ACIT, CIR-6(2), KOLKATA, Kolkata V. M/s The Calcutta Tramways Company (1978) Ltd., Kolkata

ITA 2372/KOL/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 8627 (ITAT-KOLKATA)
• Duration Of Justice: 8 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 29-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 143(3); 263

Judgement Text

ITA NO. 2372/KOL/2019 ASSESSMENT YEAR: 2013-2014 M/S. THE CALCUTTA T RAMWAYS COMPANY (1978) LIMITED 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B BENCH, KOLKATA [VIRTUAL COURT HEARING] BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT & SHRI A.T. VARKEY, JUDICIAL MEMBER I.T.A. NO. 2372/KOL/2019 ASSESSMENT YEAR: 2013-2014 ASSISTANT COMMISSIONER OF INCOME TAX,.............. .........................APPELLANT CIRCLE-6(2), KOLKATA, P-7, CHOWRINGHEE SQUARE, 6 TH FLOOR, AAYAKAR BHAWAN, KOLKATA-700069 -VS.- M/S. THE CALCUTTA TRAMWAYS COMPANY (1978) LIMITED,. ..........RESPONDENT 12, R.N. MUKHERJEE ROAD, KOLKATA-700001 [PAN: AABCT7674D] APPEARANCES BY: SHRI SUPRIYA PAL, ADDL. CIT, SR. D.R., FOR THE APPELLANT N O N E, FOR THE RESPONDEN T DATE OF CONCLUDING THE HEARING : JULY 14, 2020 DATE OF PRONOUNCING THE ORDER : JULY 17, 2020 O R D E R PER SHRI P.M. JAGTAP, VICE-PRESIDENT :- THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST TH E ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-7, KOLKATA DAT ED 28.06.2019 ON THE FOLLOWING GROUND:- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(APPEALS) HAS ERRED IN HOLDING THAT THE INTEREST ON THE BORROWED FUNDS OF RS.537.34 LAKHS CANNOT BE TERMED AS AN UNASCERTAINED LIABILITY, IGNORING THE FACT THAT THE ASSESSEE-COMPANY HAS ITSELF STATED IN THE FINANCIAL STATEMENT THAT INTEREST PAYABLE HAS BEEN ESTIMATED @ 6.25% IN ABSENCE OF ANY SPECIFIC STIPULATION FOR PAYMENT OF INTEREST. ITA NO. 2372/KOL/2019 ASSESSMENT YEAR: 2013-2014 M/S. THE CALCUTTA T RAMWAYS COMPANY (1978) LIMITED 2 2. AT THE OUTSET, IT IS NOTED THAT THERE IS A DELAY OF 53 DAYS ON THE PART OF THE REVENUE IN FILING THIS APPEAL BEFORE THE TRI BUNAL. IN THIS REGARD, THE REVENUE HAS MOVED AN APPLICATION SEEKING CONDON ATION OF THE SAID DELAY AND KEEPING IN VIEW THE REASONS GIVEN THEREIN , WE ARE SATISFIED THAT THERE WAS A SUFFICIENT CAUSE FOR THE DELAY OF 53 DA YS ON THE PART OF THE REVENUE IN FILING THIS APPEAL BEFORE THE TRIBUNAL. THE SAID DELAY IS ACCORDINGLY CONDONED AND THE APPEAL OF THE REVENUE IS BEING DISPOSED OF ON MERIT. 3. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY, W HICH IS FULLY OWNED BY THE GOVERNMENT OF WEST BENGAL. IT IS ENGAGED IN PROVIDING PUBLIC TRANSPORTATION SERVICES. THE RETURN OF INCOME FOR T HE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 26.09.2013 DECLARI NG A LOSS OF RS.28,83,24,735/-. IN THE PROFIT & LOSS ACCOUNT FIL ED ALONG WITH THE SAID RETURN, A SUM OF RS.537.34 LAKHS WAS DEBITED BY THE ASSESSEE ON ACCOUNT OF PROVISION MADE FOR INTEREST ON LOANS AVAILED FRO M GOVERNMENT OF WEST BENGAL AT THE RATE OF 6.25% PER ANNUM. THE SAID PRO VISION WAS TREATED BY THE ASSESSING OFFICER AS AN UNASCERTAINED LIABILITY FOLLOWING THE SIMILAR STAND TAKEN IN THE ASSESSMENTS COMPLETED FOR THE EA RLIER YEARS AND THE SAME WAS DISALLOWED BY HIM IN THE ASSESSMENT COMPLE TED UNDER SECTION 143(3) VIDE AN ORDER DATED 13.01.2016. 4. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICE R UNDER SECTION 143(3), AN APPEAL WAS PREFERRED BY THE ASSESSEE BEF ORE THE LD. CIT(APPEALS) CHALLENGING THE DISALLOWANCE MADE BY T HE ASSESSING OFFICER ON ACCOUNT OF PROVISION MADE FOR INTEREST. DURING T HE COURSE OF APPELLATE PROCEEDINGS BEFORE THE LD. CIT(APPEALS), IT WAS POI NTED OUT ON BEHALF OF THE ASSESSEE-COMPANY THAT A SIMILAR ISSUE WAS INVOL VED IN ASSESSEES OWN CASE FOR A.Y. 2007-08 AND THE TRIBUNAL VIDE ITS ORD ER DATED 18.10.2017 PASSED IN ITA NO. 590/KOL/2014 HAD DIRECTED THE ASS ESSING OFFICER TO TAKE INTO