ITO, CHENNAI V. M/s. Tamilnadu Water Investment Company Ltd., CHENNAI

ITA 519/CHNY/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5093 (ITAT-CHENNAI)
• Duration Of Justice: 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-05-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 12-05-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 22-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R VISWANATHAN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH A CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AN D SHRI GEORGE MATHAN, JUDICIAL MEMBER .. I.T.A. NO. 519/MDS/2011 ASSESSMENT YEAR : 2007-08 THE INCOME-TAX OFFICER, COMPANY WARD-III(1), CHENNAI. V. M/S. TAMILNADU WATER INVESTMENT COMPANY LTD., NO. 15, MURRAYS GATE ROAD, ALWARPET, CHENNAI-600 018 (PAN: AABCT8153B) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SHAJI P. JACOB RESPONDENT BY : SHRI R. VISWANATHAN O R D E R PER BENCH : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED CIT(APPEALS)-III, CHENNAI IN ITA NO. 148/09-10/A-II I DATED 7-12-2010 FOR THE ASSESSMENT YEAR 2007-08. 2. SHRI SHAJI P. JACOB, LEARNED SR. DR REPRESENTED ON BEHALF OF THE REVENUE AND SHRI R. VISWANATHAN, CA REPRESENTED ON BEHALF O F THE ASSESSEE. 3. IT WAS FAIRLY AGREED BY BOTH THE SIDES THAT THE ISSUE IN THE APPEAL BEING AGAINST THE ACTION OF THE LEARNED CIT(A) IN DELETIN G THE DISALLOWANCE OF INTEREST I.T.A. NO.519/MDS/2011 2 PAYABLE ON LOANS WAS SQUARELY COVERED BY THE DECISI ON OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE IN ITA NO. 29/MDS/2007 & ITA NO.2508/MDS/2009 DATED 20-11-007 FOR THE ASSESSMENT YEAR 2003-04 WHEREIN IN PARA 2.7. & 2.8 THE CO-ORDINATE BENCH OF THIS TRIBU NAL HAS HELD AS FOLLOWS : 2.7. FROM A READING OF THE ABOVE, IT IS CLEAR THAT THE SAID CLAUSE PERTAINS TO SUM PAYABLE BY THE ASSESSEE AS I NTEREST ON LOAN OR BORROWING FROM ANY PUBLIC FINANCIAL INSTITU TION. PUBLIC FINANCIAL INSTITUTION WHICH HAS BEEN REFERRED TO IN EXPLANATION (4) OF THE INCOME TAX ACT WHICH IS DEFINED IN SECTI ON 4A OF THE COMPANIES ACT, 1956 READ AS UNDER : (1) EACH OF THE FINANCIAL INSTITUTIONS SPECIFIED I N THIS SUB- SECTION SHALL BE REGARDED FOR THE PURPOSES OF THIS ACT, AS A PUBLIC FINANCIAL INSTITUTION NAMELY:- (I) THE INDUSTRIAL CREDIT AND INVESTMENT CORPORATION OF INDIA LIMITED, A COMPANY FORMED AND REGISTERED UNDER THE INDIAN COMPANIES ACT, 1913 (7 OF 1913); (II) THE INDUSTRIAL FINANCE CORPORATION OF INDIA, ESTABLISHED UNDER SECTION 3 OF THE INDUSTRIAL FINAN CE CORPORATION ACT, 1948 (15 OF 1948); (III) THE INDUSTRIAL DEVELOPMENT BANK OF INDIA, ESTABLISHED UNDER SECTION 3 OF THE INDUSTRIAL DEVEL OPMENT BANK OF INDIA ACT, 1964 (18 OF 1964); (IV) THE LIFE INSURANCE CORPORATION OF INDIA, ESTABLISHED UNDER SECTION 3 OF THE LIFE INSURANCE C ORPORATION ACT, 1956 (31 OF 1956); (V) THE UNIT TRUST OF INDIA, ESTABLISHED UNDER SECTION 3 OF THE UNIT TRUST OF INDIA ACT, 1963 (52 OF 1963); I.T.A. NO.519/MDS/2011 3 (VI) THE INFRASTRUCTURE DEVELOPMENT FINANCE COMPANY LIMITED, A COMPANY FORMED AND REGISTERED UN DER THIS ACT; 2. SUBJECT TO THE PROVISIONS OF SUB-SECTION (1), T HE CENTRAL GOVERNMENT MAY, BY NOTIFICATION IN THE OFFI CIAL GAZETTE, SPECIFY SUCH OTHER INSTITUTION AS IT MAY THINK FIT TO BE A PUBLIC FINANCIAL INSTITUTION: PROVIDED THAT NO INSTITUTION SHALL BE SO SPECIFIE D UNLESS (I) IT HAS BEEN ESTABLISHED OR CONSTITUTED BY OR UNDER ANY CENTRAL ACT, OR (II) NOT LESS THAN FIFTY ONE PER CENT OF THE PAID -UP SHARE CAPITAL OF SUCH INSTITUTION IS HELD OR CONTRO LLED BY THE CENTRAL GOVERNMENT. 2.8. ADMITTEDLY, NEITHER THE GOVERNMENT OF TAMIL NA DU NOR INFRASTRUCTURE LEASING & FINANCIAL SERVICES LTD . IL&FS FALL WITHIN THE DEFINITION OF PUBLIC FINANCIAL INSTITUTI ON. HENCE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)S PREM ISE THAT EXPLANATION 3(C) OF SECTION 43B(D) IS APPLICABLE, IS ERRONEOUS. AS WE HAVE ALREADY HELD EARLIER THAT AS PER THE REA DING OF LOAN AGREEMENT, THE INTEREST AMOUNT HAS VERY MUCH ACCRUE D AND THE LIABILITY HAS CRYSTALLIZED. IN THIS VIEW OF THE MA TTER, WE HOLD THAT ORDER OF THE AUTHORITIES BELOW IS LIABLE TO BE SET ASIDE AND ASSESSEES CLAIM BE ALLOWED. I.T.A. NO.519/MDS/2011 4 AS IT IS NOTICED THAT THE ISSUE IN THE APPEAL IS SQ UARELY COVERED BY THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSES SEES OWN CASE, RESPECTFULLY FOLLOWING THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE, THE ORDER OF THE LEARNED CIT(A) STANDS UP HELD. IN THE CIRCUMSTANCES, THE APPEAL OF THE REVENUE STANDS DISMISSED. 4. THE ORDER WAS PRONOUNCED IN THE COURT ON 12-05-2 011. SD/- SD/- (ABRAHAM P. GEORGE) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 12 TH MAY, 2011. H. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE