ACIT, New Delhi V. M/s. Central Warehousing Corporation, New Delhi

ITA 4334/DEL/2011

• Counselvise Citation: [2023] 100 COUNSELVISE.COM (IT) 6842 (ITAT-DELHI)
• Duration Of Justice: 12 year(s) 1 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2023
• Appeal Filed By: Department
• Order Result: PartlyAllowed
• Bench Allotted: B
• Next Hearing Date: 23-08-2023
• Assessment Year: 1998-1999
• Appeal Filed On: 28-09-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Depreciation; Opportunity of being heard; Bad and doubtful debts; Revised return; Revenue expenditure; Capital expenditure
• Section: 2; 11; 234B; 14A; 115JB; 10(33); 10(33); 13; 22

Judgement Text

ITA. No. 4190/Del/2011 AND ITA. No. 4334/Del/2011 1 IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCH “B” : DELHI ] BEFORE SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER A N D SHRI M. BALAGANESH, ACCOUNTANT MEMBER आ.अ.सं/.I.T.A No. 4190/Del/2011 िनधाᭅरणवषᭅ/Assessment Year: 1998-1999 Central Warehousing Corporation, Warehousing Bhawan, 4/1, Siri Institutional Area, Hauz Khas, August Kranti Marg, New Delhi – 110 016. बनाम Vs. DCIT, Circle : 3 (1) New Delhi. PAN No. AAACC1206D A N D आ.अ.सं./I.T.A No. 4334/Del/2011 िनधाᭅरणवषᭅ/Assessment Year: 1998-1999 ACIT, Circle : 3 (1) New Delhi. बनाम Vs. Central Warehousing Corporation, Warehousing Bhawan, 4/1, Siri Institutional Area, Hauz Khas, August Kranti Marg, New Delhi – 110 016. PAN No. AAACC1206D अपीलाथᱮ /Appellant ᮧ᭜यथᱮ/Respondent िनधाᭅᳯरतीकᳱओरसे /Assessee by : Shri S. Krishnan, Adv.; & Shri V. Rajakumar, Adv. राज᭭वकᳱओरसे / Department by : Shri T. James Singson, [CIT] - D. R.; ITA. No. 4190/Del/2011 AND ITA. No. 4334/Del/2011 2 सुनवाईकᳱतारीख/ Date of hearing : 24/08/2023 उ᳃ोषणाकᳱतारीख/Pronouncement on : 14/11/2023 आदेश /O R D E R PER C. N. PRASAD, J. M. : 1. These appeals are filed by the Revenue and the assessee against the order of the ld. Commissioner of Income Tax 9Appeals) [hereinafter referred to CIT (Appeals)] Delhi-IV, dated 13.07.2011 for assessment year 1998-1999. 2. The Revenue has raised the following substantive grounds:- “1. The Ld. CIT (A) has erred on facts and in law in allowing the claim of the assessee that the commodities handled at various CFS/ICDs during 1997-98 were notified u/s 2(e) and that the business activities carried on by the corporation at VFS/ICDs are covered u/s 11 of the Warehousing Corporation Act, 1962. 2. The Ld. CIT (A) has erred on facts and in law in deleting addition of Rs.48599861/- on account of income accrued to the assessee from its joint venture CFS with PSWC for the FY 1997-98. 3. The Ld. CIT (A) has erred on facts and in law in deleting addition of Rs.241721000/- on account of income from Bonded Warehouses. 4. The Ld. CIT (A) has erred on facts and in law in deleting addition of Rs.203602251/-on account of capitalization of unabsorbed engineering overheads. ITA. No. 4190/Del/2011 AND ITA. No. 4334/Del/2011 3 5. The Ld. CIT (A) has erred on facts and in law in directing the AO to consider on merits the claim of the assessee of dividend income of Rs.19523175/- being exempt u/s 10(33) of the I. T. Act. 6. The Ld. CIT (A) has erred on facts and in law in directing the Assessing Officer not to add the provision for payment of pay revision (Rs.86625204/-), provison for payment of gratuity (Rs.68959597/-) provision for payment of wealth tax (Rs.200000/-), provision for bad & doubtful debts. (Rs.24768433/-), and income of bonded stock (Rs.241721000/-) to the income u/s 115JA of the I. T. Act. “ 3. The assessee has raised the following substantive grounds- “1. It is contended that, on facts and circumstances of the case, both on facts and on law CIT (Appeals) has erred in restricting the Exemption under section 10(29) of the Income Tax Act on Profit instead of the Gross Income from Warehousing Activity of the Appellate Corporation, for which it has been held to be an Authority under the Warehousing Corporations Act, 1962. 2. It is contended that, both CIT (Appeal) and the Assessing Officer have erred apportioning the Expenses between CFS/ICD Activity and the General Warehousing Activity, despite the CIT (Appeals) having himself held that the Business of Appellant comprising of both CFS/ICD and the General Warehousing Activities is one indivisible in nature. 3. It is contended that the Principle of Apportionment of Expenses where the Business indivisible as laid down by the Hon'ble Apex Court in the case of Rajasthan Stat Warehousing Corporation (242 ITR 500) has not been followed by the Hon'ble CIT (Appeal) even after he himself having concluded that the Business of the Appellant is indivisible. 4. It is contended that the Computation of Income under section 10 (29) is wrong an requires revision. ITA. No. 4190/Del/2011 AND ITA. No. 4334/Del/2011 4 5. It is contended that the Appellant is entitled to Exemption under section 10(29) to the extent of Rs.1980195713/- as against Rs.399254741/- as computed by the Assessing Officer, which was confirmed even by CIT (Appeal) in his Order. 6. It is contended that No Income had accrued to the Appellant Corporation under the Head - Income from Bonded Warehouses which required to be offered for taxation or which could be taxed, even though the Corporation is following the Mercantile System of Accounting. 7. It is contended that the Realization of Income Accrued on account of Warehousing Charges on the Time Barred Bonds is generally uncertain, and as such, the Corporation is not in a position to quantify such income. 8. It is contended that the Appellant's Method of Accounting in respect of Income from Bonded Warehouses has been accepted since inception. Even according to the Accounting Principles, the Income, the realisation of which is uncertain should not be quantified and recognized as Revenue. Accordingly, the Corporation has been rightly following the Cash Method of Revenue Recognition for this Head. 9. Without prejudice to the above grounds, it is contended that even if the Income from Bonded Warehouse is taxed on Accrual Basis, the same shall qualify for Exemption u/s 10(29) of the Income Tax Act since it is of the nature of Warehousing Charges. 10. It is contended that the taxing of Income Accrued from Bonded Warehouses amounting to Rs.241721000/- is wrong and bad in law. 11. It is contended that the newly inserted section 14A of the Income Tax Act has no application and cannot be involved in the case of Appellant Corporation. Full arguments will be advanced at the time of hearing. 