West Bengal Housing Infrastructure Development Corporation Ltd., Kolkata V. ITO, Ward - 11(1), Kolkata, Kolkata

ITA 113/KOL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100091 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2015
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 19-08-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 20-01-2012
• Court: TRIBUNAL
• Department Lawyers: NIRAJ KUMAR
• Keywords: Capital asset; Depreciation; Unabsorbed depreciation
• Section: 2(14); 154; 11

Judgement Text

ITA.1739-1742/KOL/2012 AND ITA NO.113/K/2012 & 213/ KOL/2012 W.B.HOUSING INFRASTRUCTURE DEV.CORPN. LTD. 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH B KOL KATA [BEFORE HONBLE SHRI N.V.VASUDEVAN, JM & SHRI WAS EEM AHMED, AM ] ITA NO.1739/KOL/2013 ASSESSMENT YEAR : 2005-06 WEST BENGAL HOUSING INFRASTRUCTURE -VERSUS- I.T.O., WARD-11(1), DEVELOPMENT CORPORATION LTD. KOLKATA KOLKATA (PAN:AAACW 4115 F) (APPELLANT) (RESPONDENT) ITA NOS.1740&1741&1742/KOL/2013 ASSESSMENT YEARS : 2006-07,2007-08 & 2009-10 WEST BENGAL HOUSING INFRASTRUCTURE -VERSUS- DY. C.I .T., CIRCLE-11, DEVELOPMENT CORPORATION LTD. KOLKATA KOLKATA (PAN:AAACW 4115 F) (APPELLANT) (RESPONDENT) ITA NO.213/KOL/2012 ASSESSMENT YEAR : 2008-09 DY.C.I.T., CIRCLE-11, -VERSUS- WEST BENGAL HOUSING INFRASTRUCTURE KOLKATA DEVELOPMENT CORPORATION LTD. KOLKATA (PAN:AAACW 4115 F) (APPELLANT) (RESPONDENT) ITA NO.113/KOL/2012 ASSESSMENT YEAR : 2008-09 WEST BENGAL HOUSING INFRASTRUCTURE -VERSUS- I.T.O., WARD-11(1), DEVELOPMENT CORPORATION LTD. KOLKATA KOLKATA (PAN:AAACW 4115 F) (APPELLANT) (RESPONDENT) FOR THE ASSESSEE: SHRI SANJAY BHATTACHARYA, FCA FOR THE DEPARTMENT : SHRI NIRAJ KUMAR, CIT(DR) DATE OF HEARING : 17.11.2015. DATE OF PRONOUNCEMENT :.02.12.2015 ITA.1739-1742/KOL/2012 AND ITA NO.113/K/2012 & 213/ KOL/2012 W.B.HOUSING INFRASTRUCTURE DEV.CORPN. LTD. 2 ORDER PER SHRI N.V.VASUDEVAN, JM : ITA NO.1739/KOL/2013 (A.YR.2005-06) ITA NO.1739/K/13 IS AN APPEAL BY THE ASSESSEE AGAIN ST THE ORDER DATED 14.01.2013 OF CIT(A)-XII, KOLKATA, RELATING TO AY 2 005-06. 2. GROUND NOS.1 AND 2 RAISED BY THE ASSESSEE READ A S FOLLOWS : 1. THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) W AS WRONG IN CONFIRMING THE ASSESSING OFFICERS ACTION IN DISALLOWING RS.9,71,1 7,977/- U/S 40(A)(IA) IN RELATION TO THE COMPENSATION PAID IN THE FORM OF INTEREST BY TH E APPELLANT TO VARIOUS ALLOTTEES FOR DELAYS OCCURRED IN DELIVERING THE RESPECTIVE PLOTS. 2. THAT WITHOUT PREJUDICE TO THE CONTENTION RAISED IN GROUND NO.1 ABOVE, THE COMMISSIONER OF INCOME-TAX (APPEALS) FAILED TO APPR ECIATE THE TDS PROVISIONS UNDER SECTION 194A HAD NOT BEEN APPLICABLE TO THE PAYMENT S MADE BY THE APPELLANT. 3. THE ASSESSEE IS A COMPANY INCORPORATED UNDER THE COMPANIES ACT, 1956. THE ENTIRE SHARES OF THE ASSESSEE ARE OWNED BY GOVERNME NT OF WEST BENGAL. ALL THE DIRECTORS OF THE ASSESSEE ARE NOMINATED BY THE GOVE RNMENT OF WEST BENGAL. THE ASSESSEE WAS FORMED FOR DEVELOPMENT OF LAND FOR HOU SING AND FOR DEVELOPING, OPERATING AND MAINTAINING INFRASTRUCTURE FACILITIES LIKE SANITATION AND SEWERAGE, DRAINAGE, WATER SUPPLY ETC. THE ASSESSEE ALSO DEVEL OPS LAND BY DIVIDING LAND INTO SEVERAL PLOTS AND OFFERS IT FOR SALE TO INDIVIDUALS , COOPERATIVES, GOVERNMENT PROJECTS ETC. 3.1. IN THE COURSE OF ASSESSMENT PROCEEDINGS FOR A. Y.2005-06 THERE WAS AN ITEM OF DEBIT OF A SUM OF RS.9,71,17,977/- IN THE PROFIT AN D LOSS ACCOUNT OF THE ASSESSEE. THE AFORESAID SUM WAS CLAIMED AS DEDUCTION IN COMPUTING THE INCOME OF THE ASSESSEE UNDER THE HEAD INCOME FROM BUSINESS. THE NATURE OF THIS EXPENDITURE WAS EXPLAINED BY THE ASSESSEE BEFORE THE AO AS COMPENSATION FOR DELAY DELIVERY OF PLOTS. THE ITA.1739-1742/KOL/2012 AND ITA NO.113/K/2012 & 213/ KOL/2012 W.B.HOUSING INFRASTRUCTURE DEV.CORPN. LTD. 3 ASSESSEE EXPLAINED BEFORE THE AO THAT AS PER THE OF FER OF ALLOTMENT OF PLOT OF LAND DEVELOPED BY THE ASSESSEE, THE ASSESSEE IS OBLIGED TO HAND OVER PHYSICAL POSSESSION OF THE PLOT TO THE ALLOTTEES ON PAYMENT OF THE ENTIRE COST OF THE LAND. IF POSSESSION OF THE PLOT IS DELAYED FOR MORE THAN SIX MONTHS FROM THE S CHEDULED DATE OF POSSESSION THE ASSESSEE HAD TO PAY INTEREST ON INSTALMENTS ALREADY PAID BY THE ALLOTTEE DURING SUCH EXTENDED PERIOD OF THE PREVAILING FIXED TERM DEPOSI T RATES FOR SIMILAR PERIOD OFFERED BY STATE BANK OF INDIA. FOR THE SAKE OF READY REFERENC E CLAUSE (7) OF THE ALLOTMENT LETTER IS REPRODUCED AS BELOW :- 7. PHYSICAL POSSESSION OF THE PLOT WOULD BE HANDED OVER ONLY AFTER FULL PAYMENT OF THE LAND PRICE AND REGISTRATION OF SALE DEED BY THE COM PETENT AUTHORITY. IF, HOWEVER, POSSESSION OF PLOT IS DELAYED BY HIDCO BY MORE THAN 6(SIX) FROM THE SCHEDULE DATE OF POSSESSION THE CORPORATION SHALL PAY INTEREST ON IN STALMENTS ALREADY PAID BY THE ALLOTTEE DURING SUCH EXTENDED PERIOD AT THE PREVAILING FIXED TERM DEPOSIT RATES FOR SIMILAR PERIOD OFFERED BY THE STATE BANK OF INDIA. THE ASSESSEE FURTHER EXPLAINED THAT THE NATURE OF T HIS PAYMENT WAS IN FACT THE NATURE OF DAMAGES AND NOT IN THE NATURE OF INTEREST. 