Teesta Agro Industries Ltd., Kolkata V. DCIT, Cir-12(2), Kolkata, Kolkata

ITA 2024/KOL/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6270 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 1993-1994
• Appeal Filed On: 20-10-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SAURABH KUMAR ADD L
• Assessee Lawyers: B K PODDAR F
• Keywords: Capital asset
• Section: 43B; 143(3); 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : KOLKATA [BEFORE HONBLE SHRI A.T.VARKEY, JM & SHRI M.BALA GANESH, AM] I.T.A NO. 2024/KOL/20 16 ASSESSMENT YEAR : 1993-9 4 TEESTA AGRO INDUSTRIES LTD -VS- D.C.I.T., CIR CLE-12 (2) KOLKATA KOLKATA. [PAN: AABCT 1252 D] (APPELLANT) (RESPONDEN T) FOR THE APPELLANT : SHRI B.K.PODDAR, F CA FOR THE RESPONDENT : SHRI SAURABH KUMAR, ADD L. CIT, SR.DR DATE OF HEARING : 09.05.2018. DATE OF PRONOUNCEMENT : 15.05.2018 ORDER PER M.BALAGANESH, AM 1. THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE OR DER OF THE LEARNED COMMI543/CIT(A)-4/CIRCLE-12/KOL/14-15 DATED 16.05.2 016 AGAINST THE ORDER PASSED BY THE A.C.I.T., INV.CIRCLE-3(2), KOLKATA [ IN SHOR T THE LD AO] UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATE D 15.03.1996 FOR THE ASSESSMENT YEAR 1993-94. 2. THE FIRST ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF RS.39,2 9,928/- U./S 43B OF THE ACT ON ACCOUNT OF UNPAID SALES TAX IN THE FACTS AND CIRCUM STANCES OF THE CASE. 2 ITA NO.2024/KOL/2016 TEESTA AGRO INDUSTRIES LTD. A.YR. 1993-94 2 3. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSES SEE M/S TEESTA AGRO INDUSTRIES LTD WHICH WAS EARLIER KNOWN AS SUNDERBAN FERTILISERS L TD WAS IN RECEIPT OF RS.39,29,928/- UNDER SALES TAX DEFERMENT SCHEME SANCTIONED BY THE GOVERNMENT OF WEST BENGAL, MEANING THEREBY THE SALES TAX COLLECTED BY THE ASSE SSEE NEED NOT BE REMITTED TO THE SALES TAX AUTHORITIES FOR A CERTAIN PERIOD OF TIME. ACCOR DINGLY THE ASSESSEE DID NOT MAKE ANY REMITTANCE OF THIS SALES TAX COLLECTION OF RS. 39,2 9,928/- TO THE SALES TAX AUTHORITIES. THE ASSESSEE PRODUCED COPY OF THE ELIGIBILITY CERTIFICA TE ISSUED IN FORM NO.XIX BY ASSISTANT COMMISSIONER , COMMERCIAL TAXES, WEST BEN GAL VIDE CERTIFICATE NO.6295 DATED 25.06.1993 WHEREIN THE ASSESSEE DEALER WAS GI VEN ELIGIBILITY FOR DEFERMENT OF PAYMENT OF SALES TAX FOR A PERIOD OF 7 YEARS COMMEN CING FROM 21.05.1992. THE LD. AO APPLIED THE PROVISION OF SECTION 43B OF THE ACT AND HELD THAT SINCE THE ASSESSEE HAD NOT MADE THE REMITTANCE OF SALES TAX COLLECTED AND THE ASSESSEE HAD NOT PRODUCED ANY EVIDENCE TO SHOW THAT THE UNPAID SALES TAX WHICH HA S BEEN CONVERTED INTO LOAN BY THE STATE GOVERNMENT, THE REQUIREMENT OF CBDT CIRCULAR NO.496 DATED 25.09.1987 WAS NOT FULFILLED BY THE ASSESSEE AND ACCORDINGLY PROCEEDED TO MAKE DISALLOWANCE U/S 43B OF THE ACT. 4. THE LD. CIT(A) NOTED IN HIS ORDER THAT COMMERCIA L TAXES DEPARTMENT, WEST BENGAL HAD GRANTED DEFERMENT OF PAYMENT OF TAX TO T HE EXTENT OF 90% OF GROSS VALUE OF FIXED ASSETS OR RS.35 CRORES WHICHEVER IS LESS AND THAT DEFERMENT WAS FOR A PERIOD OF 7 YEARS COMMENCING FROM 21.05.1992 BASED ON THE ELIGI BILITY CERTIFICATE ISSUED TO THE ASSESSEE. THE LD. CIT(A) CATEGORICALLY STATED THAT THE ASSESSEE HAD FURNISHED EVIDENCE IN SUPPORT OF THE CLAIM THAT THE SALES TAX LIABILIT Y WAS CONVERTED INTO LOAN. THE ASSESSEE PLACED RELIANCE ON THE CBDT CIRCULAR NO.496 DATED 2 5.09.1987. THE LD. CIT(A) HOWEVER, OBSERVED FROM A PERUSAL OF THE SAID CIRCUL AR IN PARA-5 IT WAS CLEARLY STATED THAT THE CBDT HAD DECIDED WHERE AMENDMENTS WERE MADE IN THE SALES TAX LAWS ON THE LINES MENTIONED IN THE CIRCULAR, THE STATUTORY LIABILITY SHALL BE TREATED AS DISCHARGED FOR THE PURPOSES OF SECTION 43B OF THE ACT. HE OBSERVED THA T THE ASSESSEE IN THE INSTANT CASE 3 ITA NO.2024/KOL/2016 TEESTA AGRO INDUSTRIES LTD. A.YR. 1993-94 3 HAS NOT FURNISHED ANY EVIDENCE TO PROVE THAT WHETHE R ANY AMENDMENT WAS CARRIED OUT IN SALES TAX LAWS AND ACCORDINGLY THE CIRCULAR WOULD N OT COME TO THE RESCUE OF THE ASSESSEE AND UPHELD THE DISALLOWANCE MADE BY THE AO. AGGRIE VED ASSESSEE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUND : 1) FOR THAT IN THE FACTS & CIRCUMSTANCES OF THE CA SE THE LD. CIT(A) WAS UNJUSTIFIABLE CONFIRM THE DISALLOWANCE A SUM OF RS. 39,29,928/- U/S. 43B OF I T ACT ON ACCOUNT OF UNPAID SALES TAX. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND THA T THE ASSESSEE HAD DULY PLACED ON RECORD THE RELEVANT PROVISION OF WEST BENGAL SAL ES TAX ACT 1954 VIDE SECTION 8H DEFERMENT PAYMENT OF TAX WHICH IS REPRODUCED HERE UNDER:- 1 [ 8H. DEFERMENT OF PAYMENT OF TAX . - (1) NOTWITHSTANDING ANYTHING CONTAINED IN SUB-SECTION (1) OR SUB-SECTION (2) 2[ ] OF SECT ION 8 OR SUB-SECTION (1) OF SECTION 10, THE TAX PAYABLE BY A REGISTERED DEALER UNDER TH IS ACT ACCORDING TO HIS 3[ ] RETURNS REFERRED TO IN SECTION 8 OR THE TAX DUE FRO M HIM ACCORDING TO A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 10 SHALL, S UBJECT TO THE OTHER PROVISIONS OF THIS SECTION OR THE RULES MADE THEREUNDER, BE DEFER RED. (A) IN THE CASE OF A NEWLY SET UP INDUSTRIAL UNIT I N [WEST BENGAL.] FROM THE PRESCRIBED DATE ON WHICH SUCH TAX BECOMES PAYABLE I N A YEAR DURING THE PERIOD REFERRED TO IN SUB-SECTION (2) UNDER THIS ACT IN RE SPECT OF NOTIFIED COMMODITY OTHER THAN SUCH NOTIFIED COMMODITY AS MAY BE PRESCRIBED,] MANUFACTURED IN SUCH UNIT OR GOODS PURCHASED FOR USE DIRECTLY IN THE MANUFACTURE OF SUCH NOTIFIED COMMODITY, OR (B) IN THE CASE OF. AN EXISTING INDUSTRIAL UNIT IN 1 [WEST BENGAL.] WHICH HAS BEEN EXPANDED ON APPROVAL OF THE STATE GOVERNMENT, FROM THE PRESCRIBED DATE ON WHICH SUCH TAX BECOMES PAYABLE IN A YEAR DURING THE PERIO D REFERRED TO IN SUB-SECTION (2) UNDER THIS ACT IN RESPECT OF NOTIFIED COMMODITY 2[, OTHER THAN SUCH NOTIFIED COMMODITY AS MAY BE PRESCRIBED.] MANUFACTURED IN TH E EXPANDED PORTION OF SUCH UNIT ON UTILISATION OF THE ADDED CAPACITY OF THE PL ANT AND MACHINERY INSTALLED THEREIN OR GOODS PURCHASED FOR USE DIRECTLY IN THE MANUFACTURE OF SUCH NOTIFIED COMMODITY, FOR SUCH PERIOD, NOT EXCEEDING 3[ NINE YEARS,] AS M AY BE PRESCRIBED, AND DIFFERENT PERIODS MAY BE PRESCRIBED FOR DIFFERENT SUCH NEW7, SET UP OR EXISTING INDUSTRIAL UNITS HAVING REGARD TO THE LOCATION OF SUCH UNITS [ IN DIFFERENT AREAS AS MAY BE PRESCRIBED :] 4 ITA NO.2024/KOL/2016 TEESTA AGRO INDUSTRIES LTD. A.YR. 1993-94 4 5[PROVIDED THAT DEFERMENT OF PAYMENT OF TAX PAYABLE BY A DEALER IN RESPECT OF SALES OF NOTIFIED COMMODITIES MANUFACTURED BY HIM IN ANY OF THE PRESCRIBED AREAS MAY BE RESTRICTED TO SALES OF SUCH CLASS OR CLASSES OF NOT IFIED COMMODITIES AS MAY BE PRESCRIBED : PROVIDED FURTHER THAT THE PERIOD PRESCRIBED UNDER T HIS SUB-SECTION AND SUB-SECTION (2) MAY, SUBJECT TO SUCH RESTRICTIONS AND CONDITION S AS MAY BE PRESCRIBED, BE EXTENDED BY TWO YEARS IN THE CASES OF SUCH INDUSTRI AL UNITS AS MAY BE PRESCRIBED, WHERE INVESTMENT IN FIXED CAPITAL ASSETS EXCEEDS ON HUNDRED CRORE RUPEES.] IT IS NOT IN DISPUTE THAT THE ASSESSEE IS ENTITLED/ ELIGIBLE FOR SALES TAX DEFERMENT, MEANING THEREBY, THE SALES TAX COLLECTED BY THE ASSESSEE N EED NOT BE REMITTED TO THE SALES TAX DEPARTMENT FOR A PERIOD OF 7 YEARS COMMENCING FROM 21.05.1992 AS IS EVIDENT FROM THE ELIGIBILITY CERTIFICATE ISSUED BY THE SALES TAX DEP ARTMENT (SUPRA). THIS ELIGIBILITY CERTIFICATE ADMITTEDLY HAS BEEN ISSUED IN ACCORDANC E WITH THE PROVISION OF WEST BENGAL SALES TAX ACT 1954. HENCE IT CAN BE SAFELY CONCLUDE D THAT THE ASSESSEE HAD SOUGHT FOR THIS ELIGIBILITY CERTIFICATE ON SALES TAX DEFERRAL LOAN BASED ON THE PROVISIONS OF THE STATE ACT I.E. WEST BENGAL SALES TAX ACT. HENCE THE ASSES SEE WOULD SQUARELY FALL UNDER THE BENEFIT PROVIDED IN THE CIRCULAR NO.496 DATED 25.09 .1987 WHICH READS AS UNDER :- CIRCULAR NO. 496. DATED 25-09-1987 WHETHER AMOUNT OF SALES TAX LIABILITY CONVERTED IN TO LOANS MAY BE ALLOWED AS DEDUCTION IN ASSESSMENT FOR PREVIOUS YEAR IN WHICH SUCH CONVERSION HAS BEEN PERMITTED BY OR UNDER GOVERNMENT ORDERS 1. SEVERAL STATE GOVERNMENTS HAVE INTRODUCED SALES TAX DEFERRED SCHEMES AS A PART OF THE INCENTIVES OFFERED TO ENTREPRENEURS SETTING UP INDUSTRIES IN BACKWARD AREAS. UNDER THESE SCHEMES, ELIGIBLE UNITS ARE PERMITTED T O COLLECT SALES TAX AND RETAIN SUCH TAX FOR A PRESCRIBED PERIOD. AFTER THIS PERIOD , THE SALES TAX IS TO BE PAID TO THE GOVERNMENT EITHER IN LUMP SUM OR IN INSTALMENTS. 