Dy. Commissioner of Income Tax , Circle-2(2), Hyderabad V. The Nizam Sugars Limited, Hyderabad

ITA 1642/Hyd/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 0433 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-07-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB-B
• Next Hearing Date: 15-06-2021
• Assessment Year: 2015-2016
• Appeal Filed On: 13-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: TDS
• Section: 28; 43B; 40(a)(ia)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD (THROUGH VIDEO CONFERENCE) BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER I.T.A. NOS. 625 & 1642/HYD/2019 ASSESSMENT YEARS: 2014-15 & 2015-16 DCIT, CIRCLE-2(2), HYDERABAD VS M/S.THE NIZAM SUGARS LIMITED, HYDERABAD [PAN: AAACT7969A] (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI RAVI KIRAN, CIT-DR FOR ASSESSEE : SHRI S.PHANINDRA FOR SHRI A.V.RAGHURAM, AR DATE OF HEARING : 15-06-2021 DATE OF PRONOUNCEMENT : 19-07-2021 O R D E R PER S.S.GODARA, J.M. : THESE TWO REVENUES APPEALS FOR AYS.2014-15 & 2015- 16 ARISE AGAINST THE CIT(A)-12 & CIT(A)-2, HYDERABADS S EPARATE ORDERS; DATED 25-01-2019 & 18-09-2019 PASSED IN CASE NOS.10235/2018-19 & 10363/2017-18/CIT(A)-2, INVOLV ING PROCEEDINGS U/S.143(3) OF THE INCOME TAX ACT, 1961 [I N SHORT, THE ACT]. HEARD BOTH THE PARTIES. CASE FILES PERUSED. ITA NOS. 625 & 1642/HYD/2019 :- 2 -: 2. THE REVENUES INSTANT TWIN APPEALS RAISE IDENTICAL SUBSTANTIVE GRIEVANCE THAT THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN REVERSING THE ASSESSING OFFICERS ACTION INV OKING SECTION 43B DISALLOWANCE OF RS.7,01,46,591/- AND RS.6,98,06,890/-; RESPECTIVELY. THE CIT(A)S IDENTI CAL DETAILED DISCUSSION TO THIS EFFECT READS AS UNDER: 5.3 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE APPELLANT AS WELL AS THE ORDER OF THE ASSESSING OFFICER. SECTION 43B OF THE INCOME TAX ACT READS AS UNDER: 43B 'NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTH ER PROVISION OF THIS ACT, A DEDUCTION OTHERWISE ALLOWABLE' UNDER THIS ACT IN RESPECT OF- (D) ANY SUM PAYABLE BY THE ASSESSEE AS INTEREST ON ANY LOAN OR BORROWING FROM ANY PUBLIC FINANCIAL INSTITUTION (OR A STATE F INANCIAL CORPORATION OR A STATE INDUSTRIAL INVESTMENT CORPORATION, IN ACCORDA NCE WITH THE TERMS AND CONDITIONS OF THE AGREEMENT GOVERNING SUCH LOAN OR BORROWING, [OR] E) ANY SUM PAYABLE BY THE ASSESSEE AS INTEREST ON A NY [LOAN OR ADVANCE] FROM A SCHEDULED BANK [OR A CO-OPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO-OPERATI VE AGRICULTURAL AND RURAL DEVELOPMENT BANK] IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THE AGREEMENT GOVERNING SUCH LOAN [OR ADVANCES], [OR] SHALL BE ALLOWED (IRRESPECTIVE OF THE PREVIOUS YEAR IN WHICH THE LIABILITY TO PAY SUCH SUM WAS INCURRED