Mapex Infrastructure Pvt. Ltd., Kolkata V. DCIT, Circle - 8, Kolkata, Kolkata

ITA 266/KOL/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0729 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 23-02-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DAVID Z CHAWNGTHU CIT SR D
• Assessee Lawyers: G BANERJEE
• Keywords: Business income; Opportunity of being heard; Revised return

Judgement Text

1 ITA NO.266/KOL/2016 MAPEX INFRASTRUCTURE PVT. LTD., AY 2008-09 , C , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA () BEFORE .., /AND . , ) [BEFORE SHRI A. T. VARKEY, JM & SHRI M.BALAGANESH, AM] I.T.A. NO. 266/KOL/2016 ASSESSMENT YEAR: 2008-09 MAPEX INFRASTRUCTURE PVT. LTD. (PAN: AACCM6729K) VS. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-8, KOLKATA APPELLANT RESPONDENT DATE OF HEARING 31.10.2017 DATE OF PRONOUNCEMENT 13.12.2017 FOR THE APPELLANT SHRI G. BANERJEE, FCA FOR THE RESPONDENT SHRI DAVID Z. CHAWNGTHU, ADDL. C IT,SR. DR ORDER PER SHRI A.T.VARKEY, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)-18, KOLKATA DATED 16.12.2015 FOR AY 2008-09. 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER INTEREST WRITTEN BACK AS WELL AS INSURANCE CLAIM RECEIPT IS TO BE TREATED AS PART OF BUSINESS INCOME AND THE DEDUCTION U/S. 80IA OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) SHOULD HAVE BEEN ALLOWED THEREON IN THE FACTS AND CIRCUMSTANCES OF THE CASE. FOR THAT, THE ASSESSEE HAS RAISED THE FOLLOWING THREE GROUNDS: 1. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE INTEREST WRITTEN BACK OF RS.3,47,72,165/- SHOULD BE TREATED AS PART OF BUSIN ESS INCOME AND DEDUCTION U/S. 80IA SHOULD HAVE BEEN ALLOWED THEREON. 2. FOR THAT, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, INSURANCE CLAIM RECEIPT OF RS.9,52,547/- RECEIVED BY THE ASSESSEE SHOULD BE TR EATED AS BUSINESS INCOME AND DEDUCTION U/S. 80IA SHOULD HAVE BEEN ALLOWED THEREON. 2 ITA NO.266/KOL/2016 MAPEX INFRASTRUCTURE PVT. LTD., AY 2008-09 3. FOR THAT IN THE CASE THE IMPUGNED AMOUNT OF WAIV ER OF INTEREST OF RS.347,72,165/- AND/OR INSURANCE CLAIM RECEIPT OF RS.952,547 BE NOT TREATE D AS BUSINESS INCOME, THEN THESE AMOUNTS CANNOT BE AT ALL BE SUBJECTED TO LEVY OF INCOME TAX AS THESE ARE NOT OF INCOME NATURE. 3. BRIEF FACTS OF THE CASE AS NOTED BY THE AO ARE THAT THE ASSESSEE COMPANY IS ENGAGED N THE BUSINESS OF HIGHWAY DEVELOPER OF NH 2 (PANAGARH -PALSIT SECTION). THE ASSESSEE FILED ITS RETURN OF INCOME ON 24.09.2008 DECLARING A TOTA L INCOME OF RS.11,13,95,302/-. THEREAFTER, IT FILED REVISED RETURN DECLARING A TOT AL INCOME OF RS.7,66,23,137/-. DURING THE YEAR, THE ASSESSEE COMPANY HAD WRITTEN BACK INTERES T LIABILITY OF