12. The computation of Book Profit under section 115JA is wrong and requires revision. ITA. No. 4190/Del/2011 AND ITA. No. 4334/Del/2011 5 13. It is contended that the Assessing Officer should have excluded the Gross Income credited to the P&L Account on account of Warehousing Charges, which was exempt under section 10(29) of the IT Act while arriving at the Book Profit for the purpose of section 115JA and not the Profit in respect of such Income. 14. It is contended that Interest u/s 234B is not chargeable, when the Appellant is subjected to MAT under section 115JA as decided by the Hon'ble Supreme Court in the case of Kwality Biscuits Ltd. It is also contended that CIT (Appeal) has erred in coming to the conclusion that charge of interest is consequential in nature. 15. It is contended that there are number of typographical errors in the order of the CIT (Appeal) which requires correction. 16. It is contended that the above Grounds are independent and without prejudice to one another.” 4. The assessee has also raised the following additional grounds:- “1. Whether on the facts and circumstances of the case, the Appellant being a Corporation created by an Act of Parliament, could be construed to be a Company for the purposes of applying the provisions of section 115JA of the IT Act. 2. Whether both on the facts and on law, Non-schedule VI Companies are Exempt from the provisions of the Minimum Alternate Tax (MAT), since such Non- schedule VI Companies are not required under the proviso to Section 211(2) of the Companies Act to prepare their Profit & Loss Account in accordance with Schedule VI of the Companies Act, 1956. 3. Whether both on facts and on law for the purpose of computing the Book Profit under section 115JA of the Income Tax Act, the Profit & Loss Account prepared in accordance with the provisions of the Appellant's Regulatory Act viz. the Warehousing Corporations Act, 1962 read with Central Warehousing Corporation Rules, 1963 ITA. No. 4190/Del/2011 AND ITA. No. 4334/Del/2011 6 and Central Warehousing Corporation (General Regulations), 1965 shall be taken as the basis for computing the Book Profit under section 115JA of the Income Tax Act.” 5. The ld. Counsel for the assessee, at the outset, submits that these additional grounds were also raised by the assessee for assessment year 2006-07 in ITA. No. 3885/Del/2011 and the Tribunal by order dated 31.05.2021 dismissed the additional grounds of the assessee. 6. We have perused the order of the Tribunal and find that these additional grounds were dismissed observing as under:- “11. Regarding additional grounds challenging the applicability of provision of section 115JA of the assessee, the learned Counsel of the assessee submitted that the grounds raised being legal and no investigation of the fresh facts required, the additional ground raised by the assessee might be admitted. Supporting the grounds the Learned Counsel submitted that Minimum Alternate Tax (MAT) is not applicable over the assessee being a nonschedule six company and books of accounts of the assessee company are prepared in accordance with the provisions of the Warehousing Corporation Act, 1962 read with Central Warehousing Corporation Rules 1963. He submitted that issue in dispute might be restored to the file of the Assessing Officer for deciding afresh. 11.1 The Learned DR, on the other hand, opposed the admissibility of the additional grounds raised after a substantial period after filing of the appeal. He submitted that issue that the assessee is a non-schedule VI company, was never raised before the lower authorities. He submitted that the additional ground raises not covered by the decision of the Hon’ble Supreme Court in the case of NTPC Ltd versus CIT, (1998) 229 ITR 383 (SC) as the issue is not having any bearing on the tax liability of the assessee. As far as merit of the ground is concerned, the Learned DR submitted that section 211(3) of the Companies Act, 1956 has prescribed that for exemption for any class of the companies ITA. No. 4190/Del/2011 AND ITA. No. 4334/Del/2011 7 from requirement of Schedule VI, an notification has to be issued by the Central Government. The learned DR specified that no such notification had been issued by the Central Government for exempting the companies established under the Central Warehousing Act (supra). He also submitted that there is no specific provision in the relevant regulatory Act regarding accounting standards or maintenance of books of accounts and thus books of accounts have been maintained as per the Companies Act and, therefore, provisions of section 115JB have been correctly applied in the case of the assessee. 11.2 We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. The additional grounds raised by the assessee being of legal nature and no fresh investigation of the facts was required and therefore same were admitted following the ratio in the case of NTPC Ltd. (supra). The contention of the assessee is that provision of Minimum Alternative Tax (MAT) are not applicable over the assessee being a non-Schedule VI company of Companies Act. Under the section 115JB, the book profit is taken as profit computed on the basis of books of accounts maintained as per Companies Act. The part of section 115JB of the Act during relevant period is reproduced as under: “ (2) Every assessee, being a company, shall for the purposes of this section, prepare its profit and loss account for the relevant previous year in accordance with the provisions of Parts II and III of schedule 6 to the companies act, 1956 ( 1 of 1956).” 11.3 The said Schedule VIof Companies Act,1956 has provided instruction for preparing profit and loss account for the financial year and balance sheet at the financial year end. The relevant section 211 of the Companies Act, 1956 specifying the form and content of the balance-sheet is reproduced as under for ready reference:- “211. Form and contents of balance-sheet and profit and loss account.-(1) Every balance-sheet of a company shall give a true and fair view of the state of affairs of the company as at the end of the financial year and shall, subject to the provisions of this section, be in the Form set out in Part I of Schedule VI. or as near thereto as circumstances admit or in such other form as may be approved by the Central Government either generally or in any particular case ; and in preparing the balance-sheet due regard shall be had as far as may be to the general instructions for preparation of balancesheet under the heading. “Notes” at the end of that Part: Provided that nothing contained in this sub-section shall apply to ITA. No. 4190/Del/2011 AND ITA. No. 4334/Del/2011 8 any insurance or banking company, or to any other class of company for which a form of balance sheet has been specified in or under the Act governing such class of company. (2) Every profit and loss account of a company shall give a true and fair view of the profit or loss of the company for the financial year and shall, subject as aforesaid, comply with the requirements of Part II of Schedule VI, so far as they are applicable thereto Provided that nothing contained in this sub-section shall apply to any insurance or banking company, or any company engaged in the generation or supply of electricity, or to any other class of company for which a form or profit and loss account has been in or under the Act governing such class of company (3) The Central Government may by notification in the Official Gazette, exempt any class of companies from compliance with any of the requirements in Schedule VI if, in its opinion, it is necessary to grant the exemption in the public interest Any such exemption may be granted either unconditionally or subject to such conditions as may be specified in the notification (4) The Central Government may, on the application or with the consent of the Board of directors of the company, by order, modify in relation to that company any of the requirements of this Act as to the matters to be stated in the company's balance sheet or profit and loss account for the purpose of adapting them to the circumstances of the company (5) The balance sheet and the profit and loss account of a company shall, not be treated as not disclosing a true and fair view of the state of affairs of the company, merely by reason of the fact that they do not disclose- (i) in the case of an insurance company, any matters which are not required to be disclosed by the Insurance Act, 1938 (IV of 1938); (ii) in the case of a banking company, any matters which are not required to be disclosed by the Banking Companies Act. 1949 (X of 1949) ; (iii) in the case of a company engaged in the generation or supply of electricity any matters which are not required to be disclosed by both the Indian Electricity Act, 1910 and the Electricity (Supply) Act, 1948; (iv) in the case of a company governed by an other special Act for the time being in force, any matters which are not required to be ITA. No. 4190/Del/2011 AND ITA. No. 4334/Del/2011 9 disclosed by that special Act; or (v) in the case of any company, any matters which are not required to be disclosed by virtue of the provisions contained in Schedule VI or by virtue of a notification issued under sub-section (3) or an order issued under sub-section (4)” .............................................. ” 11.4 The sub section (2) of section 211 of the Companies Act, 1956 has specifically excluded application of preparing profit and loss account as per schedule VI to the insurance and banking companies, or companies engaged in the generation or supply of the electricity or any other class of the company specified. The sub-section (3) has specified requirement of issue of notification by the Central Government for exemption from the requirement of schedule VI of the Companies Act, 1956. Even being specifically asked for, no such notification issued by the Central Government was produced before us by the Learned Counsel of the assessee. The Learned Counsel also failed before us to explain about any deviation in the manner of computation of profit and loss and balance sheet for the year under consideration in terms of instruction in schedule VI of Companies Act, 1956. The guidelines prescribed in the Central Warehousing Act, 1962 regarding maintenance of books of accounts are reproduced as under: “31. Accountants and audit of Warehousing Corporation.— (1) Every Warehousing Corporation shall maintain proper accounts and other relevant records and prepare an annual statement of accounts including the profit and loss account and the balance sheet in such form as may be prescribed: Provided that, in the case of the Central Warehousing Corporation, the accounts relating to the Warehousing Fund and the General Fund shall be maintained separately. (2) The accounts of a Warehousing Corporation shall be audited by an auditor duly qualified to act as an auditor of companies under section 226 of the Companies Act, 1956 (1 of 1956). (3) The said auditor shall be appointed by the appropriate Government on the advice of the Comptroller and Auditor-General of India. (4) The auditor shall be supplied with a copy of the annual balance sheet and the profit and loss account of the Warehousing Corporation and it shall be his duty to examine them together with the accounts and vouchers relating thereto, and he shall have a list delivered to him of all books kept by the Corporation and shall at all reasonable times have access to the books, accounts and other documents of the Corporation and may require from any officer of the Corporation such information and explanations as the auditor may think necessary for the performance of his duties as auditor. ITA. No. 4190/Del/2011 AND ITA. No. 4334/Del/2011 10 (5) The auditor shall make a report to the shareholders on the accounts examined by him and on the annual balance sheet and the profit and loss account and in every such report, he shall state whether in his opinion the accounts give a true and fair view— (а) in the case of the balance sheet, of the state of the Corporation's affairs at the end of its financial year, and (б) in the case of the profit and loss account, of the profit or loss for its financial year, and in case he has called for any explanation or information from the officers, whether it has been given and whether it is satisfactory. (6) The appropriate Government may, after consultation with the Comptroller and Auditor- General of India at any time issue directions to the auditor requiring him to report to the appropriate Government upon the adequacy of measures taken by a Warehousing Corporation for the protection of its shareholders and creditors or upon the sufficiency of his procedure in auditing the accounts of the Corporation and may enlarge or extend the scope of the audit or direct that a different procedure in audit may be adopted or direct that any other examination may be made by the auditor if in the opinion of the appropriate Government public interest so requires. (7) A Warehousing Corporation shall send a copy of every report of the auditor to the Comptroller and Auditor-General of India and to the Central Government at least one month before it is placed before the shareholders. (8) Notwithstanding anything hereinbefore