ACIT, CHENNAI V. M/s. Covanta Samalpatti Operating Pvt. Ltd., CHENNAI

MA 145/CHNY/2008

• Counselvise Citation: [2010] 123 COUNSELVISE.COM (IT) 5220 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 5 month(s) 24 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 01-10-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 01-10-2010
• Assessment Year: 2001-2002
• Appeal Filed On: 07-04-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S SRIDHAR SHRI P B SEKARAN

Judgement Text

IN THE INCOMETAX APPELLATE TRIBUNAL: A- BENCH:CHENN AI (BEFORE SHRI HARI OM MARATHA, JUDICI AL MEMBER AND SHRI ABRAHAM P. GEORGE. ACCOUNTANT MEMBER) M.A NO. NO.145/MDS/08 (IN ITA NO.1118/MDS/06) ASSESSMENT YEAR 20010 2 THE ACIT. VS. M/S COVANTA SAMALPATTI OPERATING P.LTD. CO. CIR.I(3) NEW NO.101, OLD NO.42/1, 4 TH MAIN RD. CHENNAI GANDHINAGAR, ADYAR, CHENNAI-6000020 PAN AAAC04905F (PETITIONER) (RESPONDENT) ASSESSEE BY: DEPARTMENT BY: SRI S.SRIDHAR SHRI P.B.SEKARAN ORDER PER SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER- IN THIS MISC. APPLICATION FILED BY THE DEPARTMENT I TS GRIEVANCE IS THAT GROUND NO.3 OF ITS APPEAL WAS NOT ADJUDICATED BY THISTRIBUNAL. 2. GROUND NO.3 OF THE REVENUE IN THE APPEAL RAN AS UNDER: MP NO.145/MDS/08 2 3. THE LD. CIT(A) FAILED TO NOTE THAT SINCE THE AS SESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING THE ASSESS EES INSURANCE CLAIM IS ALLOWABLE ONLY IN RESPECT OF THE PERIOD WH ICH FALLS WITHIN THE ACCOUNTING YEAR AND IN THIS CASE IS ONLY FOR TH E PERIOD OF ONE MONTH(I.E.) MARCH 2001 . 3. THE ISSUE INVOLVED IN THE APPEAL WAS ASSESSEES CLAIM TOWARDS INSURANCE PREMIUM WHICH WAS ALLOWED BY THE CIT(A). A O HAD DISALLOWED THE CLAIM FOR A REASON THAT ASSESSEE WAS NOT OWNER OF THE ASSET WHICH WERE INSURED. HOWEVER, THE PLEADING OF THE ASSESSEE WAS THAT THE INSURANCE EXPENDITURE WAS INCURRED IN CONNECTION WIT H A CONTRACT WITH M/S SAMALPATTI POWER CO. P. LTD., AND UNLESS SUCH A MOUNT WAS PAID ASSESSEE WOULD NOT BE ABLE TO OPERATE THE FACILITY BY USING THE PLANT AND MACHINERY. THE FINDING GIVEN BY THIS TRIBUNAL WAS T HAT THE OWNER OF THE PLANT AND MACHINERY HAD NOT CLAIMED ANY DEDUCTION T OWARDS INSURANCE PREMIUM, AND THEREFORE ASSESSEE WAS ENTITLED TO THE CLAIM. THE TRIBUNAL ALSO GAVE A FINDING THAT THE ASSESSEE WOULD NOT BE ENTITLED TO CLAIM ITS FEES FROM THE OWNER OF THE ASSET UNLESS AND UNTIL T HE ASSESSEE FULFILLED ALL THE TERMS AND CONDITIONS OF THE AGREEMENT, CUMU LATIVELY. ONE SUCH CONDITIONS WAS THAT THE ASSESSEE PAID THE INSURANCE PREMIUM. IT WAS BASED ON THESE PREMISES THAT THE TRIBUNAL HELD THE CIT(A) TO BE JUSTIFIED IN ALLOWING THE CLAIM OF EXPENDITURE ON INSURANCE P REMIUM PAID. THE GROUND TAKEN BY THE REVENUE REGARDING MERCANTILE SY STEM OF ACCOUNTING HAD NO RELEVANCE WHATSOEVER IN REGARD TO THE CLAIM, IN THE FACTS AND MP NO.145/MDS/08 3 CIRCUMSTANCES MENTIONED ABOVE. SINCE IT WAS A CONTR ACTUAL OBLIGATION THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESEE REQUIR ED IT TO ACCOUNT EXPENDITURE AS AND WHEN INCURRED BASED ON THE TERMS OF THE CONTRACT. THUS WE FIND THAT THE GRIEVANCE RAISED BY THE REVEN UE IN THE MISC. APPLICATION HAS ALREADY BEEN TAKEN CARE OF IN THE D ECISION GIVEN BY THE TRIBUNAL. IN THE RESULT THE MISCELLANEOUS PETITION F ILED BY THE REVENUE, STANDS DISMISSED. ORDER WAS PRONOUNCED IN THE OPEN COURT SOON AFTER HEARING ON 01-10 -2010 SD/- SD/- ( HARI OM MARATHA) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI: 1 ST . OCTOBER, 2010 NBR CC: ASSESSEE/ ASSESSING OFFICER/ CIT(A)/ CIT/ D .R/ GUARD FILE.