ACIT, Circle-2(1), Sambalpur V. M/s. Konark Cotton Growers Co-Operatative Spinning Mill Limited, Kalahandi

ITA 22/CTK/2020

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 5718 (ITAT-CUTTACK)
• Duration Of Justice: 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 13-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J K LENKA
• Section: 43B; 43; 22

Judgement Text

P A G E 1 | 4 IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK SMC BENCH, CUTTACK BEFORE SHRI CHANDRA MOHAN GARG , JUDICIAL MEMBER ITA NO . 22 /CTK/20 20 ASSESSMENT YEAR : 20 08 - 2009 ACIT, CIRCLE 2(1), SAMBALPUR VS. KONARK COTTON GROWERS CO.OP. SPINNING MILLS LTD., KESINGA, DIST: KALAHANDI. PAN/GIR NO. AAALK 0062 C (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : NONE REVENUE BY : SHRI J.K.LENKA , DR DATE OF HEARING : 14 / 0 2 / 20 20 DATE OF PRONOUNCEMENT : 14 / 0 2 / 2020 O R D E R THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A), SAMBALPUR FOR THE ASSESSMENT YEAR 2008 - 09 . 2. THE ONLY GRIEVANCE OF THE REVENUE IS THAT THE LD CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION OF RS.18,00,000/ - MADE TOWARDS ADDITION U/S.43B OF THE ACT. 3. NONE APPEARED ON BEHALF OF THE RESPONDENT ASSESSEE WHEN THE MATTER WAS CALLED FOR HEARING. ON PERUSAL OF APPEAL RECORD, I FIND THAT THE APPE AL CAN BE DECIDED EXPARTE QUA RESPONDENT - ASSESSEE AFTER HEARING THE LD D.R. AND ON THE BASIS OF MATERIALS AVAILABLE ON RECORD. HENCE, I PROCEED TO DECIDE THE APPEAL ON MERITS. ITA NO.22/CTK/2020 ASSESSMENT YEAR : 2008 - 2009 P A G E 2 | 4 4. I HAVE HEARD THE SUBMISSIONS OF LD D.R. AND PERUSED THE MATERIALS AVAILABLE ON RECORD. FACTS IN BRIEF ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS RECEIVED WORKING CAPITAL LOAN FROM NATIONAL CO - OPERATIVE DEVELOPMENT, (NCDC) A GOVERNMENT OF INDIA UNDERTAKING AND SINCE THE INTEREST OF RS.18,00,000/ - HAS NOT BEEN PAID BEFORE THE DUE DATE OF FILING RETURN, THE AO DISALLOWED THE SAME AS DEDUCTION CLAIMED BY THE ASSESSEE. 5. ON APPEAL BEFORE THE LD CIT(A), THE ASSESSEE STATED THAT THE LOAN WAS RECEIVED FROM NCDC BY GOVERNMENT O F ORISHA AND IN TURN THE LOAN OF RS.2,00,00,000/ - WAS DISBURSED TO THE ASSESSEE AND THE LOAN AMOUNT ACCRUED INTEREST THEREON WAS REPAID BACK TO GOVERNMENT OF ODISHA AND NOT TO NCDC AND, THEREFORE, PROVISIONS OF SECTION 43B ARE NOT APPLICABLE. 6. AFTER CONS IDERING THE SUBMISSIONS OF THE ASSESSEE, THE LD CIT(A) DELETED THE ADDITION, INTER ALIA, OBSERVING AS UNDER: 4.2 DURING THE COURSE OF APPEAL PROCEEDINGS, THE APPELLANT HAS STATED THAT LOAN WAS RECEIVED FROM NCDC BY GOVT, OF ODISHA AND IN TURN GOVT, OF ODI SHA DISBURSED THE LOAN OF RS 2,00,00,000/ - TO IT. SIMILARLY, LOAN AS WELL AS INTEREST HAS BEEN PAID BACK TO GOVT, OF ODISHA AND NOT TO NCDC. THE RELEVANT PORTION OF THE APPELLANT'S SUBMISSION IS AS BELOW: ' WORKING CA PITAL LOAN DURING THE FY 2007 - 08, THE ASSESSEE HAD PROVIDED THE FOLLOWING INTEREST ON WORKING CAPITAL LOAN AVAILED FROM GOVT, OF ODISHA. SL.NO. PARTICULARS OF LOAN AMOUNT(RS.) RATE SANCTIONING AUTHORITY 1 WORKING CAPITAL LOAN 200.00 LACS 9% P.A GOVT, OF ODISHA (COPY OF SANCTION LETTER ENCLOSED. ASSESSEE IS A SPINNING MILL, SET UP BY GOVT, OF ODISHA, UNDER COOPERATIVE SECTOR PROTECTING & UPLIFTING THE ECONOMIC INTEREST OF THE COTTON FARMERS OF KBK DISTRICTS OF