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2017 (11) TMI 1745 - HC - Income TaxContingent liability - provision and a contingent liability - quantum claim by the EPC contractors being highly excessive, and unreasonable - Held that:- Assessee has pointed out the agreement of MOU which has been entered between the company assessee and the original company. He has specifically taken us to the agreement which was part of paper book dated 1st March, 2002 and referred Clause-2 and incorporation was done on 1st April, 2002 which is part of record and the MOU which was entered between GVK Express Pvt. Ltd. and between the NOVOPAN Industreis Ltd. and invited our attention to Clause-1. He has also referred the concession agreement which was entered between the NHAI and the assessee and he has taken us to the different clauses which we have gone through but we are not reproducing the same for the sake of brevity. Taking into consideration the volume of work which was required to be done by the assessee and the dispute regarding excess claim by the other contractor, the matter was referred to the arbitrator and the claim was made for enhancement which was accepted by the CIT(A). Where contingent liability was made in view of the revised return filed by the assessee, the Tribunal has seriously committed an error in rejecting the claim of the present assessee. Thus, the issue no. 1 is answered in favour of assessee against the department. Liability to charge of interest u/s 234B and 234C - Held that:- Tribunal has not committed an error.In that view of the matter, the issue is answered in favour of the department against the assessee. Rejection of claim under Section 80G - Held that:- The payment was made on 31st March, 2006 and if the payment was taken to be made on 31st March, 2006 the person was having clear intention of paying through cheque nonetheless in the books of accounts entry was not made by the appellant, same was not reflected in Bank Account. In that view of the matter, merely because the provision/liability was shown, rejection of claim under Section 80G, in our considered opinion, is contrary to decision referred by counsel for the assessee. In that view of the matter, the issue no. 3 is required to be answered in favour of the assessee Deduction of the benefit of 40a(ia) - Held that:- Disallowance pertains during the year under appeal and while considering the submissions made by Mr. Ranka senior counsel and Mr. Jain, it will not be out of place to mention that where the deduction or the benefit of 40a(ia), 35% of the same was payable to the respondent and the TDS was deducted on the claim made by the assessee and the same issue is required to be answered in favour of the assessee against the department. Leave encashment as a contingent liability is not liability. Even this Court while deciding the matter has taken leave encashment as liability. In that view of the matter, the issue is answered in favour of the assessee against the department. Disallowing expenditure on police stations - Held that:- the expenses which was done for protection of the employees and the other threat from the truck owners and having other instructions which has been construed liable expenses. In that view of the matter, disallowance of expenses of ₹ 5,45,264/- for the police stations is required to be answered in favour of the assessee against the department. Hence, the 6th issue is answered in favour of the assessee. Assessment order being annulled the issue is answered in favour of the assessee against the department. The assessment is not required to be cancelled on the behest of department as held in our earlier decision which has been referred hereinabove. Amount paid by the assessee for taking over the company - Held that:- Expenses which was done by the earlier company which has given it as a capital for this assessment year, the department could not have assessed such amount which has taken the whole amount against the capital gain but this company is entitled for the capital expenses as contended by counsel for the department. This could not have been allowed under the law if the assessee claim as revenue expenses but nonetheless since he has paid amount for taking over the management of the company, this would be a capital gain for the other company. The Tribunal has not committed any error in allowing the expenses. Hence, the issue is answered in favour of assessee Claim of capitalization of expenditure towards tree cutting, tampling removal of debris and everything, while considering the matter, the Tribunal has considered the expenses prior to commencement of this company has taken the management and construction activity from the previous company on the basis of MOU, all expenses done was given a capital which was shown as an expenses by the previous company. Regarding removal of debris and everything that work which was required to be done on the war footing and the time consumed therefore, the expenses which was done by the contractor employees which can be done on Jaipur road but no doubt it has to be done on war footing therefore, expenses are bound to be more than normal which has been done. In that view of the matter, the Tribunal has not committed an error in allowing their expenses regarding removal of trees tampling or removal or debris and other expenses. Hence, the issue is also answered in favour of the assessee against the department. Depreciation @ 60% on EDP Equipments treating the same as the computer equipments allowed as in our considered opinion the optical fibers which are used exclusively for the computer configuration and it is mandatory for the operation. It is part of computer system. Claim of depreciation on public roads treating the same as building to be allowed.
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