TMI Blog2020 (10) TMI 453X X X X Extracts X X X X X X X X Extracts X X X X ..... rovision, if any, by the assessee in the books of account. Accordingly, this ground of revenue for A.Y. 2013-14 is restored to the file of the AO and thus allowed for statistical purposes. Accrued interest on investment Replacement, Rehabilitation, Modernisation of Capital Assets Fund - HELD THAT:- We find that the issue is squarely covered in favour of the assessee by the decision of the Tribunal in assessee s own case for the assessment year 2007-08 [ 2011 (3) TMI 1797 - ITAT CUTTACK] which has been followed by the ld CIT(A) in the impugned order. CIT(A) has relied on the judgment of Sitaldas Tirathdas [ 1960 (11) TMI 17 - SUPREME COURT] wherein, it is held that in deciding on the issue of diversion of income, it is the nature of obligation which is the decision fact and where by virtue of obligation, the income never reaches the assessee, same cannot be brought to tax. Further, ld D.R. has not brought on record any order of the higher forum that the order of the Tribunal in assessee s own case for the assessment year 2007-08 (supra) has been reversed. - Decided against revenue. Depreciation @ 15% on railways and rolling stock treating the same as Plant Machiner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and contingencies fund for the assessment year 2013-14. 4. On the facts and in the circumstances of the case, the CIT(A) is not correct in law in allowing depreciation @ 15% on railways and rolling stock treating the same as Plant Machinery , whereas ideally such items should be covered under the head Buildings other than those used mainly for residential purpose entitling them to depreciation @ 10% as per Rule-5 of I. T. Rules New Appendixl( Note-1). 3. Apropos Ground No.1 of appeal, the relevant facts are like this. The assessee is engaged in the running of a major port namely Paradip Port established under the provisions of the Major Port Trust Act, 1963. During the course of assessment proceedings, the Assessing Officer noticed that the assessee had shown provision for accrued expenses of ₹ 2,85,71,27,417/- treating the same as ascertained liabilities as under: Sl.No. Particulars Amount (Rs.) 1 Audit fees 1,60,00,000 2. Electricity charges 3,67,03,648 3. Payme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat year. Similarly, the operations o the assessee necessitate the consumptions of heavy loads of electricity and the expenditure related the same will be a concrete, ascertained liability. During the appellate proceedings, the counsel for the assessee also submitted a chart to evidence the nature of these liabilities as 'ascertained' rather than as 'contingent' as held by the AO. In this chart, the actual payments under the various heads in the next financial year i.e. 01.04.2013 to31.03.2014 has been shown. The chart is reproduced as under : Sl.No. Description Accrued expenses as on 31.03.2013 Actual payments as on 31.03.2014 1. Audit Fees 1,60,00,000/- 1,11,09,645/4 2. Electrify Charges 3,67,11,892/- 3,67,03,468/- 3. Payment for contractors 14,94,32,891/- 14,28,56,664/- 4 Payment for other charges 19,40,65,016/- 25,38,42,520/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o show that services of auditor in the form of continuous audit or internal audit was taken then also claim of assessee upto that extent will be allowable and not entire provision. From another chart noted by the ld CIT (A) at page 3 of same order, it is clearly discernible that the actual audit fees is very less and ₹ 1,11,09,645/-, thus, this also requires examination by the AO about the treatment of remaining amount of excess provision. With these directions, the issue of audit fees is restored to the file of the AO. 10. Further, from the said tables, at page 2 3 of order for A.Y. 2013- 14, we also note that except electricity charges and payment for other charges, the provision under liability towards payment to contractors is also lesser and i.e. ₹ 14,28,56,664/- in comparison to provision of ₹ 14,94,32,991/-. Thus, the AO is also directed to examine that what treatment has been given to this excess amount of provision by the assessee. With these directions, the issue of provision towards payment to contractors is restored to the file of the AO for verification and examination. 11. Furthermore, in the chart at page showing provision and another chart ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y: i) Income is diverted at source. ii) There is an overriding charge or title for such diversion and iii) The charge/obligation is on the source of income and not on the receiver. In the assessee s case, the capital asset replacement reserve fund and the repayment of loan and contingency reserve fund were created under the specific directions of the Govt, of India contained in its Memo No. GR-15024/7/93-PG dt. 46,06.1994 and No. P F- 25/78 dt. 20.03.1978. As per the said directions of the Govt of India, the interest accruing on these funds alongwlth the corpus thereof were required to be utilized for the specific purposes of development of the Port and not in connection with the regular operations of the assessee. Hence, by the govt, directive, a specific charge was created both on the corpus and the interest of these funds whereby the same were to be diverted for specific uses. The assessee was not left with any discretion to utilize this interest in any manner he saw fit but was bound by the directives of the Govt, of India. This charge created on the interest accruing from these funds will insulate the assessee from tax consequence and merely because he receives t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on which depreciation claimed was in the nature of building and not plant and machinery. Therefore, the order of the ld CIT(A) be reversed. 20. Replying to above, ld A.R. supported the order of ld CIT(A) and also relied on the order of the Tribunal in assessee s own case for the assessment year 2007-08 in ITA No.099/CTK/2011 dated 20.5.2011, wherein, on similar facts, the assets were treated as plant and machinery, has allowed depreciation @ 15%. 21. On careful consideration of the rival submissions, we find that the Assessing Officer has allowed depreciation @ 10% on railways and rolling stock, wharfs, roads boundaries, docks, seawalls breakwater treating the same as building. However, ld CIT(A) directed the AO to allow the depreciation @ 15% treating the same as plant and machinery. We also find that the ld CIT(A) has allowed the depreciation @ 15% following the decision of this Bench in the case of the assessee for the assessment year 2007-08, wherein, the Tribunal has followed the decision of Hon ble Supreme Court in the case of CIT vs Dr. B.Ventatrao, 243 ITR 82 (SC). No other decision was placed on record by ld D.R. to take a contrary view than the view taken by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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