DCIT, Circle - 8(1), Kolkata , Kolkata V. M/s. Great Eastern Hotel Authority , Kolkata

ITA 1317/KOL/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 5173 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 8 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2020
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2004-2005
• Appeal Filed On: 14-06-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Section: 43B; 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA C BENCH, KOLKATA [BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI ABY. T. VARKEY, JUDICIAL MEMBER] I.T.A. NO. 1317/KOL/2018 ASSESSMENT YEAR: 2004-05 DCIT, CIRCLE-8(1), KOLKATA............................................. APPELLANT VS. M/S. GREAT EASTERN HOTEL AUTHORITY..........................................................................RESPONDENT [PAN: AACCG 0028 K] APPEARANCES BY: SH. SUPRIYOPAL, JCIT, SR.DR APPEARED ON BEHALF OF THE REVENUE. SH. DIBYENDU CHATTERJEE, STAFF OF HOTEL AUTHORITY, APPEARED ON BEHALF OF THE ASSESSEE. DATE OF CONCLUDING THE HEARING : JANUARY 15 TH , 2020 DATE OF PRONOUNCING THE ORDER : FEBRUARY 19 TH , 2020 ORDER PER J. SUDHAKAR REDDY, AM :- THIS IS AN APPEAL FILED BY THE REVENUE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-8, KOLKATA [CIT(A) FOR SHORT] DATED 20.04.2018 U/S 250 OF THE INCOME TAX ACT, 1961 (THE ACT FOR SHORT) FOR AY 2004-05 ON THE FOLLOWING GROUNDS: 1 THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY AO AMOUNTING TO RS.1,48,58,612/- ON ACCOUNT OF 'EXPENDITURE ON INTEREST FOR GOVERNMENT LOAN' WHICH WAS NOT PAID WITHIN THE SCHEDULED TIME AS PROVIDED U/S 43B OF THE INCOME TAX ACT, 1961. 2 THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY AO AMOUNTING TO RS.3,45,00,000/- REGARDING GRANT IN AID RECEIVED BY THE ASSESSEE FROM THE STATE GOVERNMENT AGAINST SALARY AS 'WORKING CAPITAL CONTRIBUTION' WHICH SHOULD BE TREATED AS REVENUE INCOME AS PER NOTE NO. 17 OF THE NOTES ON ACCOUNTS (SCHEDULE NO. 23) OF AUDITED ACCOUNTS. 3 THAT APPELLANT RESERVES THE RIGHT TO AMEND, ALTER OR ADD TO ANY GROUND(S) OF APPEAL BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. 2. AFTER HEARING RIVAL CONTENTIONS WE FIND THAT THE LD. CIT(A) HAS HELD THAT SECTION 43B OF THE ACT IS NOT APPLICABLE TO GOVERNMENT LOANS. ON A PLAIN READING OF THE SECTION WE UPHOLD THIS FINDING OF THE LD. CIT(A) AND DISMISS GROUND NO. 1 OF THE REVENUE. 3. ON GROUND NO. 2, WE FIND THAT THE LD. CIT(A) HAS STATED THAT, A GRANT-IN-AID, MADE FROM THE GOVERNMENT IS TOWARDS WORKING CAPITAL AND HENCE CANNOT BE CONSIDERED INCOME AND BROUGHT TO TAX. WE FIND THAT THE GOVERNMENT OF WEST BENGAL HAS GIVEN 2 I.T.A. NO. 1367/KOL/2018 ASSESSMENT YEAR: 2004-05 M/S. GREAT EASTERN HOTEL AUTHORITY. GRANT-IN-AID TO THE ASSESSEE COMPANY, AS WORKING CAPITAL CONTRIBUTION, FOR SALARY PAYMENTS. WE ARE OF THE VIEW THAT THIS AMOUNT HAS BEEN RECEIVED ON REVENUE ACCOUNT AND HENCE RIGHTLY BROUGHT TO TAX BY THE LD. AO. THE DECISION OF THE LD. CIT(A) ON THIS ISSUE AT PARAGRAPHS 11.2.1 AND 11.2.2 AT PAGE 7 OF HIS ORDER WHICH IS EXTRACTED FOR READY REFERENCE: 11.2.1 FIRST AND FOREMOST, GRANT IN AID FROM THE STATE GOVERNMENT CANNOT BE IN THE NATURE OF INCOME. IT MAY BE TREATED AS A REVENUE RECEIPT IN THE ACCOUNTS, FOR ACCOUNTANCY SAKE BUT, IT IS SIMPLY NOT INCOME. 11.2.2 GRANT-IN-AID IS AID FROM THE STATE GOVERNMENT FOLLOWING DUE PROCESS AND VOTING BY THE LEGISLATURE FOR ALLOCATION OF FUNDS FOR SPECIFIC PURPOSES AS PER BUDGETARY PROVISIONS AND PROCEDURES OF THE CONSTITUTION OF INDIA. 4. THE NATURE, CHARACTER AND PURPOSE OF THE GRANT-IN-AID HAS TO BE EXAMINED. WHEN THE AMOUNT IS RECEIVED FROM THE GOVERNMENT EITHER STATE OR CENTRE ON REVENUE ACCOUNT, IT HAS TO BE CONSIDERED AS THE INCOME. SIMPLY BECAUSE DUE PROCESS WAS FOLLOWED, A RECEIPT CANNOT BE CHARACTERIZED AS REVENUE OR CAPITAL. HENCE THIS GROUND OF THE REVENUE IS ALLOWED. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLOWED IN PART. KOLKATA, THE 19 TH FEBRUARY, 2020. SD/- SD/- [ABY T. VARKEY] [J. SUDHAKAR REDDY] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 19.02.2020 BIDHAN COPY OF THE ORDER FORWARDED TO: 1. DCIT, CIRCLE-8(1), KOLKATA. 2. M/S. GREAT EASTERN HOTEL AUTHORITY, 1/2/3, OLD COURT HOUSE STREET, KOLKATA-700 069. 3. CIT(A)-8, KOLKATA. (SENT THROUGH E-MAIL) 4. CIT- 5. CIT(DR), KOLKATA BENCHES, KOLKATA. (SENT THROUGH E-MAIL) TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, KOLKATA BENCHES