DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-6, JAIPUR V. M/S JAIPUR CITY TRANSPORT SERVICES LTD., JAIPUR

ITA 504/JPR/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 7198 (ITAT-JAIPUR)
• Duration Of Justice: 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 11-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BK GUPTA
• Assessee Lawyers: SAJAL KANOONGO ADV DH
• Keywords: Depreciation; TDS
• Section: 43B; 40A(3); 64; 10

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENC H B JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRA M SINGH YADAV, AM VK;DJ VIHY LA- @ ITA NO. 504/JP/2019 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2012-13 DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-06, JAIPUR CUKE VS. M/S JAIPUR CITY TRANSPORT SERVICES LTD., 2 ND FLOOR OLD WORKING WOKEN HOSTEL, BEHIND NEHRU PLACE, LAL KOTHI, TONK ROAD, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AABCJ9735H VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT IZR;K{KSI.K @ C.O. NO. 15/JP/2019 (ARISING OUT OF VK;DJ VIHY LA-@ ITA NO. 504/JP/2019) FU/KZKJ.K O'K Z @ ASSESSMENT YEAR 2012-13 M/S JAIPUR CITY TRANSPORT SERVICES LTD., 2 ND FLOOR OLD WORKING WOKEN HOSTEL, BEHIND NEHRU PLACE, LAL KOTHI, TONK ROAD, JAIPUR RAJASTHAN CUKE VS. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-06, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AABCJ9735H IZR;K{KSID@ OBJECTOR IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SH. B. K. GUPTA (CIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SH. SIDDHARTH RANKA & M S SAJAL KANOONGO (ADV.) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 28/08/2019 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 18/10/2019 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. 2 ITA NO. 504/JP/2019 & CO NO. 15/JP/2019 DCIT, JAIPUR VS. M/S JAIPUR CIT Y TRANSPORT SERVICES LTD., JAIPUR THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A), AJMER DATED 28.01.2019 FOR A.Y 2012-13 WHEREIN REVENUE HA S RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS . 4,40,02,647/- IN THE ABSENCE OF PROPER RECONCILIATION OF UTILIZED GRANT AND WHEN UTILIZED GRANT WAS MORE THAN 70% OF CAPITAL COST. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS . 20,72,06,324/- MADE ON ACCOUNT OF DISALLOWANCE U/S 40A(3) OF THE ACT IN RE SPECT OF EXPENSES BEING SET OFF BY RSRTC. 2. REGARDING GROUND NO. 1, BRIEFLY STATED THE F ACTS OF THE CASE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFF ICER OBSERVED THAT THE ASSESSEE COMPANY HAS SHOWN THE GRANT UTILIZED TOWARDS PURCHA SE OF BUSES OF RS. 60,73,27,300/- IN ITS BALANCE-SHEET FOR THE FIN ANCIAL YEAR ENDED 31 ST MARCH, 2012. THE ASSESSEE COMPANY WAS ASKED TO PROVIDE THE COMPL ETE DETAILS OF THE GRANT-IN- AID RECEIVED DURING THE YEAR 2011-12 WITH JUSTIFICA TION FOR NOT OFFERING THE SAME TO TAX. 3. IN RESPONSE, THE ASSESSEE COMPANY SUBMITTED THAT