ACIT, New Delhi V. Sh. Jagdish Prasad Gupta, New Delhi

ITA 3795/DEL/2016

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9270 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 29-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR VIJAY KUMAR CHADHA SENIOR
• Keywords: Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D : NEW DELHI) BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.3795/DEL./2016 (ASSESSMENT YEAR : 2011-12) ACIT, CIRCLE 28 (1), VS. SHRI JAGDISH PRASAD GUPTA , NEW DELHI. A/12, FRIENDS COLONY, NEW DELHI 110 029. (PAN : AAHPG6016D) (APPELLANT) (RESPONDENT) ASSESSEE BY : MS. SUMANGLA SAXENA, ADVOCATE SHRI RAJIV SAXENA, ADVOCATE REVENUE BY : DR. VIJAY KUMAR CHADHA, SENIOR DR DATE OF HEARING : 12.09.2019 DATE OF ORDER : 04.10.2019 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, ACIT, CIRCLE 28 (1), NEW DELHI (HEREINA FTER REFERRED TO AS THE ASSESSEE) BY FILING THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 29.04.2016 PASSED BY THE COMMI SSIONER OF INCOME - TAX (APPEALS)-10, NEW DELHI QUA THE ASSES SMENT YEAR 2011-12 ON THE GROUNDS THAT :- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.2,7 6,21,6821- WHICH WAS MADE BY THE AO ON THE GROUND OF HOLDING I T A CONTINGENT LIABILITY. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) IGNORED THE FINDINGS RECORDED BY THE AO AND THE FAC T THAT THE ITA NO.3795/DEL./2016 2 ASSESSEE RECEIVED ONLY NOTICE FROM NORTHERN RAILWAY S AND NO ACTUAL PAYMENT HAS BEEN MADE BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION WITHOUT APPRECIA TING THE FACTS: A) THAT THE ASSESSEE HAD OBJECTED BEFORE THE RAILWA Y AUTHORITIES AGAINST THE ENHANCEMENT OF LICENSE FEE AND THE RAILWAYS INITIATED LEGAL PROCEEDINGS AGAINST THE AS SESSEE BEFORE THE ESTATE OFFICER, NORTHERN RAILWAYS, NEW DELHI. B) THAT THE ESTATE OFFICE IN HIS JUDGMENT RESTRAINE D THE RAILWAYS FOR ARBITRARY ENHANCEMENT OF LICENSE FEES AND DIRECTED THEM TO FRAME A DEFINITE POLICY FOR REVISING THE SA ME, KEEPING IN VIEW THE PRINCIPLE OF NATURE JUSTICE. C) THAT THE RAILWAYS FILED AN APPEAL AGAINST THE AB OVE ORDER BEFORE THE DISTRICT COURT, WHICH WAS DISMISSED. EVE N WRIT PETITION FILE BY THE RAILWAYS WAS ALSO DISMISSED ON 05.11.20 10 BY THE HIGH COURT. 3. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE ISSUE AT HAND ARE : ASSESSEE IS INTO THE BUSINESS OF PROVIDI NG FACILITIES OF STORAGE LIQUIDS AND SOLIDS ON THE LAND ALLOTTED BY RAILWA YS ON WHICH STORAGE TANKS AND WAREHOUSE HAS BEEN BUILT UP. PURSUANT TO THE AGREEMENT ENTERED INTO BETWEEN THE ASSESSEE AND RAILWAYS, THE ASSESSEE HAS TO PAY LICENCE FEE ON REVISED RATES, REVISED BY THE RAILWA YS. ASSESSING OFFICER (AO) DISALLOWED AN AMOUNT OF RS.2,76,21,682/- CLAIM ED BY THE ASSESSEE ON ACCOUNT OF RENT, RATES & TAXES OF LICENCE FEE AS PER NOTICE ENHANCING THE LICENCE FEE BEING CONTINGENT LIABILITY AND THER EBY ADDED THE SAME TO THE NET TAXABLE INCOME OF THE ASSESSEE. 