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TMI Blog2019 (1) TMI 849X X X X Extracts X X X X X X X X Extracts X X X X ..... 8, treating the same as not ascertained liabilities (Refer to Para No.3 Page No.1&2 of DCIT Order dated 25.02.2005) (Refer to Para No.2 Page No.2 of CIT (A) Order dated 27.01.2006) 2. The learned CIT (A) has erred in law and on facts of the case in upholding the disallowance of interest paid on income tax amounting to Rs.l,81,17,628. (Refer to Para No.3 Page No.3 of CIT(A) Order dated 27.01.2006) 3.a That the learned CIT (A) has erred in law and on facts of the case in confirming the deduction u/s 80-O to Rs. 1,29,16,182 instead of Rs. 1,57,50,000. 3.b That the learned CIT(A) erred in law and on facts of the case in upholding the deduction of estimated amount of Rs. 94,46,058 on account of expenses incurred to earn the income from the amount eligible for deduction u/s 80-0. 3.c That the learned CIT(A) erred in law and on facts of the case in not considering the full amount of foreign exchange realized in respect of fees for technical services eligible for deduction u/s 80-O. (Refer to Para No.4 Page No.2 &3 of DCIT Order dated 25.02.2005) (Refer to Para No.5 Page No.3 of CIT(A) Order dated 27.01.2006) 4(a) That the learned CIT(A) has erred in law and o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . That the learned CIT (A) has erred in law and on facts of the case in not allowing deduction on account of the additions made in AY 1997-98 to 1999-2000 in respect of interest on line of credit extended to APSEB which was not received. (Refer to Para No.10 Page No.8 of CIT(A) Order dated 27.01.2006) 9. That the learned CIT(A) has erred in law and on facts of the case not allowing the amount paid to the following :- i/ Nethrajothi - Rs. 2500 ii/ Visually Impaired Women Association - Rs. 5000 (Refer to Para No.l1 Page No.8-9 of CIT(A) Order dated 27.01.2006) 10. That the learned DCIT has erred in law and on facts of the case in initiating penalty proceedings u/s 271(1)(c) of Income Tax Act. (Refer to Page No.9 of DCIT Order dated 25.02.2005) (Refer to Para No. 13 Page No.9 of CIT(A) Order dated 27.01.2006)." 2. Briefly stated the facts necessary for adjudication of the controversy at hand are : Assessee is a public sector undertaking engaged in the manufacturing of power generation equipment and other heavy industrial elements. Assessing Officer rejected the claim of the assessee fro deduction of entire amount of provision of Rs. 327,22,64,000/- by followi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowed deduction claimed by the assessee on account of addition made in AYs 1997- 98 to 1999-00 in respect of interest on line of credit extended to APSEB which was not received. AO has also not allowed the amount paid by the assessee to Netrajothi and Visually Impaired Women Association to the tune of Rs. 2,500/- & Rs. 5,000/- respectively. 5. Assessee carried the matter by way of an appeal before the ld. CIT (A) who has partly allowed the appeal. Feeling aggrieved, the assessee has come up before the Tribunal by way of filing the present appeal. 6. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case. GROUNDS NO.1(a) & 1(b) 7. Undisputedly, the assessee company has claimed deduction of Rs. 3,27,22,64,000/- which includes for provision for nonmoving stock amounting to Rs. 4,38,91,000/- and provision for liquidated damages to the tune of Rs. 42,11,93,000/- being the provisions debited to P&L account as per Schedule 11 and claimed the same to be deducted while computing the taxable income of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing which the provision was made for the liability The liability was not a contingent liability The High Court was not right in taking a view to the contrary." 10. When the business liability of the assessee company for making provisions of Rs. 327,22,64,000/- is not disputed and account of the assessee company are audited by statutory auditor and C&AG, the deduction cannot be disallowed merely on the ground that the liability has to be quantified and discharged at a future date. So, in view of the matter, this issue is required to be set aside to the AO to decide afresh in the light of the decision rendered by the Hon'ble Supreme Court in Bharat Earth Movers (supra). So, grounds no.1(a) & 1 (b) are determined in favour of the assessee company for statistical purposes. GROUND NO.2 11. Ground No.2 is dismissed having not been pressed during the course of arguments. GROUNDS NO.3.a, 3.b & 3.c 12. Assessee has claimed deduction of Rs. 1,57,50,000/- computed @ 30% of the gross receipt of Rs. 5.25 crores eligible for deduction u/s 80-O of the Act, which has been reduced to Rs. 1,29,16,182/- on the ground that the assessee has not furnished detail of direct and indirect expenses t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the total turnover and AO to recompute the deduction accordingly. 16. So far as question of deduction of profit of 90% on account of lease rental, other operational income, other receipts and interest income by AO/CIT(A) is concerned, it is undisputed fact that partial relief in this regard has been given to the assessee on same items by ld. CIT (A) in AY 2004-05, copy of order is available at pages 229 to 238 of the paper book. So, we are of the considered view that when there is no change in the facts and circumstances of the case, the AO is directed to decide this issue afresh by following the decision rendered by the ld. CIT (A) in AY 2004-05 by following the rule of consistency by providing an opportunity of being heard to the assessee. Consequently, grounds no.4(a), 4(b), 4(c) & 4(d) are determined in favour of the assessee for statistical purposes. GROUNDS NO.5(a), 5(b) & 5(c) 17. AO allowed the deduction claimed by the assessee u/s 80IA to the tune of Rs. 8,21,59,986/- as against claimed deduction of Rs. 9,82,63,507/- calculating the profit after setting off brought forward losses and allowed the deduction @ 30% of the resulting profits. AO estimated the deduction of ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to APSEB in respect of supply made to Vijayawada TPS on which simple interest was paid and was treated as income although the Memorandum of Understanding (MoU) provided for charging of compound interest. Assessee claimed to have explained all these facts in Schedule 19 of the annual accounts attached with the income-tax return but AO/CIT(A) have not allowed the deduction on account of addition made in AYs 1997-97 & 1999-00 qua the interest on line of credit extended to APSEB which was not received. Ld. AR for the assessee contended that this issue has been decided in favour of the assessee in AYs 1997-98 & 1998-99 in ITA Nos.1833 & 1834/Del/2006 order dated 11.03.2011, copy available at pages 185 to 193 of the paper book, and AY 1999-00 in ITA No.1835/Del2006 order dated 26.10.2017, copy available at pages 194 to 207 of the paper book. 22. However, ld. CIT (A) has also not dealt with the issue and disposed of the ground by stating that this ground is academic in nature. So, in these circumstances, we are of the considered view that this issue is required to be set aside to AO to decide afresh in the light of the decision taken by the Revenue in earlier years. So, ground no.8 is ..... 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