ACCOUNT THE SANCTION LETTER/CONFIRMATION LETTER OF THE ITA NO. 2372/KOL/2019 ASSESSMENT YEAR: 2013-2014 M/S. THE CALCUTTA T RAMWAYS COMPANY (1978) LIMITED 3 GOVERNMENT OF WEST BENGAL IN RESPECT OF THE RATE OF INTEREST WHICH IS TO BE CHARGED ON SUCH LOAN AND ADJUDICATE THE ISSUE AS PER THE PROVISIONS OF THE INCOME TAX ACT. IT WAS SUBMITTED ON BEHALF OF T HE ASSESSEE-COMPANY BEFORE THE LD. CIT(APPEALS) THAT THE APPEAL EFFECT TO THE ITATS ORDER FOR A.Y. 2007-08 WAS ALREADY GIVEN BY THE ASSESSING OFF ICER AND THE CLAIM OF THE ASSESSEE FOR DEDUCTION ON ACCOUNT OF PROVISION MADE FOR INTEREST WAS ALLOWED BY HIM. IT WAS ALSO BROUGHT TO THE NOTICE O F THE LD. CIT(APPEALS) BY THE ASSESSEE THAT A SIMILAR DIRECTION WAS GIVEN BY THE TRIBUNAL TO THE ASSESSING OFFICER ON IDENTICAL ISSUE INVOLVED IN AS SESSEES OWN CASE FOR A.Y. 2008-09. IT WAS SUBMITTED THAT THE ASSESSING O FFICER HIMSELF HAD ALLOWED THE DEDUCTION CLAIMED BY THE ASSESSEE ON AC COUNT OF SIMILAR PROVISION MADE FOR INTEREST IN A.Y. 2012-13 AND THE ORDER PASSED BY THE LD. PRINCIPAL CIT UNDER SECTION 263 TREATING THE AS SESSMENT ORDER OF THE ASSESSING OFFICER ALLOWING DEDUCTION ON ACCOUNT OF PROVISION FOR INTEREST AS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE WAS SET ASIDE BY THE TRIBUNAL VIDE ITS ORDER DATED 18.07.20 18 PASSED IN ITA NO. 1261/KOL/2017 READ WITH THE ORDER PASSED IN M.A. BY HOLDING THAT THE PROVISION FOR INTEREST NOT BEING IN THE NATURE OF U NASCERTAINED LIABILITY, JURISDICTION INVOLVED UNDER SECTION 263 OF THE ACT BY THE LD. PRINCIPAL CIT WAS UNFOUNDED. KEEPING IN VIEW THIS SUBMISSION MADE ON BEHALF OF THE ASSESSEE-COMPANY, THE LD. CIT(APPEALS) ACCEPTED THE CONTENTION OF THE ASSESSEE THAT THE ISSUE UNDER CONSIDERATION WAS SQU ARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBU NAL IN ASSESSEES OWN CASE FOR A.YS. 2007-08, 2008-09 AND 2012-13 AND FOL LOWING THE SAME, HE DIRECTED THE ASSESSING OFFICER TO ALLOW THE CLAIM O F THE ASSESSEE FOR DEDUCTION ON ACCOUNT OF PROVISION MADE FOR INTEREST ON LOAN BORROWED FROM THE GOVERNMENT OF WEST BENGAL. AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), THE REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 5. AT THE TIME OF HEARING FIXED IN THIS CASE BEFORE THE TRIBUNAL, NONE HAS APPEARED ON BEHALF OF THE RESPONDENT-ASSESSEE. THE LD. D.R., HOWEVER, ITA NO. 2372/KOL/2019 ASSESSMENT YEAR: 2013-2014 M/S. THE CALCUTTA T RAMWAYS COMPANY (1978) LIMITED 4 HAS FAIRLY AND FRANKLY SUBMITTED THAT THE SOLITARY ISSUE INVOLVED IN THIS APPEAL OF THE REVENUE RELATING TO THE DISALLOWANCE ON ACCOUNT OF THE PROVISION FOR INTEREST ON LOAN BORROWED BY THE ASSE SSEE FROM THE GOVERNMENT OF WEST BENGAL IS SQUARELY COVERED IN FA VOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL RENDERED IN ASSESSE ES OWN CASE FOR A.YS. 2007-08, 2008-09 AND 2012-13 AS DISCUSSED AND RELIE D UPON BY THE LD. CIT(APPEALS) IN HIS IMPUGNED ORDER. WE, THEREFORE, RESPECTFULLY FOLLOW THE SAID DECISIONS OF THE TRIBUNAL RENDERED IN ASSE SSEES OWN CASE FOR EARLIER YEARS ON SIMILAR ISSUE AND UPHOLD THE IMPUG NED ORDER OF THE LD. CIT(APPEALS) DIRECTING THE ASSESSING OFFICER TO ALL OW THE CLAIM OF THE ASSESSEE FOR DEDUCTION ON ACCOUNT OF PROVISION MADE FOR INTEREST ON LOAN BORROWED FROM THE GOVERNMENT OF WEST BENGAL. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON JULY 17, 2020 . SD/- SD/- (A.T. VARKEY) (P.M. JAGTAP) JUDICIAL MEMBER VIC E-PRESIDENT) KOLKATA, THE 17 TH DAY OF JULY, 2020 COPIES TO : (1) ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-6(2), KOLKATA, P-7, CHOWRINGHEE SQUARE, 6 TH FLOOR, AAYAKAR BHAWAN, KOLKATA-700069 (2) THE PRINCIPAL OFFICER, M/S. THE CALCUTTA TRAMWAYS COMPANY (1978) LIMITED, 12, R.N. MUKHERJEE ROAD, KOLKATA-700001 (3) COMMISSIONER OF INCOME TAX (APPEALS)-7, KO LKATA; (4) COMMISSIONER OF INCOME TAX- , KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.