Appeal details
Counselvise Citation
[2023] 140 COUNSELVISE.COM (IT) 128709 (ITAT-KOLKATA)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
10 month(s) 19 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
04-04-2023
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
A
Next Hearing Date
01-02-2023
Assessment Year
2017-2018
Appeal Filed On
16-05-2022
Judgement Text
आयकर अपीलीय अधिकरण कोलकाता 'ए' पीठ, कोलकाता म ें IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘A” BENCH, KOLKATA श्री राजपाल यादव, उपाध्यक्ष (कोलकाता क्ष े त्र) एवं डॉ. मनीष बोरड, ल े खा सदस्य क े समक्ष Before SRI RAJPAL YADAV, VICE PRESIDENT & DR. MANISH BORAD, ACCOUNTANT MEMBER I.T.A. No.: 266/KOL/2022 Assessment Year: 2017-18 West Bengal Housing Infrastructure Development Corporation Limited................................................Appellant [PAN: AAACW 4115 F] Vs. Pr. CIT, Kolkata-5, Kolkata...................................Respondent Appearances by: Sh. B.R. Datta, FCA, appeared on behalf of the Assessee. Sh. Subhrajyoti Bhattacharjee, CIT(D/R), appeared on behalf of the Revenue. Date of concluding the hearing : February 2 nd , 2023 Date of pronouncing the order : April 5 th , 2023 ORDER Per Manish Borad, Accountant Member: This appeal filed by the assessee pertaining to the Assessment Year (in short “AY”) 2017-18 is directed against the order passed u/s 263 of the Income Tax Act, 1961 (in short the I.T.A. No.: 266/KOL/2022 Assessment Year: 2017-18 West Bengal Housing Infrastructure Development Corporation Limited. Page 2 of 15 “Act”) by ld. Pr. Commissioner of Income Tax, Kolkata-5, Kolkata [in short “ld. Pr. CIT”] dated 23.03.2022. 2. The assessee is in appeal before the Tribunal raising the following grounds: “1. That the order passed by the Principal Commissioner of Income Tax- Range 5, Kolkata (here-in-after referred to as PC1T) under section 263 is against the facts of the case and is untenable under the law. 2. That the PCIT cannot assume jurisdiction u/s. 263 for making roving enquiry on the issues which are already enquired by the Assessing Officer, however, not expressly discussed in the assessment order passed. 3. That the PCIT was wrong and incorrect in holding that the Assessing Officer has not conducted any enquiry despite the order clearly stating that the Assessing Officer called for details and the appellant provided all relevant documents and made submissions. 4. That on the facts and in the circumstances of the case the PCIT has set aside the order of the Assessing Officer and directed a fresh assessment without deciding as to how the order dated 29 November 2019 was erroneous and prejudicial to the interest of the revenue. The appellant submits that such an order is not tenable in law 5. That the PCIT has erred on facts in not appreciating the accounting entries passed by the appellant clearly establishing that the Income from Interests on FDs have been duly included in the Book Profit before Tax and as such offered to tax by the appellant. 6. That on the facts and in the circumstances of the case the PCIT has erred on facts in not understanding the accounts of the appellant, as audited by a firm of Chartered Accountants and duly reviewed by CAG before it being published in public domain, which have been adequately explained in course of hearing before the Assessing Officer. 7. That the PCIT has erred on facts of the case in concluding that the order dated 29.11.2019 under section 143(3) is erroneous and prejudicial to the interest of revenue ignoring the fact clearly disclosed and explained that the Credits for Interests on FDs have been I.T.A. No.: 266/KOL/2022 Assessment Year: 2017-18 West Bengal Housing Infrastructure Development Corporation Limited. Page 3 of 15 accounted for in the accounts according to the generally accepted principles of accounting consistently followed and the same have been duly disclosed in the book Profit before tax as offered to tax. This would be evident from the Annexure I attached herewith. 8. The Appellant craves leave to add, alter, amend, withdraw, or substitute any or all the ground or grounds on or before the date hearing of this appeal.” 3. Facts in brief are that the assessee is a limited company engaged in developing land and sale of developed land and is 100% owned by Govt. of West Bengal and State Govt. bodies. Income of Rs. 1,19,57,66,850/- declared in the e-return for AY 2017-18 filed on 23.10.2017. Subsequently, case selected for scrutiny through CASS followed by serving of notices u/s 143(2) & 142(1) of the Act and assessment u/s 143(3) of the Act framed on 29.11.2019 wherein after making certain additions and also treating the FDR interest income as income from other sources which were claimed by the assessee in business income, income assessed at 2,35,52,10,355/-. Assessment records were called for by ld. Pr. CIT and after examination of the records issued the following show cause notice to the assessee: “Subject: Notice for Hearing in respect of Revision-proceedings u/s 263 of the Income Tax Act, 1961-Assessment Year 2017-18. In this regard, a hearing in the matter is fixed on 11/03/2022 at 12:30 PM. You are requested to attend in person or through an authorized representative to submit your representation, if any along with supporting documents/information in support of the issues involved (as mentioned below). If you wish that the Revision proceeding be concluded on the basis of your written submissions/representations filed in this office, on or before the said due date then your personal attendance is not required. You also have the option to file your submission from the e-filing portal using the link: incometaxindiaefiling.gov.in I.T.A. No.: 266/KOL/2022 Assessment Year: 2017-18 West Bengal Housing Infrastructure Development Corporation Limited. Page 4 of 15 Please refer to the above. 2. In the instant case, Income Tax Return for the A.Y. 2017-18 wase- filed on 23.10.2017 showing total income of Rs.119,57,66,850/-. During the year under consideration, the assessee company was engaged in the business of development of land, Housing and infrastructural facilities in New Town Project, Kolkata. The case was selected for scrutiny on the basis of CASS and the order u/s 143(3) was passed on 29.11.2019 with an assessed total income of Rs.235,52,10,355/-. 3. On perusal of assessment order dated 29.11.2019; it is observed from the computation of income that the business income was computed taking “profit under the head business income as per computation” at Rs. 23,22,01,114/-. On perusal of computation of income submitted by the assesses it was seen that profit was arrived at Rs. 23,22,01,114/- after considering “Increase and Decrease in the value of Work in Progress” at Rs. 46,98,00,832/-. On perusal of the Note 4 of Audited accounts on Project cost (Work-in-progress), it is seen that the assesses has shown opening Work-in-progress (Project cost) amounting to Rs. 2504,38,58,129/- and shown expenses of Rs. 155,62,69,449/-was incurred during the year and has shown the amount of Rs. 17,37,12,077/- as transferred to revenue/fixed assets. The assessee has deducted the interest on FDR and interest from Allottees amounting to Rs.91,27.56,541/- from the project expenses incurred during the year and the amount of Rs.17,37,12,077/- was transferred to revenue/fixed assets and reflected the balance figure of Project Cost (Work-in-progress) at Rs. 2551,36,58,960/- as on 31.03.2017 and transferred the same to the Balance Sheet as Project cost (Work-in-progress) of Rs.2551,36,58,960/-. 3.1 The computation of income submitted by the assessee is not acceptable as the value shown as Increase and Decrease in the value of Work in Progress of Rs.46,98,00,831/-is not correct and said figure was arrived after deducting the opening balance of Work in Progress from the closing balance of Work in Progress as shown in the note 4 of Audited Accounts as under: - Decrease/(Increase) in the value of Work-in-Progress: Closing Balance as on 31.03.2017 Rs. 2551,36,58,960/- Opening Balance as on 01.04.2016 Rs. 2504,38,58,1297- I.T.A. No.: 266/KOL/2022 Assessment Year: 2017-18 West Bengal Housing Infrastructure Development Corporation Limited. Page 5 of 15 In the above calculation the closing value of Work-in-Progress of Rs. 2551,36,58,960/-was arrived after deducting the interest income of Rs. 91,27,56,541/-. Hence, the effect of credit of interest Rs. 91,27,56,541/- in the computation of Income submitted by the assessee was nullified with the deduction of interest of Rs. 91,27,56,541/- from the project cost during the year, to arrive at the closing balance of Rs. 2551,36.58,960/-. The closing balance should have been calculated as under: Opening Work-in-Progress as on 01.04.2016 Rs. 2504,38,58,129/- Addition made during the Year Rs. 155,62,69,449/- Rs. 2660,01,27,578/- Less: Transferred to cost of sale Rs. 17,37,12,077/- Closing Work-in-Progress as on 31.03.2017 Rs. 2642,64,15,501/- As interest income on ED is offered to tax’ the actual Increase/(Decrease) in the value of Work-in-Progress for the year under consideration would be as under: Closing Balance as on 31.03.2017 Rs.2642,64,15,501/- Opening Balance as on 31.03.2016 Rs.2504,38,58,129/- Rs. 138.25,57,372/- 3.2 Hence, the actual Increase/(Decrease) in the value of Work-in- Progress should have been Rs. 138,25,57,372/- instead of Rs. 46,98,00,831/- as shown above and the profit should have been increased by the amount of RR.91.27.66.541/-f138.25.57.372/- 46.98.00.831/-} in the computation of income and the profit would be Rs. 114,49,57,655/- (91,27,56,541/- + 23,22,01,114/-) instead of Rs. 23,22,01,114/-) taken in the computation of the income. 3.3 The assessee submitted the computation of income for the F.Y. 2016-17 relating to the A.Y. 2017-18 showing the Decrease/(Increase) in the value of Work-in-Progress amounting to tune of Rs. 46,98,00,831/- and offering the interest from fixed deposit of Rs. 91.27,56.541/- showing Closing-Work-in-Progress to the tune of Rs. 2551,36,58,960/-. However, the actual Increase/(Decrease) in the value of Work-in-Progress should have been Rs. 138,25,57,372/- instead of Rs. 46,98,00,831/-. Here the assessee reduced the income to the tune of Rs. 91,27,56,541/- taking Decrease/(Increase) in the I.T.A. No.: 266/KOL/2022 Assessment Year: 2017-18 West Bengal Housing Infrastructure Development Corporation Limited. Page 6 of 15 value of Work-in-Progress of Rs. 46,98,00,831/-. Hence, the income to the tune of Rs. 91,27,56,541/-was not considered in the computation as above making the assessment order erroneous as well as prejudicial to the interest of the revenue. 3.4 Considering the above the assessment order is erroneous so far as it is prejudicial to the interest of Revenue. Accordingly, the assessment order is required to be revised. 4. In view of the above, you are requested to explain as to why the assessment order in your case M/s West Bengal Housing Infrastructure Development Corporation Ltd. (PAN AAACW4115F) for A.Y-2017-18 should not be revised u/s 263 of the Income Tax Act, 1961 as the assessment order passed in the aforesaid case is erroneous so far as it is prejudicial to the interest of revenue. Accordingly, your case is fixed for hearing on 11.03.2022 at 12:30 P.M. and you may appear in the chamber of Pr. Commissioner of Income Tax-5, Kolkata at Aayakar Bhawan Purba, 110, SHANTIPALLY.E.M. BY PASS, KOLKATA-700107,6th Floor, Room No 601, Kolkata -700107 either in person or through your authorized representative on the scheduled date, time, and place along with your written explanation with supporting evidences. Due to outbreak of Pandemic COVID-19, you are requested to kindly note that appearing in person or through authorized representative's optional and you may submit your explanation/ written submission through official e- mail: Kolkata.pcit5@incometax.gov.in, instead of appearing in person or through authorized representative and it will be treated as compliance to this show cause notice. If you fail to submit your explanation to this show cause letter by 11.03:2022 the case will be decided ex-parte without making any further correspondence with you with you.” 4. In reply, the assessee filed detailed written submission stating that the issues raised in the show cause notice have been examined at length by ld. AO and it is neither a case of no enquiry nor the assessment order can be said to be erroneous as well as prejudicial to the interests of the Revenue. However, ld. Pr. CIT was not satisfied on some issues and the crux of the finding in para ‘4.3’ of the impugned order is reproduced below: I.T.A. No.: 266/KOL/2022 Assessment Year: 2017-18 West Bengal Housing Infrastructure Development Corporation Limited. Page 7 of 15 “4.3 The submission of the assessee is perused and kept on record. In view of the above discussion and findings and in facts and circumstances of the case it is evident that in the present case the assessment order was passed without making necessary enquiries or verification as to how the interest on FDR amounting to Rs. 91,27,56,541/- has been taken into account while computing total income for the AY under consideration. The claim of the assessee with respect to the treatment of interest income of Rs. 91,27,56,541/- should have been verified by the Assessing Officer at the time of assessment and accordingly the Order is erroneous in so far as it is prejudicial to the interest of the Revenue in terms of Explanation 2 to section 263(1) of the Income Tax Act, 1961. The AO is directed to verify the aforesaid facts keeping in view the discussion as per para 2 supra." 5. Aggrieved, the assessee is now in appeal before this Tribunal. Ld. Counsel for the assessee submitted that the assessee has duly disclosed the alleged FDR interest income in the income tax return and offered it to tax. Ld. AO has also examined this issue and has not accepted the assessee’s claim of the said interest income as business income and while computing the income ld. AO assessed it as “Income from other sources”. Reference also made to the audited financial statement and computation of income to show that the said income has already been offered to tax. 6. On the other hand, ld. D/R vehemently argued supporting the order of ld. Pr. CIT. 7. We have heard rival contentions and perused the records placed before us. Ld. Pr. CIT has invoked the jurisdiction u/s 263 of the Act and held the order of ld. AO as erroneous and prejudicial to the interests of the Revenue for not making necessary enquiry as to how interest on FDR amounting to Rs. 91,27,56,541/- has been taken into account while computing total income for the year I.T.A. No.: 266/KOL/2022 Assessment Year: 2017-18 West Bengal Housing Infrastructure Development Corporation Limited. Page 8 of 15 under consideration. This finding of ld. Pr. CIT has been challenged before us. 8. Since the issue before us pertains to the invocation of jurisdiction u/s 263 of the Act we find that the provision of Section 263 of the Act has direct bearing on the issue raised before us, therefore, it is pertinent to take note of this section which reads as under: "263(1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. Explanation- For the removal of doubts, it is hereby declared that, for the purposes of this sub-section,- (a) an order passed on or before or after the 1 st day of June, 1988 by the Assessing Officer shall include- (i) an order of assessment made by the Assistant Commissioner or Deputy Commissioner or the Income-tax Officer on the basis of the directions issued by the Joint Commissioner under section 144A; (ii) an order made by the Joint Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer conferred on, or assigned to, him under the orders or directions issued by the Board or by the Chief Commissioner or Director General or Commissioner authorized by the Board in this behalf under section 120; (b) record shall include and shall be deemed always to have included all records relating to any proceeding under this Act available at the time of examination by the Commissioner; I.T.A. No.: 266/KOL/2022 Assessment Year: 2017-18 West Bengal Housing Infrastructure Development Corporation Limited. Page 9 of 15 (c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of any appeal filed on or before or after the 1 st day of June, 1988, the powers of the Commissioner under this sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal. (2) No order shall be made under sub-section (1) after the expiry of two years from the end of the financial year in which the order sought to be revised was passed. (3) Notwithstanding anything contained in sub-section (2), an order in revision under this section may be passed at any time in the case of an order which has been passed in consequence of, or to give effect to, any finding or direction contained in an order of the Appellate Tribunal, National Tax Tribunal, the High Court or the Supreme Court. Explanation- In computing the period of limitation for the purposes of sub-section (2), the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded." 8.1. On a bare perusal of the sub section-1 would reveal that powers of revision granted by section 263 to the learned Commissioner have four compartments. In the first place, the learned Commissioner may call for and examine the records of any proceedings under this Act. For calling of the record and examination, the learned Commissioner was not required to show any reason. It is a part of his administrative control to call for the records and examine them. The second feature would come when he will judge an order passed by an Assessing Officer on culmination of any proceedings or during the pendency of those proceedings. On an analysis of the record and of the order passed by the Assessing Officer, he formed an opinion that such an order is erroneous in so far as it is prejudicial to the interests of the I.T.A. No.: 266/KOL/2022 Assessment Year: 2017-18 West Bengal Housing Infrastructure Development Corporation Limited. Page 10 of 15 Revenue. By this stage the learned Commissioner was not required the assistance of the assessee. Thereafter the third stage would come. The learned Commissioner would issue a show cause notice pointing out the reasons for the formation of his belief that action u/s 263 is required on a particular order of the Assessing Officer. At this stage the opportunity to the assessee would be given. The learned Commissioner has to conduct an inquiry as he may deem fit. After hearing the assessee, he will pass the order. This is the 4 th compartment of this section. The learned Commissioner may annul the order of the Assessing Officer. He may enhance the assessed income by modifying the order. He may set aside the order and direct the Assessing Officer to pass a fresh order. At this stage, before considering the multi-fold contentions of the ld. Representatives, we deem it pertinent to take note of the fundamental tests propounded in various judgments relevant for judging the action of the CIT taken u/s 263. 8.2. Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT (2000) 243 ITR 83 (SC) has laid down following ratio with regard to provisions of section 263 of the Act: “There can be no doubt that the provision cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer; it is only when an order is erroneous that the section will be attracted. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. In the same category fall orders passed without applying the principles of natural justice or without application of mind. The phrase 'prejudicial to the interests of the revenue’ has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the revenue, for example, when an ITO adopted one of the courses permissible in law and it has I.T.A. No.: 266/KOL/2022 Assessment Year: 2017-18 West Bengal Housing Infrastructure Development Corporation Limited. Page 11 of 15 resulted in loss of revenue; or where two views are possible and the ITO has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue unless the view taken by the ITO is unsustainable in law. It has been held by this Court that where a sum not earned by a person is assessed as income in his hands on his so offering, the order passed by the Assessing Officer accepting the same as such will be erroneous and prejudicial to the interests of the revenue - Rampyari Devi Saraogi v. CIT [1968] 67 ITR 84 (SC) and in Smt. Tara Devi Aggarwal v. CIT [1973] 88 ITR 323 (SC). [Emphasis Supplied]” 9. Now, examining the facts of the case in light of the above discussion and settled judicial pronouncements we, on perusal of the financial statements filed by the assessee, observe that the interest on FDR amounting to Rs. 91,27,56,541/- is shown as part of the project cost ‘work-in-progress’ and the said amount has been deducted from the project cost. Further, on going through profit and loss account we find that the summarised statement of profit and loss which is part of the financial statement of the assessee company is mentioned below: Particulars Note No. 31 st March, 2017 31 st March, 2016 Rs. Rs. Rs. Rs. 1 Gross Income: Revenue from Operations 9A, 9B 467,68,37,960 214,05,44,025 Other Income 9C 65,09,76,292 33,80,43,746 Total Revenue (A) 532,78,14,252 247,85,87,771 Expenses: Cost of Land and EWS Flats sold Cost of land sold 5B 299,58,67,335 95,94,66,279 Cost of Land transferred 5B - 22,37,02,067 Cost of EWS-I and EWS-II 5 28,70,537 55,78,622 299,87,37,872 118,87,46,968 Employee Benefit Expenses 10A 8,57,22,356 8,07,85)219 Depreciation & Amortization Expenses 3 23,47,95,773 23,49,45,557 Other Expenses 10B 112,22,63,385 61,60,55,569 Prior Period Adjustment 12 64,18,28,404 12,99,87,062 Total Expenses (B) 508,33,47,790 225,05,20,375 I.T.A. No.: 266/KOL/2022 Assessment Year: 2017-18 West Bengal Housing Infrastructure Development Corporation Limited. Page 12 of 15 Profit before Exceptional & Extraordinary Items (A-B) Exceptional Items Transfer of Vocational Training Institute ’24,44,66,462 22,80,67,396 Profit / Loss before Extraordinary Items 24,44,66,462 22,80,67,396 Extraordinary Items - Profit / (Loss) before Tax 24,44,66,462 22,80,67,396 Less: Tax Expense Current Tax 12,78,47,987 13,63,06,398 Deferred Tax (28,23,984) (63,58,607) Profit/(Loss) after Taxation 11,94,42,460 9,81,19,605 Earnings per equity share Basic 109 223 Diluted 109 223 Significant Accounting Policies 14 The accompanying notes are an integral part of these financial statement. 10. In the above profit and loss account interest income on FDR is not appearing since it has been deducted from the project cost ‘work-in-progress’. As stated by ld. Counsel for the assessee the alleged sum has been shown as income in the computation of income filed in the income tax return and the same is placed at page 120 of the paperbook which is reproduced as under: WEST BENGAL HOUSING INFRASTRUCTURE DEVELOPMENT CORPORATION LIMITED PAN: AAACW4115F ASSESSMENT YEAR: 2017-18 COMPUTATION OF INCOME STATEMENT Sl.No. Particulars Rs. Rs. A. INCOME: Sale of Land Sale of Flats Other Income 4,673,289,435 3,548,525 650,976,292 Interest on FDR 912,756,541 6,240,570,793 B. Less: EXPENSES: Cost of Land sold Cost of Flat sold 2,995,867,335 2,870,537 2,998,737,872 Additions to Work-in-progress Less: Costs transferred to Fixed Assets/Revenue 1,556,269,449 173,712,077 1,382,557,372 Employee benefit expenses Depreciation Other expenses Prior period expenses (lncrease)/Decrease in Cost of Work-in-Progress 85,722,356 234.795,773 1,122,263,385 641,828,404 (469,800,831) I.T.A. No.: 266/KOL/2022 Assessment Year: 2017-18 West Bengal Housing Infrastructure Development Corporation Limited. Page 13 of 15 5,996,104,331 Profit before Tax (A-B) Less; Dividend Income Exempt from Tax 244,466,462 1,071,000 Adjusted Book Profit Add: Depreciation as per Books 243,395,462 234,795,773 Less : Depreciation as per Income Tax Provisions 478,191,235 245,990,121 Add: i) Amount disallowable U/S 43 B ii) Prior period Expenses (As per TAR) 319,601 974,176,133 232,201,114 974,495,734 Less: Amount already offered to Tax 1,206,696,848 10,930,004 C. INCOME FROM BUSINESS 1,195,766,844 D. Tax Payable on BOOK PROFIT U/S 115JB Add: Surcharge Education Cess 45,028,160 3,151,971 1,445,404 49,625,535 E. Tax payable on Total Income @29% on Rs.1195766850 Add : Surcharge Education Cess 346,772,390 41,612,687 11,651,552 400,036,629 F. Since E is greater than D TaxPayable shall be Adddnterest U/S 234C 400,036,629 2,291,115 402,327,744 Less: Advance Tax TDS TCS 463,000,000 106,074,914 10,796 569,085,710 Fax payable / (Refundable) (166,757,966) 11. From going through the above computation, we find that the assessee has separately shown interest on FDR under the head ‘income’ and it forms part of the total income from business which is offered to tax. 12. The above referred computation of income statement was placed before ld. AO and he, after examining the details filed by the assessee, came to a conclusion that the assessee should not have treated the FDR interest as business income and it is to be taxed as income from other sources. Relevant discussion has been made by ld. AO in page 2 of the assessment order and even in the computation of income this observation of ld. AO of treating the interest on FDR as income from other sources is apparent. The computation of income prepared by ld. AO is reproduced below: I.T.A. No.: 266/KOL/2022 Assessment Year: 2017-18 West Bengal Housing Infrastructure Development Corporation Limited. Page 14 of 15 “Subject to the above income of the assessee is computed as under. 1. Income from business: Net profit as per computation of income Rs. 23,22,01,114/- (after depreciation of Rs. 245990121/- and dividend income of Rs. 10,71,000/-) Less: Interest on FDR to be considered separately Rs. 91,27,56,541/- (-) Rs. 68,05,55,427/- Add: Amount disallowed u/s 43B Rs. 3,19,601/- Prior period expenses Rs. 97,41,76,133/- Rs. 97,44,95,734/- Rs. 29,39,40,307/- Less: excess charge of depreciation In A.Yr. 2015-16 claimed adjustment Rs. 1,09,30,004/- Rs. 28,30,10,303/- Add: Overstatement of cost of land sold: Rs. 113,25,70,050/- as discussed. Add: Disallowance u/s 14 A Rs. 4,93,2000/- Rs. 113,30,63,250/- Rs. 141,60,73,553/- B . Income from other sources: 1. Interest on FDR Rs. 91,27,56,541/- 2.Interest on treasury deposits Rs.2,63,80,261/- Rs.93,91,36,802/- Assessed Income- Rs. 235,52,10,355/-” 13. The above referred facts remained uncontroverted by ld. D/R and even in the impugned order ld. Pr. CIT failed to take note of all these facts which in itself are sufficient enough to show that the interest on FDR of Rs. 91,27,56,541/- already stands offered to tax by the assessee and ld. AO has carried out necessary enquiry on this issue and has taken a plausible view in accordance with I.T.A. No.: 266/KOL/2022 Assessment Year: 2017-18 West Bengal Housing Infrastructure Development Corporation Limited. Page 15 of 15 law. Therefore, the assessment order u/s 143(3) of the Act dated 29.11.2019 is neither erroneous nor prejudicial to the interests of the Revenue and deserves to be restored. Accordingly, the impugned proceedings u/s 263 of the Act are quashed. Therefore, all the grounds of appeal raised by the assessee are allowed. 14. In the result, the appeal filed by the assessee is allowed. Kolkata, the 5 th April, 2023 Sd/- Sd/- [Rajpal Yadav] [Manish Borad] Vice President Accountant Member Dated: 05.04.2023 Bidhan (P.S.) Copy of the order forwarded to: 1. West Bengal Housing Infrastructure Development Corporation Limited, HIDCO Bhaban, 35-1111, Major Arterial Road, 3 rd Rotary, New Town, West Bengal-700 156. 2. Pr. CIT, Kolkata-5, Kolkata. 3. CIT(A)- 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata
AI Insights
The case involves the West Bengal Housing Infrastructure Development Corporation Limited (the appellant) contesting an order under section 263 of the Income Tax Act, 1961, issued by the Principal Commissioner of Income Tax, Kolkata-5 (the respondent). The dispute centered on the treatment of interest income from Fixed Deposit Receipts (FDRs) and its classification as 'Income from other sources' rather than business income. The appellant argued that the interest income was properly disclosed and taxed, while the respondent contended that the original assessment did not adequately address this income, thus being erroneous and prejudicial to the Revenue. The Tribunal's decision favored the appellant, highlighting that the necessary inquiries had been made by the Assessing Officer and the treatment of the income was in accordance with the law.