RS.3,47,72,165/- AND THE SAME WAS INITIALLY SHOWN AS INCOME FROM OTHER SOURCES IN THE ORIGINAL RETURN AND OFFERED FOR TAX. HOWEVER, IN THE REVISED RETURN THE ASSESS EE HAS TREATED IT AS INCOME FROM BUSINESS ACTIVITY AND CLAIMED DEDUCTION U/S. 80IA OF THE AC T. ASSESSEE ALSO SUBMITTED THAT THIS INTEREST WAS PAYABLE TO GAMUDA WCT(OFFSHO RE) PVT. LTD. BASED AT MAURITIUS. ON THE REQUEST OF THE ASSESSEE VIDE LETTER DATED 30.03 .2006 FOR WAIVER OF INTEREST PAYMENT ON THE LOAN FROM M/S. GAMUDA WCT(OFFSHORE) PVT. LTD., THE SAID LENDER COMPANY WAIVED OFF THE INTEREST AS PER THE CLAUSE AS PROVIDED IN LOAN AGRE EMENT BETWEEN THEM. ACCORDING TO ASSESSEE, WAIVER OF INTEREST HAS BEEN DONE AS PER T HE CONTRACT AND WITH PRIOR APPROVAL OF RBI. THE SAID PLEA OF ASSESSEE WAS NOT ACCEPTABLE T O THE AO AND AS PER HIM, DEDUCTION U/S. 80IA OF THE ACT IS AVAILABLE ONLY AND EXCLUSIVELY F OR DEVELOPMENT, OPERATING AND MAINTENANCE OF HIGHWAYS WHICH IS AN INFRASTRUCTURAL FACILITY. THEREFORE, THE AO DISALLOWED THE DEDUCTION U/S. 80IA OF THE ACT BY HOLDING THAT THIS INCOME IS NOT DERIVED FROM INFRASTRUCTURE PROJECT DEVELOPMENT ACTIVITY. ON APP EAL, THE LD. CIT(A) CONFIRMED THE ACTION OF THE AO AND HELD THAT THE INTEREST INCOME OF THE ASSESSEE WAS NOT DERIVED FROM BUSINESS OF INFRASTRUCTURE DEVELOPMENT AND HENCE, THE SAID INCO ME IS NOT LIABLE FOR DEDUCTION U/S. 80IA OF THE ACT. IN RESPECT OF INSURANCE CLAIM OF RS.9,5 2,547/-, BEFORE THE LD. CIT(A) THE ASSESSEE SUBMITTED THAT THE INSURANCE CLAIM OF RS.9 ,52,547/- IS REIMBURSEMENT OF COST OF DAMAGE AND REPLACEMENT OF CRASH BARRIERS ON THE SID E OF HIGHWAYS AND CLAIMED DEDUCTION U/S. 80IA OF THE ACT. THE LD. CIT(A) CONFIRMED THE ACTION OF AO WITH REGARD TO DENIAL OF DEDUCTION U/S. 80IA OF THE ACT IN RESPECT OF INSURA NCE CLAIM IN VIEW OF THE DECISION OF 3 ITA NO.266/KOL/2016 MAPEX INFRASTRUCTURE PVT. LTD., AY 2008-09 HONBLE DELHI HIGH COURT IN THE CASE OF KOHINOOR FO ODS LTD. VS. CIT 353 ITR 264, AGGRIEVED, ASSESSEE IS BEFORE US. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT THE AY 2006-07 WAS THE FIRST YE AR WHEREIN THE ASSESSEE CLAIMED DEDUCTION U/S. 80IA OF THE ACT FOR THE PROJECTS OF NH 2 (PANAGARH-PALSIT SECTION). IN THE ORIGINAL RETURN OF INCOME, ASSESSEE COMPANY HAD WRI TTEN BACK INTEREST LIABILITY OF RS.3,47,72,165/- AND THE SAME WAS INITIALLY SHOWN AS INCOME FROM OTHER SOURCES AND OFFERED FOR TAXATION. HOWEVER, IN THE REVISED RETU RN LATER FILED, THE ASSESSEE HAS TREATED THE INTEREST INCOME AS INCOME FROM BUSINESS ACTIVITY AND CLAIMED DEDUCTION U/S. 80IA OF THE ACT. WE NOTE THAT THE ASSESSEE HAD TAKEN LOAN FROM M/S. GAMUDA WCT(OFFSHORE) PVT. LTD. AND AS PER THE LOAN AGREEMENT BETWEEN THE PARTIES T HERE WAS A CLAUSE FOR WAIVER OF INTEREST AND SINCE THE LENDER COMPANY M/S. GAMUDA WCT(OFFSHO RE) PVT. LTD HAD WAIVED THE INTEREST OFF, THE ASSESSEE HAD WRITTEN BACK THE AMO UNT OF INTEREST OF RS. 3,47,72,165/- AS INTEREST INCOME BUT MISTAKENLY IN THE ORIGINAL ASSE SSMENT IT WAS SHOWN AS INCOME FROM OTHER SOURCES WHEREAS ACCORDING TO THE ASSESSEE, THE LENDER COMP ANY HAS SANCTIONED THE LOAN FOR THE PROJECT FOR WHICH SEC. 80IA DEDUCTION HAS BEEN ALLOWED, AND THEREFORE THE INTEREST IS INEXTRICABLY LINKED WITH THE PROJECT FO R WHICH 80IA DEDUCTION HAS BEEN ALLOWED AND, THEREFORE, THE SAID AMOUNT OF INTEREST SHOULD BE ALLOWED FOR DEDUCTION AS PER SEC. 80IA OF THE ACT. WE NOTE THAT THE AUTHORITIES BELOW DID NOT HAD ANY OCCASION TO VERIFY WHETHER THE ASSESSEES THIS CONTENTION IS CORRECT OR NOT. THEREFORE, IN THE INTEREST OF JUSTICE AND FAIR PLAY, WE ARE INCLINED TO SET ASIDE THE ORDER OF THE LD. CIT(A) AND REMAND THE MATTER BACK TO THE FILE OF THE AO WITH A DIRECTION TO VERIFY AS TO WHETHER THE ASSESSEES CONTENTION THAT THE LOAN AMOUNT FROM M/S. GAMUDA WCT(OFFSHORE) PVT. LTD . WAS SANCTIONED FOR THE PURPOSE OF THE PROJECT FOR WHICH 80IA DEDUCTION WAS ALLOWED. IF THE LOAN WAS SANCTIONED FOR THE PROJECT FOR WHICH 80IA DEDUCTION HAS BEEN ALLOWED, THEN THE INTEREST AMOUNT WHICH HAS BEEN WAIVED OFF IS TO BE ADDED TO THE INCOME OF THE ASSE SSEE AND HIGHER DEDUCTION U/S. 80IA OF THE ACT IS TO BE ALLOWED. AND IF THE LOAN WAS NOT F OR THE PROJECT FOR WHICH 80IA DEDUCTION HAS BEEN ALLOWED, THEN THE INTEREST AMOUNT WHICH H AS BEEN WAIVED OFF NEED NOT BE ADDED FOR DEDUCTION UNDER 80IA. WITH THE AFORESAID DIRECT ION, THE ISSUE IN RESPECT OF INTEREST 4 ITA NO.266/KOL/2016 MAPEX INFRASTRUCTURE PVT. LTD., AY 2008-09 ELEMENT IS DISPOSED OFF. COMING TO THE INSURANCE C LAIM OF RS. 9,52,547/-, WE NOTE THAT THE AUTHORITIES BELOW HAS NOT APPLIED THEIR MIND IN RES PECT OF THE SAID CLAIM OF THE ASSESSEE, THEREFORE, WE ARE INCLINED TO SET ASIDE THE ORDER O F THE LD. CIT(A) ON THIS ISSUE AND REMAND THE MATTER TO THE FILE OF THE AO FOR FRESH ADJUDICA TION AFTER AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD AND BY A SPEAKING ORDER. 5. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER IS PRONOUNCED IN THE OPEN COURT ON 13TH DECEM BER, 2017 SD/- SD/- (M. BALAGANESH) (ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 13TH DECEMBER, 2017 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1. APPELLANT MAPEX INFRASTRUCUTRE PVT. LTD., 53A, MIRZA GHALIB STREET, ARIHANT, KOL-16. 2 RESPONDENT D.C.I.T., CIRCLE-8, KOLKATA. 3. THE CIT(A) , KOLKATA. 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, SR. PVT. SECRETARY