The Indra Company Ltd., Kolkata V. CIT, Kol - IV, Kolkata, Kolkata

ITA 619/KOL/2010

• Counselvise Citation: 61923514 RSA 2010
• Duration Of Justice: 1 year(s) 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 18-05-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 29-03-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NIRAJ KUMAR
• Assessee Lawyers: P R KOTHARI
• Keywords: Business income

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA () BEFORE . , ! ! ! ! /AND , . '# . $% ) [BEFORE SHRI N. VIJAYKUMARAN, JM & SHRI C. D. RAO, AM] !& !& !& !& / I.T.A NO. 619 /KOL/201 0 '( )* '( )* '( )* '( )*/ // / ASSESSMENT YEAR: 200 5 -0 6 THE INDRA COMPANY LTD. VS. COMMISSIONER OF INCO ME-TAX, KOL-IV (PAN : AAACT 9202 G) ( ,- /APPELLANT ) (./,-/ RESPONDENT ) DATE OF HEARING: 05.12.2011 DATE OF PRONOUNCEMENT: 09.12.2011 FOR THE APPELLANT: SHRI P. R. KOTHARI FOR THE RESPONDENT: SHRI NIRAJ KUMAR $0 / ORDER PER N. VIJAYKUMARAN, JM ( . , , , , ) THIS APPEAL BY ASSESSEE IS AGAINST THE 263 ORDER PA SSED BY LD. CIT-IV, KOLKATA DATED 18.01.2010. ASSESSMENT YEAR INVOLVED IS 2005 -06. THE REASON FOR INVOKING SECTION 263 BY THE LD. CIT IS AS FOLLOWS: WHILE COMPUTING THE INCOME FROM HOUSE PROPERTY, A SUM OF RS.13,19,381/- BEING OF MUNICIPAL TAX INCLUDING INTEREST PAID DURING THE YE AR WAS ALLOWED. HOWEVER, ACCORDING TO SECTION 23, DEDUCTION IN RESPECT OF ONLY PROPERT Y TAXES OR MUNICIPAL TAXES IS TO BE ALLOWED AND NO DEDUCTION IN RESPECT OF INTEREST ON ARREARS OF PROPERTY TAX CAN BE GIVEN. 2. WHILE FRAMING ASSESSMENT, THE ASSESSING OFFICER FOUND THAT THE ENTIRE PROPERTY TAX, MUNICIPAL TAX ALONG WITH INTEREST PAID DURING THE Y EAR IS TO BE ALLOWED. THIS WAS FOUND OBJECTIONABLE BY THE LD. CIT, THEREFORE, HE INVOKED THE 263 JURISDICTION. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE EXPRESS ION TAX OR PENALTY HAS TO BE TAKEN AS 2 ITA 619/K/2010 THE INDRA COMPANY LTD. A.Y.05-06 INCLUSIVE OF INTEREST. FURTHER PROPOSITION, HE REL IED ON THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. NEEDLE INDUSTRIES (P) LTD. (1998) 233 ITR 370 (MAD) AND MAHALAKSHMI SUGAR MILLS CO. VS. CIT (1980) 123 ITR 429 (SC). IN MAHALAKSHMI SUGAR MILLS CO. (SUPRA), WHICH THE ASSESSEE RELIED ON, HONBLE SUPREME COURT HELD THAT INTEREST PAID ON ARREARS OF SUGAR CANES PART AND PARCEL OF LIABILITY TO PAY CESS. TAKING THE SAME ANALOGY, THE LD. COUNSEL FOR THE ASSESSEE ARGUED THAT INTEREST ON AR REARS OF PROPERTY TAX SHOULD BE CONSIDERED AS PART OF ARREAR OF THE PROPERTY. HENCE, ACCORDING T O HIM, IT IS TO BE ALLOWED U/S. 23 OF THE I. T. ACT. ON BEHALF OF THE DEPARTMENT, LD. DR WOULD SUB MIT THAT THE DECISIONS RELIED ON TO SUPPORT THE CASE OF THE ASSESSEE OF HONBLE SUPREME COURT A ND HONBLE MADRAS HIGH COURT, CITED SUPRA, WERE ON DIFFERENT FIELD AND THEY ARE COMPUTA TION OF BUSINESS INCOME, HENCE THEY ARE DISTINGUISHABLE. LD. DR FURTHER SUBMITTED AS THE C OMPUTATION IS IN BUILT IN SECTION 23 ITSELF, THE TAX LEVIED BY ANY LOCAL AUTHORITY IN RESPECT OF ANY PROPERTY SHALL BE DEDUCTED IN DETERMINING THE ANNUAL VALUE OF THE PROPERTY. THE DEDUCTION OF SUC H TAXES WILL BE ALLOWED IN THE PREVIOUS YEAR IN WHICH THE TAXES WERE ACTUALLY PAID. HENCE, WHAT IS ALLOWABLE IS ONLY THE TAXES AND NOT INTEREST PAYABLE BY THE ASSESSEE FOR THE DELAY IN PAYING THE PROPERTY TAX. FURTHER PROPOSITION, LD. COUNSEL RELIED THAT ASSUMPTION OF 263 JURISDICT ION IS JUSTIFIED IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUST RIAL CO. LTD. VS. CIT 243 ITR 83 (SC). WHEN THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE, THE LD. CIT WITHIN HIS JURISDICTION TO RECTIFY THAT ERRONEOUS AND PREJUDIC IAL ORDER. HENCE, LD. DR SUPPORTED THE FINDINGS OF LD. CIT. WE FIND THAT SECTION 23 CLEAR LY GIVES THE COMPUTATION FOR ALLOWING THE TAX PAID DURING THE YEAR FOR COMPUTING THE INCOME FROM HOUSE PROPERTY. THE COMPUTATION IS IN BUILT IN SECTION 23 ITSELF. HENCE, THE ALLOWANCE O F INTEREST FOR THE DELAY IN PAYING THE PROPERTY TAX IS NOT AT ALL ENVISAGED IN THE IN BUILT PROVISI ON. HENCE, THE ASSESSMENT ORDER OF THE ASSESSING OFFICER DATED 22.6.2007 IS ERRONEOUS AND AS HE HAS ALLOWED INTEREST IT WORKS PREJUDICIAL TO THE INTEREST OF REVENUE. FURTHER LD . DR RELIED ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. H. G. GUPTA & SON S (1984) 254 ITR 253 (DEL.) WHEREIN HONBLE DELHI HIGH COURT HELD THAT IF A PARTICULAR TYPE OF EXPENDITURE IS NOT SPECIFICALLY PROVIDED TO BE DEDUCTIBLE, DEDUCTION THEREFOR CANN OT BE CLAIMED FROM OUT OF THE ANNUAL VALUE. THIS DECISION IS CONTRADICTORY ON THE ISSUE. RESPE CTFULLY FOLLOWING THE ABOVE DECISION AND ACCEPTING THE PLEA OF LD. DR AND THE DECISION OF HO NBLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. (SUPRA), RELIED ON BY LD. DR, W E ARE OF THE VIEW THAT THE ORDER OF LD. CIT U/S. 263 IS QUITE JUSTIFIED. HENCE, WE CONFIRM THE ORDER OF CIT. THE APPEAL OF THE ASSESSEE IS DISMISSED. 3 ITA 619/K/2010 THE INDRA COMPANY LTD. A.Y.05-06 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. 5. ORDER PRONOUNCED IN OPEN COURT ON 09.12.2011. SD/- SD/- . '# . , $% . , (C. D. RAO) (N. VIJAYKUMARAN) ACCOUNTANT MEMBER JUDICIAL MEMBER ( #% #% #% #%) )) ) DATED 9TH DECEMBER, 2011 12 '3 '4 JD.(SR.P.S.) $0 5 .'' 6$)7- COPY OF THE ORDER FORWARDED TO: 1 . ,- / APPELLANT THE INDRA COMPANY LTD., 707, CENTRAL PL AZA, 2/6, SARAT BOSE ROAD, KOLKATA-700 020. 2 ./,- / RESPONDENT, CIT-IV, KOLKATA. 3 . '0 ( )/ THE CIT(A), KOLKATA 4. ITO, WARD-12(3), KOLKATA. 5 . ='> .' / DR, KOLKATA BENCHES, KOLKATA / .'/ TRUE COPY, $0?/ BY ORDER, @ ! /ASSTT. REGISTRAR .