INSERTING EXPLANATION (6) TO SECTION 4 3(6) OF THE ACT WITH RETROSPECTIVE EFFECT FROM 01.04.2003 WAS NEVER AN ISSUE EITHER BEFORE AO OR B EFORE CIT(A) DURING ORIGINAL ASSESSMENT ORDER OR APPELLATE ORDER. HENCE, WE ARE OF THE VIE W THAT THE AMENDMENT ITSELF HAVING BEEN LEGISLATED BY THE PARLIAMENT THROUGH FINANCE ACT, 2 008 THERE COULD NOT HAVE BEEN ANY MERGER ON THE PRESENT ISSUE VIZ. CLAIM OF DEPRECIATION FRO M AY 2003-04 ONWARDS WITH REFERENCE TO THE BOOK VALUE TO BE TREATED AS WRITTEN DOWN VALUE AS P ER AUDITED ACCOUNTS. WE FIND THAT THE CIT(A) WHILE PASSING THE APPELLATE ORDER DATED 30.0 6.2008 IN RELATION TO AY 2004-05 HIMSELF HAD GIVEN DIRECTION TO THE AO TO ALLOW DEPRECIATION IN ACCORDANCE WITH THE AMENDMENT CARRIED OUT BY PARLIAMENT BY INSERTING EXPLANATION (6) TO S ECTION 43(6) OF THE ACT WITH RETROSPECTIVE EFFECT FROM 01.04.2003. WE ARE OF THE VIEW THAT FO R CALCULATING DEPRECIATION THE AO HAS TO CONSIDER THE RETROSPECTIVE AMENDMENT CARRIED OUT IN THE STATUTE BOOK BY INSERTING EXPLANATION (6) TO SECTION 43(6) OF THE ACT AND TO ALLOW DEPREC IATION IN ACCORDANCE WITH LAW AFTER MAKING FRESH CALCULATION WITH REFERENCE TO THE BOOK VALUE OF THE ASSETS FOLLOWING THE RETROSPECTIVE AMENDMENT. THE ASSESSEE HAS ALREADY FILED THE DETA ILED STATEMENT WHICH HAVE BEEN CHECKED AND VERIFIED BY THE AUDITORS AND ALSO THE AO COULD HAVE VERY WELL CHECKED THE SAME. NOW THE RETROSPECTIVE AMENDMENT W.E.F. 01.04.2003 OF SECTIO N 43(6) OF THE ACT WHEREBY EXPLANATION (6) HAS BEEN INSERTED THERETO AND AS PER EXPLANATION (6 ) THE TOTAL AMOUNT OF DEPRECIATION ON SUCH ASSETS, PROVIDED IN THE BOOKS OF ACCOUNT OF THE ASS ESSEE IN RESPECT OF SUCH PREVIOUS YEAR OR PRECEDING PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION SHALL BE DEEMED TO BE THE DEPRECIATION ACTUALLY ALLOWED UNDER THIS ACT FOR THE PURPOSES OF THIS CLAUSE. HENCE, THE DEPRECIATION ALLOWED FOR THE ASSESSMENT YEARS 2003- 04, 2004-05 AND 2005-06 ON ASSETS ACQUIRED PRIOR TO 01.04.2002 AND IN USE ON THAT DAT E NEED TO BE COMPUTED FOLLOWING THE AMENDED PROVISIONS. HENCE, WE DIRECT THE AO TO ACC EPT THE BOOK VALUE OF ASSETS AS ON 01.04.2002 AND RECOMPUTE THE DEPRECIATION AS ON 31. 03.2003, 31.03.2004 AND 31.03.2005 ON ALL ASSETS ACQUIRED PRIOR TO 01.04.2002 AND IN USE ON THAT DATE ON THE WRITTEN DOWN VALUE OF THE ASSETS AS PER BOOKS OF ACCOUNT OF ASSESSEE AS ON 01 .04.2002. HENCE, THIS ISSUE IS DECIDED IN 8 ITA NOS. 375-379/K/2010 & ITA NOS.98-99/K/2012 & ITA NO.1041/K/2007 KOLKATA PORT TRUST A.Y. 2003-04 TO 2005-06 FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. TH IS ISSUE IN ALL THESE APPEALS IS ANSWERED ACCORDINGLY. 