3.2. ACCORDING TO THE AO THE AFORESAID PAYMENT WAS IN THE NATURE OF PAYMENT OF INTEREST AND THEREFORE THE ASSESSEE OUGHT TO HAVE D EDUCTED TAX AT SOURCE AT THE TIME PAYMENT OR CREDITED TO THE ACCOUNT OF THE PAYEE WHI CHEVER IS EARLIER AS PER THE PROVISION OF SECTION 194A OF THE ACT. THE AO WAS OF THE FURTHER VIEW THAT SINCE THE ASSESSEE FAILED TO DEDUCT TAX AT SOURCE ON THE AFOR ESAID SUM THE CLAIM OF THE ASSESSEE FOR DEDUCTION OF THE AFORESAID SUM CANNOT BE ALLOWE D IN VIEW OF THE PROVISION OF SECTION 40(A)(IA) OF THE ACT. THE AO ON THE AFORESA ID REASONING DISALLOWED THE CLAIM OF THE DEDUCTION OF THE ASSESSEE FOR A SUM OF RS.9, 71,17,977/-. 3.3. ON APPEAL BY THE ASSESSEE THE CIT(A) CONFIRME D THE ACTION OF AO. AGGRIEVED BY THE ORDER OF CIT(A) THE ASSESSEE HAS RAISED GROUND NOS. 1 AND 2 REFERRED TO ABOVE BEFORE THE TRIBUNAL. ITA.1739-1742/KOL/2012 AND ITA NO.113/K/2012 & 213/ KOL/2012 W.B.HOUSING INFRASTRUCTURE DEV.CORPN. LTD. 4 4. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE LD. COU NSEL FOR THE ASSESEE SUBMITTED THAT SECTION 194A OF THE ACT PROVIDES FOR AN OBLIGA TION FOR DEDUCTION OF TAX AT SOURCE BY A PERSON RESPONSIBLE FOR PAYING TO A RESIDENT AN Y INCOME BY WAY OF INTEREST. IT WAS SUBMITTED BY HIM THAT THE EXPRESSION INTEREST HAS NOT BEEN DEFINED U/S 194A OF THE ACT AND THEREFORE ONE HAS TO TAKE RECOURSE WITH THE DEFINITION OF THE EXPRESSION INTEREST AS PROVIDED U/S 2(28A) OF THE ACT. THE A FORESAID PROVISION READS AS FOLLOWS :- 2(28A) INTEREST MEANS INTEREST PAYABLE IN ANY MANNER IN RESPOEC5T OF ANY MONEYS BORROWED OR DEBT INCURRED (INCLUDING A DEPOSIT, CL AIM OR OTHER SIMILAR RIGHT OR OBLIGATION) AND INCLUDES ANY SERVICE FEE OR OTHER C HARGE IN RESPECT O0F THE MONEYS BORROWED OR DEBT INCURRED OR IN RESPECT OF ANY CRED IT FACILITY WHICH HAS NOT BEEN UTILISED; IT WAS SUBMITTED BY HIM THAT THE PAYMENT IN QUESTIO N MADE BY THE ASSESSEE TO THE ALLOTTEE WAS NOT IN RESPECT OF ANY MONEY BORROWED O R DEBT INCURRED AND THEREFORE THE SAME CANNOT BE CHARACTERISED AS INTEREST. CONSEQUEN TLY THERE WAS NO OBLIGATION ON THE PART OF THE ASSESSEE TO DEDUCT TAX AT SOURCE U/S 19 4A OF THE ACT. THE LD. COUNSEL PLACED RELIANCE ON THE FOLLOWING TWO DECISIONS :- I) CIT VS H.P.HOUSING BOARD (2012) 340 ITR 388 (HP) II) GHAZIABAD DEVELOPMENT AUTHORITY VS DFR. N.K.GUPTA 2 58 ITR 337. IN THE CASE OF H.P. HOUSING BOARD THERE WAS A DELAY IN CONSTRUCTION OF HOUSE AND THEREFORE H.P.HOUSING BOARD PAID INTEREST TO THE AL LOTTEES ON THE AGREED RATE IN TERMS OF THE LETTER OF ALLOTMENT. THE QUESTION BEFORE THE HONBLE HIMACHAL PRADESH HIGH COURT WAS AS TO WHETHER THE SAME CONSTITUTE INTERES T WITHIN THE MEANING OF SECTION 2(28A) OF THE ACT. THE HONBLE HIGH COURT HELD THAT PAYMENT IN QUESTION WAS IN THE NATURE OF THE DAMAGES PAID TO THE ALLOTTEE FOR THE DELAY AND NOT IN THE NATURE OF INTEREST. SIMILAR DECISION WAS RENDERED BY THE NATI ONAL CONSUMER DISPUTES REDRESSAL COMMISSION IN THE CASE OF GHAZIABAD DEVELOPMENT AUT HORITY (SUPRA). THE LD. COUNSEL THEREFORE SUBMITTED THAT THERE WAS NO OBLIG ATION OF THE DEDUCTION OF TAX AT SOURCE ON THE PART OF THE ASSESSEE U/S 194A OF THE ACT. CONSEQUENTLY NO DISALLOWANCE ITA.1739-1742/KOL/2012 AND ITA NO.113/K/2012 & 213/ KOL/2012 W.B.HOUSING INFRASTRUCTURE DEV.CORPN. LTD. 5 OF THE AFORESAID SUM BY INVOKING THE PROVISION OF S ECTION 40(A)(IA) OF THE ACT COULD BE MADE. 4.1. THE LD. DR DREW OUR ATTENTION TO THE DEFINITIO N OF INTEREST U/S 2(28A) OF THE ACT AND SUBMITTED THAT THE DEFINITION CONTEMPLATES MONE YS BORROWED OR DEBT INCURRED INCLUDING DEPOSIT CLAIMED OR OTHER SIMILAR RIGHT OR OBLIGATION. ACCORDING TO HIM THE PAYMENT IN DISPUTE IN THIS APPEAL COULD BE ATTRIBUT ED TO A CLAIM MADE BY AN ALLOTTEE UNDER A LETTER OF ALLOTMENT WHICH COULD BE TERMED A S INTEREST U/S 2(28A) OF THE ACT. 