ACIT, Villupuram V. M/s. Kallakurichi Co-operative Sugar Mills Ltd., Kallakurichi

ITA 1953/CHNY/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5415 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 06-01-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 07-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA
• Assessee Lawyers: S VENUGOPALAN
• Section: 43B

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL D BENCH, CHENNAI. BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI V. DURGA RAO, JUDICIAL MEMBER ITA NO. 1952, 1953, 1954 AND 1955/MDS/2013 ASSESSMENT YEAR: 2005-06, 2008-09, 2009-10 AND 2010 -11 THE ASSISTANT COMMISSIONER OF INCOME TAX, VILLUPURAM CIRCLE, VILLUPURAM. VS. M/S. KALLAKURICHI CO-OPERATIVE SUGAR MILLS LTD., UNIT II, KACHIRAPALAYAM, KALLAKURICHI 606 207. [PAN : AAAAK0655Q] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S. DAS GUPTA , JCIT RESPONDENT BY : SHRI S. VENUGOPALAN, C.A. DATE OF HEARING : 06 . 0 1 .2014 DATE OF PRONOUNCEMENT : 07.01.2014 O R D E R PER BENCH THESE FOUR APPEALS FILED BY THE REVENUE ARE DIRECTE D AGAINST DIFFERENT ORDERS OF THE LD. COMMISSIONER OF INCOME TAX (APPEA LS) VI, CHENNAI ALL DATED 30.08.2013 RELEVANT TO THE ASSESSMENT YEARS 2 005-06, 2008-09, 2009-10 AND 2010-11. SINCE ALL THE APPEALS PERTAINI NG TO SAME ASSESSEE AND COMMON GROUNDS HAVE BEEN RAISED EXCEPT CHANGE O F FIGURES, ARE HEARD TOGETHER AND BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF BREVITY. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A CO-OPERATIVE SUGAR MILL. DURING THE ASSESSMENT YEAR, THE ASSESSEE HAS MADE A PROVISION FOR I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.195 195195 1952 22 2- -- -1955 1955 1955 1955/M/ /M/ /M/ /M/13 1313 13 2 SOME OF THE INTEREST ON LOANS PAYABLE TO THE GOVERN MENT OF TAMIL NADU. THE ASSESSING OFFICER REJECTED THE CLAIM OF INTEREST PA YMENT OF ` .1,40,59,382/- UNDER SECTION 43B OF THE INCOME TAX ACT ON THE PRET EXT THAT THE LOANS WERE OBTAINED FROM THE NATIONAL CO-OPERATIVE DEVELOPMENT CORPORATION [NCDC] BY COOPERATIVE SUGAR MILLS. 3. ON APPEAL, THE LD. CIT(APPEALS) HAS OBSERVED TH AT THE ASSESSEE IS A GOVERNMENT CONTROLLED SOCIETY AND THE GOVERNMENT OF TAMIL NADU APPROACHED NCDC FOR SANCTION OF LOAN, ASSISTANCE T O BE UTILIZED AS WORKING CAPITAL BY 16 CO-OPERATIVE SUGAR MILLS UNDER CERTAI N TERMS AND CONDITIONS. ALL THE EVIDENCES PROVE THAT THE LOANS ARE GRANTED BY G OVERNMENT. THE NATURE OF THE LOANS AND INTEREST PAYABLE ARE TO THE GOVERN MENT ONLY. WITH THE ABOVE OBSERVATION AND BY FOLLOWING THE DECISION OF THE ITAT IN ASSESSEES OWN CASE IN I.T.A. NO. 1079/MDS/2012 FOR THE ASSESS MENT YEAR 2006-07 VIDE ORDER DATED 14.12.2012, THE LD. CIT(APPEALS) DELETE D THE DISALLOWANCE/ ADDITION MADE BY THE ASSESSING OFFICER. 4. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 5. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ISSUE INVOLVED IN THIS APPEAL IS SQUARELY COVERED BY THE ORDER OF THE COORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.195 195195 1952 22 2- -- -1955 1955 1955 1955/M/ /M/ /M/ /M/13 1313 13 3 ASSESSMENT YEAR 2006-07 IN I.T.A. NO. 1079/MDS/2012 VIDE ORDER DATED 14.12.2012. 6. ON THE OTHER HAND, THE LD. DR FAIRLY ACCEPTED T HAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE. 7. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE ONLY I SSUE INVOLVED IN THIS APPEAL IS WHETHER THE AMOUNT OF INTEREST PAYABLE BY THE ASSESSEE ON NCDC LOANS IS HIT BY SECTION 43B OF THE ACT OR NOT. THE VERY SAME ISSUE HAS BEEN CONSIDERED BY THE TRIBUNAL IN ASSESSEES OWN CASE F OR THE ASSESSMENT YEAR 2006-07 IN I.T.A. NO. 1079/MDS/2012 VIDE ORDER DATE D 14.12.2012 AND HELD THAT ANY AMOUNT PAYABLE TO THE GOVERNMENT, BUT ACTU ALLY NOT PAID, IS NOT HIT BY SECTION 43B OF THE ACT AND CANCELLED THE DISALLO WANCE MADE BY THE ASSESSING OFFICER. THE RELEVANT PORTION OF THE ORDE R IS EXTRACTED HEREUNDER: 5. WE HEARD BOTH SIDES IN DETAIL AND ALSO PERUSED THE PROCEEDINGS OF THE DIRECTOR OF SUGARS DATED 31.7.2004, IN WHICH HE HAS REFERRED TO CERTAIN GOVERNMENT ORDERS PARTICULARLY, G.O.MS.NO.4 5, INDUSTRIES (MIC.1) DEPARTMENT, DATED 27.7.2001. ON GOING THROU GH THE PROCEEDINGS, WE UNDERSTAND THAT THE ASSESSEE HAS TA KEN A LOAN FROM GOVERNMENT OF TAMILNADU AND NOT DIRECTLY FROM NCDC. OF COURSE, NCDC IS A FINANCIAL INSTITUTION AS PROCLAIMED BY TH E GOVERNMENT OF INDIA IN TERMS OF SEC.4A OF THE COMPANIES ACT, 1956 . IF THE ASSESSEE HAS TAKEN THE LOAN DIRECTLY FROM NCDC, THE CASE WOU LD HAVE BEEN COVERED BY SEC.43B. NOW, IN THE PRESENT CASE, CENT RAL GOVERNMENT HAD ALLOWED THE GOVERNMENT OF TAMILNADU TO GO FOR OPEN MARKET LENDING FOR RAISING FUNDS TO HELP THE SUGAR MILLS IN TAMILN ADU. THE GOVERNMENT OF TAMILNADU HAS IN FACT AVAILED THE LOA N IN THE LIGHT OF APPROVAL GRANTED BY THE GOVERNMENT OF INDIA. AFTER AVAILING SUCH OPEN MARKET LOAN FROM NCDC, GOVERNMENT OF TAMILNADU DIST RIBUTED THE I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.195 195195 1952 22 2- -- -1955 1955 1955 1955/M/ /M/ /M/ /M/13 1313 13 4 AMOUNT AMONG VARIOUS SUGAR MILLS IN TAMILNADU. AS PER THE DIRECTIONS ISSUED BY THE GOVERNMENT OF TAMILNADU, THE LOANS HA VE TO BE UTILIZED FOR CERTAIN SPECIFIC PURPOSES. THE GOVERNMENT OF T AMILNADU ALSO ALLOWED THE ASSESSEE TO ENJOY A MORATORIUM ON REPAY MENT FOR A PERIOD OF 5 YEARS. THE MILLS ARE SUPPOSED TO MAKE REPAYME NT AS AND WHEN DIRECTED BY THE STATE GOVERNMENT. AT THE SAME TIME , THE ASSESSEE PROVIDED FOR SUCH INTEREST, AS IT IS FOLLOWING MERC ANTILE SYSTEM OF ACCOUNTING. THE PRIVITY OF CONTRACT IS BETWEEN THE ASSESSEE AND THE GOVERNMENT OF TAMILNADU. IN FACT, THE AUDITORS MI GHT HAVE SHOWN THE LOAN AS AVAILED FROM NCDC LOOKING INTO THE SOURCE O F SOURCE OF THE LOAN. EVEN IF IT IS AN OVERSTATEMENT, SUCH OBSERVA TION ALONE SHOULD NOT DECIDE THE EXACT NATURE OF THE ISSUE. AS FAR AS TH E PRESENT CASE IS CONCERNED, GOVERNMENT OF TAMILNADU IS THE LENDER AN D THE ASSESSEE IS THE BORROWER. ANY AMOUNT PAYABLE TO A GOVERNMENT, BUT NOT ACTUALLY PAID, IS NOT HIT BY SEC.43B. THEREFORE, THE COMMIS SIONER OF INCOME- TAX(APPEALS) IS JUSTIFIED IN CANCELLING THE DISALLO WANCE MADE BY THE ASSESSING OFFICER UNDER SEC.43B. 8. SINCE THE REVENUE COULD NOT CONTROVERT THE ABOV E FINDINGS OF THE TRIBUNAL AND THE LD. DR HAS ALSO FAIRLY ACCEPTED TH AT THE ISSUE IS NOW COVERED IN FAVOUR OF THE ASSESSEE, WE FIND NO REASON TO INTERFERE WITH THE ORDER PASSED BY THE LD. CIT(APPEALS) ON THIS ISSUE AND DISMISS THE APPEAL FILED BY THE REVENUE. I.T.A. NOS. 1953, 1954 & 1955/MDS/2013 [A.Y. 2008-0 9, 09-10 & 10-11] 10. FOR THE ASSESSMENT YEARS 2008-09, 2009-10 AND 2010- 11 ALSO, THE REVENUE HAS RAISED SIMILAR GROUND EXCEPT CHANGE OF FIGURES ON SAME SET OF IDENTICAL FACTS AND CIRCUMSTANCES. ACCO RDINGLY, FOR THE ASSESSMENT YEARS UNDER CONSIDERATION ALSO, WE FIND THAT THE LD. CIT(APPEALS) WAS JUSTIFIED IN CANCELLING THE DISALL OWANCE MADE BY THE I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.195 195195 1952 22 2- -- -1955 1955 1955 1955/M/ /M/ /M/ /M/13 1313 13 5 ASSESSING OFFICER. THEREFORE, THE APPEALS FILED BY THE REVENUE FOR THE ASSESSMENT YEARS UNDER CONSIDERATION ARE DISMISSED. 11. IN THE RESULT, ALL THE APPEALS FILED BY THE RE VENUE ARE DISMISSED. ORDER PRONOUNCED ON TUESDAY, THE 7 TH OF JANUARY, 2014 AT CHENNAI. SD/ - SD/ - (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER (V. DURGA RAO) JUDICIAL MEMBER CHENNAI, DATED, THE 07.01.2014 VM/- TO: THE ASSESSEE/A.O./CIT(A)/CIT/D.R.