D.C.I.T CC - XXVIII,kolkata., Kolkata V. M/s Bharat Hydro Power Corp Ltd., Kolkata

ITA 145/KOL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100076 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 18-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAVI TULSIYAN FCA MD GH
• Keywords: Rule of consistency
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 145 / KOL / 2013 ASSESSMENT YEAR :2009-10 DCIT, CENTRAL CIRCLE- XXVIII, 110, SHANTI PALLY, AAYAKAR POORVA, EM-BYE PASS, 4 TH FLOOR, KOLKATA 107 V/S . M/S BHARAT HYDRO POWER CORPORATION, 22, CAMAC STREET, 3 RD FLOOR, KOLKATA- 700 016 [ PAN NO.AACCB 4575 C ] /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI RAVI TULSIYAN, FCA /BY RESPONDENT MD. GHAYAS UDDIN, JCIT-SR-DR /DATE OF HEARING 03-11-2015 /DATE OF PRONOUNCEMENT 20-11-2015 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE REVENUE IS ARISING OUT OF ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-CENTRAL-I, KOLKATA IN APPEAL N O.200/CC- XXVIII/CIT(A)C-I/11-12 DATED 08.11.2012. ASSESSMENT WAS FRAMED BY DCIT,C.C.XXVIII, KOLKATA U/S 143(3) OF THE INCOME T AX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 29.1 2.2011 FOR ASSESSMENT YEAR 2009-10. ITA NO.145/KOL/2013 A.Y. 2009-10 DCIT, CC-XXVIII, KOL. V. M/S BHARAT HYDRO POWER C ORP. PAGE 2 2. ONLY GROUND RAISED BY REVENUE IN THIS APPEAL IS THAT LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF 3,64,64,577/- ON ACCOUNT OF ACCRUED INTEREST RECEIVABLE BY ASSESSEE ON UNPAID COMPENSATION. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE WAS AWARDED COMPENSATION FOR AN AMOUNT OF RS. 30,38,71,474.00 A LONG WITH THE INTEREST @12% PER ANNUM FROM THE APPOINTED DATE 30.11.1996 B Y THE SPECIAL COMMISSION CONSTITUTED UNDER THE ACT RELATING TO TH E PROJECT FOR PRODUCTION OF 100 MW ELECTRICITY KNOWN AS KABRI LANGPI (LOWER BA RAPANI) HYDRO ELECTRIC PROJECT IN THE STATE OF ASSAM AND WHICH WAS CONFIR MED BY HON'BLE GUWAHATI HIGH COURT DATED 29.03.2004. THE ASSESSEE MAINTAINS ITS BOOKS OF ACCOUNTS ON MERCANTILE BASIS. OUT OF THE TOTAL COMPENSATION AMOUNT AS STATED ABOVE ASSESSEE RECEIVED A SUM OF 6.00 & 15.00 CRORES ON DATED 19/08/2003 22/7/2005 RESPECTIVELY. THE ASSESSING OFFICER CALLS UPON THE ASSESSEE TO EXPLAIN AS TO WHY THE INTEREST ON SUCH COMPENSATION SHOULD NOT TO BE TREATED AS INCOME FOR THE YEAR UNDER CONSIDERATION. ASSESSE E SUBMITTED THAT THE QUESTION OF ACCRUAL INTEREST ON THE AMOUNT OF COMPE NSATION IS STILL INCHOATE STAGE AS THE ORDER OF HON'BLE GUWAHTI HIGH COURT ON DATED 