4. ASSESSEE CARRIED THE MATTER BY WAY OF AN APPEAL BEFORE THE LD. CIT (A) WHO HAS DELETED THE ADDITION BY PARTLY ALLO WING THE APPEAL. ITA NO.3795/DEL./2016 3 FEELING AGGRIEVED, THE REVENUE HAS COME UP BEFORE T HE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. 5. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS RELIED UP ON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN THE LIGHT OF TH E FACTS AND CIRCUMSTANCES OF THE CASE. 6. LD. AR FOR THE ASSESSEE AT THE VERY OUTSET CONTE NDED THAT THE ISSUE IN CONTROVERSY HAS ALREADY BEEN DECIDED IN FAVOUR O F THE ASSESSEE BY HONBLE DELHI HIGH COURT IN ASSESSEES OWN CASE REP ORTED IN 397 ITR 578 IN THE APPEALS FILED BY THE REVENUE CHALLENGING TH E ORDER PASSED BY THE TRIBUNAL IN AYS 1997-98 TO 2002-03, 2004-05 & 2 009-10, WHICH HAS BEEN SUBSEQUENTLY CONFIRMED BY THE HONBLE DELH I HIGH COURT IN SUBSEQUENT DECISIONS FOR AYS 2005-06, 2006-07,2 007 -08 & 2008-09. THIS POSITION OF FACT AND LAW HAS NOT BEEN CONTROVE RTED BY THE LD. DR FOR THE REVENUE. 7. LD. AR FOR THE ASSESSEE DREW OUR ATTENTION TO TH E OPERATIVE PART OF THE JUDGMENT OF HONBLE DELHI HIGH COURT IN ASSESSEES OWN CASE IN ITA NO.695/2010 & ORS. WHEREIN THE ISSUE IN CONTROVERSY HAS BEEN SET AT REST WHICH IS EXTRACTED FOR READY PERUSAL AS UND ER :- 47. IN THE ARBITRATION PROCEEDINGS, THE CLAIM OF THE RAILWAYS INCLUDES THE CLAIM FOR THE ENHANCED LICENCE FEE AS WELL AS THE ARREARS. THE ARBITRATION PROCEEDINGS COULD END EITH ER IN FAVOUR OF THE RAILWAYS OR THE ASSESSEE. IF IT GOES IN FAVO UR OF THE ASSESSEE IT WOULD THEN HAVE NO LIABILITY TO PAY SUC H ENHANCED LICENCE FEE AND IN THE YEAR IN WHICH SUCH FINAL DEC ISION IS RENDERED, THE CORRESPONDING REVERSAL OF ENTRIES WIL L HAVE TO TAKE PLACE IN TERMS OF SECTION 41(3) OF THE ACT. ALL OF THIS, IN NO WAY, EXTINGUISHES THE LIABILITY OF THE ASSESSEE TO PAY T HE LICENCE FEE. ITA NO.3795/DEL./2016 4 THE ASSESSEE WOULD BE JUSTIFIED IN CLAIMING THE ENH ANCED LICENCE FEE AS DEDUCTION IN THE YEAR IN WHICH SUCH ENHANCEM ENT HAS ACCRUED EVEN THOUGH THE ASSESSEE HAS NOT PAID SUCH ENHANCED LICENCE FEE IN THAT YEAR. THIS LEGAL PROPOSITION IS WELL SETTLED. 48. IN THESE PROCEEDINGS, THE COURT IS NOT REQUIRED TO DETERMINE WHETHER THE NORTHERN RAILWAY VALIDLY ENHA NCED THE LICENCE FEE FROM TIME TO TIME. THAT WOULD BE THE SU BJECT MATTER OF THE ARBITRATION PROCEEDINGS THAT ARE PENDING. WHAT IS TO BE SEEN IS WHETHER THE LIABILITY TO MAKE THAT PAYMENT AROSE DURING THE AYS IN QUESTION. IF IT DID, IT WOULD HAVE TO BE ALL OWED IN THAT VERY YEAR IN WHICH IT AROSE IF THE ASSESSEE IS, AS IN TH E PRESENT CASE, FOLLOWING THE MERCANTILE SYSTEM. AS ALREADY NOTED T HE RAILWAYS HAS ALREADY FILED ITS CLAIM BEFORE THE ARBITRATOR F OR THE ARREARS OF LICENCE FEES AND 'DAMAGES'. AS RIGHTLY HELD BY THE CIT (A),AND CONCURRED WITH BY THE ITAT IN ITS ORDER DATED 31ST JULY 2009, THE MERE CHARACTERISATION BY THE NORTHERN RAILWAY OF TH E AMOUNT CLAIMED BY IT FROM THE ASSESSEE AS 'DAMAGES' WILL N OT, IN THE CONTEXT OF THE PRESENT CASE, MAKE IT ANY LESS AN AC CRUED LIABILITY. IT IS AN EXPENDITURE INCURRED BY THE ASSESSEE CORRE SPONDING TO THE INCOME HE DERIVES FROM USING THE LAND FOR THE P URPOSES OF HIS BUSINESS. 