contained in this section, the Comptroller and Auditor- General of India may, either of his own motion or on a request received in this behalf from the appropriate Government, undertake in respect of a Warehousing Corporation such audit and at such time as he may consider necessary: (9) The Comptroller and Auditor-General of India and any person authorised by him in connection with the audit of the accounts of a Warehousing Corporation shall have the same rights, privileges and authority in connection with such audit as the Comptroller and Auditor- General has in connection with the audit of Government accounts and in particular, shall have the right to demand the production of books, accounts, connected vouchers and other documents and papers and to inspect the office of the Corporation. (10) The annual accounts of a Warehousing Corporation together with the audit report thereon shall be placed before the annual general meeting of the Corporation within six months of the close of the financial year. (11) Every audit report under this section shall be forwarded to the appropriate Government within a month of its being placed before the annual general meeting and that Government shall as soon thereafter as may be ITA. No. 4190/Del/2011 AND ITA. No. 4334/Del/2011 11 cause the same to be laid before both Houses of Parliament or the Legislature of the State, as the case may be.” 11.5 The Ld. Counsel of the assessee failed to explain any specific guidelines/instruction for preparing profit and loss account and balance sheet in the relevant regulatory Acts, which could become basis for non-application of sub-section 2 of section 115JB of the Act. Moreover, the assessee has complied the provisions of section 115JA or JB in earlier years and this doubt has been raised for the first time in casual manner, without supporting with any provision under any law. 11.6 In view of the above, the request of the learned Counsel to restore the matter back to the file of the Assessing Officer is not justified and accordingly rejected. The additional grounds of the appeal of the assessee are accordingly dismissed.” 7. Respectfully following the order of the Tribunal, the additional grounds raised by the assessee are dismissed. 8. Ld. Counsel submits that ground No. 1 of Revenue’s appeal and ground Nos. 1 to 5 of the grounds of appeal of the assessee are on the issue of whether the assessee is entitled for exemption under section 10(29) of the Income Tax Act, 1961 (the Act) and if is entitled and whether it is on gross income from warehousing activity. 9. The ld. Counsel for the assessee, at the outset, submits that ground No. 1 of the grounds of appeal of the Revenue and ground Nos. 1 to 5 of grounds of appeal of the assessee have been decided by the Tribunal in assessee’s own case for assessment years 1989-90 to 2000-01 in ITA. Nos. 2859 to 2867/Del/2003 and ITA. No. 5324/Del/2003 in order dated 31.03.2008 for assessment years 2006-07 to 2010-11 in order dated 31.05.2021 in ITA. Nos. 3885 & ITA. No. 4190/Del/2011 AND ITA. No. 4334/Del/2011 12 3942/Del/2011, ITA. No. 3439 & 3440/Del/2014 and ITA. Nos. 2201 & 5784/Del/2014. Copies of the orders are placed on record. 10. The ld. DR submitted that the issues in the said grounds have been decided in favour of the assessee but restored to the file of AO for quantification. 11. Heard rival submissions perused the orders of the authorities below. We find that the issue in ground No. 1 of grounds of appeal of the Revenue and ground Nos. 1 to 5 of the grounds of appeal of the assessee were adjudicated by the Tribunal in assessee’s own case. We observe that the Tribunal while adjudicating the issues in favour of the assessee held as under:- ITA. No. 4190/Del/2011 AND ITA. No. 4334/Del/2011 13 ITA. No. 4190/Del/2011 AND ITA. No. 4334/Del/2011 14 ITA. No. 4190/Del/2011 AND ITA. No. 4334/Del/2011 15 ITA. No. 4190/Del/2011 AND ITA. No. 4334/Del/2011 16 ITA. No. 4190/Del/2011 AND ITA. No. 4334/Del/2011 17 12. We further observe that in those years the Tribunal having held that the income derived from letting out of go-downs or warehouses for storage, processing or facilitating the marketing of commodities, agricultural produce, seeds, manufacturing, fertilizers, other implants and commodities modified by the Central Government is exempt under section 10(29) of the Act, restored the matter to the file of the Assessing Officer to identify the income derived from letting of go-downs, warehouses for storage of only specified commodities and allow deduction under section 10(29) of the Act in respect of such income. However, in the year under ITA. No. 4190/Del/2011 AND ITA. No. 4334/Del/2011 18 consideration it is the finding of the ld. CIT (Appeals) that in the special audit it is clearly identified the expenditure to which the benefit is to be given to the assessee the matter need not be sent back to the Assessing Officer, has not been rebutted by the Revenue. Thus we sustain the order of the ld. CIT (Appeals) on this issue following the order of the Tribunal in assessee’s own case reject ground No. 1 of grounds of appeal of the Revenue and allow ground Nos. 1 to 5 of the appeal of the assessee. 13. Ground No. 2 of grounds of appeal of the Revenue is in respect of deletion of addition on account of income accrued to the assessee from its joint venture CFS with PSWC for the financial year 1997-98 relevant to assessment year 1998-99 which is in appeal for consideration. 14. At the outset, the ld. Counsel for the assessee submits that identical issue came up for adjudication before the Tribunal in assessee’s own case in its order dated 31.05.2021 and the matter has been remanded to the Assessing Officer for examination of the income year on year and grant relief if the income had been offered in another year. The ld. Counsel submits that similar directions may be given for the year under consideration. 15. The ld. DR has no serious objection. 16. Heard rival submissions perused the orders of the authorities below. We have gone through the order of the Tribunal in assessee’s own case for assessment year 2006-07 in ITA. No. ITA. No. 4190/Del/2011 AND ITA. No. 4334/Del/2011 19 3885/Del/2011 dated 31.05.2021 wherein the assessee raised the following ground:- “5. Original ground no. 11:- It is contended that the Assessing Officer has erred innot allowing the relief claimed by the Corporation on account of its share ofincome from the Joint Venture, CFS at Ludhiana for the years 2003- 2004,2004-2005 which has been taxed twice i.e. once while framing the assessment of respective Asst. Years and then during the current Asst, year, wherein the aggregate amount for both these years clubbed with the share for 2005-2006 was accounted for and consequently offered for tax by the by the Appellant Corporation.” This ground has been adjudicated in paras 10 to 10.3 of the order as under:- ”10. The Condensed ground No. 5(five) of the appeal of the assessee relates to verification of share of income from Joint Venture CFS, Ludhiana. 