Hindustan Steelworks Construction Ltd., Kolkata V. ITO, Wd-12(1), Kolkata, Kolkata

ITA 1147/KOL/2017

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 2696 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 19-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ROBIN CHOWDHURY
• Section: 143(3); 147; 37

Judgement Text

, B , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND SHRI, M. BALAGANESH, ACCOUNTANT MEMBER ITA NO S . 1146 & 1147 / KOL / 20 17 ASSESSMENT YEARS :2006-07 & 2008-09 HINDUSTAN STEELWORKS CONSTRUCTION LTD. 5/1, COMMISSARIAT ROAD (HASTINGS), KOLKATA 700 022. [ PAN NO.AAACH 9524 R ] V/S . ITO, WARD 12(1), P-7, CHOWRINGHEE SQUARE, KOLKATA 700 069. /APPELLANT .. / RESPONDENT /BY APPELLANT NONE /BY RESPONDENT SHRI ROBIN CHOWDHURY, ADDL.CIT- SR. DR /DATE OF HEARING 30-08-2018 /DATE OF PRONOUNCEMENT 12-10-2018 / O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THESE TWO ASSESSEES APPEALS FOR ASSESSMENT YEARS 2006-07 AND 2008-09 ARISES AGAINST COMMISSIONER OF INCOME TAX (APPEALS)-18, KOLKATAS SEPARATE ORDERS, BOTH DATED 06.02.2017 PASSED IN CASE NO.527/CIT(A)-18/16- 17/CIR-11(1)/KOL AND 528/CIT(A)-18/16-17/CIR-11(1)/KOL, RESPECTIVELY, INVOLVING PROCEEDINGS U/S 143(3) READ WITH SECTION 147 OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH THE PARTIES. CASE FILE PERUSED. ITA NOS.1146 & 1147/KOL/2017 A.Y. 2006-07 & 2008-09 HINDUSTAN STEELWORKS CONSTRUCTION LTD. PAGE 2 2. THE ASSESSEES SOLE SUBSTANTIVE GRIEVANCE RAISED IN FORMER AND FIRST GROUND IN LATTER ASSESSMENT YEAR CHALLENGES BOTH THE LOWER AUTHORITIES ACTION DISALLOWING ITS LOSS CLAIM(S) OF RS. 1,30,62,000/- AND RS. 2,389.97 LAKHS; RESPECTIVELY BY HOLDING THE SAME TO BE CAPITAL IN NATURE. THERE IS NO DISPUTE REGARDING THE BASIC FACT OF THE ASSESSEE HAVING WRITTEN OFF ITS PROJECT VALUE IN LIBYA IN ITS P & L A/C (SUPRA) IN THE TWO ASSESSMENT YEARS. THE SOLE QUESTION IS ABOUT NATURE THEREOF. THE ASSESSING OFFICER AS WELL AS THE CIT(A) HOLD THE SAME TO BE IN THE NATURE OF CAPITAL LOSS. WE FIND THAT THIS IDENTICAL CLAIM REPRESENT WRITTEN DOWN VALUE OF ASSESSEES LEFT OVER ASSETS IN ITS ABANDONED PROJECT IN LIBYA. HONBLE JURISDICTIONAL HIGH COURT DECISION IN BINANI CEMENT LTD. 2016 380 ITR 116 (CALCUTTA) HAS CONCLUDED THAT SUCH A LOSS EMANATING FROM ABUNDANT PROJECTS AMOUNTS TO REVENUE CLAIM U/S 37 OF THE ACT SINCE INCURRED WHOLLY AND EXCLUSIVELY DURING THE COURSE OF RELEVANT BUSINESS. THEIR LORDSHIP, EARLIER JUDGMENT IN CIT VS ALOM INDUSTRIES LTD. IN ITA 724 OF 2004 DECIDED ON 17.08.2015, INDO RAMA SYNTHETICS (I) LTD. VS CIT (2011) 333 ITR 18 (DEL) AND ASIA POWER PROJECT (P) LTD. VS DCIT (2015) 370 ITR 257 (KARNATAKA) ALSO REITERATE THE VERY VIEW. WE ACCEPT ASSESSEES IMPUGNED IDENTICAL LOSS CLAIM IN BOTH ASSESSMENT YEARS THEREFORE. ITS FORMER APPEAL ITA 1146 SUCCEEDS ACCORDINGLY. 3. THIS LEAVES US WITH ASSESSEES SECOND SUBSTANTIVE GROUND IN AY 2008- 09 SEEKING TO REVERSE BOTH THE LOWER AUTHORITIES ACTION ADDING PRIOR PERIOD INCOME OF RS. 33.60 CRORES DURING THE COURSE OF ASSESSMENT AS UPHELD IN LOWER APPELLATE PROCEEDINGS. THE ASSESSEES CASE THROUGHOUT HAS BEEN THAT THE SAME RELATED TO INTEREST AND FINANCIAL CHARGES ARISING ON ACCOUNT OF CHANGE IN METHOD OF CHARGING OF INTEREST AS PRESCRIBED BY THE GOVT. OF INDIA FOR THE PERIOD FROM F.Y. 1999-2002 F.Y. 2006-07 AND CRYSTALISED DURING THE RELEVANT PREVIOUS YEAR. LEARNED COUNSEL PLEADS THAT IT IS IN THE NATURE OF A MERE BOOK KEEPING ENTRY NOT GIVEN RISE TO ANY ACTUAL INCOME SO AS TO BE TAXED UNDER THE PROVISIONS OF THE ACT. WE FIND THAT NEITHER THE ASSESSING OFFICER NOR CIT(A) HAVE GONE INTO DETAILS OF THE SAID CHANGE IN THE METHOD OF ACCOUNTING ITA NOS.1146 & 1147/KOL/2017 A.Y. 2006-07 & 2008-09 HINDUSTAN STEELWORKS CONSTRUCTION LTD. PAGE 3 IN LIGHT OF GOVT. OF INDIAS DIRECTIONS. THEY HAVE MERELY HELD THE IMPUGNED SUM TO BE TAXABLE INCOME SINCE THE ASSESSEE HAS CREDITED THE SUMS IN ITS P & L ACCOUNT. WE REMIT THE INSTANT ISSUE BACK TO THE ASSESSING OFFICER FOR FRESH ADJUDICATION AS PER LAW AFTER CONSIDERING ALL THE RELEVANT FACTS AND CIRCUMSTANCES GIVING RISE TO ASSESSEES ALLEGED BOOK ENTRIES AMOUNT TO RS. 33,60,02,654/- AFTER AFFORDING ADEQUATE OPPORTUNITY OF HEARING. THIS SECOND SUBSTANTIVE GROUND IS ACCEPTED FOR STATISTICAL PURPOSES. LATTER MAIN APPEAL ITA 1147/K/2017 HAS PARTLY ACCEPTED. 4. THE ASSESSEES FORMER APPEAL ITA 1146/K/2017 IS ALLOWED AND LATTER APPEAL ITA 1147/K/2017 IS PARTLY ALLOWED IN ABOVE TERMS. ORDER PRONOUNCED IN THE OPEN COURT 12/10/2018 SD/- SD/- ( ) ( ) (M.BALAGANESH) (S.S.GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) KOLKATA, BISWAJIT, SR.P.S - 12 / 10 /201 8 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-HINDUSTAN STEELWORKS CONSTRUCTION LTD. 2. /RESPONDENT-ITO, WARD 12(1), KOLKATA 3. / CONCERNED CIT KOLKATA 4. - / CIT (A) KOLKATA (SENT THROUGH E-MAIL) 5. , , / DR, ITAT, KOLKATA (SENT E-MAIL) 6. [ / GUARD FILE. BY ORDER/ , SR. PRIVATE SECRETARY, HEAD OF OFFICE/DDO ,