49. THE COURT IS ALSO NOT ABLE TO AGREE THAT THE IT AT MADE A GRIEVOUS ERROR, IN THE ORDER PASSED BY IT ON 22 ND NOVEMBER 2004, REGARDING THE CLAIM FOR ENHANCED LICENCE FEE AS A D EDUCTION BEING ALLOWABLE NOT IN AY 1995-96 BUT IN AY 1996-97 . THE ARGUMENT THAT THE ITAT MAY HAVE EXCEEDED ITS JURISD ICTION DONE NOT HOLD SINCE THE REVENUE HAS, APART FROM NOT CHAL LENGING THE SAID ORDER, IMPLEMENTED IT FULLY BY THE CONSEQUENT APPEAL EFFECT ORDER. 50. MR MANCHANDA IS NOT RIGHT IN CONTENDING THAT TH E SAID ORDER DATED 22ND NOVEMBER 2004 OF THE ITAT FOR AY 1 995-96 IS IN FAVOUR OF THE REVENUE. A CAREFUL READING OF THE SAID ORDER IN FACT INDICATES TO THE CONTRARY. THE ORDER DATED 22N D JULY 2008 OF THE ITAT ALSO DOES NOT HELP THE REVENUE ANY MORE SI NCE IT HAS BEEN SET ASIDE BY THIS COURT BY THE ORDER DATED 11 TH DECEMBER 2008. THE REASON FOR THE REMAND OF THE MATTERS TO T HE ITAT BY THE SAID ORDER WAS THAT, ACCORDING TO THIS COURT, T HE ITAT HAD NOT RETURNED ANY FINDING ON THE ISSUE WHETHER THE L ICENCE FEE PAYABLE BY THE ASSESSEE TO THE RAILWAYS FOR THE USE OF THE LAND COULD BE REGARDED AS AN ACCRUED LIABILITY OR A CONT INGENT LIABILITY. THIS COURT NOTED THE SPECIFIC PLEA OF THE ASSESSEE THAT, FOR AY 1995-96, THE ITAT HAD DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE, BY AN ORDER DATED 25 TH NOVEMBER,2004, CONSTRUING THE LICENCE FEE TO BE AN ACCRUED LIABILITY AND, THEREFO RE, ALLOWABLE AS EXPENDITURE IN THE YEAR OF ACCRUAL. ITA NO.3795/DEL./2016 5 51. FOR ALL OF THE ABOVE REASONS THE FIRST ISSUE I S DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY H OLDING THAT THE LIABILITY OF THE ASSESSEE TO PAY ENHANCED LICEN CE FEES FOR THE AYS IN QUESTION WAS AN ACCRUED LIABILITY WHICH AROS E IN THE YEAR IN WHICH DEMAND WAS RAISED. 8. FOLLOWING THE DECISION RENDERED BY HONBLE DELHI HIGH COURT IN ASSESSEES OWN CASE (SUPRA), WHICH HAS BEEN FURTHER FOLLOWED BY HONBLE HIGH COURT IN ASSESSEES OWN CASE FOR AYS 2 005-06, 2006-07, 2007-08 & 2008-09, COPY OF ORDERS ARE AVAILABLE FRO M PAGES 1 TO 60 OF THE CASE LAWS PAPER BOOK, WE ARE OF THE CONSIDERED VIEW THAT THE LD. CIT (A) HAS RIGHTLY DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING THAT THE LIABILITY OF THE ASSESSEE TO PAY THE ENHAN CED LICENCE FEE QUA THE YEAR UNDER ASSESSMENT WAS AN ACCRUED LIABILITY WHIC H AROSE IN THE YEAR IN WHICH DEMAND WAS RAISED AND HAS RIGHTLY DELETED THE ADDITION MADE BY THE AO. SO, FINDING NO ILLEGALITY OR PERVERSITY IN THE IMPUGNED ORDER PASSED BY THE LD. CIT (A), PRESENT APPEAL FILED BY THE REVENUE IS HEREBY DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 4 TH DAY OF OCTOBER, 2019. SD/- SD/- (R.K. PANDA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 4 TH DAY OF OCTOBER , 2019/TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)- 10 , NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.