10.1 Before the Learned CIT(A), the assessee submitted that Container Freight Station (CFC), Ludhiana was being run as a joint-venture with Punjab State Warehousing Corporation on 50- 50 profit/loss basis. The assessee also made investment in other joint ventures but in absence of the audited accounts, income of those joint ventures was not reported on accrual basis following mercantile system of accounting. Before us, learnedCounsel of the assessee referred to various pages of the paper-book and submitted that said income from joint ventures should be taxed once only i.e. either on mercantile basis or on cash basis. Accordingly, he submitted that issue in dispute may be restored to the file of the Assessing Officer for verification that income of joint-venture(s) is accounted on the basis of audited accounts and not on estimate basis. 10.2 The Learned DR, on the other hand, did not object for verification of the issue in dispute by the Assessing Officer. 10.3 We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. It is ITA. No. 4190/Del/2011 AND ITA. No. 4334/Del/2011 20 undisputed that income from joint-venture has to be taxed in the hands of the assessee once and same income cannot be taxed twice. Since the assessee is following mercantile system of accounting, the income from joint-venture is required to be taxed on accrual basis after verification of audited accounts of the joint ventures. The Learned Counsel of the assessee has not disputed taxing the same following mercantile system and therefore we are not going into the aspect whether those receipt should be taxable on cash basis . The income from joint-venture once considered on mercantile basis in the year under consideration, same income cannot be taxed by the Assessing Officer on cash basis in subsequent years at the time of receipt. Accordingly, the issue in dispute is restored to the file of the Assessing Officer for adjudication after verification of the documentary evidence including audited accounts of the joint ventures under reference. The ground No. 5 of the appeal of the assessee is accordingly allowed for statistical purposes.” 17. Following the order of the Tribunal we restore this issue to the file of the Assessing Officer to decide afresh in the light of the observations of the Tribunal in its order dated 31.05.2021 in accordance with law. Needless to say adequate opportunity of being heard to the assessee be provided. This ground is allowed for statistical purpose. 18. Ground No. 3 of grounds of appeal of the Revenue and ground Nos. 6 to 10 of assessee’s appeal are in respect of deletion of addition on account of income from bonded warehouses. 19. The ld. Counsel for the assessee subnmits that identical issue has been decided by the Tribunal by order dated 31.05.2021 in paras 16 to 16.4 wherein the Tribunal restored the matter to the file of the Assessing Officer with a direction to ascertain income of the bonded warehouses which has been added on mercantile basis and is not subjected to tax on cash basis again in subsequent years. ITA. No. 4190/Del/2011 AND ITA. No. 4334/Del/2011 21 The ld. Counsel submits that similar direction may be given for the year under consideration also. 20. The ld. DR has no objection. 21. Heard rival submissions perused the orders of the authorities below. We observe that on perusal of the order of the Tribunal in ITA. No. 3942/Del/2011 for assessment year 2006-07 in Revenue’s appeal the Tribunal restored the issue to the file of the Assessing Officer with the following observations:- “16. The ground No. 6 of the appeal of the Revenue relates to addition for income from bonded warehouses amounting to ₹ 7,24,44,000/-, which has been deleted by the Learned CIT(A). 16.1 The facts in brief qua the issue in dispute are that the assessee operates bonded warehouse under a license given by the customs department, where imported consignments are being deposited by the importers to enable them to take delivery of the consignment by paying custom duty and warehousing charges at the time of the actual release of the imported goods. These warehousing charges are being accounted by the assessee on realisation basis. The contention of the assessee that realisation of such warehousing charges is uncertain as sometimes paying of custom duty and warehousing charges becomes commercially unviable to the importer and therefore importers are not induced to take delivery of such consignment. According to the Assessing Officer, the assessee is following Mercantile system and therefore income has to be booked as and when it is accrued to the assessee. The Assessing Officer noted that even if the importer decided not to get his cargo released, the warehousing charges is payable to the assessee Corporation from the auction proceeds of the cargo. Accordingly, the learned Assessing Officer made addition for the amount of ₹ 7,24,44,000/-for bonding warehouse on accrual basis. The Ld. CIT(A) following the finding of his predecessor that there was uncertainty in the income of the bonded warehouse, he deleted the addition made on this account. 16.2 Before us, the learned DR submitted that the assessee ITA. No. 4190/Del/2011 AND ITA. No. 4334/Del/2011 22 cannot be allowed for both cash and Mercantile system of accounting i.e. mixed accounting system. He submitted that the assessee follows Mercantile system of accounting and accordingly the income is taxable whenever it is accrued or received whichever is earlier and thus income of bonded warehouse is liable to be assessed in the year under consideration. 16.3 On the other hand, the Learned Counsel of the assessee concurred that there cannot be mixed accounting system and income has to be taxed on the accrual basis in the case of the assessee, however, he submitted that the income offered by the assessee on cash basis should be reduced. Accordingly, he submitted that issue in dispute may be restored back to the file of the Learned Assessing Officer for working out the quantum of income to be taxed.” 