IT RECEIVES TWO KINDS OF GRANT NAMELY OPERATIONAL GRANT AND GRANT FOR NON-OP ERATIONAL PURPOSES SUCH AS FOR PURCHASES OF BUSES ETC. AS FAR AS THE OPERATION GR ANT IS CONCERNED, IT WAS SUBMITTED THAT THE SAME HAS BEEN TAKEN AS REVENUE GRANT AND D IRECTLY CREDITED TO PROFIT AND LOSS ACCOUNT AND GRANTS OTHER THAN THE OPERATIONAL GRANTS ARE TREATED AS CAPITAL GRANTS AND CAPITALIZED IN THE BOOKS OF ACCOUNTS. IT WAS FURTHER SUBMITTED THAT METHOD USED TO REFLECT THE CAPITAL GRANT IS TO SHOW ASSETS AT GROSS VALUE IN BALANCE SHEET AND AMOUNT OF GRANT HAS BEEN SHOWN IN LIABILI TIES WHICH HAS BEEN FURTHER CLASSIFIED INTO UTILIZED AND UNUTILIZED GRANT. IT W AS FURTHER SUBMITTED THAT WHILE MAKING THE EXPENDITURE TOWARDS PURCHASE OF BUSES, T HE SAME IS MADE OUT OF GRANT RECEIPT FROM THE CENTRAL GOVERNMENT TO THE EXTENT O F 50% AND 20% FROM THE GRANT 3 ITA NO. 504/JP/2019 & CO NO. 15/JP/2019 DCIT, JAIPUR VS. M/S JAIPUR CIT Y TRANSPORT SERVICES LTD., JAIPUR RECEIVED FROM THE STATE GOVERNMENT. IT WAS ACCORDIN GLY SUBMITTED THAT 70% OF COST OF BUSES SO PURCHASED IS MET OUT OF THE CAPITAL GRA NT AND TRANSFERRED FROM TOTAL GRANT TO UTILIZED GRANT ACCOUNT AND REMAINING LIES IN UNUTILIZED GRANT ACCOUNT. IT WAS ACCORDINGLY SUBMITTED THAT THE CAPITAL GRANT SO REC EIVED BY THE ASSESSEE COMPANY IS SPECIFICALLY GIVEN FOR PURCHASE OF FIXED ASSET (BUS ES) AND THE SAME IS THUS NOT CHARGEABLE TO TAX AS THE SAME IS NOT ASSESEES INC OME. 4. THE SUBMISSIONS SO FILED BY THE ASSESSEE COMPANY WERE CONSIDERED BUT NOT FOUND ACCEPTABLE TO THE ASSESSING OFFICER AND THE R ELEVANT FINDINGS OF THE ASSESSING OFFICER READ AS UNDER:- THE SUMMARIZED CHART ON THE PAGE OF 56 OF THE ANNU AL REPORT IS SHOWING THE RECEIPT OF THE GRANT AND UTILIZATION THEREOF FO R THE ALLOCATING THE GRANT BETWEEN REVENUE AND CAPITAL AS UTILIZED AND UNUTILI ZED TO MATCH THE BALANCE SHEET . THE ASSESSEE HAS NOT PROVIDED THE ADEQUATE DETAILS OF THE GRANTS SO RECEIVED, JUSTIFYING THE NATURE OF THE GRANT, WHETH ER IS OF CAPITAL OR REVENUE. THE ASSESSEE HAS STATED THAT THE GRANT IN AID OF RS . 23,92,1000/-RECEIVED DURING THE YEAR FROM CENTRAL AND STATE GOVERNMENT F OR THE PURCHASE OF BUSES, WHICH IS FORMING PART OF THE COST OF THE BUS ES AND IS OF CAPITAL IN NATURE. HOWEVER, THE GROSS BLOCK OF THE BUSES SHOWI NG THE AMOUNT CAPITALIZED FOR THE PURCHASE OF THE BUSES UPTO 31.0 3.12 IS RS. 80,47,49,504/- AS PER THE NOTE NO. (1.7) OF THE AUDITED BALANCE SHEET. RELYING ON THE ASSEESSEE'S SUBMISSION, THE UTILIZED GRANT PORTION OUT OF THE CAPITAL GRANT RECEIVED FROM THE CENTRAL & STATE GOV ERNMENT SHOULD BE 70% WHICH COMES TO RS. 56,33,24,653/. THE UTILIZED GRAN T APPEARING IN THE BALANCE SHEET TOWARDS PURCHASE OF THE BUSES IS RS. 60,73,27,300/-EXCESS BY RS. 4,40,02,647/- WHICH SEEMS IN THE NATURE OF MISAPPLICATION/MISAPPROPRIATION OF THE GRANT. IN VIEW OF THE FAILURE OF THE ASSESSEE TO PROVIDE T HE ADEQUATE DETAILS / INFORMATION I HAVE NO OPTION TO MATCH THE CORRECT A PPLICATION OF THE CAPITAL 4 ITA NO. 504/JP/2019 & CO NO. 15/JP/2019 DCIT, JAIPUR VS. M/S JAIPUR CIT Y TRANSPORT SERVICES LTD., JAIPUR GRANT TOWARDS THE BUSES PURCHASE UPTO 31.03.12 EXCE PT TO APPLY OF RATIO AS SUBMITTED BY ASSESSEE. THEREFORE, THE EXCESS FIGURE OF RS. 4,40,02,647/- IS TREATED AS REVENUE RECEIPTS FROM THE UTILIZED GRANT APPEARING IN THE BALANCE SHEET AND ADDITION IS MADE TO THE TOTAL INC OME OF THE ASSESSEE ACCORDINGLY. 5. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MA TTER IN APPEAL BEFORE LD. CIT(A) AND SUBMITTED THAT BOOKS OF ACCOUNTS OF THE ASSESSE E COMPANY ARE NOT ONLY AUDITED BY THE CHARTERED ACCOUNTANT BUT ALSO BY COMPTROLLER & AUDITOR GENERAL OF INDIA AND NO SUCH DEFECT OR QUALIFICATION HAS BEEN POINTED OU T BY THEM. IT WAS FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAS NOT POINTE D OUT WHICH ACCOUNTING STANDARD AND WHICH PROVISION OF THE INCOME TAX ACT HAS BEEN FLOUTED BY THE ASSESSEE COMPANY. THE LD. CIT(A) AFTER GOING THROUGH THE SU BMISSIONS OF THE ASSESSEE AND THE FINANCIAL STATEMENTS OF THE ASSESSEE COMPANY ST ATED THAT THE COMPLETE DETAILS OF THE GRANT RECEIVED, UTILIZED AND UNUTILIZED GRANT I S AVAILABLE IN THE BALANCE SHEET DATED 31.03.2012 OF THE ASSESSEE COMPANY. HENCE, TH ERE IS NO JUSTIFICATION FOR MAKING THE ADDITION OF RS. 4,40,02,647/- AS MISAPPL ICATION/MISAPPROPRIATION OF THE GRANT. ACCORDINGLY, THE ADDITION OF RS. 4,40,02,647 /- SO MADE BY THE AO WAS DIRECTED TO BE DELETED BY THE LD. CIT(A). AGAINST THE SAID FINDINGS OF THE LD CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 6. THE LD. DR REITERATED THE FINDINGS OF THE ASSE SSING OFFICER AND SUBMITTED THAT COMPLETE DETAILS ARE NOT AVAILABLE ON RECORD IN TER MS OF UTILISATION OF GRANT AND PURCHASE OF BUSES AND HENCE, THE ACTION OF THE ASSE SSING OFFICER IS JUSTIFIED. IT WAS FURTHER SUBMITTED THAT THE LD CIT(A) HAS ALSO NOT E XAMINED THE SAID FACT AND HAS GIVEN THE FINDINGS BROADLY BASIS THE DISCLOSURE IN THE FINANCIAL STATEMENTS WHICH IS NOT ADEQUATE TO ADDRESS THE MATTER RAISED BY THE AS SESSING OFFICER. HE ACCORDINGLY SUBMITTED TO SET-ASIDE THE ORDER OF THE LD CIT(A) A ND RESTORE THE ORDER OF THE AO. 7. PER CONTRA, THE LD. AR REITERATED THE SUBMISSIO NS MADE BEFORE THE LOWER AUTHORITIES. HE TOOK US THROUGH THE FINANCIAL STAT EMENTS OF THE ASSESSEE COMPANY AND SUBMITTED THAT THE FINANCIAL STATEMENTS ARE DUL Y AUDITED BY THE C&AG AND THERE 5 ITA NO. 504/JP/2019 & CO NO. 15/JP/2019 DCIT, JAIPUR VS. M/S JAIPUR CIT Y TRANSPORT SERVICES LTD., JAIPUR IS NO FINDING RECORDED BY THE C&AG IN TERMS OF MISA PPROPRIATION OF GRANT SO RECEIVED BY THE ASSESSEE COMPANY. HE SUPPORTED THE FINDINGS OF THE LD. CIT(A). 