Haryana State Roads and Bridges Development Corporation Ltd., Panchkula V. ACIT, Circle, Panchkula

ITA 533/CHANDI/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 4928 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 5 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 27-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHANDRAJIT SINGH CIT DR
• Keywords: Set aside
• Section: 201

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, A, CHANDIGARH . . , , BEFORE SHRI N.K. SAINI, VICE PRESIDENT & SHRI SANJAY GARG, JUDICIAL MEMBER ./ ITA NO. 533/CHD/2018 / ASSESSMENT YEAR : 2013-14 M/S HARYANA STATE ROAD & BRIDGES DEVELOPMENT CORPORATION LTD., BAYS 13-14, SECTOR 2, PANCHKULA VS. ! THE ACIT, PANCHKULA CIRCLE, PANCHKULA ' # ./ PAN NO: AACH9435M '$/ APPELLANT &' '$ / RESPONDENT & ./ ITA NO. 739/CHD/2018 / ASSESSMENT YEAR : 2014-15 THE ACIT, PANCHKULA CIRCLE, PANCHKULA VS. ! M/S HARYANA STATE ROAD & BRIDGES DEVELOPMENT CORPORATION LTD., BAYS 13-14, SECTOR 2, PANCHKULA ' # ./ PAN NO: AACH9435M '$/ APPELLANT &' '$ / RESPONDENT ()*+ /ASSESSEE BY : SHRI HARRY RIKHY, ADVOCATE *+ / REVENUE BY : SHRI CHANDRAJIT SINGH, CIT DR , -*) .# /DATE OF HEARING : 04.09.2019 /0 *) .# / DATE OF PRONOUNCEMENT : 22.10.2019 / ORDER PER SANJAY GARG, JUDICIAL MEMBER: OUT OF THE CAPTIONED APPEALS, ITA NO. 533/CHD/2018 HAS BEEN PREFERRED BY THE ASSESSEE, WHEREAS, ITA NO.739/CHD/ 2018 HAS BEEN ITA NOS. 53 & 739-CHD-2018 M//S HARYANA STATE ROADS & BRIDGE DEVELOPMENT CORPO RATION LTD, PANCHKULA 2 PREFERRED BY THE REVENUE RELATING TO DIFFERENT ASSE SSMENT YEARS BUT PERTAINING TO THE SAME ASSESSEE. 2. THE ISSUE INVOLVED IN BOTH THE APPEALS IS IDENTI CAL, HENCE, THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. 3. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A PUBLIC LIMITED COMPANY INCORPORATED BY THE GOVERNMENT OF HARYANA D EALING IN THE BUSINESS OF CONSTRUCTION AND UP-GRADATION OF ROADS AND BRIDGES IN THE STATE OF HARYANA. DURING THE ASSESSMENT PROCEEDING S FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSING OFFICER NOT ICED THAT THE ASSESSEE HAD DEBITED THE INTEREST EXPENDITURE OF AN AMOUNT O F RS. 72,44,13,474/- IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YE AR 2013-14 AND FURTHER AN AMOUNT OF RS. 99,66,91,956/- DURING TH E PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2014-15, HOWEVER, THE SAID EXPENDITURE WAS RELATING TO THE INTEREST LIABILITY OF THE EARL IER ASSESSMENT YEARS. HE, THEREFORE, DISALLOWED THE AFORESAID AMOUNT OF RS. 7 2.44 CRORES FOR THE ASSESSMENT YEAR 2013-14 AND RS. 99.66 CRORES FOR A SSESSMENT YEAR 2014-15, AS PRIOR PERIOD EXPENSES. IN BOTH THE CASES, THE ASSESSEE PREFERRED APPEALS B EFORE THE LD. CIT(A). IT WAS EXPLAINED TO THE LD. CIT(A) THAT THE ASSESSEE FOR THE PURPOSE OF IMPROVEMENT /UP-GRADATION OF ROADS IN TH E STATE OF HARYANA ITA NOS. 53 & 739-CHD-2018 M//S HARYANA STATE ROADS & BRIDGE DEVELOPMENT CORPO RATION LTD, PANCHKULA 3 HAD TAKEN LOAN FROM HUDCO IN FOUR PROJECTS. THAT O UT OF THE TOTAL PROJECT COST, 80% WAS TO BE FINANCED BY HUDCO AND BALANCE 20% WAS TO BE PROVIDED BY THE GOVERNMENT OF HARYANA AS 'COU NTER PART FUNDING'. THE 'COUNTER PART FUNDING' TO BE PROVIDED BY THE GO VERNMENT OF HARYANA WAS WITHOUT ANY INTEREST. THAT THE LOAN DU E TO HUDCO WAS TO BE REPAID FROM THE COLLECTION FROM TOLL POINTS ON VARIOUS ROADS IMPROVED & MAINTAINED BY THE ASSESSEE CORPORATION. HOWEVER, THE TOLL POINT COLLECTION WAS NOT SUFFICIENT FOR THE REPAYME NT OF QUARTERLY LOAN INSTALLMENT TO HUDCO DURING THE YEAR. SUBSEQUENTLY, THE ASSESSEE MADE REQUEST TO THE STATE GOVERNMENT FOR THE RELEAS E OF 'COUNTER PART FUNDING' FOR THE REPAYMENT OF THE QUARTERLY INSTALL MENTS. THE STATE GOVERNMENT ACCORDINGLY RELEASED THE COUNTERPART FUN DING DUE TO THE CORPORATION TIME AND AGAIN WHICH WAS WITHOUT ANY IN TEREST. HOWEVER, SUBSEQUENTLY, IN THE MONTH OF MARCH 2013 IN THE BOARD OF DIRECTORS MEETING. DIRECTOR OF FINANCE DEPARTMENT HARYANA CO NVEYED THE DECISION OF THE GOVERNMENT TO CHARGE CHARGE INTERES T FROM THE ASSESSEE @12% PER ANNUM CALCULATED ON THE MONTHLY BASIS FROM THE DATE OF ADVANCE TAKEN FROM THE STATE GOVERNMENT. ACCORDINGL Y INTEREST OF RS. 25 CRORES HAD BEEN PROVIDED FOR IN F.Y. 2012-13 AND INTEREST OF RS. 72.44 CRORES HAD BEEN PROVIDED UP TO THE EXTENT OF SURPLUS AVAILABLE (OUT OF THE INTEREST OF RS. 172.66 CR.) TOTALING RS . 97.44 CRORES DURING THE YEAR WITH ASSESSEE. THAT DECISION TO LEVY THE INTEREST @12% WAS LATER ON COMMUNICATED TO THE ASSESSEE VIDE MEMO LET TER DATED ITA NOS. 53 & 739-CHD-2018 M//S HARYANA STATE ROADS & BRIDGE DEVELOPMENT CORPO RATION LTD, PANCHKULA 4 10.05.2013 NO. 2/L/2013/SA/FA/HBPE(FD) BY THE MEMBE R SECRETARY, HARYANA BUREAU OF PUBLIC ENTERPRISES, FINANCE DEPAR TMENT. THE LD. COUNSEL, THEREFORE, HAS SUBMITTED THAT THOU GH THE DECISION OF THE STATE GOVERNMENT TO CHARGE THE INTEREST ON T HE AMOUNT FUNDED BY THE STATE GOVERNMENT WAS CONVEYED ORALLY IN A MEETI NG OF BOARD OF DIRECTORS, WHEREAS, AN EXPRESS WRITTEN COMMUNICAT ION WAS RECEIVED BY THE ASSESSEE TO THIS EFFECT VIDE LETTER DATED 10.5. 2013. THE ASSESSEE, THEREFORE, HAS PLEADED THAT SINCE THE LIABILITY TO PAY THE INTEREST TO THE GOVERNMENT CRYSTALIZED DURING THE ASSESSMENT YEARS UNDER CONSIDERATION, HENCE, THE DISALLOWANCE BY THE ASSE SSING OFFICER ON THESE INTEREST PAYMENTS ON THE GROUND THAT THESE WE RE PRIOR PERIOD EXPENSES WAS NOT JUSTIFIED. 4. THE LD. CIT(A) CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE OBSERVED THAT THE LIABILITY IN FACT WAS CRYSTALIZED ON RECEIPT OF THE WRITTEN COMMUNICATION VIDE LETTER DATED 10.5.2013, HE, THEREFORE, HELD THAT THE PAYMENT BY THE ASSESSEE OF RS. 72.44 CROR ES DURING THE FINANCIAL YEAR 2012-13 RELATING TO ASSESSMENT YEAR 2013-14 AND RELATING TO THE INTEREST LIABILITY OF EARLIER ASSESSMENT YE AR WAS NOT ALLOWABLE AS SUCH LIABILITY WAS CRYSTALIZED IN THE SUBSEQUENT YE AR I.E. DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2013- 14. THE CIT(A) HOWEVER, ALLOWED THE REMAINING PAYMENT OF RS. 99.66 CORES RELATING TO THE PRIOR PERIOD INTEREST EXPENDI TURE WHILE DECIDING ITA NOS. 53 & 739-CHD-2018 M//S HARYANA STATE ROADS & BRIDGE DEVELOPMENT CORPO RATION LTD, PANCHKULA 5 THE APPEAL OF THE ASSESSEE OF ASSESSMENT YEAR 2014- 15. THEREFORE, THE ASSESSEE HAS COME IN APPEAL AGAINST THE FINDINGS OF THE CIT(A) FOR ASSESSMENT YEAR 2013-14 REJECTING THE CLAIM OF EXPE NDITURE, WHEREAS, THE REVENUE HAS COME IN APPEAL AGAINST THE FINDING S OF THE LD. CIT(A) DATED 15.3.2018 ALLOWING THE CLAIM OF INTEREST EXP ENDITURE IN ASSESSMENT YEAR 2014-15. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE GON E THROUGH THE RECORD. IT IS APPARENT FROM THE RECORD THAT THE DEC ISION TO CHARGE THE INTEREST RETROSPECTIVELY WAS TAKEN BY THE GOVERNMEN T SUBSEQUENTLY AND NOT DURING THE PRIOR ASSESSMENT YEARS, HENCE, THE L IABILITY TO PAY THE INTEREST HAD NOT ACCRUED OR CRYSTALIZED DURING THE YEARS PRIOR TO THE ASSESSMENT YEAR 2013-14. IN THE ASSESSMENT YEAR 201 3-14, THE ASSESSEE WAS CONVEYED IN THE MEETING OF BOARD OF DIRECTORS I N THE MONTH OF MARCH 2013 ABOUT THE DECISION OF THE GOVERNMENT TO CHARGE INTEREST RETROSPECTIVELY RELATING TO THE EARLIER ASSESSMENT YEARS, HOWEVER, FORMAL COMMUNICATION WAS RECEIVED BY THE ASSESSEE I N THIS RESPECT ON 10.5.2013. THE ASSESSEE, THEREFORE, IN THE FINANCI AL YEAR 2012-13 RELATING THE ASSESSMENT YEAR 2013-14 NOT ONLY PAID THE INTEREST RELATING TO THE FINANCIAL YEAR 2012-13 BUT ALSO PAID AN AMOU NT OF RS. 72.44 CORES WHICH WAS EXTENT TO SURPLUS AVAILABLE WITH THE ASSE SSEE AT THE END OF THE YEAR. THE REMAINING AMOUNT OF RS. 99.66 CORES WAS P AID BY THE ASSESSEE DURING THE NEXT FINANCIAL YEAR 2013-14 RELATING TO ASSESSMENT YEAR 2014- ITA NOS. 53 & 739-CHD-2018 M//S HARYANA STATE ROADS & BRIDGE DEVELOPMENT CORPO RATION LTD, PANCHKULA 6 15. UNDER THE CIRCUMSTANCES, IT CANNOT BE SAID THAT THE LIABILITY TO PAY THE INTEREST HAD ACCRUED OR CRYSTALIZED DURING ANY OF THE YEAR PRIOR TO THE FINANCIAL YEAR 2012-13 RELATING TO ASSESSMENT YEAR 2013-14. THE ASSESSEE OUT OF THE ACCRUED LIABILITY RELATING TO THE INTEREST EXPENDITURE OF THE EARLIER YEARS PAID THE ACTUAL LIABILITY RELA TING TO THE FINANCIAL YEAR 2012-13 AS WELL THE AMOUNT OF SURPLUS AVAILABLE TO THE ASSESSEE DURING THE FINANCIAL YEAR 2012-13 AND PAID THE REMAINING A MOUNT IN THE NEXT FINANCIAL YEAR 2013-14 AFTER RECEIPT OF THE WRITTEN COMMUNICATION DATED 10.5.2013. THE ASSESSING OFFICER, ALLOWED THE INTER EST LIABILITY OF FINANCIAL YEAR 2012-13 WHICH WAS PAID DURING THE YE AR, HOWEVER, DISALLOWED THE REMAINING PAYMENT OF INTEREST BEING PRIOR PERIOD EXPENSES. THE LD. CIT(A) SURPRISINGLY OBSERVED THAT THE LIABILITY HAD BEEN ACTUALLY CRYSTALLIZED ON 10.5.2013 ON RECEIPT OF THE WRITTEN COMMUNICATION. HOWEVER, HE DID NOT QUESTION THE AC TION OF THE ASSESSING OFFICER TO ALLOW INTEREST EXPENSES OF FI NANCIAL YEAR 2012-13 AMOUNTING TO RS. 25 CRORES. IF AS PER THE CIT(A) THE LIABILITY WAS CRYSTALLIZED IN THE SUBSEQUENT FINANCIAL YEAR 2013 -14, THEN UNDER THE CIRCUMSTANCES, THE ASSESSEE WAS NOT JUSTIFIED TO PA Y ANY INTEREST AMOUNT IN FINANCIAL YEAR 2012-13, HOWEVER, THE SAME HAS B EEN ALLOWED BY BOTH THE LOWER AUTHORITIES. THE FACTS ITSELF SPEAKS THAT THOUGH THE ASSESSEE WA S CONVEYED THE DECISION OF THE GOVERNMENT TO CHARGE THE INTEREST RELATING TO THE EARLIER YEARS IN THE MEETING HELD IN THE MONTH OF MARCH 201 3 AND THE ASSESSEE ITA NOS. 53 & 739-CHD-2018 M//S HARYANA STATE ROADS & BRIDGE DEVELOPMENT CORPO RATION LTD, PANCHKULA 7 ACCORDINGLY PAID THE SURPLUS AVAILABLE TO IT DURING THE FINANCIAL YEAR 2012-13, HOWEVER, THE FULL AN FINAL LIABILITY WAS C RYSTALIZED DURING THE FINANCIAL YEAR 2013-14 RELATING TO ASSESSMENT YEAR 2014-15 AND ACCORDINGLY PAID THE REMAINING AMOUNT OUT OF THE IN TEREST EXPENDITURE RELATING TO THE EARLIER ASSESSMENT YEARS WHICH WAS ALLOWED BY THE CIT(A). WE, THEREFORE, DO NOT FIND JUSTIFICATION ON T HE PART OF THE CIT(A) IN DISALLOWING THE INTEREST EXPENDITURE PAID BY THE AS SESSEE DURING THE FINANCIAL YEAR 2012-13 RELATING TO ASSESSMENT YEAR 2013-14. HOWEVER, THE LD. CIT(A) RIGHTLY DELETED THE DISALLOWANCE MA DE BY THE ASSESSING OFFICER IN THE APPEAL RELATING TO ASSESSMENT YEAR 2 014-15. WE ACCORDINGLY SET ASIDE THE ORDER OF THE LD. CIT(A) D ATED 13.02.2018 RELATING TO ASSESSMENT YEAR 2013-14 AND DELETE THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON THIS ISSUE, WHEREAS, TH E FINDINGS OF THE CIT(A) RELATING TO ASSESSMENT YEAR 2014-15 ARE UPHE LD. IN THE RESULT, THE APPEAL OF THE ASSESSEE FOR ASSE SSMENT YEAR 2013- 14 IS ALLOWED, WHEREAS, THE, APPEAL OF THE REVENUE OF ASSESSMENT YEAR 2014-15 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22.10.2019. SD/- SD/- ( . . / N.K. SAINI) ( ! / SANJAY GARG) '#$ / VICE PRESIDENT %& / JUDICIAL MEMBER DATED : 22.10.2019 ITA NOS. 53 & 739-CHD-2018 M//S HARYANA STATE ROADS & BRIDGE DEVELOPMENT CORPO RATION LTD, PANCHKULA 8 RKK 1*&)2343) / COPY OF THE ORDER FORWARDED TO : 1. '$ / THE APPELLANT 2. &' '$ / THE RESPONDENT 3. , 5) / CIT 4. , 5) ( )/ THE CIT(A) 5. 36 &)7 , . 7 , 89:; / DR, ITAT, CHANDIGARH 6. :< - / GUARD FILE 1 , / BY ORDER, = / ASSISTANT REGISTRAR