TMI Blog2014 (2) TMI 1113X X X X Extracts X X X X X X X X Extracts X X X X ..... that accrue have to be taken into account for arriving at the profits - The accrued incomes even if not received has to be taken into account - Liabilities that have fallen due has at the end of the accounting year have to be provided for - The CIT(A) pointed out that the provisions such as 43B or 40(2) and such like statutory disallowances are applicable - Disallowance made by the AO cannot be sustained and CIT(A) was correct in allowing the amount. Quantification of interest – Held that:- The method of quantification of interest payable on mobilization advances was not examined by the CIT(A) – thus, the matter for the limited purpose of quantification is remitted back to the AO – Decided partly in favor Assessee. Disallowance under section 14A of the Act – Held that:- The order of the CIT(A) is reasonable and according to the facts on record - the AO did not examine the issue under section 14A at all - May be he wanted to invoke the provisions of section 36(1)(iii) i.e., diversion of funds borrowed for the purpose of business for non-business activities - The CIT(A) confirmation of disallowance of interest on diversion of ₹ 13.32 crores was also on similar lines, ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nditure on road bridge capitalized under the head "Road Bridge" described as building. As BOT Road-Bridge of Rs.217,88,63,613/- was completed and brought into use from 28th December, 2008, the depreciation claimed was of 50% of the 10% rate as 'Building'. The A.O. after making elaborate discussion, relying on certain clauses of terms of agreement between the assessee with the National Highways Authority of India (NHAI) held that assessee is not the owner of the building and the road does not form part of the assets within the meaning of building. The assessee made alternative contention that if the road is not to be treated as building, the same may be treated as plant and depreciation at 25% may be allowed and in the alternative, the entire expenditure spent on construction of road should be allowed as revenue expenditure. The A.O. did not agree with any of the above contentions and disallowed the depreciation claimed by the assessee. 2.1. Before the learned CIT(A) it was pointed out that the reasoning for disallowance of the depreciation is a verbatim reproduction of the reasoning in the case of Nyse Infrastructure Pvt. Ltd. for A.Y. 2005-2006 and in that case, the Hon'ble ITAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It has been given exclusive rights to regulate the use of the Noida-Bridge. The road is not simply a road laid out on the land. It includes all allied constructions, which includes the bridge site. The control of the land identified as constituting the bridge site is in complete land uninterrupted possession and use of the respondent company. It has powers to determine, demand, collect, retain and appropriate fees from the users of the bridge and also has the power to restrict the use of the bridge to motorized vehicles, bicycle and pedestrians, and to debar animal driven vehicles, cycle rickshaw and cattle. 23. In Mysore Minerals Ltd. (supra) after considering all the previous cases decided by it, the Supreme Court considered the term "owned" as occurring in Section 32 (1) of the Act and held that it must be assigned a wider meaning. The Supreme Court held that anyone in possession of property in his own title exercising such dominion over the property as would enable others being excluded there from and having the right to use and occupy the property and/or to enjoy its usufruct in his own right would be the owner of the buildings, though a formal deed of title may not have be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TO DISALLOWANCE OF INTEREST PAYMENTS CLAIMED ON MOBILISATION ADVANCES: 3. The assessee claimed interest on mobilization advances received by it in the P L account. The A.O. analysed that assessee has actually incurred/paid the amount of Rs.56,12,492/- whereas interest of Rs.5,66,78,872/- was only a provision made towards interest payable on mobilization advances. Assessing Officer was of the opinion that provision is not allowable as a deduction under the provisions of the I.T. Act. Therefore, the entire provision made by the assessee was disallowed. Learned CIT(A) after considering the submissions of the assessee allowed the amount by stating as under : "7. The next ground relates to disallowance of interest on mobilization of advances amounting to Rs.5,66,78,872/. The assessee incurred interest on account of mobilization advances. Some of the mobilization advances have been recovered in this year along with interest. The A.O. has allowed such interest of Rs.56,12,492/-. However, the balance of interest of Rs.5,66,78,872/- which is pertaining to mobilization advances not recovered has not been allowed. The assessee made a provision for the interest on mobilization advances r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed extent of examining the provision made vis- -vis mobilization advances, the issue is restored to the file of the A.O. Accordingly, ground No.7 is considered as partly allowed to the extent of verification of the amount quantified by the assessee. However, the ground raised by the Revenue that the amount is not debited to the P L account is not correct as the assessee did debit the amount to the P L account and therefore, part of the ground raised by the Revenue is irrelevant. With these observations, the ground is considered as partly allowed for statistical purposes. DISALLOWANCE UNDER SECTION 14A MODIFIED BY THE CIT(A) (GROUND NOS. 8 9): 4. During the year assessee did not have any exempt income but on finding that assessee made several investments in companies by acquiring shares or as joint venture companies, the A.O. invoked provisions of section 14A and disallowed interest of Rs.3,37,60,799/-, by applying provisions of section 14A and Rule 8D for its computation. While disallowing, Assessing Officer's contention was that assessee has taken loans from banks and these amounts were invested in joint venture companies. Accordingly, provisions of section 14A are attra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... average value of the investments, the amount of 13.32 crores as at. the beginning and as at the end of the year only should be adopted. Therefore the investment has to be taken at 13.32 crores because the rest of the investments were accepted to have been out of accumulated profits as far back as in 2006-07. There have also been further cash profits in the subsequent years. Therefore for the figure B in the formula the amount to be taken is 13.32 crores. Regarding the interest expenditure figure, I am accepting the contention of the assessee. However, I am not accepting the contention of the assessee with regard to investments. Therefore, the AO is directed to adopt the interest expenditure of Rs.16,76,42,761/- as worked out by the assessee for the item A in the annexure to assessment order and the investment figure as worked out by AO for the item B in the formula and work out the disallowable amount under Sec 14A on that basis". 5. On considering the revenue's grounds and assessee's cross objections, we are convinced that the order of the CIT(A) is reasonable and according to the facts on record. As seen from the assessment order, the A.O. did not examine the issue under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deductor i.e. a contractee did not grant the tax credit certificates and that if the certificates are issued, the reconciliation between the Form 26AS and the tax deduction certificates cannot prevent or deprive the assessee of the credit to which the assessee is rightly eligible. In the assessee's own case, the Income Tax Appellate Tribunal had allowed the grant of credit for the tax deducted at source from the mobilization advances in its common order in ITA Nos. 482 557/H/01 Hyderabad 'B' Bench for the assessment years 1997-98 and 1998-99 dated 23-11-2006. The learned Counsel also relied on the decision of the Third Member in the case of ACIT Vs Chandragiri Construction Co. (136 ITD 133) (Cochin) wherein it was held that the Tribunal must follow the decision of another bench where the facts are the same. In the assessee's own case, the credit was granted for the tax deducted at source from the mobilization advances. Therefore, the learned CIT(A) directed the Assessing Officer that credit for tax deducted at source for the mobilization advances should be granted, following the decision of the ITAT Hyderabad 'B' Bench in assessee's own case in ITA Nos. 482 557/H/01 before Hyde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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