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. THE ISSUE FOR CONSIDERATION IS AS TO WHETHER THE SUM OF RS.9,71,1 7,977/- WHICH WAS A SUM DEBITED IN THE PROFIT AND LOSS ACCOUNT ON ACCOUNT OF OBLIGATIO N OF THE ASSESSEE TO PAY THE ALLOTTEES FOR THE DELAY IN DELIVERY OF POSSESSION O F PLOTS WITHIN THE AGREED TIME COULD BE SAID TO BE INTEREST. WE HAVE ALREADY NOTICED THA T THERE IS NO DEFINITION OF INTEREST U/S 194A OF THE ACT WHICH DEFINES THE EXPRESSION INTER EST. IN OUR VIEW A READING THE DEFINITION OF INTEREST U/S 2(28A) OF THE ACT CLEARL Y PRESUPPOSES BORROWING OF MONEY OR INCURRING OF DEBT. IN THE PRESENT CASE AS WE HAVE A LREADY SEEN THE SUM IN QUESTION WAS PAID BY THE ASSESSEE AS PER THE TERMS OF ALLOTMENT OF PLOTS FOR THE DELAY IN DELIVERY OF PLOTS. THE LIABILITY OF THE ASSESSEE IN THIS REGARD IS A CONTRACTUAL LIABILITY. THE QUANTIFICATION OF THE LIABILITY IS IN TERMS OF PERC ENTAGE OF INTEREST PAYABLE BY STATE BANK OF INDIA. THE MANNER OF QUANTIFICATION ON THE BASIS OF PERCENTAGE OF INTEREST PAID BY STATE BANK OF INDIA ON TERMS DEPOSITS WILL NOT MAKE THE SUM IN QUESTION AS ONE IN THE NATURE OF INTEREST. IN OUR OPINION, THER E WAS NEITHER BORROWING OR DEBT INCURRED BY THE ASSESSEE. THE ARGUMENTS OF THE LD. DR THAT THE EXPRESSION MONEYS BORROWED OR DEBT INCURRED IS FURTHER QUALIFIED BY THE WORD CLAIM OR OTHER SIMILAR RIGHT OR OBLIGATION AND THE LIABILITY OF THE ASSESS EE IN QUESTION ARISES OUT OF THE CLAIM MADE BY AN ALLOTTEE OF PLOT IS ALSO NOT ACCEPTABLE. THE EXPRESSION INCLUDING A DEPOSIT, CLAIM OR OTHER SIMILAR RIGHT OR OBLIGATION HAS TO BE READ EJUSDEM GENERIS WITH THE EXPRESSION MONEYS BORROWED OR DEBT INCURRED. IN O THER WORDS THE EXPRESSION ITA.1739-1742/KOL/2012 AND ITA NO.113/K/2012 & 213/ KOL/2012 W.B.HOUSING INFRASTRUCTURE DEV.CORPN. LTD. 6 INTEREST SHOULD BE TRACEABLE TO TRANSACTIONS IN T HE FORM OF BORROWING OF MONEY. THE DECISIONS REFERRED TO BY THE LD. COUNSEL FOR THE AS SESSEE CLEARLY LAY DOWN THE PROPOSITION THAT THE NATURE OF PAYMENT FOR DELAY IN DELIVERY OF THE PLOTS IS IN THE NATURE OF DAMAGES AND NOT IN THE NATURE OF INTEREST. WE, T HEREFORE, ARE OF THE VIEW THAT THE AMOUNT IN QUESTION CANNOT BE CHARACTERISED AS INTER EST WITHIN THE MEANING OF SECTION 194A OF THE ACT. CONSEQUENTLY THERE WAS NO OBLIGATI ON ON THE PART OF THE ASSESSEE TO DEDUCT TAX AT SOURCE. CONSEQUENTLY NO DISALLOWANCE COULD BE MADE U/S 40(A)(IA) OF THE ACT. WE THEREFORE DIRECT THE DISALLOWANCE MADE BY T HE AO AND SUSTAINED BY THE CIT(A) SHOULD BE DELETED. GROUND NOS. 1 AND 2 RAISE D BY THE ASSESSEE ARE ACCORDINGLY ALLOWED. 6. GROUND NOS. 3 AND 4 RAISED BY THE ASSESSEE READ AS FOLLOWS :- 3. THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) W AS WRONG IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN MAKING AN ADDITION OF R S.26,85,000 AS THE APPELLANTS ALLEGED INTEREST INCOME IN RELATION TO THE DEPOSIT LYING THE GOVERNMENT OF WEST BENGAL. 4. THAT WITHOUT PREJUDICE TO THE CONTENTION RAISED IN GROUND NO.3 ABOVE, THE COMMISSIONER OF INCOME-TAX (APPEALS) FAILED TO APPR ECIATE THAT THERE HAS NOT BEEN ANY ACCRUAL OF INTEREST INCOME IN THE HANDS OF THE APPE LLANT. 6.1 THE ASSESSEE RECEIVES GRANTS FROM WEST BENGAL STATE THESE GRANTS ARE KEPT IN TREASURY ACCOUNTS. IT IS NOT IN DISPUTE THAT THIS A CCOUNT IS AN INTEREST BEARING ACCOUNT. THE AO NOTICED THAT THERE WAS A SUM OF RS.3,58,00,0 00/- IN TREASURY ACCOUNT WHICH WAS REFLECTED IN THE BALANCE SHEET UNDER THE HEAD INVESTMENTS. ACCORDING TO THE AO THE ASSESSEE OUGHT TO HAVE OFFERED INTEREST ACCRUED ON THE DEPOSIT AT THE RATES AT WHICH INTEREST IS GENERAL PROVIDED BY THE TREASURY NAMELY 7.5% ON RS.3.58 CRORES VIZ., A SUM OF RS.26,85,000/-. ACCORDING TO THE AO THE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING AND THEREFORE THE ASSESSEE OUGHT TO H AVE RECOGNISED THE INCOME ON ACCRUAL BASIS AND OFFERED THE SAME TO TAX. 6.2. THE PLEA OF THE ASSESSEE WAS THAT THOUGH THE ACCOUNT IS INTEREST BEARING IN SPITE OF SEVERAL REMINDERS THE TREASURY HAS NOT CREDITED ANY INTEREST AND SINCE NO INTEREST WAS ITA.1739-1742/KOL/2012 AND ITA NO.113/K/2012 & 213/ KOL/2012 W.B.HOUSING INFRASTRUCTURE DEV.CORPN. LTD. 7 COMING FROM THE TREASURY INTEREST INCOME IS NOT REC OGNISED. THE ASSESSEE ALSO BROUGHT TO THE NOTICE OF THE AO SEVERAL CORRESPONDENCES BET WEEN THE ASSESSEE AND THE GOVERNMENT WITH REGARD TO THE CREDIT OF INTEREST IN THE ACCOUNT OF THE ASSESSEE WITH THE TREASURY. THE AO, HOWEVER, WAS OF THE VIEW THAT SIN CE THE ASSESSEE WAS FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING AND OUGHT TO HAVE R ECOGNISED THE ACCRUAL BASIS AND ACCORDINGLY BROUGHT TO TAX A SUM OF RS.3,58,00,000/ -. 6.3. ON APPEAL BY THE ASSESSEE THE CIT(A) CONCURRE D WITH THE VIEW OF THE AO. BEFORE US THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS WERE MADE BEFORE THE AO. THE LD. DR RELIED ON THE ORDER OF CIT(A). 7. WE HAVE GIVEN A CAREFUL CONSIDERATION TO THE RIV AL SUBMISSIONS AND ARE OF THE VIEW THAT THE PLEA OF THE ASSESSEE FOR NOT RECOGNIS ING THE INTEREST INCOME HAS BEEN ON THE BASIS THAT THE STATE GOVERNMENT HAD NOT ISSUED ORDERS FOR PAYMENT/CREDIT OF INTEREST TO THE INTEREST BEARING TREASURY ACCOUNT O F THE ASSESSEE. THERE IS NO ALLEGATION THAT THE STATE GOVERNMENT HAS REFUSED TO PAY INTERE ST ON THE TREASURY ACCOUNT MAINTAINED BY THE ASSESSEE. IT CANNOT ALSO BE SAID THAT THE INTEREST IN QUESTION CANNOT BE RECOGNISED OWING TO DENIAL BY THE STATE GOVERNME NT OF ITS OBLIGATION TO PAY INTEREST OR FOR THE REASON THAT THE STATE GOVERNMENT IS UNAB LE TO PAY INTEREST. IN SUCH CIRCUMSTANCES WE ARE OF THE VIEW THAT THE REVENUE A UTHORITIES WERE JUSTIFIED IN BRINGING TO TAX INTEREST ON THE PREMISE THAT THERE WAS AN ACCRUAL OF INCOME UNDER THE MERCANTILE SYSTEM OF ACCOUNTING. WE DO NOT FIND ANY GROUND TO INTERFERE WITH THE ORDER OF THE CIT(A). GROUND NOS. 3 AND 4 RAISED BY THE ASSESSEE ARE DISMISSED. 8. GROUND NO.S 5 AND 6 RAISED BY THE ASSESSEE READ AS FOLLOWS :- 5. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) W AS WRONG IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING THE APPELLANTS CLAIM FOR DEDUCTION U/S 80- IA. 6. THAT WITHOUT PREJUDICE TO THE CONTENTION RAISED IN GROUND NO.5 ABOVE, THE COMMISSIONER OF INCOME-TAX (APPEALS) FAILED TO APPR ECIATE THE FACT THAT THE APPELLANT ITA.1739-1742/KOL/2012 AND ITA NO.113/K/2012 & 213/ KOL/2012 W.B.HOUSING INFRASTRUCTURE DEV.CORPN. LTD. 8 HAD BEEN RESPONSIBLE TO DEVELOP THE INFRASTRUCTURE FACILITIES OF THE AREA NOTIFIED BY THE GOVERNMENT OF WEST BENGAL. 9. THE AFORESAID GROUNDS OF APPEAL ARE IN RELATION TO THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 80IA(4)(I) OF THE ACT. THE AFORESAID PROVISION READS AS FOLLOWS :- 80IA (4) THIS SECTION APPLIES TO (I) ANY ENTERPRISE CARRYING ON THE BUSINESS 27 [OF (I) DEVELOPING OR (II) OPERATING AND MAINTAINING OR (III) DEVELOPING, OPERATING AND MAIN TAINING] ANY INFRASTRUCTURE FACILITY WHICH FULFILS ALL THE FOLLOWING CONDITIONS, NAMELY : (A) IT IS OWNED BY A COMPANY REGISTERED IN INDIA OR BY A CONSORTIUM OF SUCH COMPANIES 28 [OR BY AN AUTHORITY OR A BOARD OR A CORPORA-TION OR ANY OTHER BODY ESTABLISHED OR CONSTITUTED UNDER ANY CENTRAL OR STATE ACT;] 29 [(B) IT HAS ENTERED INTO AN AGREEMENT WITH THE CENT RAL GOVERNMENT OR A STATE GOVERNMENT OR A LOCAL AUTHORITY OR ANY OTHER STATUTORY BODY FO R (I) DEVELOPING OR (II) OPERATING AND MAINTAINING OR (III) DEVELOPING, OPERATING AND MAIN TAINING A NEW INFRASTRUCTURE FACILITY;] (C) IT HAS STARTED OR STARTS OPERATING AND MAINTAIN ING THE INFRASTRUCTURE FACILITY ON OR AFTER THE 1ST DAY OF APRIL, 1995: PROVIDED THAT WHERE AN INFRASTRUCTURE FACILITY IS TRANSFERRE D ON OR AFTER THE 1ST DAY OF APRIL, 1999 BY AN ENTERPRISE WHICH DEVELOPED SUCH INFRASTR UCTURE FACILITY (HEREAFTER REFERRED TO IN THIS SECTION AS THE TRANSFEROR ENTERPRISE) TO ANOTHER ENTERPRISE (HEREAFTER IN THIS SECTION REFERRED TO AS THE TRANSFEREE ENTERPRISE) F OR THE PURPOSE OF OPERATING AND MAINTAINING THE INFRASTRUCTURE FACILITY ON ITS BEHA LF IN ACCORDANCE WITH THE AGREEMENT WITH THE CENTRAL GOVERNMENT, STATE GOVERNMENT, LOCA L AUTHORITY OR STATUTORY BODY, THE PROVISIONS OF THIS SECTION SHALL APPLY TO THE TRANS FEREE ENTERPRISE AS IF IT WERE THE ENTERPRISE TO WHICH THIS CLAUSE APPLIES AND THE DED UCTION FROM PROFITS AND GAINS WOULD BE AVAILABLE TO SUCH TRANSFEREE ENTERPRISE FOR THE UNEXPIRED PERIOD DURING WHICH THE TRANSFEROR ENTERPRISE WOULD HAVE BEEN ENTITLED TO T HE DEDUCTION, IF THE TRANSFER HAD NOT TAKEN PLACE. 30 [EXPLANATION.FOR THE PURPOSES OF THIS CLAUSE, INF RASTRUCTURE FACILITY MEANS (A) A ROAD INCLUDING TOLL ROAD, A BRIDGE OR A RAIL SYSTEM; (B) A HIGHWAY PROJECT INCLUDING HOUSING OR OTHER AC TIVITIES BEING AN INTEGRAL PART OF THE HIGHWAY PROJECT; (C) A WATER SUPPLY PROJECT, WATER TREATMENT SYSTEM, IRRIGATION PROJECT, SANITATION AND SEWERAGE SYSTEM OR SOLID WASTE MANAGEMENT SYSTEM; (D) A PORT 31 , AIRPORT, INLAND WATERWAY 32 [, INLAND PORT OR NAVIGATIONAL CHANNEL IN THE SEA];] ITA.1739-1742/KOL/2012 AND ITA NO.113/K/2012 & 213/ KOL/2012 W.B.HOUSING INFRASTRUCTURE DEV.CORPN. LTD. 9 9.1. THE ASSESSEE DID NOT MAKE A CLAIM FOR DEDUCTI ON BEFORE THE AO. HOWEVER, SUCH A CLAIM WAS MADE BEFORE THE CIT(A). THE CIT(A) HAD N OT ALLOWED THE CLAIM OF THE ASSESSEE FOR THE FOLLOWING REASONS :- APPEAL ON GROUND NO. 5 IS AGAINST THE NOT ALLOWING THE ASSESSEE TO SET OFF BROUGHT FORWARD LOSSES/UNABSORBED DEPRECIATION. THE APPELLA NT DID NOT CLAIM ANY DEDUCTION U/S. 80LA OF THE I.T. ACT, 1961 BUT SEEING THE POSITIVE INCOME CALCULATED BY THE A.O. THE ASSESSEE FILED A PETITION U/S. 154 OF THE LT. ACT 1 961 FOR ALLOWING DEDUCTION U/S. 80LA IN VIEW OF THE POSITIVE INCOME ARRIVED AS PER THE ASSE SSMENT ORDER. THE A.O. IN HIS ORDER DID