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PURSUED THE MATERIAL AVAILABLE ON RECORD. DURING THE COURSE OF ASSESSMENT PROCEEDING S, THE ASSESSEE COMPANY WAS ISSUED A SHOW CAUSE AS TO WHY THE AMOUNT OF GRANT R ECEIVED TOWARDS PURCHASES OF BUSES SHOULD NOT BE BROUGHT TO TAX. IN RESPONSE, TH E ASSESSEE SUBMITTED THAT THE GRANT HAS BEEN GIVEN SPECIFICALLY FOR PURCHASE OF F IXED ASSET SUCH AS BUSES AND THE SAME IS NOT CHARGEABLE TO TAX, HENCE, THE SAME HAS NOT BEEN OFFERED AND CREDITED IN THE PROFIT AND LOSS ACCOUNT. THE ASSESSING OFFICER HAS NOT DISPUTED THE SAID CONTENTION SO ADVANCED BY THE ASSESSEE COMPANY THAT THE CAPITAL GRANT HAS BEEN SPECIFICALLY GRANTED FOR PURCHASE OF THE FIXED ASSE TS. THEREFORE, TO THIS EXTENT, THERE IS NO DISPUTE BEFORE US. THE ONLY DISPUTE WHICH IS EMERGING FROM THE ORDER OF THE ASSESSING OFFICER IS THAT THE AMOUNT CAPITALIZED FO R PURCHASE OF THE BUSES OUT OF THE CAPITAL GRANT SO RECEIVED FROM THE CENTRAL AND STAT E GOVERNMENT AS SHOWN IN THE BOOKS OF ACCOUNTS VIS--VIS UTILISED GRANT IS LOWER BY RS. 4,40,02,647/-. IN OTHER WORDS, THE AMOUNT OF UTILIZED GRANT IS HIGHER BY RS . 4,40,02,647/- AND THERE IS NO CORRESPONDING INCREASE IN THE GROSS BLOCK OF BUSES WHICH HAS BEEN CAPITALISED IN THE BOOKS OF ACCOUNTS. THE ASSESSEE COMPANY IS THEREFOR E REQUIRED TO EXPLAIN AND FURNISH THE NECESSARY DETAILS AND THE RECONCILIATIO N BETWEEN TWO ACCOUNTS AS WE FIND THAT THE DISCLOSURE IN THE FINANCIAL STATEMENTS ARE NOT ADEQUATE ENOUGH TO RECONCILE THESE TWO ACCOUNTS AND PROVIDE A CLEAR PICTURE. 9. IT IS NO DOUBT TRUE THAT THE BOOKS OF ACCOUNTS O F THE ASSESSEE COMPANY HAVE BEEN AUDITED BY A CHARTERED ACCOUNTANT AND ALSO BY COMPTROLLER & AUDITOR GENERAL OF INDIA AND THERE IS NO QUALIFICATION OR FINDING R EGARDING MISAPPROPRIATION OF THE GRANT. HOWEVER, WE FIND THAT THE OBSERVATION OF THE ASSESSING OFFICER REGARDING MISAPPLICATION/MISAPPROPRIATION OF THE GRANT IS TO BE SEEN AND APPRECIATED IN THE LIMITED CONTEXT OF EXAMINING THE ACTUAL UTILIZATION OF THE CAPITAL GRANT RECEIVED BY THE 6 ITA NO. 504/JP/2019 & CO NO. 15/JP/2019 DCIT, JAIPUR VS. M/S JAIPUR CIT Y TRANSPORT SERVICES LTD., JAIPUR ASSESSEE COMPANY AS TO WHETHER THE CAPITAL GRANT IS UTILIZED FOR THE PURPOSE OF MEETING THE SPECIFIC END USE FOR WHICH THE CAPITAL GRANT HAS BEEN GRANTED OR FOR MEETING OTHER OPERATIONAL EXPENDITURE. THE SAME WIL L HELP DETERMINE THE CHARACTER OF THE RECEIPT IN THE HANDS OF THE ASSESSEE COMPANY . IN A SCENARIO, THE CAPITAL GRANT IS UTILIZED FOR PURCHASE OF BUSES AND OTHER FIXED A SSETS FOR WHICH IT HAS BEEN GRANTED, THE SAME WOULD BE IN NATURE OF CAPITAL GRANT AND NO T CHARGEABLE TO TAX. WHERE THE CAPITAL GRANT IS UTILISED FOR MEETING THE OPERATION AL EXPENDITURE OF THE ASSESSEE COMPANY, THE ASSESSING OFFICER IS WELL WITHIN HIS R IGHT AND JURISDICTION TO EXAMINE THE TAXABILITY THEREOF AS TO WHY THE SAME SHOULD NO T BE TREATED AS REVENUE RECEIPT AND BROUGHT TO TAX. IN THE PRESENT CASE, AS WE HAV E NOTED ABOVE, THE ADEQUATE INFORMATION IS NOT AVAILABLE ON RECORD AND WE THERE FORE DEEM IT APPROPRIATE TO REMAND THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE THE SAME AFRESH AFTER PROVIDING REASONABLE OPPORTUNITY TO TH E ASSESSEE COMPANY. FURTHER, THE ASSESSING OFFICER SHALL BE AT LIBERTY TO EXAMINE TH E CLAIM OF THE DEPRECIATION ON THE ASSETS SO PURCHASED OUT OF THE CAPITAL GRANT AFTER CONSIDERING THE PROVISIONS OF EXPLANATION 10 TO SECTION 43(1) OF THE ACT. IN T HE RESULT, THE GROUND OF THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 10. REGARDING GROUND NO. 2 OF THE REVENUES APPE AL, BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER, ON PERUSAL OF THE AUDITOR'S QUALIFICATION NO. 12 IN THE ANNUAL REPORT OF THE ASSESSEES COMPANY, OBSERVED THAT A SUM OF RS. 20,72,06,324/- AS REVENUE COLLECTION IN CASH ON DAILY BASIS BY VIDYADHAR NAGAR DEPOT OF RSRTC HAS NOT BEEN DEPOSITED IN THE DESIGNATED ACCOUNT, IN COMPLIANCE OF THE AGREEMENT DATED 06.06.11 AND AT T HE MONTH END, THE EXPENSES HAVE BEEN SET OFF BY RSRTC TOWARDS THEIR E XPENSES INCURRED FROM THE REVENUE COLLECTION WHICH LEADS TO NON-COMPLIANCE OF STATUTORY REQUIREMENT OF SECTION 40A(3) READ WITH RULE 6DD OF THE INCOME TAX ACT, 1961. THE ASSESSEE WAS ASKED TO JUSTIFY THE PAYMENTS MADE AND IN RESPO NSE, THE ASSESSEE HAS REPLIED THROUGH ITS LETTER DATED 12.03.15 AS UNDER- 7 ITA NO. 504/JP/2019 & CO NO. 15/JP/2019 DCIT, JAIPUR VS. M/S JAIPUR CIT Y TRANSPORT SERVICES LTD., JAIPUR '7. DETAILS OF MONTHLY COLLECTION OF RSRTC (VDN) AN D EXPENDITURE AGAINST IS ENCLOSED. (COPY OF AGREEMENT WITH RSRTC IS ALSO ENC LOSED). FURTHER DETAILS OF TDS DEDUCTED AN DEPOSITED IS ALSO ENCLOSED. RSRTC WAS PLYING BUSES OF JCTSL. FOR WHICH RSRTC WA S PLYING SOME BUSES OF JCTSL FOR WHICH HE WAS DOING EXPENDITURE A ND GIVING A CONSOLIDATED P & L EVERY MONTH. JCTSL WAS BOOKING E XPENSES AND REVENUE ON BASIS OF THAT P 86 L. FURTHER RULES OF SECTION 40A(3) WITH RULE 6DD(D) AL SO SAYS THAT 'WHERE THE PAYMENT IS MADE BY WAY OF ADJUSTMENT AGAINST THE AM OUNT OF ANYB LIABILITY INCURRED BY THE PAYEE FOR ANY GOODS SUPPLIED OR SER VICES RENDERED BY THE ASSESSSEE TO SUCH PAYEE' IS AN EXCEPTION TO PROVISI ON OF SECTION 40A(3). ACCORDINGLY THIS WAS MERELY AS SETTING OFF OF LIABI LITY I.E. EXPENDITURE MADE BY RSRTC ON BEHALF OF JCTSL AGAINST REVENUE CO LLECTED BY RSRTC ON BEHALF OF JCTSL WHICH WAS A ASSET OF JCTSL . THUS TRANSACTIONS MADE WITH RSRTC ARE GENUINE AND E XPENDITURE CANNOT BE DISALLOWED.' 11. THE REPLY SO FILED BY THE ASSESSEE COMPANY WAS NOT FOUND TENABLE AND THE RELEVANT FINDINGS OF THE ASSESSING OFFICER ARE AS UNDER: 1. THE ASSESSEE IS SOLELY DEPENDENT ON THE MONTHLY COLLECTION 85 EXPENDITURE STATEMENTS GIVEN BY RSRTC. THE ASSESSEE IS NOT IN POSITION TO ACCURATELY ASSESS/GENUINENESS OF THE INCOME AND EXPENDITURE OF THE RESPECTIVE PERIOD. 2. THE ASSESSEE IS ALSO NOT AWARE ABOUT THE VARIOUS STATUTORY COMPLIANCE APPLICABLE ON THE SAID EXPENDITURE AND INCOMES. 