16.4 We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. In the case, the assessee has credited the income from the bonded warehouse on realisation basis i.e. cash basis, but the assessee is following Mercantile system of the accounting and therefore income has to be credited in the profit and loss account as and when it is accrued to the assessee. The Assessing Officer has added the income from warehousing charges which is accrued during the year under consideration. The learned Counsel has agreed in principle that warehousing charges is liable to be assessed on accrual basis in view of Mercantile system followed by the assessee, but he emphasized that income which has been taxed on accrual basis in the year under consideration, should not be subjected to tax twice i.e once on Mercantile basis and second on cash basis. We concur with the above contention of the Learned Counsel of the assessee. Accordingly, the bonded warehouse income added by the Assessing Officer on accrual basis, is hereby confirmed, however, the Assessing Officer is directed to ascertain that, bonded warehouse income which has been added on Mercantile basis in the year under consideration, is not again subjected to tax on cash basis in subsequent years. The ground No. 6 of the appeal of the Revenue is accordingly, partly allowed for the statistical purposes.” 22. Following the order of the Tribunal we restore this issue to the file of the Assessing Officer with direction to decide the issue ITA. No. 4190/Del/2011 AND ITA. No. 4334/Del/2011 23 afresh keeping in view the observations of the Tribunal for the assessment year 2006-07. Needless to say adequate opportunity of being heard to the assessee be provided by the Assessing Officer. Ground No. 3 of the grounds of appeal of the Revenue and ground Nos. 6 to 10 of grounds of appeal of the assessee are allowed for statistical purposes. 23. Ground No. 4 of grounds of appeal of the Revenue is in respect of addition on account of capitalization of un-absorbed engineering overheads. 24. The ld. Counsel for the assessee submits that identical issue has been decided by the Tribunal for assessment year 2006-07 in ITA. No. 3942/Del/2011 dated 31.05.2021 wherein the Tribunal restored the issue to the file of the Assessing Officer to consider the same afresh. The ld. Counsel for the assessee submits that similar direction may be given for the year under consideration also. 25. The ld. DR has no objection. 26. Heard rival submissions perused the orders of the authorities below. On perusal of the order of the Tribunal we find that identical issue has been decided by the Tribunal by restoring the issue to the file of the Assessing Officer with the following observations:- “15. Ground No.4 of the appeal of the Revenue relates to disallowance of Rs.4,07,54,700/- for unabsorbed overhead on capital works expenditure, which has been deleted by the Learned CIT (Appeals). ITA. No. 4190/Del/2011 AND ITA. No. 4334/Del/2011 24 15.1 The facts in brief qua the issue in dispute are that the assessee Corporation resort to monitoring of construction of warehouses by various contractors through the construction cells of company. The administrative expenses of the construction cells have been treated by the assessee as indirect cost, which together with the repair expenses have been charged directly to revenue expenditure. The assessee further explained that an accounting policy has been laid down by the assessee for charging of construction monitoring expense as revenue expenses, whereby all India percentage of such overheads is determined and actual overheads of each construction cell, restricted to the All India average percentage, are capitalised and balances charged to the revenue expenses. Following this policy, the assessee in the year under consideration out of the total construction monitoring expenditure of ₹ 11,78,00,000/-, debited Rs.40,22,000/- as repair and maintenance and treated ₹ 5,46,35,000/-as capital expenditure and claimed balance amount of ₹ 4,52,83,000/-as revenue expenditure under the head “unabsorbed overheads on capital works”. The Assessing Officer noted that no details of the relevant expenses were provided by the assessee and no distinction has been brought out as how a part of the expense was capital and balance was treated as revenue expenditure. In view of the facts, the Assessing Officer treated the revenue expenditure of ₹ 4,52,83,000/- as capital expenditure and after allowing depreciation at the rate of the 10%, disallowed the balance amount of ₹ 4,07,54,700/-. The Ld. CIT(A) following the finding of his predecessor, deleted the addition in dispute. 15.2 Before us, the Learned DR relied on the order of the Assessing Officer and submitted that in view of the no details of actual expenses incurred, there was no option with the Assessing Officer except to treat the same as capital expenditure. The learned DR submitted that issue in dispute may be restored to the file of the Learned Assessing Officer for deciding afresh in the light of the nature of the expenses actually incurred. 15.3 The Learned Counsel of the assessee, on the other hand, submitted that detail in respect of the expenses was already filed by the assessee before the Assessing Officer alongwith letter dated 22/11/2008. The Learned Counsel also referred to notes to the accounts i.e. note 7(a) and (b), available on page 69 of the paperbook. The Learned Counsel fairly accepted that the issue in dispute in the assessment year 2005-06 has been restored to the ITA. No. 4190/Del/2011 AND ITA. No. 4334/Del/2011 25 file of the Assessing Officer. 15.4 We have heard rival submission of the parties on the issue in dispute. The issue is whether the part of overhead charges on monitoring of the capital expenditure of construction, could be charged to revenue expenditure. The claim of the assessee that same have been charged to revenue expenses, following regular accounting practice whereas according to the Revenue in absence of details of expenses actually incurred, no expenditure can be allowed as revenue expenditure only on the ad-hoc accounting practice. We find that the Tribunal in ITA No. 2918/Del./2009 for assessment year 2005-06 has restored the identical issue to the file of the Assessing Officer after examining the nature of the expenses. The relevant finding of the Tribunal is reproduced as under:- “11.2 We have the rival contentions in light of the material produced and precedent relied upon. We note that Ld. Commissioner of Income Tax (Appeals) has noted that assessee was asked to give complete details of the expenditure, but the same have not been produced before the Ld. Commissioner of Income Tax (Appeals). In our considered opinion, if the matter is not enquired earlier, the same cannot act as an estoppels for the revenue authorities that the same cannot be enquired in the concerned assessment year. However, as noted by the Ld. Commissioner of Income Tax (Appeals), proper details in this regard, has not be submitted. The ld. Counsel of the assessee also did not elaborate on the system adopted in this regard with cogent material, except asserting that this system was followed for a long period. Hence, in the interest of justice we remit this issue to the files of the Assessing Officer to consider the same afresh. Needless to add that the assessee should be given adequate opportunity of being heard. However, the assessee is directed to provide necessary details in this regard before the authorities below.” 15.5 In view of the above facts and circumstances, the issue in dispute in the year under consideration is also restored to the file of the Assessing Officer for deciding afresh after providing reasonable and adequate opportunity of being heard to the assessee. This ground of the appeal of the Revenue is accordingly ITA. No. 4190/Del/2011 AND ITA. No. 4334/Del/2011 26 allowed for statistical purposes”. 27. Following the order of the Tribunal we restore this issue to the file of the Assessing Officer to decide afresh in the light of the observations of the Tribunal after providing adequate opportunity of being heard to the assessee. This ground is allowed for statistical purpose. 28. Ground No. 5 of grounds of appeal of the Revenue is with respect to directions given to the Assessing Officer to consider on merits the claim of the assessee of dividend income being exempt under section 10(33) of the Act. 29. Heard rival submissions. We find that the issue has been rightly considered by the ld. CIT (Appeals) with reference to the averments made in the assessment order and the submissions of the assessee and restored the matter to the file of the Assessing Officer with the following observations:- “22. Ground of appeal No. 14 relates to computation of income u/s 14A of the This should also be read with ground of appeal No. 29. It is observed that the asses had claimed tax exemption from dividend income to the extent of Rs.1,95,23,175/- under section 10(33) of the Act. This income had been received from State Warehousing Corporations. The Id. Assessing Officer refused to entertain the same, following the decision of Goetze (India) Ltd. Vs. CIT 284 ITR 323 (SC). 23. To drive home the point the assessee had stated that the powers of the CIT (A) is co terminus is that of the Assessing Officer. Thus, it was urged that the ground should be adjudicated. ITA. No. 4190/Del/2011 AND ITA. No. 4334/Del/2011 27 24. After having carefully gone through the impugned order and the submissions made by the Id. AR of the assessee, it is stated that the decision of the Supreme Court in Goetze (India) (supra) is not applicable to the appellate authorities. In CIT Vs. Jai Parabolic Springs Ltd. (2008) 306 ITR 42 (Delhi), the decision in Goetze India (supra) was considered. At page 46, it was held as under:- "In Goetze (India) Ltd. Vs. CIT [2006] 284 ITR 323 (SC) wherein deduction claimed by way of a letter before the Assessing Officer, was disallowed on the ground that there was no provision under the Act to make amendment in the return without filing a revised return. Appeal to the Supreme Court, as the decision was upheld by the Tribunal and the High Court, was dismissed making clear that the decision was limited to the power of the assessing authority to entertain claim for deduction otherwise than by a revised return, and did not impinge on the power of the Tribunal." 25. It emerges from the above that CIT (A) can adjudicate on the issue. This contention is further strengthened by the decision of the Bombay High Court in Balmukund Acharya Vs. DCIT (2009) 221 CTR (Bom) 440. Thus, while giving appeal effect the AO shall take the relief claimed incognizance and consider the issue on merits and facts. The assessee succeeds statistically in ground of appeal No. 14 and 29. “ 30. On perusal of the order of the ld. CIT (Appeals) it is noticed that the claim of the assessee was rejected by the Assessing Officer as the claim was not made in the original return filed but was claimed in the revised computation/revised return, in view of the decision of the Hon’ble Supreme Court in the case of Goetze (India) Ltd. Vs. CIT [2006] 284 ITR 323 (SC). However, the ld. CIT (Appeals) admitted the claim of the assessee and restored the matter back to the file of the Assessing Officer to adjudicate the issue on merits. ITA. No. 4190/Del/2011 AND ITA. No. 4334/Del/2011 28 We see no infirmity in the order passed by the ld. CIT (Appeals). Ground No. 5 raised by the Revenue is dismissed. 31. Ground No. 6 of grounds of appeal of the Revenue is in respect of various disallowances made while computing the book profit under section 115JA of the Act. 32. The ld. Counsel submits that similar matter came up for hearing before the Tribunal for assessment year 2006-07 and the Tribunal restored the issue to the file of the Assessing Officer to decide afresh. 33. On hearing both the sides and perusing the orders of the authorities below and the decision of the Tribunal in assessee’s own case for assessment year 2006-07 we find that identical issue i.e. as to whether various provisions can be added back to the book profit under section 115JA of the Act came up before Tribunal and the Tribunal restored the issue to the file of the Assessing Officer observing as under:- “17. In ground No.7, the Revenue has contested the additions for various provisions, made by the Assessing Officer in terms of section 115JB of the Act, which the Ld. CIT(Appeals) has deleted. 