NOT ACCEPT THE ASSESSEE'S CONTENTION OF ALLOWIN G DEDUCTION U/S. 80LA ON THE BASIS OF ITS FINDING THAT THE COMPANY HAD NO VALID LICENSE F ROM GOVT. OF W.B. TO DEVELOP INFRASTRUCTURE. I HAVE CONSIDERED THE FINDING OF TH E A.O. THE WRITTEN SUBMISSION FILED BY THE A.R. AND COPIES OF ORDERS/NOTIFICATIONS RELATIN G TO FORMATION OF THE ASSESSEE COMPANY WHICH WAS FILED BEFORE THE HON' BLE TRIBUNA L. AFTER GOING THROUGH THE ORDERS AND NOTIFICATIONS OF THE ASSESSEE COMPANY I.E. WEST BENGAL HOUSING INFRASTRUCTURE DEVELOPMENT CORPORATION LTD. IT IS NOT CLEAR THAT T HE ASSESSEE COMPANY WAS EVER INTRUSTED BY THE GOVT. OF WEST BENGAL AS PRINCIPLE AGENCY TO DEVELOP INFRASTRUCTURE. THE NOTIFICATION ALSO DID NOT MAKE IT CLEAR THAT THE A SSESSEE COMPANY WOULD BE CARRYING OUT WORKS ON THE BASIS OF IN PRINCIPLE APPROVAL WITHOUT ANY NECESSARY NOTIFICATION OF THE GOVT. OF WEST BENGAL EVEN ASSESSEE FAILED TO PRODUC E ANY SUPPORTING DOCUMENTS TO PROVE THAT IT WAS MANDATED BY THE GOVT. OF WEST BEN GAL TO DEVELOP INFRASTRUCTURE PROJECTS ON ITS OWN. FROM THE DETAILS OF WORKS DONE IT IS CLEAR THAT THE ASSESSEE COMPANY IS ENGAGED IN CARRYING OUT SUBSIDIARY WORKS MAINLY. AS NO COPY OF WRITTEN AGREEMENT AS MANDATED U/S. 80IA(4) (B) OF THE LT. ACT, 1961 WAS SUBMITTED EITHER BEFORE THE A.O. OR BEFORE ME I THINK A.O. WAS JUSTIFIED IN DISALLOWING DEDUCTION U/S 80IA OF THE I.T.ACT, 1961, THUS ASSESSEES APPEAL ON GROUND NO.5 IS DISM ISSED. 9.2. BEFORE US THE LD. COUNSEL FOR THE ASSESEE DRE W OUR ATTENTION TO THE ORDER OF THE CIT(A) FOR A.Y.2008-09 WHEREIN THE CIT(A) ALLOWED T HE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 80IA(4)(I) OF THE ACT. THE FOLLOWING ARE THE RELEVANT OBSERVATION OF THE CIT(A) :- 7. REGARDING GROUND NOS. 1 TO 4 RELATES TO DISALLO WANCE OF DEDUCTION U/S 80IA OF THE I.T.ACT, 1961 TO THE EXTENT OF RS.13,73,26,244/-. T HE APPELLANT IS A WHOLLY OWNED PUBLIC SECTOR UNDERTAKING OF GOVT. OF W.B. FORMED BY NOTIF ICATION DT. 19-04-1999 WITH THE MAIN OBJECT OF DEVELOPING HOUSING PROJECTS AND RELA TED INFRASTRUCTURE IN URBAN AND RURAL AREA OF WEST BENGAL. THE GOVT. OF W.B. ACQUIRED DIF FERENT PORTIONS OF LAND FROM TIME TO TIME AND TRANSFERRED THIS LANDS TO THE APPELLANT FO R DEVELOPMENT OF NEW TOWN PROJECT IN RAJARHAT. THE APPELLANT IS ENGAGED IN DEVELOPING OP ERATING AND MAINTAINING THE INFRASTRUCTURE FACILITIES LIKE DEVELOPMENT OF LAND, DRAINAGE, CONSTRUCTION OF ROADS, FLYOVERS, BRIDGES ETC. ALL THESE DEVELOPMENT ACTIVI TIES ARE BEING DISCHARGED BY THE APPELLANT IN ACCORDANCE WITH APPROVAL GIVEN BY GOVT . OF W.B. AS PER WEST BENGAL TOWN AND COUNTRY (PLANNING AND DEVELOPMENT) ACT, 1979. T HE ASSESSE HAD ALSO FILED THE REQUIRED AUDIT REPORT IN FORM NO.10CCB. KEEPING IN VIEW THIS FACTUAL MATRIX ITA.1739-1742/KOL/2012 AND ITA NO.113/K/2012 & 213/ KOL/2012 W.B.HOUSING INFRASTRUCTURE DEV.CORPN. LTD. 10 APPELLANT IS ELIGIBLE FOR DEDUCTION U/S 80IA SINCE ITS INCOME IS DERIVED FROM BUSINESS OF DEVELOPMENT, OPERATION AND MAINTENANCE OF INFRASTRU CTURE FACILITY. THEREFORE, GROUND NOS. 1 TO 4 ARE ALLOWED. 10. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN VIEW OF THE AFORESAID ORDER OF THE CIT(A) THE CLAIM OF THE ASSESSEE FOR THE AFORES AID DEDUCTION SHOULD BE ALLOWED. THE LD. DR SUBMITTED THAT THE REVENUE HAS FILED AN APPEAL BEING ITA NO.213/KOL/2012 AGAINST THE ORDER OF CIT(A) FOR A.Y.2008-09 AND THE REFORE THE SAID ORDER CANNOT BE SAID TO BE FINAL. IT WAS ALSO POINTED OUT BY HIM TH AT THE IMPUGNED ORDER OF THE CIT(A) IS LATER IN POINT OF TIME THAN THE ORDER OF THE CIT (A) FOR A.Y.2008-09. IT WAS ALSO SUBMITTED THAT THE CIT(A) WHILE DECIDING THE APPEAL FOR THE ASSESSEE HAS NOT LOOKED INTO THE CONDITION LAID DOWN IN SECTION 80IA(4)(I)( B) OF THE ACT. ACCORDING TO HIM THEREFORE THE CLAIM OF THE ASSESSEE FOR DEDUCTION U /S 80IA(4)(I) OF THE ACT OUGHT TO BE DISALLOWED. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE R EQUIREMENT OF SECTION 80IA(4) OF THE ACT IS THAT THE ASSESSEE TO CLAIM THE SAID D EDUCTION HAS TO CARRY ON THE BUSINESS OF DEVELOPING OR OPERATING AND MAINTAINING OR DEVEL OPING, OPERATING AND MAINTAINING ANY INFRASTRUCTURE. INFRASTRUCTURE FACILITY HAS BEEN DEFINED UNDER EXPLANATION TO SECTION 80IA(4)(I) OF THE ACT AND THE SAME INCLUDES HOUSING OR OTHER ACTIVITIES. BUT THAT SHOULD BE INTEGRAL PART OF THE HIGHWAY PROJECT . THE DEDUCTION HAS BEEN CLAIMED BY THE ASSESSEE PRESUMABLY IN RESPECT OF PROJECT DEVEL OPED AT NEW TOWN, RAJARHAT, KOLKATA. WHETHER IT FORMS PART OF HIGHWAY PROJECT OR NOT IS NOT CLEAR. APART FROM THE ABOVE THE AUTHORISED REPRESENTATIVE HARPED ON THE P OINT THAT THERE WAS A NOTIFICATION BY THE STATE GOVT. EMPOWERING