Tata Tea Limited, Kolkata V. A.C.I.T., Cir -4, Kolkata, Kolkata

ITA 1235/KOL/2009

• Counselvise Citation: 123523514 RSA 2009
• Duration Of Justice: 1 year(s) 11 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2011
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 06-06-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 20-07-2009
• Result in Favour of: Set Aside
• Court: TRIBUNAL
• Department Lawyers: L S NEGI
• Assessee Lawyers: A K MITRA
• Keywords: Business expenditure; Opportunity of being heard; Question of law; Notional interest; Revised return

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BEN CH B, KOLKATA () BEFORE . .. . . .. . , , , , , SHRI B.R.MITTAL, JUDICIAL MEMBER. /AND . .. .!' !'!' !'. .. . , #$ SHRI C.D.RAO, ACCOUNTANT MEMBER %& %& %& %& ' ' ' ' / ITA NO . 1235 /KOL/2009 () *+/ ASSESSMENT YEAR : 2005-06 (-. / APPELLANT ) TATA TEA LIMITED, KOLKATA (PAN: AABCT 0602 K) - ( - - VERSUS - . (01-./ RESPONDENT ) A.C.I.T., CIRCLE-4, KOLKATA -. 2 3 #/ FOR THE APPELLANT: SHRI A.K.MITRA 01-. 2 3 #/ FOR THE RESPONDENT: SHRI L.S.NEGI #4 / ORDER ( (( ( . .. .!' !'!' !'. .. . ) )) ), , , , #$ PER SHRI C.D.RAO, AM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE O RDER DATED 20.03.2009 OF THE CIT(A)-IV, KOLKATA PERTAINING TO A.YR. 2005-06. 2. GROUND NO.1 RAISED BY THE ASSESSEE RELATES TO NOTIONAL INTEREST ON ADVANCES MADE TO M/S. HALDIA PETRO CHEMICAL LIMITED AMOUNTING TO RS.1,39,16,000/-. 3. AT THE TIME OF HEARING THE LD. COUNSEL APPEAR ING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THIS ISSUE HAS BEEN SET ASIDE BY THI S TRIBUNAL IN THE IMMEDIATELY PRECEDING ASSESSMENT YEARS 2000-01, 2001-02, 2002-0 3 AND 2003-04. IN SOME OF THE ASSESSMENT YEARS THE MATTER IS STILL PENDING WITH T HE AO. IN THIS ASSESSMENT YEAR ALSO THE PECULIAR FACTS OF THIS ISSUE ARE THAT THE OLD L OANS HAS ALREADY BEEN RE-PAID AND FRESH 2 LOANS HAS BEEN GRANTED TO M/S. HALDIA PETRO CHEMICA L LIMITED. THEREFORE THE AO SHOULD GIVE A FRESH LOOK WHILE DECIDING THIS ISSUE BASED ON THE PECULIAR FACTS. 4. ON THE OTHER HAND, THE LD. DR APPEARING ON BEHALF OF THE REVENUE HAS NOT OBJECTED TO THE REQUEST OF THE LD. AR. 5. HAVING HEARD THE RIVAL SUBMISSIONS AND ON CA REFUL PERUSAL OF THE MATERIAL AVAILABLE ON RECORD, KEEPING IN VIEW OF THE FACT TH AT THE TRIBUNAL HAS SET ASIDE THE MATTER TO THE FILE OF THE AO IN THE PRECEDING YEARS WE SET ASIDE THE ISSUE TO THE FILE OF THE AO FOR THE YEAR UNDER CONSIDERATION ALSO WITH T HE DIRECTION TO DECIDE THE ISSUE AFRESH IN THE LIGHT OF THE PECULIAR FACTS NARRATED BY THE LD. COUNSEL FOR THE ASSESSEE AFTER GIVING DUE OPPORTUNITY TO THE ASSESSEE OF BEI NG HEARD AS PER LAW. IN THE RESULT GROUND NO.1 OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. 6. GROUND NO.2 OF THE ASSESSEE RELATES TO DISA LLOWANCE U/S 40A(9) ON ACCOUNT OF EXPENDITURE INCURRED TOWARDS EMPLOYEES RECREATION C LUB AMOUNTING TO RS.5,50,000/-. 7. AT THE TIME OF HEARING THE LD. COUNSEL APPEA RING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ISSUE IS COVERED IN FAVOUR OF TH E ASSESSEE BY THIS TRIBUNAL IN ASSESSEES OWN CASE VIDE ITA NO.89/KOL/2007 IN A.YR . 2003-04 ORDER DATED 30 TH SEPTEMBER, 2009. HE ALSO PLACED RELIANCE ON THE DEC ISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE CIT VS- BHARAT PETROLEUM CO RPORATION LIMITED 252 ITR 43 (BOM). WHEREIN IT HAS BEEN HELD 40A(9) OF THE ACT I S NOT APPLICABLE IN CASE THE ASSESSEE HAS REIMBURSED EXPENSES TO THE CLUB FORMED FOR THE BENEFIT OF THE EMPLOYEES. RELIANCE WAS ALSO PLACED ON THE DECISION OF THIS TR IBUNAL IN THE CASE OF DCIT VS- CHLORIDE INDUSTRIES LTD. REPORTED IN 76 ITD 1 (KOL) . 8. ON THE OTHER HAND, THE LD. DR APPEARING ON BEHALF OF THE REVENUE COULD NOT CONTRADICT THE SUBMISSIONS OF THE LD. AR. 3 9. AFTER HEARING THE RIVAL SUBMISSIONS AND ON PERUSAL OF THE MATERIALS AVAILABLE ON RECORD AND THE CASE LAWS CITED BY THE LD. COUNSEL F OR THE ASSESSEE THIS TRIBUNAL HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE VIDE I TA NO.89/KOL/2007 CITED SUPRA BY OBSERVING AS UNDER :- 17. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND THE CASE LAWS CITED BY THE LD. COUNSEL F OR THE ASSESSEE. WE FIND THAT THE FACTS ARE NOT IN DISPUTE. WE, THEREFORE, FIND M ERIT IN THE PLEA OF LD. COUNSEL FOR THE ASSESSEE THAT THE TRIBUNAL, KOLKATA IN THE CASE OF DCIT VS- CHLORIDE INDUSTRIES LTD. (SUPRA) HAS DELETED THE ADDITION BY OBSERVING AS UNDER :- THE COMMISSIONER (APPEALS) HAD DELETED THE SAID AD DITION BY FOLLOWING THE TRIBUNALS ORDER IN THE CASE OF DCIT V.APE ELLISS I NDIA LTD(IT APPEAL NOS. 527 TO 531(CAL) OF 1989). THE TRIBUNAL OBSERVED THAT SE CTION 40A(9) IS NOT APPLICABLE BECAUSE THIS SECTION STANDS FOR ANY FUND S, INSTITUTIONS, WHERE THE ASSESSEE MADE THE SUBSCRIPTION FOR THE PURPOSE OF W ELFARE OF THE EMPLOYEES. THAT MEANS THAT THERE SHOULD BE A COMPLETE IDENTITY BETWEEN THE DONOR AND THE DONEE. HERE STAFF RECREATION CLUB AND THE STAFF CLU B WERE A PART AND PARCEL OF THE ORGANIZATION ITSELF AND THEY WERE GIVEN MONEY B Y WAY OF SUBSIDY, AN AGE OLD PRACTICE. IN VARIOUS GOVERNMENT DEPARTMENTS ALS O SUBSIDIES ARE GIVEN AS A MATTER OF COURSE FOR CARRYING ON WELFARE ACTIVITIES . SO FINALLY THE TRIBUNAL UPHELD THE ORDER OF THE COMMISSIONER (APPEALS) WHO HAD DELETED THE SAID ADDITION. BY RESPECTFULLY THE EARLIER ORDER OF THE TRIBUNAL THERE WAS NO INFIRMITY WITH THE ORDER OF THE COMMISSIONER (APPEA LS) WHO HAD RIGHTLY DELETED THE SAID ADDITIONS PERTAINING TO THE STAFF WELFARE. 9.1. RESPECTFULLY FOLLOWING THE DECISIONS OF THIS TRIBUNAL AND THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS BHA RAT PETROLEUM CORPORATION LTD. (SUPRA) WE REVERSE THE ORDERS OF THE REVENUE AUTHOR ITIES TO TREAT THE EXPENDITURE ON ACCOUNT OF EMPLOYEES RECREATION CLUB AMOUNTING TO R S.5,50,000/- AS BUSINESS EXPENDITURE.THUS GROUND NO.2 OF THE ASSSESSEE IS AL LOWED. 10. GROUND NO.3 RAISED BY THE ASSESSEE RELATES TO THE CLAIM OF DEDUCTION U/S 80IC OF THE ACT AMOUNTING TO RS.11,00,44,770/-. 11. AT THE TIME OF HEARING THE LD. COUNSEL APPE ARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROC EEDINGS THE ASSESSEE VIDE LETTER DATED 25 TH AUGUST, 2008 ALONG WITH AUDITORS CERTIFICATE IN FO RM NO.10CCB CLAIMED DEDUCTION U/S 80IC OF THE ACT. THE AO AS WELL AS TH E LD. CIT(A) REJECTED THE CLAIM OF THE ASSESSEE BY RELYING ON THE JUDGEMENT OF THE HON BLE SUPREME COURT IN THE CASE OF GOETZE(INDIA) LIMITED VS CIT 284 ITR 323 (SC) ON TH E PRETEXT THAT CLAIM OF DEDUCTION 4 U/S 80IC HAS BEEN MADE BY THE APPELLANT DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND NOT IN THE RETURN OF INCOME FILED. HE SUBMITTED THAT THIS TRIBUNAL IN THE CASE OF UNIVERSAL CABLES LIMITED VS ACIT IN ITA NO.534/KOL/ 2008 AND ITA NO.458/KOL/2008 AND 459/KOL/2008 DATED 22.05.2008 H AS ALLOWED FRESH CLAIM OF THE ASSESEE MADE FOR THE FIRST TIME BEFORE THE CIT(A)AF TER CONSIDERING THE DECISION OF THE SC IN THE CASE OF GOETZE INDIA ON THE CONTENTION TH AT THE SAID DECISION OF THE SC ITSELF CLARIFIED THAT THE ABOVE DECISION IS NOT WITH REGAR D TO POWER OF APPELLATE AUTHORITIES. HE FURTHER SUBMITTED THAT SINCE THE ISSUE OF ADMITT ING A NEW CLAIM WHICH WAS NOT MADE BY WAY OF A RETURN OR A REVISED RETURN HAS ALR EADY BEEN DECIDED BY THIS TRIBUNAL IN FAVOUR OF THE ASSESSEE IN THE CASE OF UNIVERSAL CABLES LIMITED (SUPRA) HE REQUESTED TO SET ASIDE THE ISSUE TO THE FILE OF THE AO WITH T HE DIRECTION TO EXAMINE AND ALLOW THE SAID CLAIM. 12. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES. 13 AFTER HEARING THE RIVAL SUBMISSIONS AND ON CA REFUL PERUSAL OF THE MATERIALS AVAILABLE ON RECORD IT IS OBSERVED THAT THE LD. CIT (A) IS NOT JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE. THIS TRIBUNAL IN THE CASE OF UNIVERSAL CABLES LIMITED (SUPRA) HELD AS UNDER :- 11. WE HAVE CAREFULLY CONSIDERED THE ARGUMENT OF B OTH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. WE FIND THAT IN THE CASE OF GOETZE (INDIA) LTD. (SUPRA) THE HONBLE APEX COURT HELD AS UNDER: THE DECISION IN QUESTION IS THAT THE POWER OF THE TRIBUNAL UNDER SECTION 254 OF THE INCOME-TAX ACT, 1961., IS TO ENTERTAIN F OR THE FIRST TIME A POINT OF LAW PROVIDED THE FACT ON THE BASIS OF WHICH THE ISS UE OF LAW CAN BE RAISED BEFORE THE TRIBUNAL. THE DECISION DOES NOT IN ANY W AY RELATE TO THE POWER OF THE ASSESSING OFFICER TO ENTERTAIN A CLAIM FOR DEDU CTION OTHERWISE THAN BY FILING A REVISED RETURN. IN THE CIRCUMSTANCES OF TH E CASE, WE DISMISS THE CIVIL APPEAL. HOWEVER, WE MAKE IT CLEAR THAT THE ISSUE IN THIS CASE IS LIMITED TO THE POWER OF THE ASSESSING AUTHORITY AND DOES NOT IMPIN GE ON THE POWER OF THE INCOME-TAX APPELLATE TRIBUNAL UNDER SECTION 254 OF THE INCOME TAX ACT, 1961. THERE SHALL BE NO ORDER AS TO COSTS. FROM THE ABOVE, IT IS EVIDENT THAT THE HONBLE APEX COURT ITSELF HAS CLARIFIED THAT THE ABOVE DECISION IS NOT WITH REGAR D TO THE POWER OF THE APPELLATE AUTHORITIES. THEREFORE, THE EARLIER DECIS ION OF HONBLE APEX COURT IN 5 THE CASE OF NATIONAL THERMAL POWER CO. LTD. (SUPRA) WHICH DEALS WITH POWERS OF APPELLATE AUTHORITIES STILL HOLDS GOOD. 12. IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. (SUPRA) ALSO IN THE RETURN OF INCOME THE ASSESSEE HAS OFFERED THE INTER EST INCOME AS CHARGEABLE TO INCOME TAX. NO REVISED RETURN WAS FURNISHED BEFORE THE A.O. MOREOVER, BEFORE THE LD. CIT(A) NO GROUND AGAINST THE CHARGEABILITY OF INTEREST INCOME WAS RAISED. IT WAS FOR THE FIRST TIME BEFORE THE TRIBUN AL THE ASSESSEE CHALLENGED THAT THE INTEREST INCOME WAS NOT CHARGEABLE. THE TRIBUNA L DECLINED TO ENTERTAIN THE ADDITIONAL GROUND. HOWEVER, ON REFERENCE THE HONBL E APEX COURT DIRECTED THE TRIBUNAL TO ADMIT THE ADDITIONAL GROUND AND ADJUDIC ATE THE SAME. IN THIS REGARD, THEIR LORDSHIPS HELD AS UNDER: UNDOUBTEDLY, THE TRIBUNAL HAS THE DISCRETION TO AL LOW OR NOT TO ALLOW A NEW GROUND TO BE RAISED. BUT WHERE THE TRIBUNAL IS ONLY REQUIRED TO CONSIDER THE QUESTION OF LAW ARISING FROM FACTS WHICH ARE ON REC ORD IN THE ASSESSMENT PROCEEDINGS, THERE IS NO REASON WHY SUCH A QUESTION SHOULD NOT BE ALLOWED TO BE RAISED WHEN IT IS NECESSARY TO CONSIDER THAT QUESTION IN ORDER TO CORRECTLY ASSESS THE TAX LIABILITY OF AN ASSESSEE. SIMILARLY, IN THE CASE OF JUTE CORPORATION INDIA LT D. (SUPRA), THE HONBLE APEX COURT HAS HELD THAT THE APPELLATE ASSISTANT COMMISS IONER HAS A JURISDICTION TO ADMIT AN ADDITIONAL GROUND. IN VIEW OF ABOVE, WE HO LD THAT THE DECISION OF HONBLE APEX COURT IN THE CASE OF GOETZ INDIA LTD. (SUPRA) DOES NOT LIMIT THE POWER OF THE APPELLATE AUTHORITY IN ADMITTING THE A DDITIONAL GROUND. THE SAME CONTINUES TO BE GOVERNED BY THE DECISION OF HON HIE APEX COURT IN THE CASE OF JUTE CORPORATION OF INDIA LTD. (SUPRA) AND NATIONAL THERMAL POWER CO. LTD. (SUPRA). RESPECTFULLY FOLLOWING THE SAME, WE HOLD T HAT THE LD. CIT(A) HAD RIGHTLY ENTERTAINED THE GROUND RAISED BY THE ASSESS EE FOR THE FIRST TIME BEFORE HIM. WE. THEREFORE, REJECT THE ADDITIONAL GROUND RA ISED BY THE REVENUE. 13.1. IN VIEW OF THE ABOVE TRIBUNAL DECISION WE ARE OF THE VIEW THAT THE LD. CIT(A) IS NOT JUSTIFIED TO DECLINE THE CLAIM OF DEDUCTION U/S 80IC OF THE IT ACT. THEREFORE WE SET ASIDE THE ORDERS OF THE LD. CIT(A) ON THIS ISSU E AND RESTORE THE MATTER TO THE FILE OF THE AO TO DECIDE THE SAME AFRESH AS PER LAW AFTER G IVING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 14. IN THE RESULT GROUND NO.3 OF THE ASSESSEE I S ALLOWED FOR STATISTICAL PURPOSES. 6 15. IN THE RESULT THE APPEAL OF THE ASSESSEE I S ALLOWED IN PART FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 14.07.2011. SD/- SD/- . .. . . .. . , , , , B.R.MITTAL, JUDICIAL MEMBER . .. .!' !'!' !'. .. . , ,, , #$ #$ #$ #$ , C.D.RAO, ACCOUNTANT MEMBER. ( (( ('$ '$ '$ '$) )) ) DATE: 14.07.2011. #4 2 0& 5#&*6- COPY OF THE ORDER FORWARDED TO: 1. M/S.TATA TEA LIMITED, 1, BISHOP LEFFROY ROAD, KOLKA TA-700020. 2 THE A.C.I.T., CIRCLE-4, KOLKATA 3. THE CIT, 4. THE CIT(A)-IV, KOLKATA 5. DR, KOLKATA BENCHES, KOLKATA 1& 0/ TRUE COPY, #4(;/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES R.G.(.P.S.)