MCLEOD & CO. LIMITED,KOLKATA vs. DCIT, CIRCLE - 4(2), KOLKATA, KOLKATA

ITA 504/KOL/2018Status: DisposedITAT Kolkata27 June 2018AY 2010-113 pages

AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal set aside the disallowance of municipal taxes to the AO for verification. It also allowed the grounds related to un-reconciled closing balances, stating that if income was already offered in earlier years, no addition could be made in the impugned assessment year.

What were the facts?

The assessee, a company in the business of letting premises, appealed against the CIT(A)'s order upholding the AO's disallowance of municipal taxes and additions for un-reconciled closing balances. The assessee claimed municipal taxes paid were deductible and that the un-reconciled balances represented income already offered in earlier years.

What were the issues?

Whether municipal taxes paid are allowable as a deduction, and whether additions for un-reconciled balances constitute double taxation if income was already offered in prior years.

Which sections of the Income-tax Act were involved?

Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH : KOLKATA

Before: Hon’ble Shri J.Sudhakar Reddy, AM]

Hearing: 07.06.2018Pronounced: 27.06.2018

ORDER This appeal by the Assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals)-2, Kolkata (hereinafter the ‘ld. CIT(A)’), dt. 01.02.2018 passed u/s 250 of the Income Tax Act, 1961 (the ‘Act’) for the assessment year 2010-11.

The assessee is a company and is in the business of letting of premises on rent and rendering services thereto. The issues that arose from my adjudication are as follows:

1. 1. That the Ld. CIT(A) was wrong in upholding the action of the Assessing Officer in disallowing Municipal Taxes amounting to Rs. 3,77,185/- .

2. That the Ld. CIT(A) was wrong in upholding the action of the Assessing Officer in making an Addition of Rs. 2,77,232/- as Un-reconciled Closing Balance due from the Bormah Jan Tea Co (1936) Ltd.

3. That the Ld. CIT(A) was wrong in upholding the action of the Assessing Officer in making an Addition of Rs. 3,30,977/- as Un-reconciled Closing Balance due from the New Chumta Tea Co. Ltd.

McLeod & Co. Limited A.Yr.2010-11 4. That without prejudice to the contentions raised in Ground nos. 2 and 3 above, the Ld. CIT(A) failed to appreciate that both the amounts of Rs. 2,77,232/- and Rs. 3,30,977/- aggregating to Rs. 6,08,209/- were already included in the assessable income of the appellant in the earlier years in which the relevant bills had been raised by the appellant.

5. That the appellant craves leave to add, modify or withdraw any ground or grounds of appeal before or at the time of Hearing of the Appeal.

After hearing Mr. S. Bhattacharya, ld. Counsel for the assessee and Smt. Ranu Biswas the ld. CIT DR and on careful consideration of the facts and circumstances of the case, a perusal of papers on record and order of the lower authority below as well as case law cited, I hold as follows.

Ground no. 1 is against the disallowance of municipal taxes claimed to have been paid by the assessee. Before us, the assessee has submitted reconciliation statement of municipal taxes, a copy of which was also before the lower authorities. I have perused the reconciliation statement. The assessee submits that, the municipal taxes which were not claimed in the earlier assessment years and which were paid during the current financial year have to be allowed in this assessment. The ld. DR points out that the assessee had himself stated before the Ld. CIT(A), that the municipal taxes paid was Rs. 1,33,79,924/- and the assessee has recovered from its tenants an amount of Rs. 1,14,79,939/- and the difference should be allowed. I am of the opinion that this issue should be set aside to the file of the AO to verify the claim of the assessee and examine the reconciliation statement filed by it and dispose off the case on merits in accordance with law. Hence this ground is allowed for statistical purpose.

Ground no. 2 and 3 are against the additions made on account of un-reconciliation closing balances. The submits that, both M/s D. Bormah Jan Tea Company, 1936 and M/s New Chumta Tea Company Ltd. have not accepted the bills raised by the assessee

McLeod & Co. Limited A.Yr.2010-11 and that the assessee had offered the income from such bills, in the year in which they were raised on these companies and hence bringing to tax such amounts on receipt of the bills is a case of double taxation. This claim of the assessee needs examination. If the assessee has already offered these amounts to tax by way of including there amounts as income in the earlier assessment years, no addition can be made during the impugned assessment. Hence ground no. 2 and 3 are allowed for statistical purposes.

Ground nos. 4 and 5 need not be separately adjudicated as they are connected with the earlier grounds.

In the result, the appeal of the assessee is allowed in part.

Order pronounced in the Court on 27.06.2018

Recent GST High Court judgments

Search GST case law →