TMI Blog2017 (11) TMI 1600X X X X Extracts X X X X X X X X Extracts X X X X ..... ts are actually made against these provisions, TDS is deducted as was stated by the Ld. Counsel. But, what are the precise facts in this regard has not been discussed in the order. No details are available or discussed by the Ld.CIT(A) regarding various aspects, e.g. when these expenses were actually incurred, in whose name these are finally credited, who are the actual payees, when the payments were made actually and whether the TDS was deducted at the time of making of payments or not? Nothing has been brought out on record to ensure that finally there was no revenue leakage and full compliance of the TDS provisions was made ultimately. We find that order of Ld. CIT(A) is devoid of any factual narration and, therefore, we find it appropriate to send this issue back to the file of the CIT(A) for complete factual analysis. Disallowance as retrenchment compensation paid to AAI - Held that:- Following the order of his predecessor in the assessee’s own case for A.Ys. 2010-11 and 2011-12 wherein noted that the said provision is applicable only if the assessee has incurred any expenditure in any previous year by way of payment of any sum to a employee in connection with voluntary ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 292 ITR 470). The appellant prays that the same may be allowed. The assessee has also moved an application, dated 12.09.2017, for admission of the additional ground, which reads as under: On the facts and in the circumstances of the case and in law, the appellant has erred by offering the Passenger Service Fee Security Component [PSF(SC)] of Rs..93,49,42,199/- as taxable income during the year under consideration. The appellant prays that the PSF(SC) is not the income of the appellant. Hence, the suo moto addition on this account made by the appellant may please be deleted. 3. At the outset, it was brought to our notice that similar additional ground has been taken up by the assessee for A.Ys. 2009-10 to 2011-12, except for the change in figure and both the parties agreed that whatever view this Tribunal has taken in those assessment years, the same view may be taken for the impugned assessment year also. 4. We find that this Tribunal vide its order dated 13.11.2017 in A.Ys. 2009-10 to 2011-12, it has been held as under: 8. We have considered the rival submissions and have gone through the case laws as were referred to before us. We noted the facts rela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e admitted, has not given any justifiable reason for not admitting the same. It is a settled law that the additional ground if it is a legal ground can be taken for the first time before the appellate authority. Therefore, the submissions made by the learned DR that the assessee has not raised this issue before the Assessing Officer or the CIT(A) does not have any legs to stand. We, therefore, admit the additional ground taken by the assessee. Thus, the Tribunal admitted the additional ground and further held as under: 14 From the findings of the Tribunal, it is apparent that the said amount is not taxable in the hands of the assessee and, thereby directed the Assessing Officer to re-compute the income of the assessee while holding so this Tribunal also gave liberty to the Assessing Officer that no portion of amount collected by the assessee on account of PSF-SC is utilized by the assessee for its own purposes or for any purposes which are not permitted by MOCA/other competent authorities. In case any violation is done by the assessee in this regard, then the Assessing Officer will be at his liberty to treat the amount so misappropriated as income of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same carefully along with the orders of the tax authorities below. We have gone through the order of this Tribunal, dated 30.11.2016, in the assessee s own case for A.Y. 2008-09, in ITA No. 3232/Mum/2012, which has been followed by us in the assessee s case for A.Ys 2009-10 2011-12 as well. The Tribunal while dealing with identical ground has held as under: 13.1. The brief facts of the case are that in the assessment order, the AO made addition of the aforesaid amount on account of provision for leave encashment debited to the Profit Loss Account on the ground that the decision of Calcutta High Court in the case of Excel Industries vs UOI 292 ITR 470 (Cal) has been stayed by the Hon ble Supreme Court and, therefore, as on that date, the expenses were not allowable. 13.2. Before the Ld. CIT(A), the assessee challenged this disallowance. But Ld. CIT(A) decided the issue against the assessee. 13.3. During the course of hearing, the Ld. Counsel of the assessee fairly submitted that this issue should go back and it should be decided on the basis of judgement of the Hon ble Supreme Court in the case of Excel Industries Ltd (supra). It was also submitted that the amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e? 2(a) Whether on the facts and in the circumstances of the case and in law, the learned CIT(A) erred in directing the Assessing Officer to treat the expenditure of ₹ 13,83,37,443/- incurred towards various expenditure such as realignment of nallah's in forecourt of proposed integrated Terminal, reallocation of CPWD staff and other operational expenditure as revenue expenditure without appreciating that these expenses result in enduring benefit to the assessee and hence is capital expenditure? 