DCIT, CIR-6(2), KOLKATA, Kolkata V. M/s West Bengal Infrastructure Development Corporation Ltd., Kolkata

ITA 298/KOL/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6535 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 26-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S M DAS

Judgement Text

1 ITA NO.298/KOL/2016 WEST BENGAL INFRASTRUCTURE DEVELOPMENT CORPN. LTD., AY- 2011-12 , C , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA () .., . ' # $% % , '() [BEFORE SHRI A. T. VARKEY, JM & DR. A. L. SAINI, A M] I.T.A. NO. 298/KOL/2016 ASSESSMENT YEAR: 2011-12 DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-6(2), KOLKATA. VS. WEST BENGAL INFRASTRUCTURE DEVELOPMENT CORPORATION LTD. (PAN: AAACW3073C) APPELLANT RESPONDENT DATE OF HEARING 05.04.2018 DATE OF PRONOUNCEMENT 26.04.2018 FOR THE APPELLANT SHRI S. M. DAS, ADDL. CIT, SR. D R FOR THE RESPONDENT SHRI SANJAY BHATTACHARYA, FCA ORDER PER SHRI A.T.VARKEY, JM THE APPEAL FILED BY THE REVENUE IS AGAINST THE ORDE R OF LD. CIT(A)-4, KOLKATA DATED 01.12.201`5 FOR AY 2011-12. 2. THE SOLITARY ISSUE OF REVENUES APPEAL IS AGAINS T THE ORDER OF LD. CIT(A) DIRECTING THE AO TO WORK OUT OR RECALCULATE THE ELIGIBLE PROF IT/LOSS IN RESPECT OF EACH UNIT IN RESPECT OF DEDUCTION U/S. 80IA OF THE INCOME-TAX ACT, 1961 (HE REINAFTER REFERRED TO AS THE ACT). 3. BRIEFLY STATED FACTS AS STATED BY THE AO IN THE ASSESSMENT ORDER ARE THAT THE AO WAS OF THE VIEW THAT THE ASSESSEE WAS NOT ELIGIBLE TO C LAIM DEDUCTION U/S. 80IA OF THE ACT, FOR THE YEAR UNDER CONSIDERATION, FOR THE REASON THAT T HE DEDUCTION CLAIMED HAD NO DIRECT NEXUS WITH THE CORE ACTIVITIES OF INDUSTRIAL UNDERTAKING OF THE ASSESSEE. IT WAS ALSO NOTED BY THE AO THAT IN THE SHOW CAUSE LETTER ISSUED TO THE ASSE SSEE THAT IT HAD CALCULATED THE ELIGIBLE DEDUCTION U/S. 80IA OF THE ACT AT RS.5,25,56,714/- WHEREAS THE CLAIM HAD BEEN RESTRICTED TO RS.3,84,73,489/- FOR WANT OF SUFFICIENT GROSS TOTAL INCOME JUST TO REDUCE THE TOTAL INCOME TO NIL. ACCORDING TO AO, THE ASSESSEE DID NOT HAVE ANY SURPLUS FUNDS FROM ITS CORE ACTIVITIES AND ITS INCOME CONSISTS MAINLY OF INTEREST ON BANK DEPOSITS, RENT, OTHER INCOME, MISCELLANEOUS INCOME AND MAINTENANCE & SERVICE CHAR GES. HE, THEREFORE, REFERRED TO THE INCOME & EXPENDITURE A/C OF ALL THE 13 BRANCH OFFIC ES TO PROVE HIS POINT, AS DEPICTED IN THE ORDER, TO THE EFFECT THAT NONE OF THE BRANCHES HAD ANY SURPLUS INCOME, AFTER SETTING OFF THE 2 ITA NO.298/KOL/2016 WEST BENGAL INFRASTRUCTURE DEVELOPMENT CORPN. LTD., AY- 2011-12 INCIDENTAL EXPENDITURE RELATABLE TO THE ELIGIBLE BU SINESS ACTIVITIES FOR CLAIMING DEDUCTION U/S 80LA OF THE ACT. THEN HE RELIED ON THE CASE LAWS OF LIBERTY INDIA VS. CIT [2009] 317 ITR 218 (SC) AND PANDIAN CHEMICALS VS. CIT [2003] 262 I TR 278 (SC) TO PUT ACROSS HIS POINT THAT NONE OF THE INCOME AS MENTIONED ABOVE COULD BE HELD TO BE DERIVED FROM THE ELIGIBLE BUSINESS WHICH COULD BE CLAIMED AS DEDUCTION U/S 80 LA OF THE ACT. IN RESPONSE TO THE SHOW CAUSE LETTER IN THIS REGARD, THE ASSESSEE RESPONDED TO THE EFFECT THAT ALL INCOMES AROSE FROM THE BUSINESS OF INFRASTRUCTURE DEVELOPMENT OPERATIO N AND MAINTENANCE FOR WHICH ALL THE SURPLUS EMANATING THERE FROM WERE ELIGIBLE FOR DEDU CTION U/S 801A OF THE ACT. IT WAS CONTENDED THAT ALL EXPENSES DIRECTLY ATTRIBUTABLE T O THE BUSINESS OF DEVELOPMENT MAINTENANCE AND OPERATION OF INFRASTRUCTURE FACILIT IES WERE CAPITALIZED AND INCLUDED IN EITHER UNDER THE HEAD FIXED ASSETS OR DEVELOPMENT O F INDUSTRIAL AREAS AND ESTATES. IT WAS FURTHER STATED THAT THE INCOME FROM THE BUSINESS OF BBIIDC WAS BEING CREDITED TO THE INCOME AND EXPENDITURE ACCOUNT OF EACH OF ITS UNITS AT THEIR GROSS VALUES; AND THAT EXPENSES DEBITED TO THE INCOME & EXPENDITURE A/C HA D BEEN FOR THAT PARTICULAR UNIT AS A WHOLE. THE ASSESSEE THEN WENT ON TO EXPLAIN THAT TH E VARIOUS EXPENSES INCURRED AS WELL AS THE INCOME EARNED ON ACCOUNT OF INTERESTS EARNED UN DER VARIOUS HEADS WERE HAVING DIRECT NEXUS WITH THE BUSINESS OF INFRASTRUCTURE DEVELOPME NT. ACCORDING TO AO, THE EXPLANATIONS OFFERED BY THE ASSESSEE WAS FOUND TO BE NOT ACCEPTA BLE TO THE AO, THEREFORE, HE REJECTED THE SAME AND CAME TO THE CONCLUSION THAT THE ASSESSEE W AS NOT ELIGIBLE TO CLAIM DEDUCTION U/S 80LA OF THE ACT FOR THE REASON THAT THE INCOMES EAR NED UNDER DIFFERENT HEADS FROM ITS VARIOUS UNITS DID NOT HAVE FIRST DEGREE NEXUS WITH ITS CORE BUSINESS OF INFRASTRUCTURAL DEVELOPMENT. THUS, THE AO DISALLOWED THE CLAIM OF T HE ASSESSEE U/S 80LA OF THE ACT TO THE EXTENT OF RS.3,84,73,489/-. AGGRIEVED, ASSESSEE PRE FERRED APPEAL BEFORE THE LD. CIT(A), WHO DIRECTED THE AO TO WORK OUT THE ELIGIBLE PROFIT /LOSS IN RESPECT OF EACH UNIT, THEN GROSS UP THE INCOME/LOSS OF THE INDIVIDUAL UNITS AND ALL OW ADMISSIBLE DEDUCTION, IF ANY, IN ACCORDANCE WITH LAW. AGGRIEVED, REVENUE IS BEFORE US. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT THE ISSUE HAS BEEN DEALT WI TH BY COORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2010-11 WHEREIN THE TRIB UNAL VIDE PARA 5.3 OF ITS ORDER HAS HELD AS UNDER: HAVING HEARD THE RIVAL SUBMISSIONS, PERUSED THE M ATERIAL ON RECORD, WE ARE OF THE VIEW THAT THE ORDER OF LD. CIT(A) HAS TO BE CONFIRMED AS NOTH ING HAS BEEN BROUGHT ON RECORD TO SHOW THAT THE CONCLUSION OF THE CIT(A) ARE INCORRECT. W E ARE OF THE VIEW THAT THE AO SHOULD BE DIRECTED TO GIVE APPEAL EFFECT OF THE ORDER PASSED BY THE CIT(A)-XII, KOLKATA IN APPEAL NO. 140/XII/CIR-10/13-14, DATED 14.02.2014, AND WE DO S O. WITH THE ABOVE OBSERVATIONS, WE DISMISS THE APPEAL OF THE ASSESSEE. 3 ITA NO.298/KOL/2016 WEST BENGAL INFRASTRUCTURE DEVELOPMENT CORPN. LTD., AY- 2011-12 SINCE LD. DR WAS UNABLE TO CONTROVERT THE FINDING O F THE LD. CIT(A) DIRECTING THE AO TO WORK OUT OR RECALCULATE THE ELIGIBLE PROFIT/LOSS IN RESPECT OF EACH UNIT IN RESPECT OF DEDUCTION U/S. 80IA OF THE ACT BY PRODUCING ANY MATERIAL AND THERE IS NO CHANGE IN FACTS OR LAW POINTED OUT BEFORE US, RESPECTFULLY FOLLOWING THE D ECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2010-11 (SUP RA), WE CONFIRM THE ORDER OF LD. CIT(A), AND, THEREFORE DECLINE TO INTERFERE WITH T HE SAME AND THE SAME IS HEREBY UPHELD. THUS THE REVENUES APPEAL IS DISMISSED. 5. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSE D. ORDER IS PRONOUNCED IN THE OPEN COURT ON 26TH APR IL, 2018. SD/- SD/- (DR. A. L. SAINI) (ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED :26TH APRIL, 2018 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT DCIT, CIRCLE-6(2), KOLKATA. 2 RESPONDENT M/S. WEST BENGAL INFRASTRUCTURE DEVELO PMENT CORPORATION LTD., 5, COUNCIL HOUSE STREET, 3 RD FLOOR, KOLKATA-700 001. 3 . THE CIT(A), KOLKATA 4. 5. CIT , DR, ITAT, KOLKATA. / TRUE COPY, BY ORDER, SENIOR PVT. SECY .