THE ASSESSE TO DEVELO P OR OPERATE AND MAINTAIN INFRASTRUCTURE FACILITY WHICH CAN BE EQUATED TO AGR EEMENT BETWEEN THE ASSESSEE AND THE STATE GOVT.. WE FURTHER NOTICE THAT THE CONDITION F OR GRANT OF DEDUCTION U/S.80IA(4)(I) OF THE ACT IS THAT THE ASSESSEE SHOULD START OPERA TING AND MAINTAIN THE INFRASTRUCTURE FACILITY. AS RIGHTLY CONTENDED BY THE LD. DR, THE CIT(A) IN DECIDING THE APPEAL FOR A.Y.2008-09 HAS NOT CONSIDERED ANY OF THE AFORESAID REQUIREMENTS FOR ALLOWING ITA.1739-1742/KOL/2012 AND ITA NO.113/K/2012 & 213/ KOL/2012 W.B.HOUSING INFRASTRUCTURE DEV.CORPN. LTD. 11 DEDUCTION U/S 80IA(4)(I) OF THE ACT. IN THE IMPUGNE D ORDER, THE CIT(A) HAS ONLY REFUSED DEDUCTION THAT THE CONDITIONS MENTIONED U/S 80IA(4)(B)(I) OF THE ACT HAS NOT BEEN SATISFIED. IN THE GIVEN CIRCUMSTANCES, WE ARE OF THE VIEW THAT IT IS JUST AND APPROPRIATE TO SET ASIDE THE ORDER OF CIT(A) AND RE MAND THE QUESTION OF ALLOWING DEDUCTION U/S 80IA(4)(I) OF THE ACT TO THE AO FOR F RESH CONSIDERATION. THE AO WILL EXAMINE ALL THE REQUIREMENTS FOR ALLOWING THE AFORE SAID DEDUCTION. THE ASSESSEE WILL PROVIDE ALL THE DETAILS TO SUBSTANTIATE ITS CLAIM F OR THE AFORESAID DEDUCTION FOR STATISTICAL PURPOSE. GROUND NOS. 5 AND 6 RAISED BY THE ASSESSEE ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 12. IN THE RESULT ITA NO.1739/KOL/2013 OF THE ASSES SEE IS PARTLY ALLOWED. ITA NO.1740/KOL/2013 (A.YR.2006-07) 13. THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE O RDER DATED 14.01.2013 OF CIT(A)-XII, KOLKATA RELATING TO A.Y.2006-07. 14. GROUNDS NOS.1 AND 2 RAISED BY THE ASSESSEE ARE IDENTICAL TO GROUND NOS. 1 AND 2 RAISED BY THE ASSESSEE IN ITA NO.1739/KOL/201 3 FOR A.Y.2005-06. SIMILARLY GROUND NO.S 3 AND 4 AND 5 AND 6 RAISED B Y THE ASSESSEE IN THIS APPEAL ARE IDENTICAL TO GROUND NOS. 3 AND 4 AND 5 AND 6 IN ITA NO.1739/KOL/2013 FOR A.Y.2005-06. WHILE DECIDING THE APPEAL IDENTICAL GR OUNDS IN ITA NO.1739/KOL/2012 FOR A.YR.2005-06 WE ALLOW GROUND N O.S1 AND 2 RAISED BY THE ASSESSEE AND DISMISSED GROUND NOS. 3 AND 4 RAISED B Y THE ASSESSEE AND ALLOWED GROUND NOS. 5 AND 6 FOR STATISTICAL PURPOSES. 15. IN THE RESULT ITA NO.1740/KOL/2013 OF THE ASSES SEE IS PARTLY ALLOWED. ITA NO.1741/KOL/2013 (A.YR.2007-08) ITA.1739-1742/KOL/2012 AND ITA NO.113/K/2012 & 213/ KOL/2012 W.B.HOUSING INFRASTRUCTURE DEV.CORPN. LTD. 12 16. THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE O RDER DATED 14.01.2013 OF CIT(A)-XII, KOLKATA RELATING TO A.Y.2007-08 17. GROUNDS NOS.1 AND 2 RAISED BY THE ASSESSEE IN T HIS APPEAL ARE IDENTICAL TO GROUND NOS. 1 AND 2 RAISED BY THE ASSESSEE IN ITA N O.1739/KOL/2013 FOR A.Y.2005-06. FOR THE REASONS STATED THEREIN WHILE D ECIDING THE AFORESAID GROUNDS THESE GROUNDS OF APPEAL ARE ALLOWED. 18. IN THE RESULT ITA NO.1741/KOL/2013 OF THE ASSES SEE IS ALLOWED. ITA NO.1742/KOL/2013 (A.YR.2009-10) 19. THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE O RDER DATED 15.03.2013 OF CIT(A)-XII, KOLKATA RELATING TO A.Y.2009-10. 20. GROUNDS NOS.1 AND 2 RAISED BY THE ASSESSEE IN T HIS APPEAL IS WITH REGARD TO THE CLAIM OF DEDUCTION U/S 80IA OF THE ACT. THE FAC TS AND CIRCUMSTANCES UNDER WHICH THE DEDUCTION U/S 80IA OF THE ACT WAS CLAIMED BY THE ASSESSEE AND DISALLOWED BY THE AO IS IDENTICAL TO THE FACTS AND CIRCUMSTANCES AS IT PREVAILED IN A.Y.2005-06. WHILE DECIDING THE IDENTICAL GROUND NO S. 5 AND 6 FOR A.Y.2005-06 IN ITA NO.1739/KOL/2013 WE HAVE ALREADY SET ASIDE T HE ORDER OF CIT(A) IN THIS REGARD AND REMAND THE QUESTION OF ALLOWING DEDUCTIO N U/S 80IA(4) OF THE ACT TO THE AO FOR FRESH CONSIDERATION FOR THE REASONS STAT ED THEREIN. GROUND NOS. 1 AND 2 RAISED BY THE ASSESSEE ARE TREATED AS ALLOWED FOR S TATISTICAL PURPOSES. 21. GROUND NOS. 3 AND 4 RAISED BY THE ASSESSEE IN T HIS APPEAL ARE IDENTICAL GROUNDS 1 AND 2 IN ITA NO.1739/KOL/2013 AND GROUND NOS.5 AND 6 IN THIS APPEAL ARE IDENTICAL TO GROUND NOS. 3 AND 4 IN ITA NO.1739 /KOL/2013. FOR THE REASONS STATED THEREIN GROUND NOS. 3 AND 4 ARE ALLOWED AND GROUND NO.S 5 AND 6 ARE DISMISSED. 22. IN THE RESULT ITA NO.1740/KOL/2013 OF THE ASSES SEE IS PARTLY ALLOWED. ITA.1739-1742/KOL/2012 AND ITA NO.113/K/2012 & 213/ KOL/2012 W.B.HOUSING INFRASTRUCTURE DEV.CORPN. LTD. 13 ITA NO.113/KOL/2012 AND ITA NO.213/KOL/2012 23. ITA NO.113/KOL/2012 IS AN APPEAL BY THE ASSESSE E WHILE ITA NO.213/KOL/2012 IS AN APPEAL BY THE REVENUE. BOTH T HESE APPEALS ARE DIRECTED AGAINST THE ORDER DATED 04.11.2011 OF CIT(A)-XII, K OLKATA RELATING TO A.Y.2008- 09. ITA NO.113/KOL/2012 (ASSESSEES APPEAL)(A.Y.2008-09 ): 24. GROUND NOS. 1 AND 2 RAISED BY THE ASSESSEE IS S IMILAR TO GROUND NOS. 1 AND 2 RAISED BY THE ASSESSEE IN ITA NO.1739/KOL/2013 FO R A.Y.2005-06. WHILE DECIDING THE AFORESAID GROUND IN A.Y.2005-06 WE HAV E ALREADY HELD THAT THE ADDITION MADE BY THE AO AND CONFIRMED THE CIT(A) CA NNOT BE SUSTAINED. FOR THE REASONS STATED THEREIN GROUND NOS. 1 AND 2 RAISED B Y THE ASSESSEE IN THIS APPEAL IS ALLOWED. 