ODISHA. IN THE FINANCIAL YEAR 2003 - 04, WORKING CAPITAL LOAN ITA NO.22/CTK/2020 ASSESSMENT YEAR : 2008 - 2009 P A G E 3 | 4 OF RS.200.00 LAKH WAS AVAILED FROM_GOVT . OF ODISHA TO RUN THE UNIT. COPIES OF SANCTION LETTER DT. 25.03.2004. INTEREST TO THE EXTENT OF RS. 18,00,000/ - WAS PROVIDED ON THE SAID WORKING CAPITAL LOAN AVAILED FROM TEXTILE & HANDLOOM DEPARTMENT, GOVT, OF ODISHA, IN THE FINANCIAL YEAR 2007 - 08, BUT N OT PAID DURING THE YEAR. GOVT, OF ODISHA HAD RECEIVED THE LOAN FROM NATIONAL COOPERATIVE DEVELOPMENT CORPORATION (NCDC) A GOVT, OF INDIA UNDERTAKING, TO MEET THE WORKING CAPITAL REQUIREMENT OF THE MILLS. NEITHER THE ASSESSEE MILL DID HAVE ANY WRITTEN CONTR ACT/AGREEMENT WITH NCDC REGARDING THIS LOAN NOR HAD RECEIVED THE LOAN DIRECTLY FROM NCDC GOVT, OF ODISHA, AS APART OF IT'S ENDEAVOR FOR ECONOMIC DEVELOPMENT OF THE MILL FINANCED THE WORKING CAPITAL OUT OF FUNDS RECEIVED FROM NCDC. THE LOAN WAS RECEIVED & FINALLY REPAID TO THE TEXTILE & HANDLOOM DEPT. GOVT, OF ODISHA. THE ASSESSEE MILL DID NOT HAVE ANY FINANCIAL CONTRACT WITH NCDC REGARDING THIS LOAN. IT IS EVIDENT FROM THE ABOVE FACTS THAT INTEREST HAD BEEN PROVIDED DURING THE FINANCIAL YEAR 2008 - 09 ON T HE WORKING CAPITAL LOAN RECEIVED FROM TEXTILE DEPT. GOVT, OF ODISHA. THESE LOANS ARE CONSIDERED AS GOVT, LOANS. AS PER SECTION 43 B OF INCOME TAX ACT, 1961 ONLY INTEREST ON LOAN/BORROWINGS FROM A PUBLIC FINANCIAL INSTITUTIONS OR STATE FINANCIAL CORPORATION OR STATE INDUSTRIAL INVESTMENT CORPORATION OR SCHEDULED BANK INCLUDING COOPERATIVE BANK SHALL BE ALLOWED AS EXPENDITURE ONLY ON PAYMENT BASIS. INTEREST ON LOAN FROM GOVT, OF ODISHA, NOT BEING CATEGORIZED UNDER ANY OF THE ABOVE MENTIONED FINANCIAL INSTITUT IONS/BANKS, SHOULD NOT BE DISALLOWED U/S 43B OF INCOME TAX ACT, 1961. SECTION 43B IS NOT APPLICABLE TO INTEREST ON GOVT, LOAN CIT VS UP RAJYA VIDYUT UTPADAN NIGAM LTD. (2013) 218 TAXMAN 153(ALL). ' 4.3 I HAVE CAREFULLY EXAMINED THE ASSESSMENT ORDER AND THE APPELLANT'S SUBMISSION. I FIND THAT LOAN HAS BEEN GIVEN BY GOVT, OF ODISHA TO THE APPELLANT AND THEREFORE, THE PROVISIONS OF SECTION 43B OF I.T. ACT, 1961 ARE NOT APPLICABLE TO THE APPELLANT. ACCORDINGLY, THE ADDITION MADE BY THE ASSESSING OFFICER OF R S 18,00,000/ - IS ORDERED TO BE DELETED. THE GROUND OF APPEAL IS ALLOWED. 7. IN THE INSTANT CASE, THE LOAN WAS PROVIDED TO THE ASSESSEE BY GOVERNMENT OF ODISHA AND THE SAME WAS REPAID BACK TO GOVERNMENT OF ODISHA. THEREFORE, THE PROVISIONS OF SECTION 43B ARE NOT APPLICABLE TO THE ASSESSEE. THE ABOVE FINDINGS OF THE LD CIT(A) WAS NO T CONTROVERTED BY LD D.R. IN VIEW OF ABOVE, I AM OF THE CONSIDERED VIEW THAT T HE CIT (A) WAS QUITE JUSTIFIED IN DELETING THE IMPUGNED DISALLOWANCE. HENCE, I APPROVE AND CONFIRM THE SAME. ITA NO.22/CTK/2020 ASSESSMENT YEAR : 2008 - 2009 P A G E 4 | 4 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON 14 / 0 2 /20 20 . S D/ - ( CHANDRA MOHAN GARG) JUDICIAL MEMBER CUTTACK; DATED 14 / 0 2 /20 20 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER SR . PVT. S ECRETARY ITAT, CUTTACK 1. THE APPELLANT : ACIT, CIRCLE 2(1), SAMBALPUR 2. THE RESPONDENT. KONARK COTTON GROWERS CO.OP. SPINNING MILLS LTD., KESINGA, DIST: KALAHANDI 3. THE CIT(A) - , SAMBALPUR 4. PR.CIT - , SAMBALPUR 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//