2(b) Whether on the facts and in the circumstances of the case and in law, the learned CIT(A) erred in directing the Assessing Officer to treat the expenditure of ₹ 13,83,37,443/- incurred towards various expenditure such as realignment of nallah's in forecourt of proposed integrated Terminal, reallocation of CPWD staff and other operational expenditure as revenue expenditure ignoring the ratio of the decision of the Hon'ble Supreme Court in the case of CIT vs. Mangayarkarasi Mills (315 ITR 114) wherein it was held that replacement expenditure is neither current repairs nor revenue in nature which is squarely applicable to the assessee's case? 3( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 2010-11, relevant for the assessment year 2011-12, is a capital receipt and not a revenue receipt? 5(b) Whether on the facts and in the circumstances of the case and in law, the learned CTT(A) erred in holding that Development Fee collected by the assessee company is a capital receipt based on its application for acquisition of capital assets without appreciating the fact that application of receipts does not determine the nature and taxability of the receipts? 5(c) Whether on the facts and in the circumstances of the case and in law, the learned CIT(A) erred in relying on the decision of the Hon'ble Supreme Court in the case of Consumer Online Foundation vs. Union of India Others (2011 5 SCC 360) without appreciating that in that case the issue before the Hon'ble Apex Court was whether the assessee company as a lessee of AAI, can collect development fee from the embarking passengers at the Chhatrapati Shivaji International Airport, Mumbai and the Apex Court did not give a finding regarding the nature of receipt in the hands of lessees of the Airports, including the assessee company? 5(d) Whether on the facts and in the circumstances of the case and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee is non-refundable. The assessee has got the privilege under OMDA to collect charges of the nature as mentioned in the agreement entered into i.e. OMDA from the users of Airport premises. We observe that it is not a case where the assessee has got the transfer of a right to enjoy the Airport premises. The assessee only got a license or right to do something at the Airport premises. The Hon ble Apex Court has held in the case of B. M. Lal (supra) that the transaction is a lease, if it grants the interest in the land and whereas it is a license if it gives a personal privilege with no interest in the land. We are of the considered view that the assessee has got the economic /commercial right under the said agreement to collect charges from the users of the Airport premises which is similar to grant of a license to the assessee. This case is similar to the case of Technoshares and Stocks Ltd and others (supra), wherein the Hon ble Apex Court has held that a right given to member of Stock-Exchange to carry on the business at the premises of the Stock-Exchange is a business or commercial right which is akin to license in terms of section 32(1)(ii) of the Act, therefore, eligib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te of 25% on the said payment of upfront fee of ₹ 150 crores. Thus, Ground No.1 taken by department is rejected. Respectfully following the order of the Tribunal in the assessee s own case, we confirm the order of the CIT(A) deleting the disallowance for the year under consideration. This ground taken by the revenue is dismissed. 4. Ground no.2 relates to the treatment of various expenses incurred towards realignment of nallah's in forecourt of proposed integrated Terminal, reallocation of CPWD staff and other operational expenditure as revenue expenditure. The learned DR contended that the assessee has incurred a sum of ₹ 13,83,37,443,/- towards civil works/operational expenses as revenue expenditure. Both the parties agreed that identical issue had arisen in the case of the assessee for A.Ys. 2009-10, 2010-11 and 2011-12 and whatever view is taken therein shall be applicable to this year also. We find that the Tribunal vide its order dated 13.11.2017, in the A.Ys 2009-10, 2010-11 and 2011-12 has decided the issue in favour of the assessee, by observing as under: 22. We have heard the rival submissions and carefully considered the same along with the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,73,477/- of sum of ₹ 16,07,30,868/- has been contributed by the assessee to MMRDA for the construction of Sahar Elevated access road from Western Express Highway to Chhatrapati Shivaji International Airport. The ownership of this road would remain with the MMRDA and would not be transferred to the assessee. The assessee s interest, in our view, in this road was that the passengers would have a smooth access to Chhatrapati Shivaji International Airport and provide a look as per international standard. The rest of the expenditure relate to the maintenance and upkeep of the existing assets. The Assessing Officer treated the whole of the expenses to be capital expenditure as the assessee itself has treated the said expenditure in the books of account as capital expenditure. The allowability of expenses for the purpose of Income tax, as has been held by us in the previous paragraphs, following the decision of Hon ble Supreme Court in the case of Kedarnath Jute Manufacturing Co. Ltd. vs. CIT (supra), will depend on the provision of income tax Act and not on the view which the assessee might take of his rights nor can existence or absence of entries in the books of accounts be dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incurred expenditure for the purpose of construction of jetty for handling, storage and transportation of materials manufactured or handled by the assessee. The assessee was granted license by the state government. Under the terms of license, the assessee was given the right to use the jetty without payment of any charges for a period of three years from its completion. However, the ownership would remain with the state government. It was held that such expenditure was incurred with a view to obtain commercial advantage and, therefore, it was revenue expenditure. 25. Further, we noted that Hon ble Rajasthan High Court in the case of CIT vs. Raj Spinning Weaving Mills Ltd. [2005] 272 ITR 487 (Raj), following the decision of Hon ble Supreme Court in the case of Empire Jute Co. Ltd. [1980] 124 ITR 1 (SC) held as under: In determining whether a particular expenditure is capital expenditure or revenue expenditure the test of enduring benefit is not a certain or conclusive test and it cannot be applied blindly and mechanically without regard to the particular facts and circumstances of a given case. The mere fact that the amount spent has been used for construction of a buildi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owance of ₹ 3,00,51,959/- u/s. 40(a)(ia) of the Act. Both the parties agreed that this issue is covered in the assessee s own case for A.Y. 2008-09, vide its order dated 30.11.2016, in ITA No. 3232/Mum/2012, wherein the Tribunal on identical facts restored the issue to the file of the CIT(A) with specific directions. We have gone through the said order of the Tribunal and have noted that vide para 6.5 and 6.6, the Tribunal has held as under: 6.5. We have gone through the submissions made by both the sides. The case of the assessee is that the impugned amounts represented mere provisions and, therefore, these could not have been properly quantified and further, even names of the payees were not clear. Therefore, no TDS could be deducted in the year under consideration. 6.6. It is noted from the perusal of the order of the Ld. CIT(A) that he has simply accepted the claim of the assessee by stating that the assessee had made only provision and the Ld. Counsel of the assessee had submitted that in the next year when payments were made against the provisions, TDS was deducted and thus disallowance made by the AO was also deleted. We find that, unfortunately, the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er view is taken therein shall be applicable to this year also. We find that the Tribunal vide its order dated 13.11.2017, in the A.Ys 2009-10, 2010-11 and 2011-12 has decided the issue in favour of the assessee, by observing as under: 33. We have heard the rival submissions and have carefully considered the same along with the orders of the authorities below. We noted from the facts on record for A Y 2010-11 that the assessee, under an agreement of OMDA with Airports Authority of India, is developing and maintaining Chhatrapati Shivaji International Airport. The assessee has to carry out operations, maintenance and development of the airport with certain terms and conditions. As per clause 6.14 in Chapter 6 of the OMDA, the assessee is obliged to make an offer of employment to a minimum of 60% General Employees at any time during the Operation support period but not later than three months prior to the expiry of the operation support period, that it wants to employ, an option to accept or reject the offer by employees. This clause further provides that if less than 60% of the general employees accept the offer of employment made by the assessee, then assessee shall pay to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edecessor in the assessee s own case for A.Ys. 2010-11 and 2011-12 deleted the said disallowance. 7. Facts and circumstances being identical and being consistent with the view taken by us in the assessee s own case for A.Ys. 2010-11 and 2011-12 we, do not find any infirmity in the order of the CIT(A) deleting the disallowance. It is accordingly upheld. The ground taken by the revenue stands dismissed. 8. Ground no.5 relates to the treatment of development amounting to ₹ 25,98,50,335/- as capital receipt. Both the parties agreed that identical issue had arisen in the case of the assessee for A.Ys. 2010-11 and 2011-12 and whatever view is taken therein shall be applicable to this year also. We find that the Tribunal vide its consolidated order dated 13.11.2017, for A.Ys 2009- 10, 2010-11 and 2011-12 has decided the issue in favour of the assessee, by observing as under: 37. We have heard the rival submissions and have carefully considered the same along with the orders of the authorities below. The learned DR relied on the order of the Assessing Officer while the learned AR vehemently contended that the said development fees has been collected with the permission o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the collected Development Fee at will and has to maintain an account of the same which is subject to supervision and audit from the Central Government. The appellant has been permitted to collect amount only for 48 months and the same cannot be exceeded funding gap of ₹ 1,543/- crores. The Ministry of Civil Aviation has vide F.No. AV.24011/001/2009-AD dated February 27, 2009 had in para (g) to (j) has stated as under: ( g) The amount collected through DF would under no circumstances exceed the ceiling of ₹ 1543 cores and in case of any cost escalation beyond ₹ 9802 crores, the amount representing the escalation would have to be brought in by MIAL, through other sources. The ceiling amount would be exclusive of taxes, if any. ( h)Rate and tenure of levy are premised upon the traffic projections and other estimates. In case due to actual figures being different than those estimated, the 'collections during levy period exceed the amount of Rs, 1543 crores, or any other amount, which the Regulator/Government may determine, the excess amount so collected shall not be utilized, for any purpose whatsoever, without the prior approval of the Regulator/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the funding gap in connection with the development of Aeronautical Assets. For convenience, such Development Fee would be collected by various Airlines at the time they sell the tickets to the passengers and would be paid to appellant. Accordingly, the airlines are collecting the Development Fee levied u/s 22A of AAI Act from the passengers and paying the same to the appellant towards meeting the funding gap for development of Aeronautical Assets which are transfer assets as per OMDA. In support of the contention that the Development fee so collected has been utilized only for the developing the capital assets i.e. Aeronautical Assets, a copy of the certificate from a chartered accountant has been placed on record certifying the utilisation of Development fee for construction of Aeronautical Assets as per provisions prescribed u/s 22 A of the AAI Act. 9.9 The appellant has placed strong reliance on the judgment of Hon'ble Supreme Court in the case of Consumer Online Foundation Vs Union of India others (2011 5 SCC 360) where Hon'ble Supreme Court bus categorically made the distinction between Section 22 and Section 22A of AAI Act. In the said judgment, Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Hon'ble Supreme Court in the case of Consumer Online Foundation vs. UOI Ors (supra). So far as the collection of Toll Charges is concerned, the same is collected to recover the capital cost, operating and maintaining cost along with profit. The Toll Charges are determined as per the policy of the Government of India and are not in the nature of tax or cess. The Toll Charges are treated as revenue receipts in the hands of Developer. Letter dated 27.02.2009 received from the Ministry of Civil Aviation which is on record indicates that Development Fee is a capital receipt. 9.11 I further notice that Airport Regulator has clearly mentioned in its order that for the purpose of allowing return to Airport Operator, it will consider Asset Base (RAB) net off Development Fee amount and no depreciation will be allowed on such assets. I further find from the letter dated 18.12.2012 of Airport Authority of India addressed to the Director, Ministry of Civil Aviation which was placed on record, wherein it is mentioned that the treatment of Development Fee should be as per the guidelines given in AS-12 - Accounting for Government Grants issued by the Institute of Chartered Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fee so collected only for the purposes of acquiring /constructing the Aeronautical Assets. Accordingly, the collection of Development fee is therefore, meant only for specific purpose of acquisition / construction of capital assets and therefore, it is on capital account and not on revenue account. Thus, the nature of the receipt is capital and not revenue. Accordingly, I hold that the receipts of ₹ 2,87,83,48,538/- on account of Development Fee being in the nature of tax or cess is a capital receipt and therefore the same cannot be brought to tax. Accordingly, the addition of ₹ 286,30,14,565/- is deleted. The AO is also directed to reduce an amount of ₹ 19,85,99,146/- from the block of building and ₹ 700,70,264 from the block of plant machinery and recomputed the depreciation after the said reduction as claimed by the appellant in the return of income. Accordingly, Ground Nos. 11 and 12 are allowed. 38. We find that the CIT(A) has elaborately discussed the provisions of section 22A of Airports Authority of India Act 1994, under which the assessee has collected the development fees and also the terms and conditions attached to the said collection a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the impugned assessment year. Both the parties agreed that identical issue had arisen in the case of the assessee for A.Ys. 2010-11 and 2011-12 and whatever view is taken therein shall be applicable to this year also. We find that the Tribunal vide its order of dated 13.11.2017, in the A.Ys 2009-10, 2010-11 and 2011- 12 relying on the decision of the Hon ble Delhi High Court in the case of Cheminvest Ltd. 378 ITR 33 (Del) and that of Hon ble Bombay High Court (Nagpur Bench) in the case of Principal CIT vs. Ballarpur Industries Limited in ITA No. 51/2016 dated 13.10.2016 has confirmed the deletion of the disallowance made u/s. 14A read with Rule 8D by the learned CIT(A). Facts and circumstances being similar, we find no reason to interfere with the order of the CIT(A). It is accordingly, upheld and the ground is dismissed. 9. Ground no.7 in revenue s appeal relates to the rate of depreciation allowed on taxiways, aprons, parking bays and bridges @15% instead of 10%. We find that the CIT(A), while allowing depreciation @15% on taxiways, aprons, parking bays and bridges, has followed the decision of the Tribunal in assessee s own case for A.Y. 2007-08 in ITA No. 7111/Mum/2011, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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