25. GROUND NOS. 3 AND 4 RAISED BY THE ASSESSEE READ AS FOLLOWS : 3. THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) W AS WRONG IN NOT DIRECTING THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS.26.1 7 CRORE ON ACCOUNT OF PENAL INTEREST WHICH HAD ALREADY BEEN INCLUDED IN THE ASSESSMENT F OR THE PRECEDING ASSESSMENT YEAR, VIZ., 2007-08. 4. THAT WITHOUT PREJUDICE TO THE CONTENTION RAISED IN GROUND NO.3 ABOVE, THE COMMISSIONER OF INCOME-TAX (APPEALS) FAILED TO APPR ECIATE THAT THERE HAD OCCURRED A DOUBLE ASSESSMENT OF THE SUM OF RS.26.17 CRORE ONCE IN THE ASSESSMENT YEAR 2007-08 AND AGAIN IN THE ASSESSMENT YEAR 2008-09. 26. THE ASSESSEE RECEIVED A SUM OF RS.26.17 CRORE T OWARDS PENAL INTEREST ON DELAYED PAYMENT ON SALE OF BULK LAND. THIS SUM WAS OFFERED TO TAX FOR A.Y.2007-08 AND HAS BEEN DULY TAXED. CONSEQUENT TO THE COMMENTS OF THE CONTROLLER AND AUDITOR GENERAL THIS SUM WAS CONSIDERED AS INCOME OF THE AS SESSMENT IN A.Y.2008-09 ALSO AS PRIOR PERIOD INCOME. BEFORE CIT(A) THE ASSESSEE POI NTED OUT THAT A SUM OF RS.26.17 CRORE HAD ALREADY BEEN OFFERED TO TAX IN A.Y.2007-0 8. THEREFORE THE AFORESAID SUM SHOULD BE EXCLUDED FROM THE TOTAL INCOME IN A.Y.200 8-08. THE CIT(A) REJECTED THE ITA.1739-1742/KOL/2012 AND ITA NO.113/K/2012 & 213/ KOL/2012 W.B.HOUSING INFRASTRUCTURE DEV.CORPN. LTD. 14 CLAIM OF THE ASSESSEE FOR THE REASONS THAT THE ASSE SSEE SHOULD RAISE AN OBJECTION IN THIS REGARD ONLY IN A.Y.2007-08 AND NOT IN A.Y.2008-09. THE CIT(A) WAS ALSO OF THE VIEW THAT IN A.Y.2008-09 THE ASSESSEE HAS INCLUDED THE S UM OF RS.26.17 CRORE AS PRIOR PERIOD INCOME IN THE ACCOUNTS. CIT(A) ACCORDINGLY D ISMISSED THE GROUNDS OF APPEAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF THE CIT(A) THE ASSESSEE HAS RAISED GROUND NOS. 3 AND 4 BEFORE THIS TRIBUNAL. 27. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE HAVE AL SO PERUSED THE ORDER OF THE ASSESSMENT OF THE ASSESSEE FOR A.Y.2007-08. AT PAR A 3 OF THE SAID ASSESSMENT ORDER, THE AO HAS DISCUSSED THE QUESTION AS TO WHETHER THE SUM OF RS.26.17 CRORE SHOULD BE ADDED AS OTHER INCOME OF THE ASSESSEE. THE ASSESSEE SUBMITTED THAT THE SAID ITEM OF THE INCOME HAS BEEN CONSIDERED IN A.Y.2008-09 BESIDES R ELYING UPON ACCOUNTING STANDARD-XVI OF ICAI. THE AO HAS THEREAFTER OBSERVE D THAT A SUM OF RS.26.17 CRORES BEING PENAL INTEREST COLLECTED FOR PERIOD PAYMENT O N SALE VALUE OF THE LAND DURING THE YEAR IS REQUIRED TO BE INCLUDED IN OTHER INCOME AND SINCE THE SALE OF LAND WAS COMPLETED THE CREDIT OF INTEREST TO THE PROJECT COS T OF WORK IN PROGRESS IS NOT IN ORDER AND HAS RESULTED IN UNDERSTATEMENT OF INCOME. THE AO HAS ACCORDINGLY ADDED A SUM OF RS.26.17 CRORE TO THE TOTAL INCOME OF THE ASSESS EE. THE ASSESSEE HAS ACCEPTED THIS ADDITION AND HAS NOT CHALLENGED THE SAME BEFORE CIT (A) FOR A.Y.2007-08. 27.1. IN THE LIGHT OF THE FACTUAL BACKGROUND ON TH E AFORESAID ISSUE, WE ARE OF THE VIEW THAT A SUM OF RS.26.17 CRORE WAS INCOME OF A.Y.2007 -08 AND HAS BEEN TAXED IN THE SAID ASSESSMENT YEAR AND THEREFORE CANNOT BE TAXED AGAIN IN A.Y.2008-09. ACCORDINGLY GROUND NOS. 3 AND 4 RAISED BY THE ASSES SEE IS ALLOWED. 28. IN THE RESULT ITA NO.113/KOL/2012 OF THE ASSESS EE IS ALLOWED. ITA NO.213/KOL/2012 (REVENUES APPEAL)(A.Y.2008-09) : 29. GROUND NO.1 RAISED BY THE REVENUE READS AS FOLL OWS :- ITA.1739-1742/KOL/2012 AND ITA NO.113/K/2012 & 213/ KOL/2012 W.B.HOUSING INFRASTRUCTURE DEV.CORPN. LTD. 15 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, LD. CIT(A) HAS ERRED IN DELETING THE ADDITION ON ACCOUNT OF UNDER STATEMENT OF PROFIT AMOUNTING TO RS.204.67 CRORE THOUGH THE ASSESSEE HAD ALLOTTED AND HANDED O VER THE LAND. 30. AS WE HAVE ALREADY SEEN THAT THE ASSESSEE DEVEL OPS AND SELLS LAND, FLAT ETC. THE ASSESSEE ADOPTS A PRACTICE OF RECOGNISING THE INCOM E ON SALE OF LAND AND FLATS ONLY WHEN REGISTRATION OF CONVEYANCE IS COMPLETED. THE C AG COMMENTED IN HIS REPORT THAT SINCE THE ASSESSEE HAD ALLOTTED LAND AND HANDED OVE R THE LAND AND SINCE THE SALE OF LAND HAD BEEN DULY APPROVED BY THE BOARD OF DIRECTORS OF THE ASSESSEE AND CONTROL OF THE LAND PASSED TO THE ALLOTTES AND THEREFORE SALE SHOU LD BE TREATED AS COMPLETED AND THE RESULTING INCOME ON SALE OF LAND OUGHT TO HAVE BEEN RECOGNISED BY THE ASSESSEE IN THE BOOKS OF ACCOUNTS. THE CAG WAS OF THE OPINION THAT THERE IS AN UNDER STATEMENT