M/s. Kaveri Gas Powr Ltd., CHENNAI V. ITO, CHENNAI

MA 83/CHNY/2018

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 7026 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 25 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 21-08-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 26-04-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B SAGADEVAN
• Assessee Lawyers: G BASKAR
• Section: 14A; 115JB; 154

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI ... , !, # !$ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER %% / M.P. NOS.82 & 83/CHNY/2018 (IN I.T.A. NOS.1848 & 3200/MDS/2016) & '& / ASSESSMENT YEARS : 2010-11 & 2012-13 M/S KAVERI GAS POWER LTD., NO.5, RANGANATHAN GARDEN, 15 TH MAIN ROAD EXTN., ANNANAGAR, CHENNAI - 600 040. PAN : AABCK 4793 Q V. THE DEPUTY COMMISSIONER OF INCOME TAX / ITO CORPORATE CIRCLE 4(2)/WARD 4(3), CHENNAI ()*& /PETITIONER) ()+*,/ RESPONDENT) )*& . / /PETITIONER BY : SHRI G. BASKAR, ADVOCATE )+*, . / / RESPONDENT BY : SHRI B. SAGADEVAN, JCIT 0 . 1# / DATE OF HEARING : 22.06.2018 23' . 1# / DATE OF PRONOUNCEMENT : 21.08.2018 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THE ASSESSEE HAS FILED THE PRESENT MISCELLANEOUS PETITIONS ON THE GROUND THAT THERE IS AN ERROR IN THE ORDER O F THIS TRIBUNAL DATED 28.02.2018. 2. SHRI G. BASKAR, THE LD.COUNSEL FOR THE ASSESSEE, SUBMITTED THAT THIS TRIBUNAL DISPOSED OF THE APPEAL OF THE AS SESSEE FOR THE 2 M .P. NO.82 & 83/CHNY/18 ASSESSMENT YEARS 2010-11 AND 2012-13. THE ASSESSEE HAS RAISED THE GROUND WITH REGARD TO DISALLOWANCE OF 69,11,061/- TOWARDS COMPENSATION PAYABLE TO M/S MADURA COATS PVT. LTD. AND M/S AGNI STEELS PVT. LTD. ACCORDING TO THE LD. COUNSEL, THI S TRIBUNAL CONFIRMED THE ORDER OF THE CIT(APPEALS) ON THE GROU ND THAT PROCEEDINGS ARE PENDING BEFORE THE ARBITRATION. AC CORDING TO THE LD. COUNSEL, SUBSEQUENT TO THE ORDER PASSED BY THE CIT(APPEALS), THE ARBITRATOR PASSED THE ARBITRAL AWARDS IN THE CA SE OF MADURA COATS PVT. LTD. ON 13.02.2015 AND IN THE CASE OF AG NI STEELS PVT. LTD. ON 20.03.2016. ACCORDING TO THE LD. COUNSEL, THE CIT(APPEALS) WITHOUT CONSIDERING THE ARBITRAL AWARDS, CONFIRMED THE ORDER OF THE ASSESSING OFFICER ON THE GROUND THAT IT IS ONLY CON TINGENT LIABILITY. ACCORDING TO THE LD. COUNSEL, IN VIEW OF ARBITRAL A WARDS PASSED BY THE ARBITRATOR, THE LIABILITY IS NOT CONTINGENT. I N OTHER WORDS, THE LIABILITY IS CRYSTALISED, THEREFORE, IT HAS TO BE A LLOWED. THE LD.COUNSEL FURTHER SUBMITTED THAT COPIES OF ARBITRA L AWARDS WERE FILED BEFORE THIS TRIBUNAL BY WAY OF ADDITIONAL EVI DENCE DURING THE COURSE OF APPELLATE PROCEEDING. THEREFORE, ACCORDI NG TO THE LD. COUNSEL, TO THAT EXTENT, THERE IS AN ERROR IN THE O RDER OF THIS TRIBUNAL. 