TMI Blog2012 (3) TMI 557X X X X Extracts X X X X X X X X Extracts X X X X ..... stock. The assessee explained that this reconciliation quantity was in the nature of shortage/loss of natural gas and the value of the same was already included in the cost of natural gas as appearing in the profit and loss account. The assessee assigned following reasons for shortage/loss of natural gas: - (a) Natural Gas is purchased in volume-metric unit, however, 97% of IGL s sales is CNG i.e. sold by weight. Therefore, any difference in the conversion factor from volume to weight would have a direct impact on the reconciliation difference. IGL receives Natural Gas from GAIL, which is either ex-LPG plant, Vijaypur or ex-LPG and C2C3 recovery plant Pata, U.P. The composition of Natural Gas is changing continuously though not significantly. Therefore, the specific gravity of the gas and the conversion factor is also continuously changing. However, the gas analysis is carried out by GAIL only on hourly basis and an average value is taken IGL also works out the conversion factor based on the average daily values and finally on a monthly basis. (b) Whenever a new equipment (Compressor or Dispenser) is commissioner some quantity of gas is consumed during repetitive start/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actual stock of natural gas available in the pipe lines and to see whether any loss in transit actually took place, he required the assessee to provide details of the length of pipe lines as on 31.03.2004 and the appropriate natural gas stored in that length at pressure of 16 Kg/SCM and 24 Kg/SCM. Since, the assessee failed to provide any details, he computed the value at ₹ 2,47,61,450/- as per the details given in para 2.9 of his order. Ld. CIT(A) deleted the addition following the Tribunal s order for A.Ys. 2002-03 2004-05. 5. Being aggrieved, the department is in appeal before us and has taken following grounds of appeal: - On the facts and circumstances of the case and in law, the CIT(A) has erred in deleting the addition of ₹ 2,47,61,450/- on account of reconciliation difference. 6. At the outset ld. Counsel for the assessee pointed out that this issue is covered in favour of assessee by the various decisions of Tribunal. We find that the Tribunal vide its order in ITA No. 5324/Del/2011 ITA No. 5325/Del/2011dated 31.01.12 following the order for A.Y. 2005-06 has upheld the ld. CIT(A) s order. The facts of the year under consideration are identical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... failed to provide any information in the matter, the AO was justified in disallowing the reconciliation loss. The ld. CIT(Appeals) made observations about expert opinion, but the same has not been obtained and the relief has been given on the basis of observation of the Tribunal that the loss of 4% was reasonable and the loss in this year is lower than this percentage. However, he did not carry the matter further to obtain appropriate expert view from the officials of GAIL or ONGC Ltd. with a view to settle the issue once and for all. Therefore, since the assessee failed to furnish the details as per the order of the Tribunal, namely, whether the percentage of loss at about 3.46% of purchases had to be subjected to verification, as reasonable loss. Accordingly, it is argued that the addition made by the AO may be restored. 2.1 In reply, the ld. Counsel referred to the finding of the Tribunal in its case for A.Y. 2002-03. In this order, it has been mentioned that the reconciliation difference as percentage of purchases varies between 4.01% to 4.47% in A.Ys. 2000-01 to 2004-05, which is an information based on balance-sheet of the assessee. The percentage of loss which works o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ideration are identical and the shortage in the year under consideration is 4.47% only, the above decision of ITAT is squarely applicable. Respectfully following the same, we uphold the order of ld. CIT(A) and dismiss the appeal filed by the Revenue. 8. ITA No. 5875/11 for A.Y. 2006-07: - In this year the assessee company had filed return of income declaring total income of ₹ 1,71,06,56,516/-. The assessment was completed after making following disallowances: - i) claim of Leave Encashment to the extent of ₹ 18,20,068/- ii) cost of reconciliation difference in the closing stock of natural gas ₹ 4,83,29,900/- iii) disallowance u/s 14A ₹ 20,93,850/-. 9. Ld. CIT(A) while partly allowing the assessee s appeal deleted the disallowance on account of provision for leave encashment and addition on account of reconciliation difference in the closing stock and restricted the disallowance u/s 14A from ₹ 20,93,850/- to ₹ 2,66,943/-. 10. Being aggrieved, the department is in appeal before us and has taken following grounds of appeal: - 1. On the facts and circumstances of the case and in law, the ld. CIT(A) has erred in deleting the add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2001 with effect from 1st April, 2002 made claim of deduction with regard to any sum payable by the assessee as an employer in lieu of any leave at the credit of his employee only on paid basis. By virtue of the proviso to section 43B(f) the payment was allowable in the F.Y. till the due date for furnishing of return u/s 139(I) of the I.T. Act, 1961. 3.6 In the case of the assessee company the factual position is as under: 1. Provision of Leave Encashment ending Mar., 2006 - 50,81,684 2. Provision made in F.Y. 2005-06 - 36,84,064 3. Paid during the F.Y. 2005-06 - 4,52,138 4. Leave Encashment actually paid upto the due date u/s 139(1) - 14,11,858 5. Leave Encashment liable for disallowance as per Section 43B(f) - 18,20,068 3.7 The Calcutta High Court judgment reported in 292 ITR 470 being distinguishable on facts is not applicable on the Assessing Officer working under the jurisdiction of the Delhi High Court. 3.8 In view of the above discussion the claim of Leave Encashment to the extent of ₹ 18,20,068/- is disallowed u/s 43B(f) of the I.T. Act, 1961 and added to the income of the assessee. Ld. CIT(A), inter-alia, following the order for A.Y. 2005 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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