2. SECTION 43B OF THE INCOME-TAX ACT, 1961, INTRODU CED BY THE FINANCE ACT, 1983, WITH EFFECT FROM 1-4-1984 PROVIDES, INTER ALIA, THA T A DEDUCTION IN RESPECT OR ANY SUM PAYABLE BY THE ASSESSEE BY WAY OF TAX OR DUTY U NDER ANY LAW FOR THE TIME BEING IN FORCE SHALL BE ALLOWED FROM THE INCOME OF THE PR EVIOUS YEAR IN WHICH SUCH SUM IS ACTUALLY PAID IRRESPECTIVE OF THE PREVIOUS YEAR IN WHICH THE LIABILITY TO PAY SUCH SUM WAS INCURRED. SINCE THE INTRODUCTION OF THIS PR OVISION, THE ASSES SEES WHO COLLECT SALES TAX, BUT DO NOT PAY THE AMOUNTS TO TH E GOVERNMENT DURING THE 5 ITA NO.2024/KOL/2016 TEESTA AGRO INDUSTRIES LTD. A.YR. 1993-94 5 PREVIOUS YEAR, UNDER THE DEFERRAL SCHEMES PROVIDED BY THE STATE GOVERNMENTS ARE NOT ENTITLED TO THE BENEFIT OF DEDUCTION FROM THEIR INCOME. 3. REPRESENTATIONS HAVE BEEN RECEIVED FROM VARIOUS STATE GOVERNMENTS AND OTHERS THAT CASES OF DEFERRED SALES TAX PAYMENTS SHOULD BE EXCLUDED FROM THE PURVIEW OF SECTION 43B AS THE OPERATION OF THIS PROVISION HAS THE EFFECT OF DILUTING THE INCENTIVE OFFERED BY THE DEFERRAL SCHEMES. 4. THE MATTER HAS BEEN EXAMINED IN CONSULTATION WIT H THE MINISTRY OF LAW AND THE VARIOUS STATE GOVERNMENTS. THE MINISTRY OF LAW HAS OPINED THAT IF THE STATE GOVERNMENTS MAKE AN AMENDMENT IN THE SALES TAX ACT TO THE EFFECT THE SALES TAX DEFERRED UNDER THE SCHEME SHALL BE TREATED AS ACTUA LLY PAID, SUCH A DEEMING PROVISION WILL MEET THE REQUIREMENTS OF SECTION 43B . 5. THE GOVERNMENT OF MAHARASHTRA HAVE BY THE BOMBAY SALES TAX (AMENDMENT) ACT, 1987, MADE THE AMENDMENT ACCORDINGLY. THE BOAR D HAVE DECIDED THAT WHERE AMENDMENTS ARE MADE IN THE SALES TAX LAWS ON THESE LINES, THE STATUTORY LIABILITY SHALL BE TREATED TO HAVE BEEN DISCHARGED FOR THE PU RPOSES OF SECTION 43B. CIRCULAR: NO. 496 [F. NO. 20J/34/86-/T(A-IL)] DATED 25-9-/987 5.1. WE ALSO FIND THAT CBDT HAD ALSO COME OUT WITH CIRCULAR NO.674 DATED 29.12.1993 ON THE IMPUGNED ISSUE WHICH READS AS UND ER :- WHETHER AMOUNT OF SALES TAX LIABILITY CONVERTED IN TO LOANS MAY BE ALLOWED AS DEDUCTION IN ASSESSMENT FOR PREVIOUS YEAR IN WHICH SUCH CONVERSION HAS BEEN PERMITTED BY OR UNDER GOVERNMENT ORDERS 1.THE SCOPE OF APPLICATION OF THE PROVISIONS OF SE CTION 43B TO THE SALES TAX COLLECTED BUT NOT ACTUALLY PAID UNDER DEFERRAL SCHE MES OF THE STATE GOVERNMENTS WAS CONSIDERED IN BOARD'S CIRCULAR NO. 496, DATED 2 5-9-1987 [CLARIFICATION 2], AND IT WAS DECIDED THAT, WHERE THE STATE GOVERNMENT S MAKE AN AMENDMENT IN THE SALES-TAX ACT TO THE EFFECT THAT THE SALES TAX DEFE RRED UNDER THE SCHEME SHALL BE TREATED AS ACTUALLY PAID, THE STATUTORY LIABILITY SHALL BE TREATED AS DISCHARGED FOR THE PURPOSES OF SECTION 43B. 2. IT HAS SINCE BEEN BROUGHT TO THE NOTICE OF THE BOARD THAT SOME STATE GOVERNMENTS, INSTEAD OF AMENDING THE SALES-TAX ACT. HAVE ISSUED GOVERNMENT ORDERS NOTIFYING SCHEMES UNDER WHICH SALES TAX IS D EEMED TO HAVE BEEN ACTUALLY COLLECTED AND DISBURSED AS LOANS. SUCH GOVERNMENT O RDERS ALSO PROVIDE THAT ENTRIES SHALL BE MADE IN THE GOVERNMENT ACCOUNTS GI VING EFFECT TO DEEMED 6 ITA NO.2024/KOL/2016 TEESTA AGRO INDUSTRIES LTD. A.YR. 1993-94 6 COLLECTIONS BY CREDITING THE APPROPRIATE RECEIPT-HE ADS RELATING TO SALES-TAX COLLECTIONS AND DEBITING THE HEADS RELATING TO DISB URSAL OF LOANS. IT HAS, THEREFORE, BEEN REPRESENTED THAT, AS SUCH CONVERSION OF THE SA LES TAX LIABILITY INTO LOANS HAVE SIMILAR STATUTORY EFFECT AS CAN BE ACHIEVED THROUGH AMENDMENTS OF THE SALES-TAX ACT, THE AMOUNTS COVERED UNDER THE SCHEME SHOULD BE ALLOWED AS DEDUCTION TOR THE PREVIOUS YEAR IN WHICH THE CONVERSION HAS BEEN PERM ITTED BY THE STATE GOVERNMENTS. 3. THE BOARD HAVE CONSIDERED THE MATTER AND ARE OF THE OPINION THAT SUCH DEFERRAL SCHEMES NOTIFIED BY THE STATE GOVERNMENTS THROUGH G OVERNMENT ORDERS MEET THE REQUIREMENTS OF THE BOARDS CIRCULAR NO. 496, DATED 25-9-1987 IN EFFECT THOUGH IN A DIFFERENT FORM. ACCORDINGLY, THE BOARD HAVE DECIDED THAT THE AMOUNT OF SALES TAX LIABILITY CONVERTED INTO LOANS MAY BE ALLOWED AS DE DUCTION IN THE ASSESSMENT FOR THE PREVIOUS YEAR IN WHICH SUCH CONVERSION HAS BEEN PER MITTED BY OR UNDER GOVERNMENT ORDERS. CIRCULAR NO. 674, DATED 29-12-1993. IN VIEW OF THE ABOVE CIRCULARS OF THE CBDT WHICH AR E BINDING ON THE REVENUE AUTHORITIES AND IN VIEW OF THE EVIDENCE SUBMITTED B Y THE ASSESSEE THAT THE SALES TAX HAD BEEN CONVERTED INTO LOAN PURSUANT TO PROVISIONS OF THE STATE ACT I.E. WEST BENGAL SALES TAX ACT, THE ASSESSEE IS DEEMED TO HAVE COMPLIED WI TH THE PROVISIONS OF SECTION 43B OF THE ACT AND ACCORDINGLY ENTITLED FOR DEDUCTION OF T HE SAME. HENCE WE HAVE NO HESITATION TO CONSIDER GRANT OF DEDUCTION OF RS.39, 29,928/- U/S 43B OF THE ACT ON ACCOUNT OF UNPAID SALES TAX. ACCORDINGLY GROUND NO. 1 RAISED BY THE ASSESSEE IS ALLOWED. 6. HE NEXT GROUND TO BE DECIDED IS AS TO WHETHER TH E LD. CIT(A) WAS JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF RS.1,51,26,826/- U/S 43B OF THE ACT ON ACCOUNT OF UNPAID INTEREST TO IDBI IN THE FACTS AND CIRCUMSTAN CES OF THE CASE. 7. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSESS EE EXPLAINED THAT THE COMPANY HAD SUFFERED HUGE LOSS AND BECAME A SICK COMPANY UNDER SICK INDUSTRIAL COMPANIES (SPECIAL PROVISIONS) ACT, 1985 AND STOOD UNDER THE PURVIEW OF BOARD OF INDUSTRIAL AND FINANCIAL RECONSTRUCTION (BIFR). THE COMPANY IN ORD ER TO REVIVE ITS BUSINESS, 7 ITA NO.2024/KOL/2016 TEESTA AGRO INDUSTRIES LTD. A.YR. 1993-94 7 BORROWED FUNDS ON INTEREST AND DUE TO ADVERSE BUSI NESS SITUATION, IT WAS UNABLE TO PAY INTEREST ON SUCH LOANS IMMEDIATELY AND ACCORDINGLY APPROACHED THE LENDING INSTITUTION (IDBI) WITH A PROPOSAL FOR RESCHEDULING THE LOAN A ND FOR CONVERTING THE UNPAID INTEREST INTO A LOAN WHICH WILL BE REPAID OVER A PERIOD OF T IME. THE SAID PROPOSAL WAS ACCEPTED BY IDBI. ACCORDINGLY THE UNPAID INTEREST FOR THE YE AR UNDER APPEAL GOT CONVERTED