10. THE SECOND ISSUE IN THESE APPEALS I.E. IN ITA N O.1041/K/2007 FOR AY 2003-04 AND IN ITA NO. 378/K/2010 FOR AY 2005-06 RAISED BY ASSESSE E IS AS REGARDS TO TREATMENT OF SUBSIDY ON ACCOUNT OF RIVER DREDGING AND MAINTENANCE. THE ASSESSEE HAS RAISED THIS ISSUE VIDE GROUND NO. 3 IN ITA NO.1041/K/2007 FOR AY 2003-04. IN SHO RT, THE SECOND ISSUE IS CONCERNED WITH THE QUESTION, WHETHER SUBSIDY SHOULD BE TAXED IN THE HA NDS OF THE ASSESSEE ON CASH BASIS AS IS BEING CONSISTENTLY FOLLOWED BY ASSESSEE OR ON ACCRUAL BAS IS AS ALLEGED BY AO IN AY 2003-04 AND AY 2005-06. THE GROUND NO.3 RAISED IN ITA NO.1041/K/2 007 IS AS UNDER: 3. FOR THAT THE CIT(A) ERRED IN HOLDING THAT THE A MOUNT OF SUBSIDY ON ACCOUNT OF RIVER DREDGING AND MAINTENANCE AMOUNTING TO 10,927.25 LAK HS COULD BE ASSESSED AS THE APPELLANTS INCOME. THE PURPORTED FINDINGS OF THE CIT(A) ON THE ABOVE ISSUE ARE ERRONEOUS BOTH ON FACTS AND IN LAW. 11. THE ASSESSEE A PORT TRUST HAD BEEN RECEIVED SUB SIDY FROM GOVT. OF INDIA, MINISTRY OF SHIPPING & TRANSPORT, NEW DELHI W.E.F. FY 1968-69 I N PURSUANT TO SHRI P. C. BHATTACHARYAS REPORT ON THE FINANCES OF THE KOLKATA PORT TRUST IN TERMS OF LETTER NO.9-PG(17)/69 DATED 19.03.1969. THIS LETTER MAKES IT CLEAR THAT GOVT. OF INDIA AGREED TO BEAR 50% OF THE EXPENDITURE ON RIVER DREDGING AND MAINTENANCE WITHI N THE OVERALL JURISDICTION OF PORT COMMISSIONER INCLUDING CHARGES. ACCORDINGLY, THE S UBSIDY WAS BY WAY OF REIMBURSEMENT OF THE ACTUAL REVENUE EXPENDITURE INCURRED BY ASSESSEE PORT TRUST ON RIVER DREDGING AND MAINTENANCE AS WELL AS EXPENSES BY WAY OF INTEREST AND DEBTS INCURRED IN RELATION THERETO. THE SUBSIDY WAS INCREASED FROM 50% TO 80% IN TERMS OF L ETTER NO.9-PG/(14)/71 DATED 14.03.1972. SUBSEQUENTLY, THE SUBSIDY WAS INCREASED TO 100% IN TERMS OF LETTER NO. PR-15021/5/92-PG DATED 02.02.1994 W.E.F. FY 1992-93. THE ASSESSEES CLAIM IS THAT IT IS CLEAR FROM THIS LETTER THAT SUBSIDY WAS GRANTED BY WAY OF REIMBURSEMENT OF REVE NUE EXPENDITURE AND NOT BY WAY OF MEETING THE CAPITAL COST OF THE FIXED ASSETS OWNED AND EMPLOYED BY ASSESSEE TRUST IN RELATION TO VARIOUS OPERATIONS. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS DREW ATTENTION OF THE ASSESSEE TOWARDS THE REPORT OF PRINCIPAL DIRECT OR OF AUDIT, CENTRAL, WHO STATED THAT THE ASSESSEE HAS UNDER STATED THE INCOME BY RS.11120.09 LACS BECAUSE OF ACCOUNTING TREATMENT IN RESPECT OF CENTRAL GOVT. ACCOUNTS TOWARDS RIVER DRE DGING AND MAINTENANCE PAYMENTS. THE ASSESSEE EXPLAINED VIDE LETTER DATED 20.09.2005 AS UNDER: THE