ACIT, Circle - 4(1), Kolkata, Kolkata V. M/s. Duncans Industries Ltd., , Kolkata

ITA 503/KOL/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 8853 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 22-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL
• Assessee Lawyers: G A SESHAN AVPTAXATION
• Keywords: Notional interest
• Section: 250

Judgement Text

, A , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOLKATA ( . . , . . , ) [BEFORE SHRI A.T. VARKEY, JM & DR. A.L. SAINI, AM] I.T.A. NO. 503/KOL/2018 ASSESSMENT YEAR: 2011-12 ACIT CIRCLE-4(1), KOLKATA. VS. M/S. DUNCANS INDUSTRIES LTD. 31, NETAJI SUBHASH ROAD, 2 ND FLOOR, KOLKATA-700 001. (PAN: AAACD 9302 P) APPELLANT RESPONDENT FOR THE APPELLANT SHRI SUPRIYO PAL, JCIT, SR. DR FOR THE RESPONDENT MR. G.A. SESHAN, AVP-TAXATION DATE OF HEARING 24.10.2019 DATE OF PRONOUNCEMENT 22.11.2019 ORDER PER SHRI A.T.VARKEY, JM THIS IS AN APPEAL PREFERRED BY THE REVENUE AGAINST THE ACTION OF THE LD. CIT(A)-2, KOLKATA DATED 11.01.2018 U/S 250 OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) FOR ASSESSMENT YEAR 2011-12 ON THE FOLLOWING GROUNDS: 1. 'WHETHER ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF EXPENSE OF RS.1,89,398/- MADE TO CLUBS FOR AVAILING THE CLUB FACILITIES AND SERVICES, IGNORING THE DECISION OF HONBLE ITAT, KOLKATA IN ASSESSEE'S OWN CASE FOR A.Y. 1994-95 AND 1998-99.' 2. 'WHETHER ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.1,67,44,560/- MADE AS NOTIONAL INTEREST ON THE LOANS GIVEN TO CERTAIN COMPANIES/PERSONS BY THE ASSESSEE.' 3. 'THAT THE APPELLANT CRAVES FOR LEAVE TO ADD, DELETE, AMEND OR MODIFY ANY GROUND BEFORE OR AT THE TIME OF APPELLATE PROCEEDINGS. 2. THE ASSESSEE IS A COMPANY AND IS ENGAGED IN THE BUSINESS OF GROWING AND MANUFACTURING OF TEA AT ITS GARDENS LOCATED IN THE STATE OF WEST BENGAL AND IT HAS FILED ITS RETURN OF INCOME ON 30.09.2012 DECLARING TOTAL INCOME AT NIL. AT THE OUTSET ITSELF IT 2 I.T.A. NO. 503/KOL/2018 ASSESSMENT YEAR: 2011-12 M/S. DUNCANS INDUSTRIES LTD. HAS BEEN BROUGHT TO OUR NOTICE THAT BOTH THE ISSUES ARE COVERED IN FAVOUR OF ASSESSEE BY THE TRIBUNALS ORDER. 3. GROUND NO. 1 IS ON THE DISALLOWANCE OF EXPENDITURE INCURRED BY THE ASSESSEE FOR AVAILING THE FACILITIES OF CLUBS. THE LD. CIT(A), AT PAGE 3 OF HIS ORDER BY FOLLOWING THE TRIBUNALS ORDER IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2010-11, HELD AS FOLLOWS: I HAVE CONSIDERED THE SUBMISSIONS OF THE AUTHORIZED REPRESENTATIVE OF THE APPELLANT AS WELL AS THE ASSESSMENT ORDER FRAMED IN THE LIGHT OF THE MATERIALS AVAILABLE ON RECORD BEFORE THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS. THE AR OF THE APPELLATE HAS SUBMITTED THAT SIMILAR DISALLOWANCE WAS MADE BY THE LEARNED ASSESSING OFFICER IN THE ASSESSMENT FOR THE ASSESSMENT YEAR 1999-2000, WHICH WAS CONFIRMED BY THE C1T(A). ON APPEAL BEFORE THE ITAT, THE ENTIRE EXPENSES WERE ALLOWED AS EXPENSES INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE APPELLANT. THE RELEVANT I.TA NO. IS 1412/KOL/2003 . COPY OF THE AFORESAID ORDER IS ENCLOSED. IN THE APPEAL ORDER DATED 28-02- 2008 FOR THE ASSESSMENT YEAR 2002-03 IN APPEAL NO.42/CIT(A)-IV/05-06, SIMILAR DISALLOWANCE MADE WAS DELETED. IN THE APPELLATE ORDER DATED 24/08/2017 PASSED BY THE UNDERSIGNED FOR THE ASSESSMENT YEAR 2010-11 IN APPEAL CASE NO. 1264/CIT (A)-2/2014- 15 SIMILAR DISALLOWANCE MADE IN THE ASSESSMENT WAS DELETED. IN VIEW OF ABOVE, BY FOLLOWING THE DECISION OF ITAT AND UNDERSIGNED IN THE APPELLATE OWN CASE, THE AO IS DIRECTED TO DELETE THE ADDITION. THIS GROUND OF APPEAL IS ALLOWED. 4. ON A PERUSAL OF THE IMPUGNED ORDER, IT IS NOTED THAT THE LD. CIT(A) HAS DELETED THE ADDITIONS BY FOLLOWING THE TRIBUNALS ORDER IN ASSESSEES OWN CASE IN ITA NO. 1412/KOL/2003 BY ORDER DATED 28.02.2009 (AY 1999-2000). SINCE THE LD. DR COULD NOT POINT OUT ANY DIFFERENCE IN FACTS OR LAW, SO WE FIND NO INFIRMITY IN THIS FINDING OF THE LD. CIT(A) AND UPHOLD THE SAME. ACCORDINGLY, GROUND NO. 1 OF THE REVENUE IS DISMISSED. 5. GROUND NO. 2 IS ON THE ISSUE OF TAXABILITY OF NOTIONAL INCOME ON LOANS ADVANCED. THE LD. CIT(A) AT PAGE 6 OF HIS ORDER HELD AS FOLLOWS: I HAVE CONSIDERED THE SUBMISSIONS OF THE AUTHORIZED REPRESENTATIVE OF THE APPELLANT AS WELL AS THE ASSESSMENT ORDER FRAMED IN THE LIGHT OF THE MATERIALS AVAILABLE ON RECORD BEFORE THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS. THE AR OF THE APPELLATE HAS SUBMITTED THAT IN THE ASSESSMENT FOR THE ASSESSMENT YEAR 2001-02 , THE LEARNED ASSESSING OFFICER HAD DISALLOWED SIMILAR AMOUNTS OUT OF INTEREST EXPENSES INCURRED BY THE APPELLANT. THE CIT (A) IN HIS ORDER HAD STATED THAT SUCH DISALLOWANCE SHOULD NOT BE MADE OUT OF INTEREST EXPENSES, BUT THE INTEREST SHOULD BE ASSESSED ON NOTIONAL BASIS UNDER OTHER SOURCE'. ON APPEAL BEFORE THE ITAT, AT THE INSTANCE OF THE ASSESSEE, THE DECISION OF THE CIT (A] WAS REVERSED AND IT WAS HELD THAT NO AMOUNT CAN BE TREATED AS NOTIONAL INTEREST IN A CASE WHERE INTEREST HAS NOT BEEN CHARGED BY THE ASSESSEE. IN THE APPELLATE 3 I.T.A. NO. 503/KOL/2018 ASSESSMENT YEAR: 2011-12 M/S. DUNCANS INDUSTRIES LTD. ORDER DATED 24/08/2017 PASSED BY UNDERSIGNED FOR THE ASSESSMENT YEAR 2010-11 IN APPEAL NO. 1264/CIT(A)-2/2014-15 SIMILAR ADDITION MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER PASSED U/S 143(3] WAS DIRECTED TO BE DELETED FOLLOWING THE DECISION OF THE ITAT 'E BENCH IN ITA NO. 980/KOL/05 FOR THE ASSESSMENT YEAR 2001-02 . THE FACTS FOR THIS ASSESSMENT YEAR ARE SIMILAR. IN VIEW OF ABOVE, BY FOLLOWING THE DECISION OF ITAT AND UNDERSIGNED IN THE APPELLATE OWN CASE, THE AO IS DIRECTED TO DELETE THE ADDITION. THIS GROUND OF APPEAL IS ALLOWED. 6. WE FIND THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE IN ITA NO. 980/KOL/2005 FOR AY 2001-02 WHICH ORDER HAS BEEN RELIED BY THE LD. CIT(A) TO GIVE RELIEF TO THE ASSESSEE. SINCE THERE IS NO CHANGE OF FACTS OR LAW, WE FIND NO INFIRMITY IN THIS ORDER OF THE LD. CIT(A) AND UPHOLD THE SAME. ACCORDINGLY GROUND NO. 2 OF THE REVENUE IS DISMISSED. 7. GROUND NO. 3 IS GENERAL IN NATURE. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 22 NOVEMBER, 2019. SD/- SD/- (A.L. SAINI) (A.T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 22 NOVEMBER, 2019 BIDHAN (P.S.) COPY OF THE ORDER FORWARDED TO: 1 APPELLANT M/S. DUNCANS INDUSTRIES LTD., 31, NETAJI SUBHASH ROAD, 2ND FLOOR, KOLKATA- 700 001. 2 RESPONDENT ACIT CIRCLE-4(1), KOLKATA. 3 CIT(A)- 2, KOLKATA. (SENT THROUGH E-MAIL) 4 CIT 5 DR, KOLKATA BENCHES, KOLKATA. (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, ` ASSISTANT REGISTRAR