Assistant Commissioner of Income Tax, Circle-1, Bellary V. Tungabhadra Steel Products Ltd, Hospet

ITA 259/BANG/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 0972 (ITAT-BANGALORE)
• Duration Of Justice: 3 year(s) 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 07-07-2021
• Assessment Year: 2008-2009
• Appeal Filed On: 31-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI GEORGE GEORGE K., JUDICIAL MEMBER IT A NO. 259/BANG/2018 ASSESSMENT YEAR: 2008 - 09 THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1, BELLARY. VS. TUNGABHADRA STEEL PRODUCTS LTD., TUNGABHADRA DAM, HOSPET 583 225. KARNATAKA. PAN: AAACT 8126H APPELLANT RESPONDENT APPELLANT BY : S HRI MUZAFFAR HUSSAIN, CIT(DR) ( ITAT), BENGALURU. RESPONDENT BY : NONE DATE OF HEARING : 07.07 .202 1 DATE OF PRONOUNCEMENT : 12 .0 7 .202 1 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST T HE ORDER OF THE CIT(APPEALS), GULBARGA DATED 29.11.2017 FOR THE ASS ESSMENT YEAR 2008-09. 2. NONE APPEARED FOR THE ASSESSEE-RESPONDENT AT TH E TIME OF HEARING. HOWEVER, WE PROCEED TO DISPOSE OF THE APPEAL AFTER PERUSING THE MATERIAL ON RECORD AND HEARING THE LD. DR. 3. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS:- 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME -TAX (APPEALS) IS OPPOSED TO LAW AND FACTS OF THE CASE. ITA NO.259/BANG/2018 PAGE 2 OF 4 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A), HAS ERRED IN DIRECTING TO ALLOW THE CLAIM OF THE AS SESSEE COMPANY ON ACCOUNT OF INTEREST PROVISIONS ON LOAN OBTAINED FROM GOVT. OF INDIA IGNORING THE FACT THAT THE ASSESSEE COMPANY I TSELF HAS WORKED OUT SUCH LIABILITY ON PROVISIONAL BASIS. 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ID. CIT(A), HAS ERRED IN HOLDING THAT DISALLOWANCE MADE BY THE A.O. ON ACCOUNT OF INTEREST LIABILITY TO GOVT. OF INDIA IS NOT ACCORDANCE WITH THE LAW IGNORING THE FACT THAT THE ASSESSEE CO MPANY HAS BEEN DECLARED AS SICK COMPANY SINCE 04.08.2005 AND HAS F ILED APPLICATION UNDER BIFR AND THUS, THERE IS NO INTENT ION OF THE ASSESSEE COMPANY TO PAY INTEREST TO GOVT. OF INDIA DEBITED TO THE PROFIT AND LOSS ACCOUNT. 4. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ID. CIT(A), HAS ERRED IN DIRECTING TO ALLOW THE CLAIM OF THE AS SESSEE COMPANY ON ACCOUNT OF INTEREST DUE ON LOAN OBTAINED FROM GO VT. OF INDIA IGNORING THE FACT THAT THE ASSESSEE COMPANY HAS NOT PAID ANY INTEREST TO THE GOVT. OF INDIA SINCE LONG TIME. 5. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ID. CIT(A), HAS ERRED IN HOLDING THAT DISALLOWANCE MADE BY THE A.O. ON ACCOUNT OF INTEREST LIABILITY TO GOVT. OF INDIA IS NOT COVERED UNDER THE PROVISIONS OF SECTION 43B OF THE ACT IGNORING T HE FACT THAT THE ASSESSING OFFICER HAS NOT INVOKED THE PROVISIONS SE CTION 43B OF THE ACT WHILE DISALLOWING THE CLAIM OF ASSESSEE ON ACCOUNT OF INTEREST PROVISIONS ON LOAN OBTAINED FROM GOVT. OF INDIA. 4. WE HAVE HEARD BOTH THE PARTIES AND CONSIDERED TH E MATERIAL ON RECORD. SIMILAR ISSUE CAME UP FOR CONSIDERATION IN ASSESSEES OWN CASE FOR THE AY 2006-07 IN ITA NO.984/BANG/2017 BEFORE THE T RIBUNAL AND VIDE ORDER DATED 27.10.2017 THE TRIBUNAL OBSERVED AS FOL LOWS :- WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTAT IVE AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE ASS ESSEE COMPANY HAS NOT PAID INTEREST TOWARDS THE GOVT. OF INDIA LO AN OF RS.12,71,90,551 BUT HAS DEBITED THE SAME ON PROVISI ONAL BASIS. THE ASSESSING OFFICER DISALLOWED THE INTEREST ON TH E GROUND THAT THE ASSESSEE HAD NO INTENTION TO PAY INTEREST LIABI LITY TO GOVT. OF ITA NO.259/BANG/2018 PAGE 3 OF 4 INDIA AND FURTHER WHEN THE INTEREST WAS NOT ACTUALL Y PAID THEN AS PER THE PROVISIONS OF SECTION 43B, THE SAME IS NOT ALLOWABLE. ON APPEAL, THE CIT (APPEALS) HAS DELETED THE ADDITION MADE BY THE ASSESSING OFFICER IN PARA 4.1.1 AS UNDER : THUS IT IS CLEAR THAT THE ASSESSEE HAS NOT WRITTEN OFF THE LIABILITY BUT IT IS SHOWING IN THE BOOKS OF ACCOUNTS AS LIABILITY PAYABLE TO GOVT. OF INDIA. FURTHER THE INTEREST DOES NOT FALL UNDER THE PROVISIONS OF SECTION 43B AND THEREFORE WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE IMPUGNED ORDER OF THE CIT (APPEALS) QUA THIS IS SUE. ITA NO.259/BANG/2018 PAGE 4 OF 4 5. WE THEREFORE DO NOT FIND INFIRMITY IN THE ORDER OF CIT(APPEALS) IN DELETING THE ADDITION MADE ON ACCOUNT OF DISALLOWAN CE OF INTEREST ON LOANS DUE TO GOVT. OF INDIA. WE UPHOLD THE ORDER OF THE CIT(APPEALS) TO THIS EXTENT. 6. IN THE RESULT, THE APPEAL BY THE REVENUE IS DISM ISSED. PRONOUNCED IN THE OPEN COURT ON THIS 12 TH DAY OF JULY, 2021. SD/- SD/- ( GEORGE GEORGE K. ) ( CHANDRA POOJARI ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 12 TH JULY, 2021. / DESAI S MURTHY / COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.