Solapur Tollways Pvt. Ltd., Kolkata V. I.T.O.,Ward-11(3), Kolkata

ITA 2421/KOL/2019

AI Insights

The case involves Solapur Tollways Pvt. Ltd, which appealed against the order of the Commissioner of Income Tax (Appeals)-24, Kolkata, concerning the assessment year 2015-16. The primary issues in the appeal were the taxation of interest income received from a bank guarantee and the taxation of gains from mutual funds. The assessee argued that the interest income was part of a composite transaction related to a project and should not be taxed separately from the interest expenditure. The Tribunal agreed with the assessee regarding the interest income but upheld the taxation of gains from mutual funds, as these were not part of the business activities.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 128190 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: A
• Next Hearing Date: 21-02-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 07-11-2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 250

Judgement Text

आयकर अपीलȣय अͬधकरण, कोलकाता पीठ ‘ए’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH KOLKATA Įी संजय गग[, ÛयाǓयक सदèय एवं Įी मनीष बोरड, लेखा सदèय के सम¢ Before Shri Sanjay Garg, Judicial Member and Dr. Manish Borad, Accountant Member I.T.A No.2421/Kol/2019 Assessment year: 2015-16 Solapur Tollways Pvt. Ltd.............................................................Appellant Vishwakarma Building, 86C, Topsia Road(South), Kolkata-700046. [PAN: AARCS2958K] vs. ITO, Ward-11(3), Kolkata.............................................................Respondent Appearances by: Smt. Sanve Sanwalka, AR, appeared on behalf of the appellant. Smt. Ranu Biswas, Addl. CIT-DR, appeared on behalf of the Respondent. Date of concluding the hearing : February 22, 2023 Date of pronouncing the order : February 22, 2023 आदेश / ORDER संजय गग[, ÛयाǓयक सदèय ɮवारा / Per Sanjay Garg, Judicial Member: The present appeal has been preferred by the assessee against the order dated 11.09.2019 of the Commissioner of Income Tax (Appeals)-24, Kolkata [hereinafter referred to as the ‘CIT(A)’] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’). 2. The assessee, in this appeal, has taken the following grounds of appeal: “1. That on the facts and in the circumstances of the case, the Learned Commissioner of Income Tax (Appeals) [hereinafter referred to as the ‘CIT(Appeals)’] was not justified and grossly erred in confirming the addition of interest of Rs.2,65,56,472/-. I.T.A No.2421/Kol/2019 Assessment year: 2015-16 Solapur Tollways Pvt. Ltd 2 2. That on the facts and in the circumstances of the case, the Learned CIT(Appeals) was not justified and grossly erred in confirming the addition of gains from mutual fund of Rs.56,212/-. 3. That the appellant craves leave to add, to amend, modify, rescind, supplement or alter any of the grounds stated hereinabove, either before or at the time of hearing of this appeal.” 3. Ground No.1 – At the outset, Ms. Sanve Sanwalka, the ld. AR of the assessee, has stated that the assessee is engaged in the business of infrastructure development. The assessee for a project had borrowed loan from some concern for the purpose of furnishing bank guarantee in the shape of FDR with the bank. The assessee capitalised the interest expenditure incurred on the loan as well as interest income received on the bank guarantee towards work-in-progress. However, the Assessing Officer bifurcated the interest received on FDR furnished for bank guarantee and taxed the same as income from other sources. The ld. counsel has submitted that the loan was taken for the purpose of furnishing of bank guarantee with the bank which was related to the project undertaken by the assessee and that the borrowings of the loan and paying interest thereupon and further earning of interest income on the said guarantee amount was part of the composite transaction and that the Assessing Officer was not justified in bifurcating the said transaction and thereby though allowed the capitalisation of the expenditure, whereas, disallowed the capitalisation of the interest income and thereby separately taxed the same. 4. The ld. DR, on the other hand, has relied upon the findings of the lower authorities. 5. Considering the overall facts and circumstances of the case, we find force in the contention of Ms. Sanve Sanwalka, the ld. AR of the assessee. Since the transaction was a composite transaction which was I.T.A No.2421/Kol/2019 Assessment year: 2015-16 Solapur Tollways Pvt. Ltd 3 done by the assessee for the purpose of getting project undertaken, therefore, the Assessing Officer was not justified in bifurcating the transaction by taxing the interest income on and above which was borrowed by the assessee for the purpose of bank guarantee and had paid interest expenditure thereupon. The Assessing Officer, therefore, is directed to set off the interest income against the interest expenditure incurred on the borrowed amount used for bank guarantee and tax the net of the same, if any. 6. Ground No.2 – Vide Ground No.2, the assessee has agitated the action of the CIT(A) in confirming the addition of gains from mutual funds of Rs.56,212/-. The ld. AR of the assessee, in this respect, has submitted that the assessee was having surplus funds out of which some funds were invested in the mutual funds and that the gains from the mutual funds were capitalized. We are not convinced with the above argument of the ld. AR. The said investment in mutual funds, in our view, has nothing to do with the business of the assessee. In view of this, we do not find any error in the impugned order of the lower authority in taxing the said gains from mutual funds. Ground No.2 of the assessee’s appeal is dismissed. 7. In view of decisions given above, the appeal of the assessee stands partly allowed. Kolkata, the 22 nd February, 2023. Sd/- Sd/- [डॉÈटर मनीष बोरड /Dr. Manish Borad] [संजय गग[ /Sanjay Garg] लेखा सदèय /Accountant Member ÛयाǓयक सदèय /Judicial Member Dated: 22.02.2023. RS I.T.A No.2421/Kol/2019 Assessment year: 2015-16 Solapur Tollways Pvt. Ltd 4 Copy of the order forwarded to: 1. Solapur Tollways Pvt. Ltd 2. ITO, Ward-11(3), Kolkata 3. CIT(A)- 4. CIT- , 5. CIT(DR), //True copy// By order Assistant Registrar, Kolkata Benches