PRINCIPLE DIRECTOR OF AUDIT CENTRAL HAS STATED THAT INCOME WAS UNDERSTATED BY RS.11,120.09 LAKHS. THIS IS MAINLY BECAUSE OF ACCOU NTING TREATMENT IN RESPECT OF CENTRAL GOVERNMENTS GRANT TOWARDS RIVER DREDGING AND MAINTE NANCE. IT IS TRUE THAT KOPTS CLAIM AS PER ACCOUNTS WAS RS.33,571.60 LAKHS. OUT O F THE SAID AMOUNT KOPT RECEIVED 9 ITA NOS. 375-379/K/2010 & ITA NOS.98-99/K/2012 & ITA NO.1041/K/2007 KOLKATA PORT TRUST A.Y. 2003-04 TO 2005-06 RS.20,000 LAKHS DURING THE FINANCIAL YEAR 2002-03. KOPT HAS FOLLOWED ACCOUNTING STANDARD (AS-12) ISSUED TO PARA 13 OF AS-12 GOVERNM ENTS GRANTS SHOULD NOT BE RECOGNIZED UNTIL THERE IS REASONABLE ASSURANCE THAT (I) THE ENTERPRISE WILL COMPLY WITH THE CONDITIONS ATTACHED TO THEM (II) THE GRANTS WILL BE RECEIVED. CLAIM MADE BY KOPT FOR SUBSIDY TOWARDS RIVER DREDGI NG AND MAINTENANCE IS ENTERTAINED BY THE GOVERNMENT AFTER IT IS VERIFIED AND PASSED BY THE AUDIT. IN SUCH AUDIT CLAIMS MADE BY KOPT MAY BE REDUCED BY THE AUDITORS BECAUSE OF VARIOUS DISALLOWANCES. IN VIEW OF THE SAME UNTIL THERE IS REASONABLE ASSUR ANCE REGARDING PHYSICAL REALISATION OF DREDGING SUBSIDY FROM THE GOVERNMENT, IT IS NOT PRU DENT TO RECOGNIZE THE ENTIRE CLAIM AS INCOME OF KOPT. REASONABLE ASSURANCE CAN ALSO BE VE RIFIED FROM THE BUDGET ALLOCATION OF THE MINISTRY FOR THE PURPOSE OF RECOGNITION OF T HE SUBSIDY AS INCOME. THERE WAS A BUDGET ALLOCATION OF RS.200 CRORES FOR THE FINANCIA L YEAR 2002-03 IN THE REVISED ESTIMATE OF GOVERNMENT OF INDIA AND THE SAID AMOUNT WAS ACTU ALLY RELEASED TO KOPT. IN THE FINANCIAL YEAR 2002-03 THERE WAS NO REASONABLE ASSU RANCE THAT THERE WOULD BE BUDGET ALLOCATION BY THE GOVERNMENT OF INDIA IN THE SUBSEQ UENT YEAR FOR THE EXACT BALANCE AMOUNT OF RS.13,571.60 LAKHS. UNLESS THE SUBSIDY CL AIMED IS FULLY AUDITED AND THE BUDGET ALLOCATION IS MADE BY THE GOVERNMENT OF INDI A, REASONABLE ASSURANCE REGARDING REALIZATION OF THE CLAIM CANNOT BE CONSTRUED. IF TH E ENTIRE AMOUNT OF CLAIM OF KOPT I.E. RS.33,571.60 LAKHS WAS RECOGNIZED AS INCOME IN THE FINANCIAL YEAR 2002-03, IT WOULD HAVE BEEN A THEORETICAL ACCRUAL. THEORETICAL ACCRUA L CANNOT BE THE BASIS FOR RECOGNIZING ANY INCOME AS PER AS-12. THEREFORE, THERE WAS NO UN DERSTATEMENT OF INCOME BY THE ASSESSEE IN THE YEAR 2002-03. THE SAME ARGUMENT HOL DS GOOD IN RESPECT OF ALLEGED UNDERSTATEMENT OF CLAIM FOR REIMBURSEMENT OF RS.134 .70 LAKHS. THE BOARD OF KOPT HAS NOT ACCEPTED THE QUALIFICATIO N MADE IN THE AUDITORS REPORT. AS PER SECTION 105 OF THE MAJOR PORT TRUSTS ACT, 1963, IF THERE IS A DIFFERENCE OF OPINION BETWEEN ANY BOARD AND THE COMPTROLLER & AUD ITOR GENERAL (CAG) ON ANY POINT INCLUDED IN THE AUDIT REPORT AND THE BOARD IS UNABL E TO ACCEPT AND IMPLEMENT THE RECOMMENDATIONS MADE BY HIM ON SUCH POINTS, THE MAT TER SHALL FORTHWITH BE REFERRED TO THE CENTRAL GOVERNMENT, WHICH SHALL PASS FINAL ORDE R THERE ON AND THE BOARD SHALL BE BOUND TO GIVE EFFECT TO SUCH ORDERS. REPLY OF THE B OARD OF KOPT HAS ALREADY BEEN SENT TO THE CENTRAL GOVERNMENT. THE CENTRAL GOVERNMENT HAS NOT PASSED ANY ORDER IN RESPECT OF FINANCIAL YEAR 2002-03. 12. THE AO HAS NOT ACCEPTED THE EXPLANATION OF THE ASSESSEE AND ADDED THE SUBSIDY RECEIPT ON ACCOUNT OF RIVER DREDGING AND MAINTENANCE REIMBU RSEMENT CHARGES. THE ASSESSEE BEFORE CIT(A) AS WELL AS BEFORE US NOW EXPLAINED THE DIFFE RENCE POINTED OUT BY PRINCIPAL DIRECTOR OF AUDIT, CENTRAL STATING THAT INCOME WAS UNDERSTATED BY ASSESSEE BY RS.11120.09 LACS. IT WAS EXPLAINED THAT IT WAS MAINLY BECAUSE OF ACCOUNTING TREATMENT IN RESPECT OF CENTRAL GOVT. SUBSIDY TOWARDS RIVER DREDGING AND MAINTENANCE. IT WAS EXPLAINED BY ASSESSEES COUNSEL THAT ASSESSEE CLAIMED THE TOTAL AT RS.33571.60 LACS AND OUT OF THIS ASSESSEE RECEIVED A SUM OF RS.20000 LACS TOWARDS FY 2002-03 RELEVANT TO AY 200 3-04. ASSESSEES COUNSEL EXPLAINED THAT IT IS FOLLOWING AS-12 (ACCOUNTING STANDARDS) ISSUED BY INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA AND AS PER AS-12 GOVT. GRANTS SHOULD NOT RECO GNIZE UNTIL THERE IS REASONABLE ASSURANCE THAT 10 ITA NOS. 375-379/K/2010 & ITA NOS.98-99/K/2012 & ITA NO.1041/K/2007 KOLKATA PORT TRUST A.Y. 2003-04 TO 2005-06 (I) THE ENTERPRISE WILL COMPLY WITH THE CONDITIONS ATTACHED TO THEM (II) THE GRANTS WILL BE RECEIVED AS STIPULATED. THE ASSESSEE EXPLAINED THAT CLAIM AS MADE BY ASSESS EE FOR SUBSIDY TOWARDS RIVER DREDGING AND MAINTENANCE WHICH IS ENTERTAINED BY GOVERNMENT AFTE R IT IS VERIFIED AND PASSED BY GOVT. AUDITOR. ACCORDING TO HIM, DURING AUDIT CLAIM MADE BY ASSESSEE MAY BE REDUCED BY THE AUDITORS BECAUSE OF VARIOUS DISALLOWANCES. ACCORDIN G TO HIM, UNLESS THERE IS REASONABLE ASSURANCE REGARDING PHYSICAL REALISATION OF DREDGIN G SUBSIDY FROM GOVERNMENT IT IS NOT PRUDENT OR CORRECT TO RECOGNISE THE ENTIRE CLAIM AS INCOME. HE EXPLAINED THAT THE REASONABLE ASSURANCE CAN ALSO BE VERIFIED FROM THE BUDGET ALLOCATION OF THE MINISTRY FOR THE PURPOSE OF RECOGNITION OF SUBSIDY AS INCOME. HE EXPLAINED THAT THERE WAS BUD GET ALLOCATION OF RS.2000 CR. DURING FY 2002-03 RELEVANT TO AY 2003-04 IN THE REVISED ESTIM ATE MADE BY GOVT. OF INDIA AND GOVT. OF INDIA ACTUALLY RELEASED THIS AMOUNT TO THE ASSESSEE . HENCE, ACCORDING TO