17.1 The facts in brief qua the issue in dispute are that section 115JB of the Act specifies that provisions made for meeting liabilities other than ascertained liabilities are to be added to the book profit as per clause (c) of said section. The assessee in its books of accounts made provision for payment of gratuity at Rs.6,37,59,797/-, provision for bad and doubtful debts at ₹ 8,96,86,802/-, provision for payment of wealth tax at Rs.6,62,044/-, provision for leave encashment at ₹ 5,42,27,950/- and provision for PLI of ₹ 4,02,05,550/-. For working out book ITA. No. 4190/Del/2011 AND ITA. No. 4334/Del/2011 29 profit as per section 115JB of the Act, the Assessing Officer added these provisions to the book profit shown by the assessee in the books of accounts. Before the Ld. CIT(A), the assessee claimed that provision for payment of the gratuity and leave encashment was created as per the actuarial valuation and therefore those were ascertained liabilities. The Ld. CIT(A) accordingly held that there was no scope for making any addition for those provisions under section 115JB of the Act. Regarding wealth tax provisions, it was submitted by the assessee that it was an exact amount of the liability and which has been added back in the computation being inadmissible in nature. The Ld. CIT(A) following the finding of his predecessors in assessment year 2003-04, 2004-05 and 2005-06 deleted the addition. As far as provision of PLI is concerned, the Learned CIT(A) deleted the addition in view of the holding the same as ascertained liability while adjudicating additions under regular provisions of the Act. The addition for provision of bad and doubtful debt was deleted following the decision of the Hon’ble Supreme Court in the case of HCL Comnet Systems and Services 305 ITR 409 (SC).. 17.2 The Learned DR submitted that the liabilities being unascertained, the Ld AO has correctly added the items to the profit as per books of accounts for arriving at book profit as per the provisions of section 115JB read with explanation 1(c) of the Act. 17.3 The Learned Counsel of the assessee relied on the order of the Learned CIT(A) and submitted that items in dispute are ascertained liability and therefore cannot be added invoking Explanation 1(c) of section 115JB of the Act. 17.4 We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. Before us, the learned Counsel of the assessee has submitted that provision for gratuity and leave encashment have been made on the basis of the actuarial valuation and therefore, these are ascertained liabilities. Similarly, regarding wealth tax provisions, it has been submitted that the liability has been added back. Similar submissions have been made regarding provision for bad and doubtful debts. Regarding profit linked incentives, we have already restored the issue in dispute to the file of the Assessing Officer for verification of the working of said liability. In view of the above facts and circumstances, we feel it appropriate to restore this issue to the file of the Assessing Officer for verification ITA. No. 4190/Del/2011 AND ITA. No. 4334/Del/2011 30 of the claim of the assessee of actuarial valuation and other documentary evidence to substantiate that the relevant liabilities are ascertained liabilities. The ground No. 7 of the appeal of the Revenue is accordingly allowed for statistical purposes.” 34. We observe that in the year under consideration also the Assessing Officer made various additions of provisions made towards pay revision, gratuity, bad and doubtful debts, bonded stock and wealth tax and the ld. CIT (Appeals) allowed the claim of the assessee except wealth tax and bonded stock. As the issue has been restored to the file of the Assessing Officer in preceding assessment years by the Tribunal, we feel it appropriate to restore this ground to the file of the Assessing Officer to decide afresh in accordance with law after providing adequate opportunity of being heard to the assessee. Ground No. 6 of grounds of appeal of the Revenue is allowed for statistical purpose. 35. Coming to ground No. 11 of grounds of appeal of the assessee which relates to disallowance under section 14A of the Act. As we have restored ground No. 5 of grounds of appeal of the Revenue in respect of deduction under section 14A vis-à-vis the dividend income exempt under section 10(33) of the Act this ground is also restored to the file of the Assessing Officer for de novo adjudication in accordance with law. We also find that the Tribunal by order dated 17.07.2009 in para 22 restored the matter to the file of the Assessing Officer. Ground No. 11 is allowed for statistical purpose. 36. In ground Nos. 12 and 13 the computation of book profit under section 115JA of the Act has been challenged. The ITA. No. 4190/Del/2011 AND ITA. No. 4334/Del/2011 31 contention of the assessee was that warehousing charges were exempt under section 10(29) of the Act. The contention of the assessee was that the Assessing Officer should have excluded the gross income credited to the P & L account on account of warehousing charges which was exempt under section 10(29) of the Act while allowing book profits under section 115JA and not the profit in respect of such income. 37. As we have dismissed the additional grounds raised by the assessee in respect of applicability of provision of section 115JA of the Act to the assessee Warehousing Corporation, we feel it appropriate to restore these grounds to the file of the Assessing Officer to decide in accordance with law after providing adequate opportunity of being heard to the assessee especially as there was no finding given by the AO/ld. CIT (Appeals). Thus these grounds are allowed for statistical purpose. 38. Ground No. 14 of grounds of appeal of the assessee is in respect of charging of interest under section 234B of the Act which is only consequential and no need for adjudication. 39. Ground Nos. 15 to 17 of grounds of appeal of the assessee are general in nature and no need for adjudication. 40. In the result, appeal of the Revenue and appeal of the assessee are partly allowed as indicated above. Order pronounced in the open court on : 14/11/2023. Sd/- Sd/- ( M. BALAGANESH ) ( C. N. PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER ITA. No. 4190/Del/2011 AND ITA. No. 4334/Del/2011 32 Dated : 14/11/2023. *MEHTA* आदेश की Ůितिलिप अŤेिषत / Copy of Order Forwarded to:- 1. आवेदक / Assessee 2. राजˢ / Revenue 3. संबंिधत आयकर आयुƅ / Concerned CIT 4. आयकर आयुƅ- अपील / CIT (A) 5. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, DELHI / DR, ITAT, DELHI 6. गाडŊ फाइल / Guard file. By order ASSISTANT REGISTRAR ITAT, New Delhi. Date of dictation 08.11.2023 Date on which the typed draft is placed before the dictating Member 10.11.2023 Date on which the typed draft is placed before the Other Member 14.11.2023 Date on which the approved draft comes to the Sr. PS/PS 14.11.2023 Date on which the fair order is placed before the Dictating Member for pronouncement 14.11.2023 Date on which the fair order comes back to the Sr. PS/PS 14.11.2023 Date on which the final order is uploaded on the website of ITAT 14.11.2023 ITA. No. 4190/Del/2011 AND ITA. No. 4334/Del/2011 33 Date on which the file goes to the Bench Clerk 14.11.2023 Date on which the file goes to the Head Clerk The date on which the file goes to the Assistant Registrar for signature on the order Date of dispatch of the Order