ACIT, CIR-6(2), KOLKATA, KOLKATA vs. M/S THE CALCUTTA TRAMWAYS COMPANY (1978) LTD., KOLKATA

At the outset, it is noted that there is a delay of 53 days on the part of the Revenue in filing this appeal before the Tribunal. In this regard, the Revenue has moved an application seeking condonation of the said delay and keeping in view the reasons given therein, we are satisfied that there was a sufficient cause for the delay of 53 days on the part of the Revenue in filing this appeal before the Tribunal. The said delay is accordingly condoned and the appeal of the Revenue is being disposed of on merit.

The assessee in the present case is a Company, which is fully owned by the Government of West Bengal. It is engaged in providing public transportation services. The return of income for the year under consideration was filed by it on 26.09.2013 declaring a loss of Rs.28,83,24,735/-. In the Profit & Loss Account filed along with the said return, a sum of Rs.537.34 lakhs was debited by the assessee on account of provision made for interest on loans availed from Government of West Bengal at the rate of 6.25% per annum. The said provision was treated by the Assessing Officer as an unascertained liability following the similar stand taken in the assessments completed for the earlier years and the same was disallowed by him in the assessment completed under section 143(3) vide an order dated 13.01.2016.

Against the order passed by the Assessing Officer under section 143(3), an appeal was preferred by the assessee before the ld. CIT(Appeals) challenging the disallowance made by the Assessing Officer on account of provision made for interest. During the course of appellate proceedings before the ld. CIT(Appeals), it was pointed out on behalf of the assessee-company that a similar issue was involved in assessee’s own case for A.Y. 2007-08 and the Tribunal vide its order dated 18.10.2017 passed in had directed the Assessing Officer to take into account the sanction letter/confirmation letter of the Assessment year: 2013-2014 M/s. The Calcutta Tramways Company (1978) Limited Government of West Bengal in respect of the rate of interest which is to be charged on such loan and adjudicate the issue as per the provisions of the Income Tax Act. It was submitted on behalf of the assessee-company before the ld. CIT(Appeals) that the appeal effect to the ITAT’s order for A.Y. 2007-08 was already given by the Assessing Officer and the claim of the assessee for deduction on account of provision made for interest was allowed by him. It was also brought to the notice of the ld. CIT(Appeals) by the assessee that a similar direction was given by the Tribunal to the Assessing Officer on identical issue involved in assessee’s own case for A.Y. 2008-09. It was submitted that the Assessing Officer himself had allowed the deduction claimed by the assessee on account of similar provision made for interest in A.Y. 2012-13 and the order passed by the ld. Principal CIT under section 263 treating the assessment order of the Assessing Officer allowing deduction on account of provision for interest as erroneous as well as prejudicial to the interest of the Revenue was set aside by the Tribunal vide its order dated 18.07.2018 passed in ITA No. 1261/KOL/2017 read with the order passed in M.A. by holding that the provision for interest not being in the nature of unascertained liability, jurisdiction involved under section 263 of the Act by the ld. Principal CIT was unfounded. Keeping in view this submission made on behalf of the assessee-company, the ld. CIT(Appeals) accepted the contention of the assessee that the issue under consideration was squarely covered in favour of the assessee by the decision of the Tribunal in assessee’s own case for A.Ys. 2007-08, 2008-09 and 2012-13 and following the same, he directed the Assessing Officer to allow the claim of the assessee for deduction on account of provision made for interest on loan borrowed from the Government of West Bengal. Aggrieved by the order of the ld. CIT(Appeals), the Revenue has preferred this appeal before the Tribunal.

At the time of hearing fixed in this case before the Tribunal, none has appeared on behalf of the respondent-assessee. The ld. D.R., however, Assessment year: 2013-2014 M/s. The Calcutta Tramways Company (1978) Limited has fairly and frankly submitted that the solitary issue involved in this appeal of the Revenue relating to the disallowance on account of the provision for interest on loan borrowed by the assessee from the Government of West Bengal is squarely covered in favour of the assessee by the decision of the Tribunal rendered in assessee’s own case for A.Ys. 2007-08, 2008-09 and 2012-13 as discussed and relied upon by the ld. CIT(Appeals) in his impugned order. We, therefore, respectfully follow the said decisions of the Tribunal rendered in assessee’s own case for earlier years on similar issue and uphold the impugned order of the ld. CIT(Appeals) directing the Assessing Officer to allow the claim of the assessee for deduction on account of provision made for interest on loan borrowed from the Government of West Bengal.

In the result, the appeal of the Revenue is dismissed. Order pronounced in the open Court on July 17, 2020.