ASSESSEE, THERE IS NO REASONABLE ASSURANCE THAT THERE WOULD BE TOTAL BUDG ET ALLOCATION BY THE GOVT. OF INDIA IN THE SUBSEQUENT YEAR OF THE EXACT BALANCE AMOUNT OF RS.1 3571.60 LACS. HE EXPLAINED THAT UNLESS AND UNTIL SUBSIDY CLAIMED IS FULLY AUDITED AND BUDG ET ALLOCATION AS MADE BY GOVT. OF INDIA REASONABLE ASSURANCE REGARDING REALISATION OF THE C LAIM CANNOT BE CONSTRUED AND RECOGNITION OF THIS INCOME AS INCOME FOR THE PURPOSE OF TAXATION W OULD BE THEORETICAL ACCRUAL. ACCORDING TO HIM, THE THEORETICAL ACCRUAL CANNOT BE THE BASIS FO R RECOGNITION OF INCOME AS PER AS-12. THE ASSESSEE EXPLAINED BEFORE US THAT EVEN NOW THE MATT ER IS PENDING WITH CENTRAL GOVERNMENT REGARDING FINALISATION OF THE CLAIM AND THIS HAS NO T BEEN SETTLED AND THERE IS NO TIME LIMIT FOR SETTLEMENT OF THIS CLAIM. BEFORE US, LD. COUNSEL F OR THE ASSESSEE FILED THE SUMMARY OF STATEMENT IN RELATION TO ALL THE YEARS BEGINNING FR OM AY 2003-04 TO AY 2008-09 WHICH ARE GIVEN AT ASSESSEES PAPER BOOK PAGES 153 AND 154, V OLUME-1. FURTHER, THE ASSESSEE HAS ALSO FILED COPIES OF GOVT. AUDIT REPORTS EXAMINING THE A SSESSEES CLAIM OF SUBSIDY AND SANCTIONING OF LOWER AMOUNT AS VERIFIED BY THEM AT PAGES 786 TO 99 6 OF ASSESSEES PAPER BOOK, VOLUME-4. ASSESSEES COUNSEL BEFORE US CLAIMED THAT IT IS A F ACT THAT CASH SYSTEM OF ACCOUNTING AND TAXATION HAS BEEN ACCEPTED BY REVENUE IN ASSESSMENT YEARS 2004-05, 2006-07, 2007-08, 2008- 09 AND 2009-10. FOR THIS, HE FILED COPIES OF ASSES SMENT ORDERS PASSED U/S. 143(3) OF THE ACT IN RESPECT TO ABOVE ASSESSMENT YEARS. THE ASSESSEE FI LED ANNEXURE STATING THE AMOUNT CLAIMED AND AMOUNT SANCTIONED IN VIEW OF THE SUBSIDY ON ACCOUNT OF RIVER DREDGING AND MAINTENANCE WHICH IS AS UNDER: BILL NO. & DATE AMOUNT CLAIMED (RS) LETTER REF FOR RELEASE OF FUND AMOUNT SANCTIONED (RS) ACCOUNTING TREATMENT F.Y-2002-03 FIN/204/B DATED 314.76 CRORES PO-28011/1/2002-SBD 26/06/2002-RS80 CR. 200 CRORES AT THE TIME OF RAISING BILL 11 ITA NOS. 375-379/K/2010 & ITA NOS.98-99/K/2012 & ITA NO.1041/K/2007 KOLKATA PORT TRUST A.Y. 2003-04 TO 2005-06 09/06/03 30/12/2002-RS 20 CR. 31/03/2003-RS100 CR. DEBTORS A/C DR TO CLAIM OF COST FOR DREDGING AND RIVER MAINT. AT THE OF RECEIPT OF SUBSIDY CLAIM OF COST FOR RIVER DREDGING AND RIVER MAINT. DR TO INCOME F.Y 2004-05 FIN/247/B DATED 15/06/05 291.41 CRORES PO-28011/1/2002-SBD 08/10/2004-RS.22 CR + 100 CR ON ACCOUNT OF F.Y.2003-04 31/03/2005-RS70.44 CR + 69.56 CR ON ACCOUNT OF F.Y. 2003-04 92.44 CRORES ON ACCOUNT OF F.Y. 2004-05 + 169.56 CRORES ON ACCOUNT OF F.Y. 2003-04 AT THE TIME OF RAISING BILL DEBTORS A/C DR TO CLAIM OF COST FOR DREDGING AND RIVER MAINT. AT TIME OF RECEIPT OF SUBSIDY CLAIM OF COST FOR RIVER DREDGING AND RIVER MAINT. DR TO INCOME 13. FROM THE ABOVE FACTS AND CIRCUMSTANCES IT IS CL EARLY INDICATED BY THE ASSESSEE PORT TRUST AS TO HOW THE DREDGING SUBSIDY HAS BEEN OFFERED FOR TAXATION YEAR AFTER YEAR. SINCE THE DREDGING SUBSIDY TOWARDS REIMBURSEMENT OF DREDGING EXPENSES CLAIMED TO HAVE BEEN INCURRED BY THE ASSESSEE WAS NOT ACCEPTED AS CLAIMED YEAR AF TER YEAR AND SANCTIONED IN EACH YEAR WAS GRANTED LONG AFTER CLOSE OF THE RELEVANT FINANCIAL YEAR. EVEN THERE IS CURTAILMENT IN THE AMOUNT AND A TOO FAR LOWER AMOUNT WAS GRANTED. THE ASSESS EE OFFERED FOR TAXATION THE AMOUNT ACTUALLY PAID BY GOVERNMENT YEAR AFTER YEAR AGAINST THE DRED GING SUBSIDY IN THE RELEVANT YEAR IN WHICH SUCH PAYMENT WAS ACTUALLY RECEIVED AND THE AMOUNT S ANCTIONED BY WAY OF DREDGING SUBSIDY, WHICH WAS OFFERED FOR TAXATION IN THE YEAR IN WHICH SUCH SANCTION WAS GRANTED ON RECEIPT OF AUDIT VERIFICATION FROM CAG. FURTHER, IT IS A FACT THAT GOVT. OF INDIA DID NOT PAY THE BALANCE SANCTIONED AMOUNT IMMEDIATELY IN THE YEAR IN WHICH SUCH AUDIT REPORT WAS VERIFIED AND ISSUED BY CAG. ONCE THE ASSESSEE IS CONSISTENTLY FOLLOWIN G A SYSTEM OF ACCOUNTING THAT ACTUALLY RECEIVED AMOUNT IS OFFERED FOR TAXATION YEAR AFTER YEAR AND IT IS ACCEPTED IN SOME OF ASSESSMENT YEARS, REVENUE CANNOT TAKE A DIFFERENT STAND IN OTH ER YEARS. HENCE, WE ACCEPT THE CLAIM OF THE ASSESSEE AND ALLOW THIS ISSUE OF ASSESSEES APPEAL. SIMILARLY, ASSESSEES ISSUE IN OTHER YEARS IS ALSO ALLOWED. AO WILL ALLOW ACCORDINGLY. 14. NEXT GROUND NOS. 4 AND 5 RAISED IN ITA NO.1041/ KOL/2007 READ AS UNDER: 4. FOR THAT THE CIT(A) ERRED IN UPHOLDING THE ADDI TION OF THE PROFIT ON DISPOSAL OF THE CAPITAL ASSETS AMOUNTING TO RS.3,00,92,557/-. THE FINDING OF THE CIT(A) ON THE ISSUE ARE ERRONEOUS BOTH ON FACTS AND IN LAW. 12 ITA NOS. 375-379/K/2010 & ITA NOS.98-99/K/2012 & ITA NO.1041/K/2007 KOLKATA PORT TRUST A.Y. 2003-04 TO 2005-06 5. FOR THAT THE CIT(A) ERRED IN NOT ALLOWING THE CL AIM OF LONG TERM CAPITAL LOSS OF RS.23,11,63,507/- AND CARRY FORWARD OF THE SAME. T HE PURPORTED FINDINGS OF THE CIT(A) ON THE ISSUE ARE ERRONEOUS BOTH ON FACTS AND IN LAW. 15. THE GROUNDS ABOVE ARE ON THE ISSUE OF PROFIT ON SALE OF CAPITAL ASSET BUT THE ASSESSEE AT THE TIME OF HEARING CATEGORICALLY STATED THAT THE A SSESSEE IS NOT INTERESTED IN PROSECUTING THESE GROUNDS AND THIS MAY BE ALLOWED TO BE WITHDRAWN. O N QUERY FROM THE BENCH, LD. CIT, DR HAS MADE NO OBJECTION. HENCE, THESE ARE PERMITTED TO B E WITHDRAWN AND ARE DISMISSED AS WITHDRAWN. 16 THE NEXT ISSUE RAISED IN ITA NO.378/KOL/2010 VID E GROUND NOS. 1, 2 AND 3 IS AS REGARDS TO DEDUCTION IN RESPECT TO DONATION PAID TO PRIME M INISTERS NATIONAL RELIEF FUND CLAIMED U/S. 80G OF THE ACT. THE RELEVANT THREE GROUNDS READ AS UNDER: 1. THAT ON FACTS AS WELL AS ON LAW, THE LEARNED CI T(APPEAL) HAS ERRED IN NOT DIRECTING THE A.O TO ALLOW DEDUCTION UNDER SECTION 80G OF THE INCOME TAX ACT IN RESPECT OF DONATION OF RS. 4 CRORES PAID TO PRIME MINISTERS NA TIONAL RELIEF FUND, WHICH WAS NOT CLAIMED IN THE RETURN OF INCOME DUE TO ABSENCE OF G ROSS TOTAL INCOME N THE RETURN. 2. THAT ON, FACTS AS WELL AS ON LAW, THE LEARNED CI T(APPEAL) HAS ERRED IN NOT CONSIDERING THE FACT THAT THE DEDUCTION UNDER SECTION 80G COULD NOT BE CLAIMED IN THE RETURN OF INCOME OR REVISED RETURN OF INCOME DUE TO ABSENCE O F GROSS TOTAL INCOME IN THE RETURN OF INCOME. 3. THAT ON FACTS AS WELL AS ON LAW, THE LEARNED CIT (APPEAL) HAS ERRED IN HOLDING THAT IN ABSENCE OF CLAIM IN THE ORIGINAL RETURN OF INCOME A ND IN ABSENCE OF REVISED RETURN OF INCOME FOR SUCH CLAIM AND ALSO FOR NOT RAISING THE CLAIM BEFORE THE LEARNED A.O IN THE COURSE OF ASSESSMENT THE CLAIM FOR DEDUCTION UNDER SECTION 80G IS LIABLE TO BE REJECTED. 17. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSEE PORT TRUST HAS MADE DEDUC TION OF RS. 4 CRORES TO THE PRIME MINISTERS NATIONAL RELIEF FUND BY CHEQUE NO. 478168 DATED 13. 12.2004 DRAWN ON INDIAN OVERSEAS BANK, NEW DELHI I.E. FOR THE FY ENDING 31.03.2005 CORRESP ONDING TO AY 2005-06. THE ASSESSEE EXPLAINED THAT DURING THE FY 2004-05 RELEVANT TO AY 2005-06 THE SAID DONATION WAS INADVERTENTLY DEBITED TO SUSPENSE ACCOUNT AND WAS N OT TRANSFERRED TO P&L ACCOUNT DRAWN FOR 31 ST MARCH, 2005. LD. COUNSEL FOR THE ASSESSEE STATED THAT THIS MISTAKE WAS DETECTED IN FY ENDING 31.03.2009 RELEVANT TO AY 2009-10 AND IMMEDI ATELY DONATION OF RS.4 CRORES WAS TRANSFERRED TO P&L ACCOUNT UNDER THE HEAD PRIOR PER IOD CHARGE. HE EXPLAINED THIS FACT FROM THE TAX AUDIT REPORT DATED 29 TH SEPTEMBER, 2009 PREPARED BY M/S. RAY & RAY, CHARTE RED ACCOUNTANTS. THIS AUDIT REPORT APPEARS AT PAGE 64 OF ASSESSEES PAPER BOOK. IT WAS EXPLAINED BY ASSESSEES COUNSEL THAT THE SAID DONATION OF RS. 4 CRORES WAS NOT CLAIMED BY ASSESSEE PORT TRUST IN ITS RETURNS FOR ANY OF THE YEARS AND EVEN DURING FY ENDING 31.03.2009 RELEVANT TO AY 13 ITA NOS. 375-379/K/2010 & ITA NOS.98-99/K/2012 & ITA NO.1041/K/2007 KOLKATA PORT TRUST A.Y. 2003-04 TO 2005-06 2009-10. HOWEVER, ASSESSEE TOOK ADDITIONAL GROUND BEFORE CIT(A)-XX, KOLKATA IN APPEAL BEARING NO.428/CIT(A)-XX/CIRCLE-35/07-08 FILED BY T HE ASSESSEE AGAINST THE ASSESSMENT ORDER DATED 20.12.2007 U/S. 143(3) OF THE ACT IN RESPECT TO AY 2005-06. BUT THE CIT(A) DID NOT ADMIT THE AFORESAID GROUND MAINLY ON THE BASIS THAT SUCH CLAIM WAS NEITHER MADE BEFORE AO NOR ANY REVISED RETURN WAS FILED BY THE ASSESSEE PO RT TRUST MAKING SUCH CLAIM. THE LD. COUNSEL FOR THE ASSESSEE BEFORE US CLEARLY CITED TH E CASE LAW OF HONBLE SUPREME COURT THAT IN THE CASE OF GOETZE INDIA LTD. VS. CIT (2006) 284 IT R 323 (SC) WHEREIN HONBLE SUPREME COURT WAS CONCERNED ONLY WITH THE LIMITED ISSUE AS TO THE POWER OF THE AO TO ALLOW A FURTHER DEDUCTION CLAIMED BY ASSESSEE DURING THE ASSESSMENT PROCEEDING THROUGH A LETTER ADDRESSED TO THE AO WITHOUT REVISING THE RETURN OF INCOME. THE HONBLE COURT, ACCORDING TO LD. COUNSEL, FURTHER NOTED THAT THEIR SAID DECISION DID NOT IMPI NGE ON THE POWER OF THE APPELLATE AUTHORITIES I.E. TRIBUNAL ALSO U/S. 254 OF THE ACT AS ALREADY H ELD BY HONBLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CORPORATION LTD. VS. CIT (19 98) 229 ITR 383 (SC). HE ALSO RELIED ON THE CASE LAW OF HONBLE SUPREME COURT IN THE CAS E OF JUTE CORPORATION OF INDIA LTD. VS. CIT (1991) 187 ITR 688 (SC). WHEN THIS WAS PUT TO LD. CIT, DR, HE FAIRLY STATED THAT THIS CAN BE VERIFIED BY THE AO IF THE TRIBUNAL SO FEELS AND CAN BE REMITTED BACK TO THE FILE OF AO FOR TAKING A DECISION. IN PRINCIPLE, WE ARE IN AGREEME NT WITH THE LD. CIT, DR AS WELL AS LD. COUNSEL FOR THE ASSESSEE THAT THIS IS AN ALLOWABLE CLAIM IN THE YEAR IN WHICH THE PAYMENT IS MADE AS IS EVIDENT FROM THE ARGUMENTS OF THE ASSESS EE AND RECORDS PRODUCED BEFORE US. BUT, HOWEVER, THESE ARE SUBJECT TO VERIFICATION OF AO AF TER VERIFYING THE CLAIM OF DONATION OF RS. 4 CRORES WILL DECIDE IN WHICH YEAR IT IS ALLOWABLE AN D ACCORDINGLY DECIDE THE ISSUE. 18. IN THE RESULT, ASSESSEES APPEALS ARE PARTLY AL LOWED AND REVENUES APPEALS ARE DISMISSED. 19. ORDER PRONOUNCED IN THE OPEN COURT ON 24.01.201 3 SD/- SD/- , ! ! ! ! ' ! ' ! ' ! ' ! , (PRAMOD KUMAR) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( - - - -) )) ) DATED : 24TH JANUARY, 2013 ./ '$01 '2 JD.(SR.P.S.) 14 ITA NOS. 375-379/K/2010 & ITA NOS.98-99/K/2012 & ITA NO.1041/K/2007 KOLKATA PORT TRUST A.Y. 2003-04 TO 2005-06 , 3 ''4 54&6- COPY OF THE ORDER FORWARDED TO: 1 . )* / APPELLANT KOLKATA PORT TRUST, 15, STRAND ROAD, KO LKATA-700 001. 2 +)* / RESPONDENT DCIT/ACIT, CIRCLE 35, KOLKATA. 3 . ',$ ( )/ THE CIT(A), KOLKATA 4. 5. ',$ / CIT KOLKATA 4<'= '$ / DR, KOLKATA BENCHES, KOLKATA +4 '/ TRUE COPY, ,$/ BY ORDER, ! 1 /ASSTT. REGISTRAR .