INTO LOAN. THE ASSESSEE PLEADED THAT SINCE THERE WAS NO OUTSTANDING INTEREST TO BE PAID ON THE LAST DATE OF THE FINANCIAL YEAR, IT AMOUNTED TO CON STRUCTIVE PAYMENT OF INTEREST BY THE ASSESSEE THEREBY MAKING IT ELIGIBLE FOR DEDUCTION U/S 43B OF THE ACT. THE LD. AO OBSERVED THAT INTEREST HAS BEEN CONVERTED INTO LOAN AND AS SUCH THE LIABILITY TO PAY THE INTEREST HAD NOT ARISEN AND ACCORDINGLY THE ASSESSE E IS NOT ELIGIBLE FOR DEDUCTION U/S 43B OF THE ACT. THIS ACTION OF THE LD. AO WAS UPHELD BY THE LD. CIT(A). AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US ON TH E FOLLOWING GROUND : 2) FOR THAT IN THE FACTS & CIRCUMSTANCES OF THE CA SE UNJUSTIFIED IN CONFIRMING THE DISALLOWANCE A SUM OF U/S. 43B OF I T ACT BEING UNP AID INTEREST TO IDBI BANK. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS. IT IS NOT I N DISPUTE THAT THE UNPAID INTEREST HAS BEEN CONVERTED/RESCHEDULED INTO FRESH LOAN. THE ASSESSEE HAD ONLY MADE A CLAIM U/S 43B OF THE ACT AS DEDUCTION PASSED ON CONSTRUCTIVE PAYMENT OF INTEREST TO THE BANK AND CONSTRUCTIVE RECEIPT THEREON FROM THE BANK AS LOAN. BUT WE FIND THAT THE PROVISIONS OF EXPLANATION 3C TO SECTION 43B OF THE ACT ARE AGAINS T THE ASSESSEE WHICH READS AS UNDER :- [ EXPLANATION 3C- FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT A DEDUCTION OF ANY SUM, BEING INTEREST PAYABLE UNDER CLAUSE (D) OF THIS SECTION, SHALL BE ALLOWED IF SUCH INTEREST HAS BEEN ACTUALLY PAID AND ANY INTEREST REFERRED TO IN THAT CLAUSE WHICH HAS BEEN CONVERTED INTO A LOAN OR BORROWING SHALL NOT BE DEEMED TO HAVE BEEN ACTUALLY PAID. FROM A PERUSAL OF THE AFORESAID PROVISION IT IS VER Y CLEAR THAT THE UNPAID INTEREST WHICH GOT CONVERTED INTO LOAN CANNOT BE CLAIMED AS DEDUCT ION U/S 43B OF THE ACT. HENCE WE 8 ITA NO.2024/KOL/2016 TEESTA AGRO INDUSTRIES LTD. A.YR. 1993-94 8 HOLD THAT THE LD. CIT(A) HAD RIGHTLY CONFIRMED THE DISALLOWANCE OF UNPAID INTEREST IN THE SUM OF RS.1,51,26,826/- PAYABLE TO IDBI. ACCORD INGLY GROUND NO.2 RAISED BY THE ASSESSEE IS DISMISSED. 9. DURING THE COURSE OF HEARING GROUNDS NO.3 AND 4 WERE STATED TO BE NOT PRESSED IN VIEW OF SMALLNESS OF THE AMOUNT. ACCORDINGLY GROUND S NO. 3 AND 4 ARE DISMISSED AS NOT PRESSED. 10. GROUND NO.5 RAISED BY THE ASSESSEE IS GENERAL I N NATURE AND DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION. 11. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 15.05.2018. SD/- SD/- [A.T.VARKEY] [ M.BALAGANESH ] JUDICIAL MEMBER ACCOUNTANT MEM BER DATED : 15.05.2018 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. TEESTA AGRO INDUSTRIES LTD., 5A, VALMIKEE STREET (1 ST FLOOR), KOLKATA-700026. 2. D.C.I.T., CIRCLE-12 (2), KOLKATA. 3..C.I.T.-(A)-4, KOLKATA. 4. C.I.T.- 4, KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S 9 ITA NO.2024/KOL/2016 TEESTA AGRO INDUSTRIES LTD. A.YR. 1993-94 9