3. WE HEARD SHRI B. SAGADEVAN, THE LD. DEPARTMENTAL REPRESENTATIVE, ALSO. 3 M .P. NO.82 & 83/CHNY/18 4. THIS TRIBUNAL CONFIRMED THE ORDER OF THE CIT(APP EALS) BY OBSERVING THAT THE CLAIM OF COMPENSATION WAS PENDIN G BEFORE ARBITRATOR. ADMITTEDLY, ON THE DATE OF PASSING OF THE ORDER BY THIS TRIBUNAL, THE ARBITRATION PROCEEDINGS WERE NOT PEND ING AND IT WAS CULMINATED BY ARBITRAL AWARDS DATED 13.02.2015 IN T HE CASE OF MADURA COATS PVT. LTD. AND IN THE CASE OF AGNI STEE LS PVT. LTD. ON 20.03.2016. THEREFORE, THE CLAIM OF THE ASSESSEE H AS TO BE CONSIDERED ON THE BASIS OF ARBITRAL AWARDS. SINCE BOTH THE ARBITRAL AWARDS WERE NOT CONSIDERED BY THIS TRIBUNAL, THERE IS AN ERROR IN THE ORDER OF THIS TRIBUNAL DATED 28.02.2018. EVEN THOU GH THE ASSESSEE HAS FILED THE COPIES OF ARBITRAL AWARDS BY WAY OF A DDITIONAL EVIDENCE, AS RIGHTLY SUBMITTED BY THE LD.COUNSEL FOR THE ASSE SSEE, BY OVERSIGHT, THIS WAS NOT CONSIDERED BY THIS TRIBUNAL . THEREFORE, THERE IS AN ERROR CREPT IN THE ORDER WHICH NEEDS TO BE RE CTIFIED. ACCORDINGLY, THE ORDER OF THIS TRIBUNAL DATED 28.02 .2018 IS HEREBY RECTIFIED AS FOLLOWS:- AT PAGES 9 AND 10, PARA 15 IS DELETED. INSTEAD, TH E FOLLOWING SHALL BE INSERTED AS PARA 15. 15. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS PER THE AGREEMENT, IN CASE 4 M .P. NO.82 & 83/CHNY/18 OF NON-SUPPLY OF POWER, THE ASSESSEE HAS TO PAY COMPENSATION TO M/S MADURA COATS PVT. LTD. AND M/S AGNI STEELS PVT. LTD. IN FACT, BOTH M/S MADURA COATS PVT. LTD. AND M/S AGNI STEELS PVT. LTD. INITIATED ARBITRATION PROCEEDINGS AND CLAIMED COMPENSATION. ARBITRATOR IN THE CASE OF M/S MADURA COATS PVT. LTD. IS SHRI JUSTICE N.V. BALASUBRAMANIAN, RETIRED JUDGE OF MADRAS HIGH COURT, PASSED AWARD ON 22.12.2014. A COPY OF AWARD IS AVAILABLE AT PAGES 155-257 OF THE PAPER- BOOK. 16. SIMILARLY, IN THE CASE OF M/S AGNI STEELS PVT. LTD., THREE RETIRED JUDGES OF MADRAS HIGH COURT, NAMELY, SHRI JUSTICE K.P. SIVASUBRAMANIAM, SHRI JUSTICE T. SOMASUNDARAM AND SHRI JUSTICE K. CHANDRU WERE NOMINATED. DURING THE COURSE OF ARBITRAL PROCEEDING BEFORE THE ARBITRATORS, A COMPROMISE MEMO WAS FILED AND THE ARBITRATORS PASSED THE AWARD IN TERMS OF COMPROMISE MEMO FILED BY THE PARTIES ON 07.01.2015. A COPY OF AWAR D IS AVAILABLE AT PAGES 258-261. IN VIEW OF THE ABOV E, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT WHE N THE COMPENSATION WAS QUANTIFIED BY ARBITRAL 5 M .P. NO.82 & 83/CHNY/18 AWARDS, THE SAME HAS TO BE CONSIDERED TO DECIDE WHETHER THE CLAIM OF COMPENSATION BY THE ASSESSEE IS ASCERTAINABLE ONE OR NON-ASCERTAINABLE ONE. BOTH THE AUTHORITIES BELOW HAVE NOT CONSIDERED THE ARBITRAL AWARDS PASSED BY THE ARBITRATORS. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE MATTER NEEDS TO BE RE-EXAMINED BY THE ASSESSING OFFICER. ACCORDINGLY, THE ORDERS OF BOTH THE AUTHORITIES BELOW IN RESPECT OF DISALLOWANCE OF 69,11,061/- TOWARDS COMPENSATION PAYABLE TO MADURA COATS PVT. LTD. AND AGNI STEELS PVT. LTD. ARE SET ASIDE AND THE MATTER IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RE-EXAMINE THE MATTER IN THE LIGHT OF THE MATERIAL THAT MAY BE FILED BY THE ASSESSEE AND AFTER CONSIDERING THE ARBITRAL AWARDS PASSED BY THE ARBITRATORS, THE ASSESSING OFFICER SHALL DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW, AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. THE ORDER OF THIS TRIBUNAL DATED 28.02.2018 IS RECT IFIED ACCORDINGLY. 6 M .P. NO.82 & 83/CHNY/18 5. NOW COMING TO ASSESSMENT YEAR 2012-13, SHRI G. B ASKAR, THE LD.COUNSEL FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSING OFFICER PASSED AN ORDER UNDER SECTION 154 OF THE IN COME-TAX ACT, 1961 (IN SHORT 'THE ACT') ON 09.04.2013 ONLY FOR TH E ASSESSMENT YEAR 2010-11 AND NOT FOR ASSESSMENT YEAR 2012-13. HOWEV ER, ACCORDING TO THE LD. COUNSEL, THIS TRIBUNAL FOUND THAT THE AS SESSING OFFICER BY AN ORDER UNDER SECTION 154 OF THE ACT EXCLUDED THE ENHANCEMENT OF 99,12,497/- IN COMPUTING THE BOOK PROFIT UNDER SECT ION 115JB OF THE ACT. THE LD.COUNSEL FURTHER SUBMITTED THAT FOR THE ASSESSMENT YEAR 2012-13, THE DISALLOWANCE WAS 34,44,189/- AND NOT 25,27,355/- ACCORDING TO THE LD. COUNSEL, THE GROU ND RAISED BY THE ASSESSEE AT 3.1, 3.2 AND 3.3 WAS NOT CONSIDERED AT ALL. 6. WE HEARD SHRI B. SAGADEVAN, THE LD. DEPARTMENTAL REPRESENTATIVE, ALSO. 7. ADMITTEDLY, DISALLOWANCE UNDER SECTION 14A OF TH E ACT READ WITH RULE 8D OF THE INCOME-TAX RULES, 1962 WAS 34,44,189/- FOR THE ASSESSMENT YEAR 2012-13 AND NOT 25,27,355/-. IT IS NOT THE CASE OF THE REVENUE THAT THE ASSESSEE HAS EARNED EX EMPTED INCOME. THEREFORE, IN VIEW OF THE JUDGMENT OF MADR AS HIGH COURT IN THE CASE OF REDINGTON (INDIA) LTD. V. ADDL. CIT (20 17) 77 TAXMANN.COM 257, THERE CANNOT BE ANY DISALLOWANCE. THE TRIBUNAL 7 M .P. NO.82 & 83/CHNY/18 HAS ALREADY DELETED A SUM OF 25,27,355/-. BUT THIS FIGURE IS FOR ASSESSMENT YEAR 2010-11. SIMILAR DISALLOWANCE MADE FOR THE ASSESSMENT YEAR 2012-13 TO THE EXTENT OF 34,44,189/- HAS TO BE DELETED ON THE SAME BASIS. THEREFORE, THERE IS AN ERROR IN THE ORDER OF THIS TRIBUNAL TO THAT EXTENT. MOREOVER, THE ENH ANCEMENT IN COMPUTING BOOK PROFIT UNDER SECTION 115JB OF THE AC T WAS MADE FOR THE ASSESSMENT YEAR 2010-11 AND NOT FOR ASSESSMENT YEAR 2012- 13. WHILE COMPUTING THE BOOK PROFIT, THE ASSESSING OFFICER EXCLUDED 99,12,497/-. THEREFORE, THIS NEEDS TO BE RECTIFIED . SINCE THE ERROR IS APPARENT ON THE FACE OF RECORD, THIS T RIBUNAL IS OF THE CONSIDERED OPINION THAT THE ERROR NEEDS TO BE RECTI FIED. ACCORDINGLY, THE SAME IS RECTIFIED AS FOLLOWS:- AT PAGE 4, AT THE END OF PARA 4, THE FOLLOWING SH ALL BE ADDED:- SIMILARLY, FOR THE ASSESSMENT YEAR 2012-13, THE DISALLOWANCE OF 34,44,189/- IS ALSO DELETED. AT PAGE 4, PARA 6 IS DELETED. INSTEAD, THE FOLLOWI NG SHALL BE INSERTED AS PARA 6. 6. SHRI G. BASKAR, THE LD.COUNSEL FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSING OFFICER HIMSELF BY AN ORDER UNDER SECTION 154 OF THE ACT DATED 09.04.2013, EXCLUDED THE ENHANCEMENT OF 99,12,497/- FOR THE ASSESSMENT YEAR 2010-11 8 M .P. NO.82 & 83/CHNY/18 WHILE COMPUTING BOOK PROFIT UNDER SECTION 115JB OF THE ACT. HOWEVER, FOR THE ASSESSMENT YEAR 2012- 13, THE MATTER NEEDS TO BE VERIFIED BY THE ASSESSING OFFICER. ACCORDINGLY, THE ISSUE OF ENHANCEMENT UNDER SECTION 115JB OF THE ACT FOR THE ASSESSMENT YEAR 2010-11 DOES NOT REQUIRE ANY ADJUDICATION. HOWEVER, FOR THE ASSESSMENT YEAR 2012-13, THE MATTER IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR VERIFICATION. THE ASSESSING OFFICER SHALL VERIFY AND THEREAFTER DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW, AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. THE ORDER OF THIS TRIBUNAL DATED 28.02.2018 IS RECT IFIED ACCORDINGLY. 8. NOW WITH REGARD TO DISALLOWANCE OF LIABILITY OF SPARES TO THE EXTENT OF 99,12,497/-, THIS TRIBUNAL SPECIFICALLY DISCUSSED T HE MATTER AT PARAS 10 AND 11 OF ITS ORDER. THIS TRIBU NAL SPECIFICALLY FOUND THAT THE LIABILITY TO PAY THE MONEY ACCRUED T O THE ASSESSEE WHEN THE SPARE PARTS WERE DELIVERED. SINCE THE ASS ESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING, THEREFOR E, THE ACCRUED LIABILITY HAS TO BE ALLOWED WHILE COMPUTING THE TOT AL INCOME. 9 M .P. NO.82 & 83/CHNY/18 THEREFORE, TO THAT EXTENT, THERE IS NO ERROR IN THE ORDER OF THIS TRIBUNAL. 9. WITH THE ABOVE OBSERVATION, THE ORDER OF THIS TR IBUNAL DATED 28.02.2018 IS RECTIFIED AND BOTH THE MISCELLANEOUS PETITIONS FILED BY THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED COURT IN THE COURT ON 21 ST AUGUST, 2018 AT CHENNAI. SD/- SD/- ( !) ( ... ) (S. JAYARAMAN) (N.R.S. GANESAN) # / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 21 ST AUGUST, 2018. KRI. . )16% 7%'1 /COPY TO: 1. )*& / PETITIONER 2. )+*, /RESPONDENT 3. 0 81 () /CIT(A) 4. 0 81 /CIT 5. %9 )1 /DR 6. :& ; /GF.