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2017 (12) TMI 182 - AT - Income TaxDepreciation of Railway lines & sidings - Held that:- Disallowance of depreciation confirmed since the asset is owned by the Indian Railways but not by the assessee relying on the decision of Hon’ble Supreme Court in the case of Mysore Minerals Limited [1999 (9) TMI 1 - SUPREME Court] Disallowance of provision towards the Post retirement benefit Scheme - Held that:- Set aside the orders of both the lower authorities in disallowing the claim of the appellant towards provision for Post Retirement Benefit Scheme and direct the assessing officer to allow the claim of the appellant. Provision for employee family benefits - Held that:- As relying on assessee’s own case, we set aside the orders of both the lower authorities in disallowing the claim of the assessee company towards provision for Employees Family Benefit Scheme and direct the lower authorities to allow the claim of the assessee company. Provision for future leave encashment - Held that:- Claim of the assessee cannot be allowed in view of the specific provisions of S.43B(f) of the Income Tax Act, 1961 which provides for allowance of such claim only in the year of payment. Provision for Long service award - Held that:- As consistent with our view taken in assessee’s own case in earlier years, we hold that provision made by the assessee company towards long service award based on actuarial valuation is to be allowed as expenditure. Provision for mines closure - Held that:- We are of the considered view that the claim of the expenditure is quite premature. During the previous year relevant to the impugned assessment year, the assessee did not incur any expenditure in this regard. The provision was made merely in terms of the statutory provisions relating to the operation of mines. It is not a case where the expenditure accrues in proportion to the period for which the mines are operated. Therefore, we are in complete agreement with the view taken by the assessing officer Addition in respect of provision for leave travel concession - Held that:- LTC expenditure is allowed as per the scheme of the leave travel concession of the company. The liability commences no sooner the employee undertakes the tour, without the commencement of the tour, there is no liability accrue or arise under the leave travel concession. In the case of the company, it is evident from the assessment order that the assessee has not furnished the LTC rules, the operation of LTC account, the amounts actually incurred out of the account, treatment given to the unutilized amounts and the amount that cannot be utilized etc. Though the A.O. has called for the specific details, the assessee has not furnished the above details. The expenditure cannot be ascertained on actuarial valuation and the expenditure has to be ascertained and determined on the basis of the LTC rules and the details called for by the A.O. and the journeys undertaken as discussed above. Therefore, we are of the considered opinion that the assessee company required to submit the above details and the issue needs further verification at the end of the A.O. to ascertain the liability accrued. Payment made to A.P. Transco towards service line charges - Held that:- Expenditure is revenue expenditure and allowable in the year under consideration Disallowance u/s 14A r.w.r 8D - Held that:- When there is no exempt income, there is no case for making the disallowance u/s 14A r.w.r 8D of the Act. Entertainment expenditure disallowed - Held that:- On verification of the order of the Ld. CIT(A) the expenditure was incurred towards tea, snacks, milk and other expenses for customers or official guests at various office locations. The expenses were also incurred for dinner for airline officials and agro forest department, food arrangement for common wealth games teams and catering arrangements at cricket stadium, south zone volleyball team, etc. These expenses mainly incurred for the purpose of promoting the sports and games are in the nature of marketing and advertisement expenses related to the business activity of the assessee. On careful verification of the order of the Ld. CIT(A), there is no doubt regarding genuine of the expenditure and no lavish expenditure was incurred by the assessee except the lunch and dinner expenses. Therefore, we do not find any reason to restrict the disallowance. Accordingly, we allow the appeal of the assessee. Expenditure incurred for afforestation and horticulture - anture od expenditure - revenue or capital - Held that:- When the receipt from sale of trees is assessed as revenue receipt, the expenditure incurred on maintenance of the trees is also to be allowed as revenue expenditure. Further, the expenditure was incurred very much during the course of the business of the assessee and no enduring benefit is obtained on account of the expenditure incurred. Peripheral development expenditure - Held that:- Expenditure incurred by the appellant as a part of the corporate social responsibility is to be allowed. Community development expenses - allowable business expenditure - Held that:- There was no dispute with regard genuineness of the expenditure. Since the company has spent the sums towards the educational medical camps for the people who are re-located the same is allowable expenditure. It is obligation on the part of the company to give support to the people who are displaced due to setting up of the industry by losing their landed property and assets. The company is discharging its obligation for the same purpose. Therefore, following the decision of Hon’ble Madras High Court in the case of CIT Vs. Madras Refineries Limited [2003 (11) TMI 47 - MADRAS High Court ] we hold that the CIT(A) has rightly allowed the appeal of the assessee and accordingly uphold the order of the Ld. CIT(A) and dismiss the appeal of the revenue. Charging of interest u/s 201 & 201(1A) of the Act for non-deduction of tax at source - Held that:- The contract-I is a supply contract primarily for supply of the machinery equipment and spares and contract-II is works contract for commissioning the equipment. The Ld. CIT(A) after verification of the recitals of the contract given a finding that both are independent contracts and held that it is not possible to come to conclusion that due to services required to be rendered under contract no.(ii), the terms of the contract no.(i) would be in the nature of works contract. The Ld. DR did not bring any other evidence to show that the finding given by the Ld. CIT(A) is incorrect and also did not place any other decision to support the view of the department. The facts are identical to the decision of this Tribunal in the case of NTPC Limited cited (2013 (9) TMI 644 - ITAT VISAKHAPATNAM ). Since the CIT(A) has allowed the appeal of the assessee, following the order of this Tribunal, we do not find any infirmity in the order of the Ld. CIT(A) and the same is upheld.
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