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Income Tax Appellate Tribunal, KOLKATA BENCH “C” KOLKATA
Before: Shri S.S.Godara & Dr. A.L. Saini
आदेश /O R D E R PER S.S.Godara, Judicial Member:-
This assessee’s appeal for assessment year 2014-15 calls into question the Commissioner of Income Tax (Appeals)-2, Kolkata’s order dated 25.07.2017 passed in case No.11843/CIT(A)-2/16-17 ex-parte upholding Assessing Officer’s action disallowing / adding interest amount provision of ₹15,02,64,000/- under section 43B, provision of gratuity / leave salary of ₹69,15,000/- and expenditure of ₹32,27,000/-, respectively involving proceedings under section 143(3) of the Act. Heard both the parties. Case file perused.
W.B. Agro Industries Corporation Ltd. Vs. ACIT Cir-6(2), Kol. Page 2 2. Learned counsel representing assessee invites our attention to assessee’s four substantive ground inter alia challenging the CIT(A) order passed ex-parte upholding the latter three disallowances / additions. He states at the bar that the assessee confines its challenge to disallowance of interest provision on loans amounting to ₹15,02,64,000/- paid to government during the relevant previous year. The other three substantive ground hereinabove are therefore dismissed has not pressed at assessee’s behest.
We now advert to the sole issue of disallowance of provision relating interest expenses amounting to ₹15,02,64,000/-. Relevant paper book page 3 note 24 comprises of assessee’s financial cost reveals that it had made the impugned provision on account of accumulated interest on government loans involving the sum in question of ₹15,02,64,000/-. The Assessing Officer invoked section 43B of the Act to conclude that the same would be allowable only on actual payment a based on a mere provision. The CIT(A) upholds the same in his ex-parte lower appellate order.
We have given our thoughtful consideration to rival contentions against and in support of the impugned addition. There is hardly any dispute about the assessee having made the impugned provision of ₹15,02,64,000/- in respect of its loans payable to government. The question before us is only that of applicability of section 43B(d) of the Act. The lower authorities case is that the impugned claim pertains to any sum payable by the assessee as interest on a loan or borrowing from the specified financial institutions or state financial institution or state industrial investment corporation, as the case may be. We find no substance in this reason. The Revenue fails to rebut the fact that the legislature has specified various types of payees which nowhere includes a government payee as is the case before us. We make it clear that we are dealing with a disallowance provision in a tax statute liable to be strictly construed. This tribunal’s coordinate bench’s decision in DCIT vs M/s. Baghpat Co-operative Sugar Mills Ltd. ITA 6855/Del/2015 dated 20.09.2017 has held that section 43B does not apply in case of a government payee. We therefore reverse both the lower authorities’ action disallowing assessee’s provision of interest in question. Its fourth substantive ground succeeds accordingly.
W.B. Agro Industries Corporation Ltd. Vs. ACIT Cir-6(2), Kol. Page 3 5. This assessee’s appeal is partly allowed. Order pronounced in the open court 18/07/2018