West Bengal Agro Industries Corporation Ltd., Kolkata V. ACIT, Cir - 6(2), Kolkata, Kolkata

ITA 2164/KOL/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6159 (ITAT-KOLKATA)
• Duration Of Justice: 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 09-10-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SAURABH KUMAR
• Assessee Lawyers: V N DATTA
• Section: 43B; 143(3)

Judgement Text

, C , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C KOLKATA BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. A.L. SAINI, ACCOUNTANT MEMBER ITA NO. 2164 / KOL / 20 17 ASSESSMENT YEAR :2014-15 WEST BNGAL AGRO INDUSTRIES CORPORATION LTD., 23B, N.S. ROAD, 3 RD FLOOR, KOLKATA 700 001. [ PAN: AAACW 3323 M ] V/S . ACIT, CIRCLE-6(2), P-7, CHOWRINGHEE SQUARE, KOLKATA 700 069. /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI V.N. DATTA, ADVOCATE /BY RESPONDENT SHRI SAURABH KUMAR, ADDL. CIT, SR. (DR) /DATE OF HEARING 10-07-2018 /DATE OF PRONOUNCEMENT 18-07-2018 / O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2014-15 CALLS INTO QUESTION THE COMMISSIONER OF INCOME TAX (APPEALS)-2, KOLKATAS ORDER DATED 25.07.2017 PASSED IN CASE NO.11843/CIT(A)-2/16-17 EX-PARTE UPHOLDING ASSESSING OFFICERS ACTION DISALLOWING / ADDING INTEREST AMOUNT PROVISION OF 15,02,64,000/- UNDER SECTION 43B, PROVISION OF GRATUITY / LEAVE SALARY OF 69,15,000/- AND EXPENDITURE OF 32,27,000/-, RESPECTIVELY INVOLVING PROCEEDINGS UNDER SECTION 143(3) OF THE ACT. HEARD BOTH THE PARTIES. CASE FILE PERUSED. ITA NO. 2164/KOL/2017 A.Y. 2014-15 W.B. AGRO INDUSTRIES CORPORATION LTD. VS. ACIT CIR-6(2), KOL. PAGE 2 2. LEARNED COUNSEL REPRESENTING ASSESSEE INVITES OUR ATTENTION TO ASSESSEES FOUR SUBSTANTIVE GROUND INTER ALIA CHALLENGING THE CIT(A) ORDER PASSED EX-PARTE UPHOLDING THE LATTER THREE DISALLOWANCES / ADDITIONS. HE STATES AT THE BAR THAT THE ASSESSEE CONFINES ITS CHALLENGE TO DISALLOWANCE OF INTEREST PROVISION ON LOANS AMOUNTING TO 15,02,64,000/- PAID TO GOVERNMENT DURING THE RELEVANT PREVIOUS YEAR. THE OTHER THREE SUBSTANTIVE GROUND HEREINABOVE ARE THEREFORE DISMISSED HAS NOT PRESSED AT ASSESSEES BEHEST. 3. WE NOW ADVERT TO THE SOLE ISSUE OF DISALLOWANCE OF PROVISION RELATING INTEREST EXPENSES AMOUNTING TO 15,02,64,000/-. RELEVANT PAPER BOOK PAGE 3 NOTE 24 COMPRISES OF ASSESSEES FINANCIAL COST REVEALS THAT IT HAD MADE THE IMPUGNED PROVISION ON ACCOUNT OF ACCUMULATED INTEREST ON GOVERNMENT LOANS INVOLVING THE SUM IN QUESTION OF 15,02,64,000/-. THE ASSESSING OFFICER INVOKED SECTION 43B OF THE ACT TO CONCLUDE THAT THE SAME WOULD BE ALLOWABLE ONLY ON ACTUAL PAYMENT A BASED ON A MERE PROVISION. THE CIT(A) UPHOLDS THE SAME IN HIS EX-PARTE LOWER APPELLATE ORDER. 4. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RIVAL CONTENTIONS AGAINST AND IN SUPPORT OF THE IMPUGNED ADDITION. THERE IS HARDLY ANY DISPUTE ABOUT THE ASSESSEE HAVING MADE THE IMPUGNED PROVISION OF 15,02,64,000/- IN RESPECT OF ITS LOANS PAYABLE TO GOVERNMENT. THE QUESTION BEFORE US IS ONLY THAT OF APPLICABILITY OF SECTION 43B(D) OF THE ACT. THE LOWER AUTHORITIES CASE IS THAT THE IMPUGNED CLAIM PERTAINS TO ANY SUM PAYABLE BY THE ASSESSEE AS INTEREST ON A LOAN OR BORROWING FROM THE SPECIFIED FINANCIAL INSTITUTIONS OR STATE FINANCIAL INSTITUTION OR STATE INDUSTRIAL INVESTMENT CORPORATION, AS THE CASE MAY BE. WE FIND NO SUBSTANCE IN THIS REASON. THE REVENUE FAILS TO REBUT THE FACT THAT THE LEGISLATURE HAS SPECIFIED VARIOUS TYPES OF PAYEES WHICH NOWHERE INCLUDES A GOVERNMENT PAYEE AS IS THE CASE BEFORE US. WE MAKE IT CLEAR THAT WE ARE DEALING WITH A DISALLOWANCE PROVISION IN A TAX STATUTE LIABLE TO BE STRICTLY CONSTRUED. THIS TRIBUNALS COORDINATE BENCHS DECISION IN DCIT VS M/S. BAGHPAT CO-OPERATIVE SUGAR MILLS LTD. ITA 6855/DEL/2015 DATED 20.09.2017 HAS HELD THAT SECTION 43B DOES NOT APPLY IN CASE OF A GOVERNMENT PAYEE. WE THEREFORE REVERSE BOTH THE LOWER AUTHORITIES ACTION DISALLOWING ASSESSEES PROVISION OF INTEREST IN QUESTION. ITS FOURTH SUBSTANTIVE GROUND SUCCEEDS ACCORDINGLY. ITA NO. 2164/KOL/2017 A.Y. 2014-15 W.B. AGRO INDUSTRIES CORPORATION LTD. VS. ACIT CIR-6(2), KOL. PAGE 3 5. THIS ASSESSEES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT 18/07/2018 SD/- SD/- ( ) ( ) (A.L. SAINI) (S.S.GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) KOLKATA, BISWAJIT, SR.P.S - 18 / 07 /201 8 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-WEST BENGAL AGRO INDUSTRIES CORPORATION LTD., 23B, N.S. ROAD, 3 RD FLOOR, KOLKATA 700 001. 2. /RESPONDENT-ACIT, CIRCLE-6(2), P-7, CHOWRINGHEE SQUARE, KOLKATA 700 069. 3. / CONCERNED CIT KOLKATA 4. - / CIT (A) KOLKATA (SENT THROUGH E-MAIL) 5. , , / DR, ITAT, KOLKATA (SENT E-MAIL) 6. [ / GUARD FILE. BY ORDER/ , SR. PRIVATE SECRETARY, HEAD OF OFFICE/DDO ,