BY THE ASSESSEE ACCORDING TO THE METHOD OF ACCOUNTING REGULARLY EMPLOYED BY HIM) ONLY IN COMPU TING THE INCOME REFERRED TO IN SECTION 28 OF THAT PREVIOUS YEAR IN WHICH SUCH SUM IS ACTUALLY PAID BY HIM' AS CAN BE SEEN FROM A PLAIN READING OF THE SECTION, IT APPLIES TO INTEREST PAYABLE ON LOANS TAKEN FROM PUBLIC FINANCI AL INSTITUTIONS, STATE FINANCE CORPORATION OR STATE INDUSTRIAL INVES TMENT CORPORATION, -AND NOT TO ALL INTEREST PAYMENTS MADE TO STATE GOV ERNMENT. THE ASSESSING OFFICER, IN THE ASSESSMENT ORDER, HAS HIM SELF OBSERVED THAT THE BORROWINGS ON WHICH INTEREST IS PAID BY THE ASS ESSEE ARE FROM GOVERNMENT OF A.P. AND GOVERNMENT CORPORATIONS LIKE APRDC AND APCSC. HOWEVER IN THE INSTANT CASE THE APRDC AND AP CSC ARE NOT COME UNDER THE PURVIEW OF STATE FINANCIAL CORPORATI ON AND STATE INDUSTRIAL INVESTMENT CORPORATION, HENCE THE ABOVE INSTITUTIONS DOES NOT FIT INTO THE PROVISIONS OF SECTION 43B(D). THE ITAT, DELHI IN THE ITA NOS. 625 & 1642/HYD/2019 :- 3 -: CASE OF RAMALA SAHKARI CHINI MILLS LTD VS. ACIT (IT A NO.6452/DEI/2014), WHILE DECIDING A SIMILAR ISSUE, OBSERVED AS UNDER: WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS . ASSESSEE THAT ACCUMULATED AMOUNT OF INTEREST ACCRUED AND DUE BUT NOT PAID TO VARIOUS UNSECURED LOAN AND THEREFORE THE PROVISIONS OF SECTION 43(D) WAS INVOK ED BY THE LD.A.O. HOWEVER OUT OF RS.3,63,59,677/- ONLY RS.15,24,100/- HAS BEEN CH ARGED TO THE PROFIT AND LOSS ACCOUNT ON ACCOUNT OF INTEREST ACCRUED AND DUE BUT NOT PAID. IN VIEW OF THIS CIT(A) RESTRICTED THE DISALLOWANCE TO RS.15,24,100/- ONLY. IN ITA NO. 6157/DEL/2012 FOR ASSESSMENT YEAR 2007-08 IN PARA NUMBER OF 7 OF THE ORDER IT IS HELD THAT IF THE INTEREST IN QUESTION IS PLAYABLE TO GOVERNMENT OF I NDIA AND UTTAR PRADESH GOVERNMENT. SECTION 43B(D) DOES NOT APPLY. NO OTHER CONTRARY DECISION WAS BROUGHT TO OUR NOTICE. IN VIEW OF THIS, FOLLOWING T HE DECISION OF COORDINATE BENCH, WE REVERSE THE FINDING OF CIT(A) CONFIRMING THE DIS ALLOWANCE U/S 43B(D) OF RS.1524100/-. IN VIEW THEREOF, SECTION 43B WILL NOT APPLY TO INTE REST PAYMENTS TO GOVERNMENT OF AP AND TO GOVERNMENT CORPORATIONS APR DC AND APCSC. IT IS NOT CLEAR AS TO WHOM THE INTEREST ON P URCHASE TAX LOAN IS PAYABLE TO. THE A.O. IS THEREFORE DIRECTED TO DELET E THE ADDITION TO THAT EXTENT, AFTER VERIFYING WHICH LOANS HAVE BEEN TAKEN FROM STATE GOVERNMENT. THE APPELLANT WOULD THEREFORE GET RELIE F TO THAT EXTENT. 3. A PERUSAL OF THE FOREGOING LOWER APPELLATE DISCUSS ION MAKES IT CLEAR THAT THE CIT(A) HAS PARTLY RESTRICTED THE ASSESSING OFFICERS ACTION INVOKING SECTION 43B DISAL LOWANCE QUA INTEREST PAYMENTS MADE TO THE GOVERNMENT OF ANDHRA PRADESH AND ITS CORPORATIONS APRDC AND APCSC IN TU NE WITH CLAUSE (D) OF THE FOREGOING STATUTORY PROVISION GR ANTING EXEMPTION TO PUBLIC FINANCIAL INSTITUTIONS. IT IS THEREFO RE VERY MUCH APPARENT THAT THE REVENUES ASSERTION SEEKING TO RE VIVE THE ENTIRE SECTION 43B DISALLOWANCE IS FOUND TO BE AG AINST THE FACTS ON RECORD. WE NEXT NOTE THAT THIS TRIBUNALS ORDER IN ASSESSEES CASE ITSELF INVOLVING REVENUES APPEAL IT A NO.1239/HYD/2019 FOR AY.2016-17 DECIDED ON 24-03-20 21 HAS UPHELD THE CIT(A)S IDENTICAL ACTION. WE THUS ADOPT JUDICIAL ITA NOS. 625 & 1642/HYD/2019 :- 4 -: CONSISTENCY TO REJECT THE REVENUES INSTANT SOLE SUBSTANTI VE GRIEVANCE IN BOTH THESE APPEALS. 4. LEARNED DEPARTMENTAL REPRESENTATIVE NEXT INVITED OUR ATTENTION TO THE REVENUES PETITION DT.15-06-2021 SEEKING TO RAISE AN ADDITIONAL GROUND THAT THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN ACCEPTING THE ASSESSEES INTEREST PAYMENTS O N LOAN (SUPRA) DESPITE THE FACT THAT NO TDS HAS BEEN DEDUCTED U/S.194A OF THE ACT WHICH ATTRACTS SECTION 40(A)(IA) DISALLOWANCE. 5. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RIVAL PLEADINGS. SUFFICE TO SAY, THE HON'BLE APEX COURTS L ANDMARK DECISION IN NATIONAL THERMAL POWER CO. LTD., VS., CIT [229 ITR 383] (SC) AS CONSIDERED IN TRIBUNALS SPECIAL BENCH S DECISION ALL CARGO GLOBAL LOGISTICS LTD., VS. DCIT (2012) [1 37 ITD 217](SB) (MUMBAI), HOLDS THAT THIS TRIBUNAL CAN VERY WELL ENTERTAIN A NEW GROUND GOING TO ROOT OF THE MATTER SO AS TO DETERMINE CORRECT TAX LIABILITY OF A TAXPAYER PROVI DED ALL THE RELEVANT FACTS ARE ALREADY ON RECORD . WE GO BY THE VERY ANALOGY AND ALLOW THE DEPARTMENTS FOREGOING PETITION AND DEC LINE ASSESSEES OBJECTIONS AGAINST THE SAME. 6. COMING TO MERITS OF THE IMPUGNED ADDITIONAL GROUND I N BOTH THESE ASSESSMENT YEARS, THE FACT REMAINS THAT THE ASSESSING OFFICER HAD MADE ANY DISALLOWANCE U/S.40( A)(IA) OF THE ACT. THE QUESTION AS TO WHETHER SUCH A DISALLOWANCE COULD BE MADE IN SECTION 251(1)(A) PROCEEDINGS FOR THE FIR ST TIME IS FOUND TO HAVE BEEN DECIDED IN ASSESSEES FAVOUR AND AGAINST THE DEPARTMENT IN CIT VS. SHAPOORJI PALLONJI MISTRY (19 62) ITA NOS. 625 & 1642/HYD/2019 :- 5 -: 44 ITR 891 (SC). WE THEREFORE DECLINE REVENUES ADDI TIONAL SUBSTANTIVE GROUND IN FOREGOING TERMS. 7. THESE TWO REVENUES APPEALS ARE DISMISSED. A COP Y OF THIS COMMON ORDER BE PLACED IN THE RESPECTIVE CASE FI LES. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH JULY, 2021 SD/- SD/- (LAXMI PRASAD SAHU) (S.S.G ODARA) ACCOUNTANT MEMBER JUDICIAL MEM BER HYDERABAD, DATED: 19-07-2021 TNMM ITA NOS. 625 & 1642/HYD/2019 :- 6 -: COPY TO : 1.THE DCIT, CIRCLE-2(2), HYDERABAD. 2.M/S.THE NIZAM SUGARS LIMITED, 5-10-174, SHAKKAR BHAVAN, FATEH MAIDAN ROAD, HYDERABAD. 3.CIT(APPEALS)-12, HYDERABAD. 4.CIT(APPEALS)-2, HYDERABAD. 5.PR.CIT-II, HYDERABAD. 6.D.R. ITAT, HYDERABAD. 7.GUARD FILE.