OF PROFIT BY REASON OF THE ASSESSEE NOT RECOGNISING TH E SALE TO THE EXTENT OF RS.204.67 CRORE. AO BASED ON THE REPORT OF THE CAG CONCLUDED THAT THERE IS AN UNDER STATEMENT OF REPORT BY THE ASSESSEE TO THE EXTENT OF RS.204.6 7 CRORE AND ACCORDINGLY BROUGHT THE SAME TO TAX. 31. ON APPEAL BY THE ASSESSEE THE CIT(A) DELETED T HE SAID ADDITION OBSERVING AS FOLLOWS :- REGARDING GROUND NOS. 9 & 10 RELATING TO ADDITION OF RS.205,00,52,000/- DUE TO CAGS COMMENTS REGARDING UNDERSTATEMENT OF PROFIT FOR THE YEAR BY RS.204,67,00,000/-. THE ASSESSEE HAS SUBMITTED THAT THE APPELLANT FOLLOWED A PRACTICE TO RECOGNISE SALE OF LAND/FLAT ONLY WHEN THE REGISTRATION OF DEEDS FOR T HE ENTIRE ALLOTTED LAND/FLAT WOULD BE COMPLETED. HOWEVER, CAG COMMENTED IN ITS REPORT THA T SINCE THE APPELLANT HAD ALLOTTED AND HANDED OVER THE LAND FOR AN AGGREGATE SALE VALU E OF RS.242.60 CRORES (HAVING COST OF RS.37.93 CRORES) AND THE CONTROL OF LAND PASSED TO THE ALLOTTEES, THE APPELLANT SHOULD HAVE ACCOUNTED FOR SUCH SALE IN ITS ACCOUNTS RESULT ED IN UNDERSTATEMENT OF PROFIT OF RS.204.67 CRORES. THE APPELLANT HAD CONSIDERED THE INCOME FROM SALE OF LAND IN THE NEXT YEARS ACCOUNTS RELATING TO A.Y.2009-10. THE APPELL ANT HAD SUBMITTED THAT THE LAND BEING STOCK IN TRADE AND NOT BEING A CAPITAL ASSET, THE DEFINITION OF TRANSFER U/S 2(47) OF THE I.T.ACT, 1961 IS NOT APPLICABLE TO ASSESSEE COM PANY AND THE SALE OF LAND WHICH IS HELD AS STOCK IN TRADE SHOULD BE RECOGNISED ONLY WH EN THE LEGAL TITLE OF THE LAND IS TRANSFERRED TO THE RELEVANT ALLOTTEE. THE ASSESSEE IS CONSISTENTLY FOLLOWING THIS METHOD OF ACCOUNTING AND IN A.Y.2009-10 APPELLANT HAD ALREADY ACCOUNTED FOR THE RELEVANT SALES OF RS.203.3 CRORES. THE ASSESSEE IS ENTITLED TO RELIEF OF RS.204.67 CRORES. THEREFORE GROUND NOS. 9 & 10 ARE ALLOWED. ITA.1739-1742/KOL/2012 AND ITA NO.113/K/2012 & 213/ KOL/2012 W.B.HOUSING INFRASTRUCTURE DEV.CORPN. LTD. 16 AGGRIEVED BY THE ORDER OF THE CIT(A) REVENUE IS IN APPEAL BEFORE THIS TRIBUNAL. 31. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE LD. DR PLACED RELIANCE ON THE ORDER OF THE AO. THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF THE CIT(A). WE ARE OF THE VIEW THAT THE ORDER OF THE CIT(A) DOES NOT C ALL FOR ANY INTERFERENCE. IT IS NOT DISPUTED BY THE REVENUE THAT THERE HAS BEEN A METHO D OF ACCOUNTING FOLLOWED BY THE ASSESSEE WAS TO RECOGNISE INCOME ONLY WHEN REGISTRA TION OF CONVEYANCE IS COMPLETED IN FAVOUR OF THE ALLOTTEES. IN FACT THE SETTLED POS ITION IN LAW IS THAT A SALE IS COMPLETE ONLY ON REGISTRATION OF CONVEYANCE. THE EXTENDED ME ANING OF THE DEFINITION TRANSFER U/S 2(47) OF THE ACT WILL NOT BE APPLICABLE IN THE PRESENT CASE FOR THE REASON THAT SALE OF LAND BY THE ASSESSEE IS SALE OF STOCK IN TRADE AND STOCK IN TRADE IS NOT A CAPITAL ASSET WITHIN THE MEANING OF DEFINITION OF THE SAID TERM U /S 2(14) OF THE ACT. THE EXTENDED MEANING OF THE DEFINITION TRANSFER U/S 2(47) OF T HE ACT IS APPLICABLE ONLY TO TRANSFER OF A CAPITAL ASSET. BESIDES THE ABOVE WE ARE OF THE VIEW THAT THE ASSESSEE HAS RECOGNISED THIS INCOME FROM THE SALE OF LAND IN THE SUBSEQUENT YEAR I.E. 2009-10. IN THE GIVEN FACTS AND CIRCUMSTANCES WE ARE OF THE VIE W THAT CIT(A) WAS FULLY JUSTIFIED IN DELETING THE ADDITION MADE BY THE AO. CONSEQUENTLY GROUND NO.1 RAISED BY THE REVENUE IS DISMISSED. 32. GROUND NO.2 RAISED BY THE REVENUE IN THIS APPEA L IS IDENTICAL TO GROUND NOS. 5 AND 6 IN ASSESSEES APPEAL IN ITA NO.1739/KOL/2013 FOR A.Y.2005-06. FOR THE REASONS GIVEN THEREIN IN THE AFORESAID GROUND THE ISSUE IS RESTORED TO THE AO AND THE GROUND OF APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOS ES. 33. GROUND NO.3 RAISED BY THE REVENUE IN THIS APPEA L IS IDENTICAL TO GROUND NOS. 3 AND 4 RAISED BY THE ASSESSEE IN ITA NO.1739/KOL/201 3 FOR A.Y.2005-06. FOR THE REASONS GIVEN THEREIN IN THE AFORESAID GROUND WE AL LOW THE GROUND RAISED BY THE REVENUE. ITA.1739-1742/KOL/2012 AND ITA NO.113/K/2012 & 213/ KOL/2012 W.B.HOUSING INFRASTRUCTURE DEV.CORPN. LTD. 17 34. IN THE RESULT ITA NO.213/KOL/2012 OF THE REVENU E IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 02.12.2015. SD/- SD/- [ WASEEM AHMED ] [ N.V.VASUDEV AN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE:.02.12.2015. R.G.(.P.S.) COPY OF THE ORDER FORWARDED TO: . 1. WEST BENGAL HOUSING INFRASTRUCTURE DEVELOPMENT CORPORATION LTD., 35- 1111 MAJOR ARTERIAL ROAD, NEW TOWN, KOLKATA-700156. . 2. THE I.T.O., WARD-11(1), KOLKATA. 3. D.C.I.T., CIRCLE-11,KOLKATA. . 4. THE C.I.T.(A)-XII, KOLKATA 5. THE C IT-IV, KOLKATA 6. C.I.T.(DR), KOLKATA BENCHES, KOLKATA TRUE COPY, BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES