West Bengal Housing Infrastructure Development Corporation Ltd., Kolkata V. THE CIT, KOLKATA-4, Kolkata

ITA 180/KOL/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4257 (ITAT-KOLKATA)
• Duration Of Justice: 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 31-08-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 08-02-2016
• Court: TRIBUNAL
• Department Lawyers: RAJAT SUBHRA BISWAS
• Assessee Lawyers: SANJAY BHATTACHARYA F
• Keywords: Assessment record; Revised return; Revenue expenditure
• Section: 143(3); 263

Judgement Text

1 ITA NO. 180/KOL/2016 W.B. HOUSING DEVELOPMENT CORPN. LTD., AY 2011-12 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA [BEFORE SHRI WASEEM AHMED, AM & SHRI K. NARASIMHA CHARY, JM] I.T.A NO. 180/KOL/2016 ASSESSMENT YEAR: 2011-12 WEST BENGAL HOUSING DEVELOPMENT VS. DEPUTY COMMIS SIONER OF INCOME-TAX, CORPORATION LTD. CIRCLE-11, KOLKATA. (PAN: AAACW4115F) ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 20.10.2016 DATE OF PRONOUNCEMENT: 11.11.2016 FOR THE APPELLANT: SHRI SANJAY BHATTACHARYA, F CA FOR THE RESPONDENT: SHRI RAJAT SUBHRA BISWAS, CIT, DR ORDER PER SHRI K. NARASIMHA CHARY, JM: THIS APPEAL BY ASSESSEE IS ARISING OUT OF REVISION ORDER OF PR. CIT, KOLKATA-4, KOLKATA PASSED U/S. 263 OF THE INCOME-TAX ACT, 1961(HEREIN AFTER REFERRED TO AS THE ACT) VIDE NO. 6839-41 DATED 03.12.2015. ASSESSMENT WAS FRAMED BY DCIT, CIRCLE-11, KOLKATA U/S. 143(3) OF THE ACT FOR AY 2011-12 VIDE HIS ORDER DAT ED 28.03.2014. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE C OMPANY HAS BEEN ENGAGED IN THE BUSINESS OF DEVELOPMENT OF LAND, HOUSING AND INFRAS TRUCTURE FACILITIES IN NEW TOWN PROJECT, KOLKATA. FOR AY 2011-12 THEY HAVE FILED RETURN OF I NCOME ON 19.12.2011 DECLARING TOTAL INCOME OF RS.10,81,33,638/-. SUBSEQUENTLY, THEY FI LED A REVISED RETURN OF INCOME ON 12.03.2012 DECLARING A TOTAL INCOME OF RS.2,54,38,8 05/- AFTER MAKING DEDUCTION U/S. 80IA OF THE ACT. THE ORDER OF ASSESSMENT U/S. 143(3) OF TH E ACT WAS PASSED ON 28.03.2014 ASSESSING THE TOTAL INCOME AT RS.84,15,10,694/-. SUBSEQUENTL Y, THE PR. CIT HAD EXAMINED THE ASSESSMENT RECORD, AND FINDING THE ORDER U/S. 143(3 ) OF THE ACT AS ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF THE REVENUE ON TWO C OUNTS, ISSUED SHOW CAUSE NOTICE U/S. 263 OF THE ACT ON 28.03.2014. FIRSTLY, HE FOUND THAT THE ASSESSEE COMPANY HAD SHOWED THE SALE VALUE AND PURCHASE VALUE OF THE LAND AND FLATS ALON G WITH OTHER EXPENDITURE ROUTED THROUGH P&L ACCOUNT AND THE WAIVED LOAN AMOUNT TO THE TUNE OF RS.50.71 CR. WAS ADJUSTED WITH WORK IN PROGRESS. THE LD. PR. CIT OPINED THAT IT W AS AN ITEM OF REVENUE IN NATURE AS THE LOAN OBTAINED BY THE ASSESSEE FOR THE PURPOSE OF RE VENUE EXPENDITURE; THE WAIVER OF A PART THEREOF SHALL ALSO BE TREATED AS REVENUE RECEIPT AN D HAS TO BE ADDED TO THE TOTAL INCOME OF THE 2 ITA NO. 180/KOL/2016 W.B. HOUSING DEVELOPMENT CORPN. LTD., AY 2011-12 ASSESSEE. THE NEXT GROUND IS THAT IN THE ACCOUNTS OF THE ASSESSEE FOR THE YEAR ENDED WITH 31.03.2011, THE ASSESSEE COMPANY DID NOT RECOGNIZE INCOME OF RS.8.89 CR. FROM SALE OF LAND OF 4.196 ACRES TO SHANKARA NETRALAYA, KOLKATA AND T HE ASSESSEE HAD TO TREAT IT AS INCOME FOR FY 2010-11. AFTER HEARING THE ASSESSEE THROUGH THE IR AR, THE LD. PR. CIT, KOLKATA CONCLUDED THAT THE WAIVED LOAN AMOUNT HAD TO BE TRE ATED AS REVENUE RECEIPT AND ALSO THE PROCEEDS ARISING OUT OF THE SALE OF PLOT OF LAND TO SHANKARA NETRALAYA SHOULD ALSO BE CONSIDERED FOR FY 2010-11. ON THESE TWO GROUNDS, T HE LD. PR. CIT DIRECTED THE AO TO PASS FRESH ORDERS AFTER GIVING THE ASSESSEE AN OPPORTUNI TY OF BEING HEARD ON THESE ASPECTS. 3. CHALLENGING THE SAID ORDER U/S. 263 OF THE ACT T HE ASSESSEE CAME IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS: 1) THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) W AS WRONG IN PASSING AN ORDER U/S. 263 SETTING ASIDE THE ASSESSMENT ORDER DATED 28-03-2014 WITH A DIRECTION TO PASS AN ORDER AFRESH. 2) THAT WITHOUT PREJUDICE TO THE CONTENTION RAISED IN GROUND NO.1 ABOVE, THE COMMISSIONER OF INCOME-TAX WAS WRONG IN HOLDING THAT THE ASSESSMENT ORDER DATED 28-03-2014 PASSED U/S.143(3) HAD ALLEGEDLY BEEN ERRONEOUS IN SO FAR A S PREJUDICIAL TO THE INTEREST OF REVENUE AND THUS HE ERRED IN SETTING ASIDE THE SAID ASSESSMENT ORDER. 3) THAT WITHOUT PREJUDICE TO THE CONTENTION RAISED IN GROUNDS NOS.1 AND 2 ABOVE, THE COMMISSIONER OF INCOME-TAX WAS WRONG IN NOT APPRECI ATING THAT DURING THE ASSESSMENT PROCEEDING THE ASSESSING OFFICER HAD DULY EXAMINED THE ISSUES RELATING TO WAIVER OF LOAN AS WELL AS THE APPELLANT'S PROCEDURE FOR RECOGNITION O F THE REVENUE ARISING FROM SALE OF LAND AND THUS HE ERRED IN SETTING ASIDE THE ASSESSMENT ORDER DATED 28-03-2014. 4. IT IS THE ARGUMENT OF THE LD. AR THAT THE LOAN W AS OBTAINED FOR ACQUISITION OF LAND AND DEVELOPMENT THEREOF BY CONSTRUCTING THE BRIDGES AND ROADS AT DIFFERENT PLACES IN NEW TOWN AND SINCE THE LOAN HAS BEEN TAKEN FOR PROJECT PURPOSE, IT WAS PROPER TO CREDIT THE WAIVED PART OF LOAN TO THE COST OF THE PROJECT. HE FURTHER SUBMITTED THAT SINCE THE COST OF PROJECT IS REDUCED TO THE EXTENT OF THE WAIVED PART OF LAND, ULTIMATELY WHEN THE PROPERTY WAS SOLD THERE WILL BE CORRESPONDING INCREASE IN THE PR OFITS, WHICH WILL BE BROUGHT TO TAX AS SUCH; THERE IS NO PREJUDICE TO THE INTEREST OF THE REVENU E ON THIS GROUND. THEREAFTER, HE SUBMITTED THAT THE SALE OF LAND TO SHANKARA NETRALAYA WAS CON SIDERED FOR THE FY 2011-12 AS PRIOR PERIOD ITEM. BESIDES THIS, HE FURTHER SUBMITTED TH AT THE GROSS SALE CONSIDERATION CANNOT BE CONSIDERED TO BE THE INCOME BUT ONLY THE PROFIT ARI SING OUT OF THE SALE AFTER DEDUCTING THE COST OF THE LAND AND ENHANCEMENTS THERETO, THE PROF IT IS TO BE BROUGHT TO TAX. LD. AR, HOWEVER, FAIRLY SUBMITTED THAT THE ASSESSEE HAS GOT NO MUCH OBJECTION FOR CONSIDERING BOTH THE ITEMS POINTED OUT BY THE LD. PR. CIT IN THE SEC TION 263 ORDER FOR AY 2011-12 BUT PRAYED 3 ITA NO. 180/KOL/2016 W.B. HOUSING DEVELOPMENT CORPN. LTD., AY 2011-12 THAT A DIRECTION MAY BE GIVEN TO THE AO TO CONSIDER THESE TWO ASPECTS AND TO DELETE THESE THINGS FROM THE RETURN OF INCOME FOR AY 2011-12 INA SMUCH AS THE ASSESSEE HAD SHOWN THESE THINGS IN THE SUBSEQUENT YEAR. HE MADE THIS SUBMIS SION ON THE GROUND THAT UNLESS APPROPRIATE DIRECTIONS ARE GIVEN IN THIS APPEAL THE RE IS LIKELIHOOD OF DOUBLE TAXATION IN RELATION TO BOTH THESE ISSUES I.E. INCLUSION OF THE WAIVED LOAN AS INCOME AND INCLUSION OF SALE OF LAND IN THE RETURN OF INCOME FOR AY 2012-13 BY A PPLYING THE PRINCIPLE LAID DOWN IN GOETZ (INDIA) LTD. VS. CIT (2006) 284 ITR 323 (SC). 