8 ITA NO. 504/JP/2019 & CO NO. 15/JP/2019 DCIT, JAIPUR VS. M/S JAIPUR CIT Y TRANSPORT SERVICES LTD., JAIPUR 3. THE COLLECTION AGENCY (RSRTC) IS VIOLATING THE T ERMS OF AGREEMENT ENTERED ON 06.06.2011 FOR THE COLLECTION OF REVENUE AND ITS REMITTANCE BY WAY OF DEPOSIT IN THE DESIGNATED COLLECTION ACCO UNT, MEANS THEREBY THE COLLECTION AGENCY HAVING NO RIGHT FOR ADJUSTMEN T OF THE EXPENDITURE. 4. AS REPLIED BY THE ASSESSEE FOR ADJUSTMENT OF THE COLLECTION WITH EXPENSES INCURRED UNDER RULE 6DD IS ALSO NOT APPLIC ABLE IN THE ASSESSEE'S CASE, BECAUSE THE ASSESSEE HAS NOT RENDE RED THE SERVICE TO RSRTC, THEREFORE, INTER-HEAD ADJUSTMENT IS NOT POSS IBLE. IN THESE CIRCUMSTANCES AND ON THE FACTS OF THE CASE , WHICH IS ALSO QUALIFIED BY THE STATUTORY AUDIT OF THE COMPANY FOR THE STATUTORY VIOLATION OF THE COMPLIANCE. SINCE, THERE WAS A FAI LURE OF THE ASSESSEE ON ACCOUNT OF PROPER ACCOUNTING SYSTEM AND TO HAVE ADEQUATE INTERNAL CONTROL OVER THE OPERATION OF THE BUSINESS AND IS V IOLATING THE PROVISIONS OF SECTION 40A(3) OF THE INCOME TAX ACT, 1961. THEREFORE, WE HAVE NO OTHER TO DISALLOW THE SUM OF RS. 20,72,0 6,324/- AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. 12. ON APPEAL, THE LD. CIT(A) HAS DELETED THE ADD ITION SO MADE BY THE ASSESSING OFFICER AND THE RELEVANT FINDINGS OF THE LD CIT(A), WHICH ARE UNDER CHALLENGE BEFORE US, READ AS UNDER: M/S RSRTC IS RUNNING THE BUSES ON BEHALF OF JCTCL (APPELLANT), COLLECTING REVENUE FROM OPERATION AND ALSO INCURRIN G THE EXPENSES. THE ENTRIES OF REVENUE AND EXPENDITURE ARE MADE IN THE BOOKS OF THE APPELLANT ON THE BASIS OF MONTHLY INCOME AND EXPEND ITURE STATEMENT RECEIVED FROM RSRTC. NO CASH PAYMENT IN CONTRAVENTI ON OF SECTION 40A(3) BY THE APPELLANT HAS BEEN BROUGHT ON RECORD BY THE AO. THE EXPENSES HAVE BEEN BOOKED BY THE APPELLANT ON THE B ASIS OF MONTHLY 9 ITA NO. 504/JP/2019 & CO NO. 15/JP/2019 DCIT, JAIPUR VS. M/S JAIPUR CIT Y TRANSPORT SERVICES LTD., JAIPUR STATEMENT OF INCOME AND EXPENDITURE RECEIVED FROM R SRTC. THEREFORE, THERE IS NO JUSTIFICATION FOR MAKING DIS ALLOWANCE OF RS. 20,72,06,324/- U/S 40A(3). ACCORDINGLY, THE DISALLO WANCE OF RS. 20,72,06,324/- MADE BY THE AO IS HEREBY DELETED. 13. WE HAVE HEARD BOTH THE PARTIES AND CONSIDERED THE MATERIAL AVAILABLE ON RECORD. FIRSTLY, IT IS NOTED THAT WHAT HAS BEEN DI SALLOWED IS A SUM OF RS 20,72,06,324 WHICH IS THE AMOUNT OF DAILY CASH COLL ECTIONS BY RSRTC ON BEHALF OF THE ASSESSEE COMPANY. HOW THE REVENUE RECEIPTS CAN BE SUBJECT MATTER OF DISALLOWANCE AND THAT TOO, BY INVOKING THE PROVISIO NS OF SECTION 40A(3) IS BEYOND OUR IMAGINATION. HAD THE ASSESSEE NOT REPORTED THE SAM E AS PART OF ITS REVENUE RECEIPTS, THE REVENUE HAS ALL THE RIGHT TO BRING TH E SAME TO TAX, HOWEVER, THERE IS NO SUCH FINDING BY THE ASSESSING OFFICER THAT THE REVE NUE RECEIPTS HAVE NOT BEEN OFFERED TO TAX. SECONDLY, WHERE THERE IS A VIOLATION OF TE RMS OF AGREEMENT ENTERED INTO BETWEEN RSRTC AND THE ASSESSEE COMPANY, THE SAME IS A SUBJECT MATTER OF CONTRACTUAL DISPUTE WHICH HAS BEEN HIGHLIGHTED BY T HE AUDITORS IN THEIR AUDIT REPORT AND IT IS FOR THE PARTIES TO THE DISPUTE AND THE AP PROPRIATE AUTHORITIES TO TAKE NOTE OF THE SAME. HOW THE SAME HAS EFFECTED THE REPORTING OF REVENUES IN THE FINANCIAL STATEMENTS AND OFFERING THE SAME TO TAX IN THE RETU RN OF INCOME HAS NOT BEEN STATED AT ALL BY THE ASSESSING OFFICER. THEREFORE, WHERE THERE IS NO FINDING BY THE ASSESSING OFFICER THAT THE REVENUE SO COLLECTED HAS NOT BEEN OFFERED TO TAX, THERE CANNOT BE ANY BASIS FOR MAKING ADDITION IN THIS REGARD. 14. CONSIDERING THE MATTER FROM ANOTHER PERSPECTIVE , AS IT IS EMERGING FROM THE RECORDS, RSRTC INCURS THE EXPENDITURE ON BEHALF OF THE ASSESSEE COMPANY OUT OF SUCH REVENUE COLLECTION IN CASH AND THEN, REMITS TH E BALANCE AMOUNT TO THE ASSESSEE COMPANY. ON THE EXPENDITURE SO INCURRED BY RSRTC O N BEHALF OF THE ASSESSEE COMPANY, THE LATTER HAS SUBMITTED THE DETAILS OF TD S DEDUCTED AND DEPOSITED. THE LD CIT(A) HAS RETURNED A FINDING THAT NO CASH PAYMENT IN CONTRAVENTION OF SECTION 40A(3) BY THE APPELLANT HAS BEEN BROUGHT ON RECORD BY THE AO. DURING THE COURSE OF HEARING, THE LD DR HAS NOT BRO UGHT ON RECORD ANYTHING WHICH 10 ITA NO. 504/JP/2019 & CO NO. 15/JP/2019 DCIT, JAIPUR VS. M/S JAIPUR CIT Y TRANSPORT SERVICES LTD., JAIPUR CONTROVERTS SUCH FINDINGS. THEREFORE, WHERE NO FIN DING HAS BEEN GIVEN BY THE ASSESSING OFFICER IN TERMS OF ANY SPECIFIC VIOLATIO N OF PROVISIONS OF SECTION 40A(3) READ WITH RULE 6DD, WE DONOT SEE ANY INFIRMITY IN T HE ACTION OF THE LD CIT(A) IS DELETING THE SAID DISALLOWANCE. 15. IN THE RESULT, GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 16. NOW, COMING TO THE SOLE GROUND TAKEN BY THE A SSESSEE COMPANY IN ITS CROSS OBJECTION WHEREIN IT HAS CHALLENGED THE SUSTENANCE OF DISALLOWANCE OF RS. 29,10,,010/- U/S 43B OF THE ACT. 17. IN THIS REGARD, OUR REFERENCE WAS DRAWN BY THE LD AR TO THE FINANCIAL STATEMENTS OF THE ASSESSEE COMPANY FOR THE YEAR END ED 31.03.2012 AVAILABLE AT PAGE 64 OF THE PAPER BOOK WHEREIN A SUM OF RS. 29,1 0,010/- HAS BEEN SHOWN AS INTEREST ACCRUED BUT NOT DUE, OUT OF WHICH RS. 4,95 ,257/- IS TOWARDS PURCHASE OF BUS AND RS. 24,65,753/- IS TOWARDS PAYMENT TO RAJASTHAN STATE ROAD TRANSPORT CORPORATION. IT WAS SUBMITTED BY THE LD AR THAT RAJ ASTHAN STATE ROAD TRANSPORT CORPORATION IS NEITHER A SCHEDULED BANK, NOR IT IS A STATE INDUSTRIAL INVESTMENT CORPORATION NOR IT IS STATE FINANCIAL CORPORATION, NOR IS IT A PUBLIC FINANCIAL INSTITUTION. HENCE, THE PROVISIONS OF SECTION 43B ARE WRONGLY AP PLIED BY THE ASSESSING OFFICER. IT WAS FURTHER SUBMITTED THAT SUCH INTEREST WAS NOT PA ID AND HAS BEEN REVERSED IN THE SUBSEQUENT FINANCIAL YEAR. 18. PER CONTRA, THE LD. DR IS HEARD WHO HAS RELIE D ON THE FINDINGS OF THE LD. CIT(A) AND THE RELEVANT FINDINGS READS AS UNDER:- 6.4 FROM THE REPLY OF THE APPELLANT, IT IS EVID ENT THAT THE LIABILITY TO PAY THE INTEREST WAS NOT A GENUINE LIABILITY BECAUSE ADMITT EDLY THE SAID LIABILITY WAS CANCELLED IN THE SUBSEQUENT ASSESSMENT YEAR WHICH I TSELF SHOWS THAT THE INTEREST WAS NOT PAYABLE BY THE APPELLANT. ACCORDIN GLY, IT IS HELD THAT THE INTEREST LIABILITY HAD NOT CRYSTALLIZED IN THE PREV IOUS YEAR RELEVANT TO A.Y. 11 ITA NO. 504/JP/2019 & CO NO. 15/JP/2019 DCIT, JAIPUR VS. M/S JAIPUR CIT Y TRANSPORT SERVICES LTD., JAIPUR 2012-13. ACCORDINGLY, THE DISALLOWANCE OF INTEREST OF RS. 29,10,010/- MADE BY THE AO IS HEREBY CONFIRMED. 19. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ASSESSING OFFICER HAS STR AIGHT AWAY APPLIED THE PROVISIONS OF SECTION 43B OF THE ACT AND THE LD CIT(A) HAS INS TEAD HELD THAT THE INTEREST LIABILITY HAD NOT CRYSTALLIZED IN THE PREVIOUS YEAR RELEVANT TO A.Y. 2012-13 AND HE HAS SUSTAINED THE DISALLOWANCE. NO DOUBT THE PROVISION S OF SECTION 43B ARE NOT APPLICABLE IN THE INSTANT CASE AS RAJASTHAN STATE R OAD TRANSPORT CORPORATION IS NOT A SPECIFIED FINANCIAL INSTITUTION AS DEFINED IN SECTI ON 43B OF THE ACT. AT THE SAME TIME, WHAT NEEDS TO BE SEEN IS WHETHER THE INTEREST LIABI LITY HAS CRYSTALLIZED DURING THE YEAR OR NOT. ONLY WHERE IT IS HELD THAT THE INTERE ST LIABILITY HAS CRYSTALLIZED DURING THE YEAR, THE INTEREST EXPENSE CAN BE CLAIMED AND THERE AFTER, THE QUESTION OF APPLICABILITY OF SECTION 43B ARISES FOR CONSIDERATI ON. THE PROVISIONS OF SECTION 43B ARE NOT IN THE NATURE OF ENABLING PROVISIONS BUT AR E IN THE NATURE OF DISABILING PROVISIONS IN THE SENSE THAT FIRSTLY, IT NEEDS TO B E DETERMINED THAT THE EXPENSE SHOULD PERTAIN TO THE RELEVANT FINANCIAL YEAR IN RE SPECT OF WHICH THE ASSESSEE HAS INCURRED THE LIABILITY AND THEREAFTER, UNLESS SUCH LIABILITY IS DISCHARGED BY ACTUAL PAYMENT, SUCH LIABILITY CANNOT BE ALLOWED BUT WILL NOT BE ALLOWED IN THE YEAR OF ACTUAL PAYMENT. IN THE INSTANT CASE, THE ASSESSEE COMPANY HAS NOT ESTABLISHED THAT THE LIABILITY TOWARDS THE INTEREST HAS CRYSTALLIZED DURING THE YEAR, HENCE, WE DONOT SEE ANY INFIRMITY IN THE FINDINGS OF THE LD CIT(A) AND THE SAME IS HEREBY CONFIRMED. IN THE RESULT, THE SOLE GROUND TAKEN BY THE ASSESSE E IN ITS CROSS-OBJECTION IS DISMISSED. IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY ALLO WED FOR STATISTICAL PURPOSES AND CROSS OBJECTION OF THE ASSESSEE IS DISMISSED. 12 ITA NO. 504/JP/2019 & CO NO. 15/JP/2019 DCIT, JAIPUR VS. M/S JAIPUR CIT Y TRANSPORT SERVICES LTD., JAIPUR ORDER PRONOUNCED IN THE OPEN COURT ON 18/10/2019 SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 18/10/2019 GANESH KR. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- DCIT, CIRCLE-06, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- M/S JAIPUR CITY TRANSPORT SERVICES LTD., JAIPUR 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 504/JP/2019 & CO NO. 15/JP/2019 } VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR