M/s H.P. State Industrial Development Corporation Ltd., Shimla V. DCIT, Shimla

ITA 1141/CHANDI/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5139 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-05-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 06-02-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 23-12-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Keywords: Bad and doubtful debts

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER & MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO. 1141/CHD/2014 ASSESSMENT YEAR: 2011-12 M/S H.P. STATE INDUSTRIAL DEVELOPMENT VS. THE DCIT, CORPORATION LTD., SHIMLA SHIMLA PAN NO. AACCT0331N (APPELLANT) (RESPONDENT) APPELLANT BY : SH. VISHAL MOHAN RESPONDENT BY : SH. S.K. MITTAL DATE OF HEARING : 20.04.2017 DATE OF PRONOUNCEMENT : 19.05.2017 ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 5.11.2014 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS CIT(A)], SHIMLA. 2. THE ASSESSEE ORIGINALLY HAD TAKEN THE FOLLOWING TWO EFFECTIVE GROUNDS OF APPEAL :- 2 1.THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) IS NOT JUSTIFIED IN UPHOLDING THE ADDING BACK A SUM OF RS. 494703/- ON ACCOUNT OF AMOUNTS RECOVERABLE FROM THE ALLOTTEES OF INDUSTRIAL PLOTS AT BADDI AND DAVNI BY TREATING THE SAME AS INCOME OF THE ASSESSEE FOR THE INSTANT YEAR. 2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) IS NOT JUSTIFIED IN ADDING A SUM OF RS. 2,21,88,950/- ON ACCOUNT OF INTEREST ON LOANS RECEIVABLE. THE ASSESSEE IS FOLLOWING THE CASH SYSTEM OF ACCOUNTING IN RESPECT OF ITS FINANCING BUSINESS AND THE SAID ADDITION COULD NOT HAVE BEEN MADE AND AS SUCH THE SAME IS BAD IN LAW AND FACTS. HOWEVER, LATER ON, THE ASSESSEE HAD MOVED AN APPLIC ATION FOR RAISING AN ADDITIONAL GROUND OF APPEAL WHEREIN THE ASSESSEE HA S SOUGHT TO TAKE THE FOLLOWING ADDITIONAL GROUND OF APPEAL:- THAT ALTERNATIVELY IT IS SUBMITTED THAT EVEN IF IT IS ACCEPTED THAT THE INCOME FROM PROVIDING LONG TERM FINANCE HAD TO BE ASSESSED ON THE MERCANTILE SYSTEM OF ACCOUNTING NO ADDITION COULD BE MADE AS THE CASE OF THE ASSESSEE WAS COVERED UNDER SECTION 43D OF THE INCOME-TAX ACT, 1961 AND INTEREST ON BAD LOANS HAD TO BE ASSESSED ON RECEIPT BASIS. 3. AT THE OUTSET, THE LD. AUTHORISED REPRESENTATIVE OF THE ASSESSEE HAS STATED AT BAR THAT THERE IS NOT MERIT IN GROUND NO. 1 OF THE APPEAL AND THE 3 SAME MAY BE DISMISSED. IN VIEW OF THIS, GROUND NO.1 OF THE APPEAL IS DISMISSED. 4. SO FAR AS GROUND NO.2 OF THE APPEAL IS CONCERNED , THE LD. AUTHORISED REPRESENTATIVE HAS STATED THAT THE ADDITIONAL GROUN D SOUGHT TO BE RAISED IS CONNECTED TO GROUND NO.2 OF THE APPEAL. HE, WHILE RELYING UPON THE PROVISIONS OF SECTION 43D OF THE ACT, HAS STATED TH AT THE ASSESSEE IS ALTERNATIVELY COVERED UNDER THE SAID PROVISIONS OF THE ACT AND THAT THE ADDITION PERTAINING TO THE ISSUE RAISED IN GROUND N O.2 OF THE APPEAL, THEREFORE, OTHERWISE IS NOT LEGALLY WARRANTED. HE, THEREFORE, HAS PLEADED THAT THE APPLICATION OF THE ASSESSEE FOR RAISING TH E ADDITIONAL LEGAL GROUND WHICH IS LEGAL IN NATURE, BE ALLOWED AND THE MATTER BE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR DECISION AFRESH ON GROUND NO.2, ALONGWITH THE ADDITIONAL GROUND. 5. THE LD. DR, ON THE OTHER HAND, HAS STRONGLY OPPO SED THE APPLICATION OF THE ASSESSEE FOR RAISING THE ADDITIONAL GROUND. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE AS SESSEE HAS RAISED A PURELY LEGAL GROUND WHICH IS PLEADED AS ALTERNATE TO GROUND NO.2 STATING THEREIN THAT EVEN OTHERWISE AS PER THE PROVISIONS O F SECTION 43D OF THE ACT, NO ADDITIONS WERE WARRANTED, AS THE ASSESSEE BEING A STATE INDUSTRIAL DEVELOPMENT CORPORATION, THE INCOME BY WAY OF INTER EST IN RELATION TO SUCH CATEGORIES OF BAD OR DOUBTFUL DEBTS AS MAY BE PRES CRIBED HAVING REGARD TO THE GUIDELINES ISSUED BY THE RESERVE BANK OF INDIA, IS CHARGEABLE TO TAX IN THE PREVIOUS YEAR IN WHICH IT IS CREDITED TO THE PR OFIT AND LOSS ACCOUNT OF 4 THE ASSESSEE CORPORATION. WE ARE OF THE VIEW THAT T HERE IS NO BAR IN ADMITTING AND DECIDING THIS LEGAL ISSUE RAISED BY T HE ASSESSEE, THOUGH AT THE SECOND APPELLATE STAGE, AS NO NEW FACTS HAVE TO BE EXAMINED. ONLY THE APPLICABILITY OF THE PROVISIONS OF SECTION 43D IS T O BE DECIDED. WE, THEREFORE, ALLOW THE APPLICATION OF THE ASSESSEE FO R RAISING THE ADDITIONAL GROUND. 7. NOW COMING TO THE MERITS, BOTH THE LD. REPRESENT ATIVES OF THE PARTIES HAVE AGREED THAT THE ISSUE IS REQUIRED TO BE EXAM INED BY THE ASSESSING OFFICER AFRESH AS TO THE ELIGIBLY OF THE ASSESSEE T O CLAIM THE BENEFIT UNDER THE PROVISIONS OF SECTION 43D OF THE ACT. WE ACCOR DINGLY RESTORE GROUND NOS. 2 & ADDITIONAL GROUND OF THE APPEAL TO THE FI LE OF THE ASSESSING OFFICER TO DECIDE THE ISSUE RAISED THEREIN AFRESH, IN ACCORDANCE WITH LAW. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 19.05.2017 SD/- SD/- ( ANNAPURNA GUPTA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 19 TH MAY, 2017 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR