ACIT, Bhubaneswar V. Orissa Power Transmission Corporation Ltd., Bhubaneswar

ITA 91/CTK/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3733 (ITAT-CUTTACK)
• Duration Of Justice: 2 year(s) 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 27-06-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 05-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K PRADHAN
• Assessee Lawyers: P V RAO
• Section: 142(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI N.S.SAINI, AM & SHRI PAV AN KUMAR GADALE, JM ./ ITA NO. 91 / CTK /20 1 5 ( / ASSESSMENT YEAR : 20 09 - 20 1 0 ) ACIT, CORPORATE CIRCL E - 1(2), BHUBANESWAR VS. ORISSA POWER TRANSMISSION CORPORATION LIMITED, JANAPATH, BHUBANESWAR ./ ./ PAN/GIR NO. : A A ACO 7873 L ( / APPELLANT ) .. ( / RESPONDENT ) /REVENUE BY : SHRI D.K.PRADHAN, D R /AS SESSEE BY : SHRI P.V.RAO, AR / DATE OF HEARING : 27 / 0 6 /201 7 / DATE OF PRONOUNCEMENT 28 / 06 /201 7 / O R D E R PER SHRI PAV AN KUMAR GADALE, JM : TH E REVENUE HAS FILED THE APPEAL AGAINST THE ORDER OF CIT(A) - 1 , BHUBANESWAR , DATED 26.12.2014 , PASSED IN I.T. APPEAL NO. 0297 / 14 - 15 , WHEREIN THE REVENUE HAS RAISED THE FOLLOWING GROUNDS : - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN LAW AS WELL AS ON FAC TS BY DELETING ADDITIONS OF RS.28,74,375/ - UNDER THE HEAD OTHER EXPENSES (PRIOR PERIOD EXPENSES) AND OF RS.34,94,615 UNDER THE HEAD EMPLOYEE COST (PRIOR PERIOD EXPENSES). 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW IN NOT ACCEPTING THE EXAMINATION OF FINDINGS MADE BY THE AO ON THE ISSUES. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PUBLIC LIMITED COMPANY OF ODISHA STATE AND IS ENGAGED IN THE B USINESS OF TRANSMISSION OF POWER AND FILED THE R ETURN OF IN COME ELECTRONICALLY ON 24.09.2009 ITA NO. 91/2015 2 DECLARING TOTAL INCOME RS.NIL FO R THE ASSESSMENT YEAR 2009 - 2010 . SUBSEQUENTLY, THE ASSESSEE S CASE WAS SELECTED FOR SCRUTINY AND NOTICES U/S.143(2) AND 142(1) OF THE ACT ALONG WITH QUESTIONNAIRE ARE ISSUED TO THE ASSESSEE . THE AO ON VERIFICATION OF BOOKS OF ACCOUNTS FOUND THAT THE ASSESSEE HAS CLAIMED IN OTHER EXPENSES PRIOR PERIOD EXPENDITURE OF RS.31,94,054/ - AND EMPLOYE E COST OF RS.34,94,615/ - . THE AO OBSERVED THAT THE PRIOR PERIOD EXPENSES WERE NOT ALLOWED U/S.37(1) OF THE ACT AND DEALT WITH THE PROVISIONS U/S.145 OF THE ACT ON THE MAINTENANCE OF B OOKS OF ACCOUNTS AND CAME TO THE CONCLUSION THAT EACH YEARS INCOME HAS TO BE CALCULATED SEPARATELY AND THE MATCHING CONCEPT OF EXPENSES HAS TO BE COMPLIED AND DISALLOWED THE AGGREGATE AMOUNT OF RS.66,88,669/ - AND PASSED THE ORDER U/S.143(3) OF THE ACT DATED 29.12.2011. 3 . AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE HAS PREFERRED AN APPEAL BEFORE THE CIT(A). IN THE APPELLATE PROCEEDINGS , LD. AR OF THE ASSESSEE ARGUED THE GROUND S AND EXPLAINED THAT THESE EXPENSES PERTAIN TO EARLIER YEAR S CRYSTALLIZED DURING THE CURRENT YEAR AND THEREFORE, HAS TO BE ALLOWED. FURTHER, LD. AR SUBMITTED THAT THE OTHER EXPENSES INCLUDE SERVICE TAX PAYMENT OF RS.28,74,375/ - WHICH WAS CRYSTALLIZED DURIN G THE YEAR AND WHICH WAS COLLECTED FROM M/S DHARMA PORT CO. LTD. AND DEPOSITED WITH THE GOVERNMENT TREASURY. SINCE THE SERVICE TAX HAS BEEN COLLECTED AND PAID, AND SAME CANNOT BE CALLED AS PRIOR PERIOD EXPENSES. THE L D. CIT(A) DEALT WITH THE DECISIONS OF H ON BLE SUPREME COURT AND HONBLE HIGH COURTS ON THE CONCEPT OF CRYSTALLISATION OF THE CLAIM, AND THE ITA NO. 91/2015 3 LD. CIT(A) IS OF THE OPINION THAT EXPENSES ARE ALLOWABLE U/S.37(1) OF THE ACT AND ALLOWED THE APPEAL OF THE ASSESSEE. 4 . AGGRIEVED BY THE ORDER OF THE CIT( A) THE REVENUE CONTESTED WITH APPEAL BEFORE THE TRIBUNAL. THE L D. DR ARGUED THAT THE LD. CIT(A) WAS ERRED IN LAW BY DELETING THE ADDITION S O F OTHER EXPENSES AND EMPLOYEE COST BEING PRIOR PERIOD AND SUPPORTED THE ORDER S OF THE AO. PER CONTRA , LD. AR RELIED ON THE ORDER OF CIT(A) AND PRAYED FOR DISMISSAL OF THE REVENUES APPEAL. 5 . WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. DR S CONTENTION THAT THE CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION O F PRIOR PERIOD EXPE NSES. WE FIND THAT THE CIT(A) RELIED ON THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF OMC VS.ADDL. CIT, RANGE - 1, IN ITA NO.551/CTK/2012, DATED 21.12.2012 . THE L D. AR EXPLAINED THAT THE EXPENDITURE PERTAIN S TO SERVICE TAX PAYMENT , WHIC H WAS COLLECTED AND PAID TO THE GOVERNMENT AND THERE IS NO PRIOR PERIOD EXPENSES. SIMILARLY, THE EXPENDITURE LIABILITY HAS TO BE ALLOWED IN THE IMPUGNED ASSESSMENT YEAR IN WHICH IT CRYSTALLISE D AND BECOME PAYABLE. SINCE THE EMPLOYEE COST AND THE SERVICE TA X AMOUNT IS CRYSTALLISED DURING THE FINANCIAL YEAR AND WAS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS , W E ARE OF THE CONSIDERED OPINION THAT THESE EXPENSES ARE ALLOWABLE U/S.37 (1) OF THE ACT. ACCORDINGLY, WE ARE NOT INCLINED TO INTERFERE W ITH THE ORDER OF LD. CIT(A) AND DISMISS THE GROUNDS OF APPEAL OF THE REVENUE. 6 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED . ITA NO. 91/2015 4 O RDER PRONOUNCED IN THE OPEN COURT ON THIS 28/06 / 201 7 . SD/ - ( N. S. SAINI ) SD/ - ( PA V AN KUMAR GADALE ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER CUTTACK ; DATED 28 / 06 /201 7 . . / PKM , SENIOR PRIVATE SECRETARY / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) , / ITAT, CUTTACK 1. / THE APPELLANT - ACIT, CORPO RATE CIRCLE - 1(2), BHUBANESWAR 2. / THE RESPONDENT - ORISSA POWER TRANSMISSION CORP. LTD. 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, CUTTACK 6. / GUARD FILE. //TRUE COPY//