5. ON THE OTHER HAND, THE LD. DR SUBMITTED THAT INS OFAR AS THE REVENUE RECEIPT FOR THE FY 2010-11 IS CONCERNED, IT IS NOT OPEN FOR THE ASS ESSEE TO SAY THAT THERE WILL BE CORRESPONDING INCREASE IN THE PROFIT WHEN THE PROPE RTY WAS SOLD IN SUBSEQUENT YEARS. SO ALSO, HE DEFENDED THE ORDER PASSED U/S. 263 OF THE ACT ON THE GROUND THAT THE LD. PR. CIT WAS JUSTIFIED IN HOLDING THAT AS PER MERCANTILE SYS TEM OF ACCOUNTING WHICH WAS FOLLOWED BY THE ASSESSEE, INCOME FROM SALE OF LAND TO THE TUNE OF RS.8.89 CR. ACCRUED DURING THE FY 2011-12 SHALL BE TREATED AS INCOME IN THAT YEAR AND THE ASSESSEE AT THEIR WILL CANNOT CLAIM THE SAME TO THE SUBSEQUENT YEARS. 6. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE DO NOT FIND ANY FORCE IN THE RESISTANCE M ADE BY THE ASSESSEE TO THE ORDER PASSED U/S. 263 OF THE ACT BECAUSE THE LOAN WAS OBTAINED B Y THE ASSESSEE WAS FOR REVENUE EXPENDITURE AS SUCH, THE ASSESSEE CANNOT OBJECT THE WAIVED PART OF THE LOAN TO BE TREATED AS REVENUE RECEIPT. THERE CANNOT BE ANY VALID LEGAL RE SISTANCE TO THIS POINT. SO ALSO, INSOFAR AS THERE IS NO DISPUTE THAT THE ASSESSEE WAS FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING, THE LD. PR. CIT CANNOT BE SAID TO HAVE COMMITTED ANY ER ROR WHILE DIRECTING THE AO TO CONSIDER THE PROCEEDS FROM THE SALE OF LAND TO SHANKARA NETR ALAYA FOR AY 2011-12. APPEAL FILED ON THESE TWO GROUNDS AND THE ORDER OF THE LD. PR. CIT IS IMPECCABLE IN ITS REASONING. 7. NOW COMING TO THE ASPECTS OF THE SUBMISSION OF T HE LD. AR TO DIRECT THE AO TO CONSIDER THE INCLUSION OF THESE TWO ASPECTS I.E. TH E WAIVED PART OF LOAN SO ALSO THE SALE CONSIDERATION FOR THE AY 2012-13. WE ALSO FIND SOM E SUBSTANCE IN THE SUBMISSION OF THE LD. AR THAT THE ENTIRE SALE CONSIDERATION IN RESPEC T OF THE LAND SOLD TO SHANKARA NETRALAYA CANNOT BE TREATED AS INCOME, AND IT IS JUST AND PRO PER THAT THE AO WILL CONSIDER WHETHER ONLY THE PROFITS ARISING OUT OF SUCH TRANSACTION HAVE TO BE TAKEN INTO CONSIDERATION. SINCE THE 4 ITA NO. 180/KOL/2016 W.B. HOUSING DEVELOPMENT CORPN. LTD., AY 2011-12 ASSESSEE SUBMITS THAT THE WAIVED PART OF THE LOAN I S BEING CONSIDERED FOR THE AY 2011-12, THE SAME MAY BE GIVEN CONSIDERATION IN RESPECT OF T HE SUBSEQUENT YEARS WHEREIN THE ASSESSEE HAS SHOWN THE ENHANCED PROFITS WHILE REDUCING THE C OST OF THE PROJECT BY GIVING CREDIT TO THE WAIVED PART OF THE LOAN TO THE PROJECT COST. WHILE FRAMING THE ASSESSMENT FOR THE AY 2012- 13, REGARD SHALL BE HAD TO THE ASPECT OF TAXING THE PROCEEDS ARISING OUT OF THE SALE OF LAND TO SHANKARA NETRALAYA DURING THE AY 2011-12. SUBJECT TO THESE TWO OBSERVATIONS THE APPEAL STANDS DISMISSED 8. IN THE RESULT, THE APPEAL OF ASSESSEE IS DISMISS ED AS INDICATED ABOVE. ORDER IS PRONOUNCED IN THE OPEN COURT ON 11.11.201 6 SD/- SD/- (WASEEM AHMED) (K. NARASIMHA CHARY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED :11TH OCTOBER, 2016 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT WEST BENGAL HOUSING DEVELOPMENT CORPORA TION LTD., HIDCO BHAWAN, PREMISES NO. 35-1111 MAJOR ARTERIAL R OAD, 3 RD ROTARY, NEW TOWN, KOLKATA-700156. 2 RESPONDENT DCIT, CIRCLE-11, KOLKATA 3 . THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .