DCIT, Circle - 11(1), Kolkata, Kolkata V. M/s. Hindustan Steelworks Construction Limited , Kolkata

ITA 388/KOL/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0235 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 08-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K SRIHARI
• Assessee Lawyers: S K PRANSUKHA
• Keywords: Bad and doubtful debts
• Section: 43B; 115JB; 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA C BENCH, KOLKATA (BEFORE SRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER & SRI S. S. GODARA, JUDICIAL MEMBER) I.T.A. NO. 297/KOL/2018 ASSESSMENT YEAR: 2011-12 HINDUSTAN STEELWORKS CONSTRUCTION LIMITED....................................APPELLANT 5/1, COMMISSARIAT ROAD HASTINGS KOLKATA 700 022 [PAN : AAACH 9524 R] VS. INCOME TAX OFFICER, WARD 12(1), KOLKATA..............................................................RESPONDENT I.T.A. NO. 388/KOL/2018 ASSESSMENT YEAR: 2011-12 DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 11(1), KOLKATA.................APPELLANT VS. HINDUSTAN STEELWORKS CONSTRUCTION LIMITED................................RESPONDENT 5/1, COMMISSARIAT ROAD HASTINGS KOLKATA 700 022 [PAN : AAACH 9524 R] APPEARANCES BY: SHRI S.K. PRANSUKHA, A/R, APPEARED ON BEHALF OF THE ASSESSEE . SHRI P.K. SRIHARI, CIT, D/R. APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : NOVEMBER 28 TH , 2019 DATE OF PRONOUNCING THE ORDER : DECEMBER 31 ST , 2019 ORDER PER J. SUDHAKAR REDDY, AM :- THESE ARE CROSS-APPEALS DIRECTED AGAINST THE ORDER OF THE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 4, KOLKATA, (HEREINAFTER THE LD.CIT(A)), PASSED U/S. 250 OF THE INCOME TAX ACT, 1961 (THE ACT), DT. 21/12/2017, FOR THE ASSESSMENT YEAR 2011-12. 2. THE ASSESSEE IS A PUBLIC SECTOR UNDERTAKING (PSU) AND FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2011-12 ON 23/09/2011, DECLARING TOTAL LOSS OF RS.29,09,69,900/- UNDER THE NORMAL PROVISIONS OF THE ACT AND COMPUTED BOOK LOSS OF 2 I.T.A. NO. 297/KOL/2018 ASSESSMENT YEAR: 2011-12 I.T.A. NO. 388/KOL/2018 ASSESSMENT YEAR: 2011-12 HINDUSTAN STEELWORKS CONSTRUCTION LIMITED RS.67,73,50,700/- U/S 115JB OF THE ACT. THE LD. COUNSEL FOR THE ASSESSEE, BROUGHT TO THE NOTICE OF THE BENCH THAT THE GROUNDS OF APPEAL ARE NOT CONCISE AND PRECISE AS REQUIRED UNDER THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 1963 AND HENCE, HE FILED THE FOLLOWING REVISED GROUND OF APPEAL:- THE LD. CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS.3.7 CR BEING 30% OUT OF GENERAL CHARGES 12.73 CR ON AD HOC BASIS WITHOUT APPRECIATING THAT ALL EXPENSES ARE INCURRED FOR BUSINESS PURPOSE. 3. AFTER HEARING RIVAL CONTENTIONS, WE FIND THAT THE ASSESSEE IS A PSU AND THE ADHOC DISALLOWANCE MADE BY THE ASSESSING OFFICER AS CONFIRMED BY THE LD. CIT(A) IS TOTALLY UNWARRANTED AND BASED ON SURMISES AND CONJECTURES. JUST BECAUSE THE ASSESSEE HAS INCURRED HUGE LOSS, DURING THE YEAR, AND JUST BECAUSE THE EXPENSES UNDER THE HEAD GENERAL CHARGES HAD INCREASED DURING THE YEAR, IT DOES NOT LEAD TO THE CONCLUSION THAT AN ADHOC DISALLOWANCE CAN BE MADE. HENCE, WE DELETE THE SAME AND ALLOW THIS GROUND OF THE ASSESSEE. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. 4. WE NOW TAKE UP THE APPEAL OF THE REVENUE IN ITA NO. 388/KOL/2018. 5. GROUND NO. 1 IS ON THE ISSUE OF VIOLATION OF RULE 46A OF THE INCOME TAX RULES, 1962 (RULES), BY THE LD. CIT(A). WE FIND NO SUCH VIOLATION. THE ASSESSEE HAD NOT CLAIMED DEDUCTION IN ITS COMPUTATION OF INCOME ON PROVISIONS MADE AND SIMILARLY, WHEN SUCH PROVISIONS WERE WRITTEN BACK, IT HAD NOT OFFERED THE SAME AS INCOME. THUS, AT PARA 4 PAGE 3 OF THE ORDER, THE LD. CIT(A) DELETED THE ADDITION. WE FIND NO INFIRMITY IN THE SAME. HENCE, THIS GROUND OF THE ASSESSEE IS DISMISSED. 6. GROUND NO. 2 IS ON THE ISSUE OF DISALLOWANCE OF UNPAID CESS U/S 43B OF THE ACT. THE LD. CIT(A) RECORDS A FACTUAL FINDING THAT THE ASSESSEE HAS NOT CLAIMED A DEDUCTION OF THIS AMOUNT AND HENCE, THE QUESTION OF DISALLOWANCE U/S 43B OF THE ACT DOES NOT ARISE. WE FIND NO INFIRMITY IN THIS FINDING AND HENCE DISMISS GROUND NO. 2 OF THE REVENUE. 3 I.T.A. NO. 297/KOL/2018 ASSESSMENT YEAR: 2011-12 I.T.A. NO. 388/KOL/2018 ASSESSMENT YEAR: 2011-12 HINDUSTAN STEELWORKS CONSTRUCTION LIMITED 7. GROUND NO. 3 IS ON THE ISSUE OF TAXABILITY OF INTEREST ON SECURITY DEPOSIT. SECURITY DEPOSIT WAS PLACED WITH A CLIENT OF THE ASSESSEE AND THE REALISATION OF THE SAME DEPENDS ON THE PERFORMANCE AND COMPLETION OF THE PROJECT WITHIN THE DUE DATE AS PER THE AGREED TERMS AND CONDITIONS. THE LD. CIT(A) HELD THAT THE INTEREST IN QUESTION CANNOT BE TAKEN AS INCOME DURING THE YEAR, IN VIEW OF THE CONSISTENT METHOD OF ACCOUNTING BEING FOLLOWED BY THE ASSESSEE AND IN VIEW OF THE FACT THAT THERE IS NO CERTAINTY OF REALISATION OF INTEREST ON SECURITY DEPOSIT IN COME CASES. WE FIND NO INFIRMITY IN THIS FINDING OF THE LD. CIT(A). IN THE RESULT, GROUND NO. 3 OF THE REVENUE IS DISMISSED. 8. GROUND NO. 4 IS ON THE ISSUE OF DEDUCTION OF BAD DEBTS. THE ASSESSEE FILED DETAILS DISCLOSING THAT AMOUNTS DUE FROM CENTRAL COALFIELD LTD. WERE WRITTEN OFF ON SETTLEMENTS. AS THE DEBT WAS WRITTEN OFF AND AS THE SAME WAS TAKEN INTO ACCOUNT IN THE EARLIER ASSESSMENT YEARS, THE PROPOSITION OF LAW LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF TRF LTD. VS. COMMISSIONER OF INCOME TAX REPORTED IN [2010] 323 ITR 397 (SC), APPLIES AND HENCE WE DISMISS THIS GROUND OF THE REVENUE. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED AND APPEAL BY THE REVENUE IS DISMISSED. KOLKATA, THE 31 ST DAY OF DECEMBER, 2019. SD/- SD/- [S.S. GODARA] [ J. SUDHAKAR REDDY ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 31.12.2019 {SC SPS} 4 I.T.A. NO. 297/KOL/2018 ASSESSMENT YEAR: 2011-12 I.T.A. NO. 388/KOL/2018 ASSESSMENT YEAR: 2011-12 HINDUSTAN STEELWORKS CONSTRUCTION LIMITED COPY OF THE ORDER FORWARDED TO: 1. HINDUSTAN STEELWORKS CONSTRUCTION LIMITED 5/1, COMMISSARIAT ROAD HASTINGS KOLKATA 700 022 2. INCOME TAX OFFICER, WARD 12(1), KOLKATA 3. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 11(1), KOLKATA 4. CIT(A)- 5. CIT- , 6. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, KOLKATA BENCHES