29.03.2004 WAS STAYED BY THE HON'BLE SUPREME COURT VIDE ORDER DATE D 21.04.2005 AND RELEVANT EXTRACT OF THE APEX COURT IS REPRODUCED BE LOW:- THE SPECIAL COMMISSION CONSTITUTED UNDER THE ACT H AS AWARDED A SUM OF RS.30 CRORE APPROXIMATELY BY WAY OF COMPENSATION TO THE RESPONDENTS. THE HIGH COURT HAS AFFIRMED THE ORDER OF THE SPECIAL COMMISSION WITH LITTLE VARIATION. THE AMOUNT OF COM PENSATION REMAINS TO BE RS.30 CRORE APPROXIMATELY. THIS AMOUNT IS APART FROM THE STATUTORY INTEREST PAYABLE UNDER THE ACT. THE APPELLANTS HAVE ALREADY DEPOSITED RS.6 CRORE WH ICH HAVE BEEN WITHDRAWN BY THE RESPONDENTS. OPERATION OF THE IMPU GNED ORDER IS STAYED SUBJECT TO THE DEPOSIT OF ANOTHER SUM OF RS. CRORE BY THE APPELLANTS WITHIN 6 WEEKS, FAILING WHICH THE STAY SHALL BE STA ND VACATED AUTOMATICALLY. RESPONDENTS WOULD BE AT LIBE RTY TO WITHDRAW THE AMOUNT ON FURNISHING SECURITY TO THE S ATISFACTION OF THE REGISTRAR GENERAL OF THE HG OF GAUHATI AT GAWAH ATI. ITA NO.145/KOL/2013 A.Y. 2009-10 DCIT, CC-XXVIII, KOL. V. M/S BHARAT HYDRO POWER C ORP. PAGE 3 FROM THE ABOVE THE AO IS FOUND THAT THE STAY ORDER WAS GRANTED ON DATED 21.4.2005 BY THE APEX COURT SUBJECT TO THE DEPOSIT OF ANOTHER SUM OF RS. 9 CRORES BY THE APPELLANT WITHIN 6 WEEKS OTHERWISE TH E STAY WILL GET VACATE AUTOMATICALLY. FROM THE ORDER OF THE AO, IT IS FOUN D THAT THE ASSESSEE HAS RECEIVED RS. 9 CRORES ON DATED 22/07/2005 WHICH IS FALLING AFTER THE EXPIRY OF 6 WEEKS FROM THE DATE OF APEX COURT ORDER I.E. 21-04- 2005. ON THE BASIS OF ABOVE, AO OPINED THAT STAY GRANTED BY HON'BLE SUPRE ME COURT STAND VACATED AND AUTOMATICALLY AND HE WORKED OUT THE INTEREST @ 12% OF 30,38,71,474/- WHICH COMES TO 3,64,64,577/- AND ADDED THE SAME TO THE INCOME OF ASSESSEE. THE AO ALSO ENQUIRED FROM THE ASSESSEE AB OUT THE PRESENT STATUS OF THE APEX COURT ORDER PASSED ON DATED 21.4.2005, BUT THE ASSESSEE FAILED UPDATE THE THEN PRESENT STATUS OF THE ORDER OF THE APEX COURT. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT (A), WHO DELETED THE ADDITION MADE BY AO RELYING ON THE ORDER OF THIS IT AT, KOLKATA B BENCH IN ASSESSEES OWN CASE IN ITA NO. 427/KOL/2011 WHEREIN THE ORDER PASSED BY CIT WAS QUASHED, THE RELEVANT EXTRACT IS REPRODUCED BELOW : IN VIEW OF THE ABOVE FACTS, WE FIND SUBSTANCE IN T HE SUBMISSION OF THE LD. AR THAT THE SAID ORDER OF THE HON'BLE GAUHATI HIGH COU RT HAS NOT BECOME FINAL AND ACCORDINGLY THE ORDER DIRECTING TO PAY INTEREST @ 12% PA. FROM 30.11.1996 (APPOINTED DATE) TILL THE PAYMENT WAS MA DE HAD NOT BECOME FINAL FURTHER, AS FAR AS ORDER OF THE HON'BLE GAUHATI HIG H COURT IS CONCERNED, THE SAID ORDER WAS CONSIDERED IN RESPECT OF PAYMENT OF RS.6,00,00,000/- RECEIVED BY THE ASSESSEE AND THE INTEREST ELEMENT, WHICH WAS DIRECTED TO BE PAID BY THE HON'BLE HIGH COURT FROM 30.11.1996 ON THE COMPE NSATION AMOUNT, HAD ALREADY BEEN STAYED BY THE HON'BLE SUPREME COURT AN D ACCORDINGLY THE SAID ORDER COULD NOT BE SAID THAT THE INTEREST HAD ACCRU ED TO THE ASSESSEE. THE APPELLANT HAS THEREFORE SUBMITTED THAT THE AO F OLLOWING THE RULE OF CONSISTENCY IN VIEW OF THE ORDER OF THE ITAT SHOULD NOT HAVE MADE THE SAID ADDITION OF RS.3,64,64,577/-. I HAVE CONSIDERED THE RELEVANT FACTS AND THE MATERIAL ON RECORD. I FIND MERIT AND SUBSTANCE IN T HE CONTENTIONS AS RAISED BY THE APPELLANT. IT IS CLEAR THAT THE ORDER OF THE HO N'BLE HIGH COURT HAD BEEN STAYED BY THE HON'BLE. THE JUDICIAL DECISIONS RELIE D UPON BY THE APPELLANT CLEARLY SUGGEST THAT THE VARIOUS HIGH COURTS AS WEL L AS THE SUPREME COURT HAS CONSISTENTLY HELD THAT THE COMPENSATION DOES NO T BECOME TAXABLE TILL THE MATTER HAS REACHED ITS FINALITY AND THE RECEIPT OF COMPENSATION HAS BECOME FINAL. THE HON'BLE ITAT IN THE CASE OF SHARDA PAREE K HAS ALSO TAKEN THE SAME VIEW IN A SIMILAR CASE AS THAT OF THE APPELLANT. AB OVE ALL, THE CASE OF THE ITA NO.145/KOL/2013 A.Y. 2009-10 DCIT, CC-XXVIII, KOL. V. M/S BHARAT HYDRO POWER C ORP. PAGE 4 APPELLANT IS DIRECTLY COVERED BY THE DECISION OF TH E JURISDICTIONAL ITAT IN ITS OWN CASE FOR THE ASSESSMENT YEAR 2004-05. THE CASE OF THE APPELLANT IS ALSO COVERED BY THE ORDER OF THE LD. CIT(A) C-I, KOLKATA IN ITS OWN CASE FOR THE ASSESSMENT YEAR 2008-09. IN APPEAL NO. 220/CIT(A) C-I/CC-XXVIII/10-11, THE LD. CIT(A) DELETED SIMILAR ADDITION BY HOLDING AS UNDER- CONSIDERING ABOVE AND THE RATIO OF THE DECISIONS CI TED BY THE LD. AR IT IS HELD THAT THE INTEREST PERTAINING TO THE DISPUTE D COMPENSATION FOR THE FY 2007-08 HAS NOT ACCRUED TO THE ASSESSEE, SINCE T HE ASSESSEE DOES NOT HAVE A LEGALLY ENFORCEABLE RIGHT IN RESPECT OF THE AFORESAID INTEREST TILL THE TIME THE APPEAL IS FINALLY DISPOSED OFF. A CCORDINGLY THE ADDITION OF RS.3,64,64,577/- ON ACCOUNT OF ACCRUED INTEREST MAD E BY THE AO IS DELETED. IN VIEW OF THE ABOVE, AND, RESPECTFULLY FOLLOWING T HE DECISION OF MY LEARNED PREDECESSOR AND THE HON'BLE JURISDICTIONAL ITAT, IT IS TO BE HELD THAT THE ADDITION OF RS.3,64,64,577/- ON ACCOUNT OF INTEREST AS MADE BY THE AO IS NOT SUSTAINABLE IN LAW; AND SO, THE SAME IS DIRECTED TO BE DELETED. GROUND NO. 2 IS ALLOWED. AGGRIEVED, REVENUE PREFERRED APPEAL BEFORE US OF TH E FOLLOWING GROUND:- (I) THAT THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS IN FACTS AND CIRCUMSTANCES OF THE CASE IN DELETING THE ADDITION OF RS.3,64,64,577/- MADE ON ACCOUNT OF ACCRUED INTERES T RECEIVABLE BY THE ASSESSEE ON UNPAID COMPENSATION. SHRI RAVI TULSIYAN LD. AUTHORIZED REPRESENTATIVE AP PEARING ON BEHALF OF ASSESSEE AND MD. GHAYAS UDDIN, LD. AUTHORIZED REPRE SENTATIVE APPEARING ON BEHALF OF REVENUE. 4. WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PART IES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. LD. DR RELIED ON THE ORDER OF AO AND SUBMITTED THAT SUBJECT MATTER OF THE DISPUTE HAS REACHED TO I TS FINALITY BY THE ORDER OF APEX COURT ON DATED 29.11.2012 AND THE RELEVANT POR TION OF THE ORDER IS RE- PRODUCED BELOW :- ORDER ON NOVEMBER 22, 2012, THE FOLLOWING CONSENSUS EMERG ED BETWEEN THE LEARNED SENIOR COUNSEL FOR THE PARTIES: I) THE APPELLANTS SHALL PAY A SUM OF RS.34 CRORES T O RESPONDENT NO.2 BHARAT HYDRO POWER CORPORATION LIMITED IN FU LL AND FINAL ITA NO.145/KOL/2013 A.Y. 2009-10 DCIT, CC-XXVIII, KOL. V. M/S BHARAT HYDRO POWER C ORP. PAGE 5 SETTLEMENT OF THEIR CLAIM WHICH IS THE SUBJECT MATT ER OF THESE APPEALS HOWEVER, ON THE OTHER HAND THE LD. AR RELIED ON THE ORDER OF LD. CIT(A) AND SUBMITTED A PAPER BOOK CONTAINING THE PAGES FROM 1 TO 52. THE LD. AR FURTHER SUBMITTED THAT THE RELEVANT CASE PERTAINS TO THE AY 2009-10 AND THE JUDGMENT OF HON'BLE SUPREME COURT CAME IN PREVIOUS YEAR 2012 -13, THEREFORE THE INTEREST INCOME ACCRUED ON THE COMPENSATION AMOUNT WILL BE TAXED IN AY 2013-14. FROM THE AFORESAID DISCUSSION, AND SUBMISS IONS MADE BY BOTH THE PARTIES, WE FIND THAT AO HAS ADDED THE INTEREST INC OME IN THE TOTAL INCOME OF THE ASSESSEE FOR THE AY 2009-10 WHICH WAS SUBJECT M ATTER OF LITIGATION FOR THE RELEVANT YEAR UNDER CONSIDERATION. FUNDAMENTALLY IN COME TAX ACT PROVIDES THAT ANY RECEIPT WILL BE TREATED AS INCOME LIABLE T O TAX ONLY WHEN THIS IS UNCONDITIONALLY, UNEQUIVOCALLY, WITHOUT DOUBT AND W ITHOUT ANY SORT OF AMBIGUITY, UNCERTAINTY IS RECEIVED BY THE ASSESSEE. HERE IN THE INSTANT CASE, THE INTEREST INCOME IS NOT FROM A DEFINITE SOURCE A S IT IS SUBJECT TO LITIGATION. THE ASSESSEE RECEIVED A SUM OF RS. 15.00 CRORES AS PART PAYMENT OUT OF THE TOTAL COMPENSATION AND THE BALANCE WAS STILL TO BE RECEIVED SUBJECT TO THE DECISION OF THE APEX COURT. SO IT IS QUITE CLEAR TH AT THE INTEREST INCOME IS ALSO A SUBJECT MATTER OF THE FINAL ORDER OF THE COURT. H ENCE INTEREST CANNOT BE TAXED TILL FINALITY IS ACHIEVED IN THIS CASE. HOWEVER, TH E DISPUTE HAS REACHED TO ITS FINALITY ON DATED 29-11-2012 AND FOR THIS THE RELEV ANT ASSESSMENT YEAR IS 2013-14 FOR THE CHARGING THE INTEREST INCOME TO TAX . HERE, WE ARE ADJUDICATING THE ISSUE OF CHARGING THE INTEREST INCOME, PERTAINI NG TO THE ASSESSMENT YEAR 2009-10 WHEN THE DISPUTE OF CHARGING THE INTEREST I NCOME WAS A SUBJECT MATTER OF LITIGATION. SO THE ENTIRE AMOUNT OF INTER EST INCOME WHICH HAS BEEN ACCRUED TILL THE DATE OF FINALIZATION OF THE LITIGA TION WILL BE TAXED ONLY IN RELEVANT ASSESSMENT YEAR I.E. 2013-14, WHEN THE DISPUTED MAT TER HAS COME TO ITS END. WE ARE ALSO RELYING THE ORDER OF ITAT KOLKATA B B ENCH IN ASSESSEES OWN CASE IN ITA NO.1675/KOL/2011, WHERE THE MATTER WAS DECIDED IN FAVOUR OF ASSESSEE AND RELEVANT EXTRACT IN PARA-5 OF THE ORDE R REPRODUCED BELOW:- ITA NO.145/KOL/2013 A.Y. 2009-10 DCIT, CC-XXVIII, KOL. V. M/S BHARAT HYDRO POWER C ORP. PAGE 6 5.WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE R ECORDS. WE FIND THAT THE ISSUE INVOLVED IN THIS CASE IS COVERED IN FAVOUR OF ASSESSEE BY THE DECISION OF THIS TRIBUNAL IN ASSESSEES OWN CAS E IN ITA NO 427/KOL/2011 FOR A.YR 2004-05 VIDE ORDER DATED 24.06.2011. IN T HIS CASE AFTER CONSIDERING ALL THE FACTS AND CIRCUMSTAN CES OF THE CASE THE TRIBUNAL HAS OBSERVED THAT IT FOUND SUBSTANCE IN TH E SUBMISSION OF THE LD. AR THAT THE SAID ORDER OF THE HON'BLE GUWAHATI HIGH COURT HAS NOT BECOME FINAL AND ACCORDINGLY THE ORDER DIRECTING TO PAY INTEREST @ 12% P.A. FROM 30.11.1996 TILL THE PAYMENT WAS MADE HAD NOT BECOME FINAL. IN VIEW OF THE ABOVE FINDING OF THE TRIBUNAL BOTH T HE COUNSEL FAIRLY AGREED THAT THE ISSUE INVOLVED IN THIS CASE IS IN F AVOUR OF THE ASSESSEE. ACCORDINGLY WE FIND NO INFIRMITY IN THE ORDER OF LD . CIT(A) AND WE UPHOLD THE SAME. IN TERMS OF ABOVE AND KEEPING A CONSISTENT VIEW, WE ARE NOT INCLINED TO INTERFERE IN THE ORDER OF LD. CIT(A) AND THIS GROUN D OF REVENUES APPEAL IS DISMISSED. 5. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 20 /11/2015 SD/- SD/- (MAHAVIR SINGH) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP !- 20 /1 1 /2015 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-DCIT, CC-XXVIII, 110, SHANTI PALLY, AAYA KAR POORVA, EM-BYE PASS, 4 TH FLOOR, KOLKATA-107 2. ESPONDENT-M/S BHARAT HYDRO POWER CORP, 22, CAMAC ST, 3 RD FL, KOLKATA- 16 3. * +,- - . / CONCERNED CIT KOLKATA 4. - - .- / CIT (A) KOLKATA 5.01233+,, - +, , / DR, ITAT, KOLKATA 6.26789 / GUARD FILE. BY ORDER/ -, /TRUE COPY/ / - +, ,