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Income Tax Appellate Tribunal, BENCH ‘A’ KOLKATA
Before: Hon’ble Shri P.M.Jagtap, AM & Smt. Madhumita Roy, JM ]
ITA Nos.1447 & 1448/Kol/2016 Asansol Durgapur Development Authority A.Y.2010-11 1
IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH ‘A’ KOLKATA [Before Hon’ble Shri P.M.Jagtap, AM & Smt. Madhumita Roy, JM ] ITA.Nos.1447 & 1448/Kol//2016 Assessment year : 2010-11
A.C.I.T., Circle-1 -versus- Asansol Durgapur Development Kolkata Authority, Kolkata (PAN: AAALA 0733 G) (Appellant) (Respondent)
For the Appellant: Shri P.K.Srihari, CIT For the Respondent: Shri Samir Chakrabrty, Sr.Advocate, Shri Amar Chakraborty,Advocate & Shri Abhijit Biswas, Advocate
Date of Hearing : 23.05.2018. Date of Pronouncement : 06.06.2018.
ORDER PER MADHUMITA ROY, JM: The appeal being ITA No.1447/Kol/2016 filed by the Revenue is against the order dated 28.12.2015 passed by the ld. Commissioner of Income Tax(Appeals) Durgapur arising out of the order dated 31.03.2014 passed by the Deputy Commissioner of Income Tax, Circle-1, Durgapur u/s 143(3)/147 of the Income Tax Act, 1961 (Act) for A.Y.2010-11. Another appeal being ITA No.1448/Kol/2016 filed by the Revenue is directed against the order dated 11.05.2016 passed by the ld. Commissioner of Income Tax (Appeals) Durgapur u/s 250 of the Act arising out of order dated 28.12.2015 passed by the same authority. 2. An application for condonation of delay has also been filed for condoning the delay of 109 days in respect of the appeal being ITA No.1447/Kol/2016 filed by the Revenue. 3. According to the revenue such delay occurred due to the pendency of the application for rectification filed on 05.02.2016 by the AO against the order dated 28.12.2015 passed by the ld. CIT(A)-Durgapur. The Revenue was under the firm belief that the same would be allowed by the ld. CIT(A). In this regard the explanation
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given by the revenue is sufficient and reasonable and considering the same we allow such application condoning the delay. 4. The common issue involved in these two appeals is that whether in the facts and circumstances of the case the CIT(A) has erred in facts and in law by deleting the addition of Rs.4,42,23,282/- under the head interest on Government loan on the ground that the same does not fall under the purview of section 43B of the Act. Further that whether the CIT(A) has erred in law by giving contradictory findings from that of the predecessor CIT(A) in assessee’s own case thereby not following the proposition of judicial consistency. 5. The case of the assessee is this that it has debited Rs.4,42,23,282/- in the profit and loss account under the head interest on loan. The assessee claimed that it is not carrying on any business activity and therefore the provision of section 28 to 44 of the Act is not applicable to it. The contentions of the assessee was not acceptable by the ld. AO since the registration u/s 12A of the Act preferred by the assessee has been rejected by CIT(A)-Durgapur by an order dated 10.01.2009. The ld. AO further observed that the assessment of the assessee has taxable entity pertaining to A.Y.2005-06; 2007-08 and 2009-10 already been confirmed by the ld. CIT(A)- Durgapur. In the absence of cogent evidence in support of the claim that the accrued interest of Rs.4,42,23,282/- on outstanding loans comes under the purview of section 43B of the Act, has not been accepted by the ld. AO and thus disallowed the debit of interest due to Government. Against the said order appeal was preferred before the First Appellate Authority by the assessee which was ultimately allowed on 28.12.2015 with the following observations : “Assessing Officer has disallowed interest paid by assessee to the tune of RS. 4,42,23,282/- to Govt. of West Bengal. Assessing officer applied the provision of section 43B of the Act by stating that interest was not paid in time. Assessee in appeal proceeding argued that neither clause (d) nor clause (e) of section 43B are applicable on the case of the assessee. For the sake of convenience relevant portion of section 43B is reproduced below:-
Certain deductions to be only on actual payment.
43B. Notwithstanding anything contained in any other provision of this Act, a deduction otherwise allowable under this Act in respect of-
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(d) any sum payable by the assessee as interest on any loan or borrowing from any . public financial institution [ or a State financial corporation or a State industrial investment corporation], in accordance with the terms and conditions of the agreement governing such loan or borrowing [, or]
[( e) any sum payable by the assessee as interest on any [term loan] from a scheduled bank in accordance with the terms and conditions of the agreement governing such loan [or advances],] [or]
From the above it is clear that State Govt. is not covered under any clause of section 43B of the Act as public finance institution/ State financial corporation/ state industrial investment corporation or scheduled bank. State Govt. or Central Govt. are not covered under section 43B of the Act hence I accept the argument of the assessee and delete the addition of Rs. 4,42,23,282/ -.the ground of assessee is allowed.”
After the order passed by CIT(A), Durgapur dated 28.12.2015 a Miscellaneous Application was preferred by the AO on 05.02.2016 for rectification of the mistake stating that in A.Y.2009-10 CIT(A)-Durgapur has held that the appellant could not prove the source of such loan which could prove that the same are covered u/s 43B and based on the said observation the AO did not allow the debit of interest. 7. The miscellaneous application was dismissed by the ld. CIT(A), Durgapur with following observation :- “Considering the provision of section 43B it is seen that there is no such clause where liberty has been given to the department to disallowing interest on the ground that the same was never paid. The exclusion of such debit of interest from income is made by section 43B, where it allows debit of interest from income to certain entities, even on non-payment and only on the basis of accrual. Keeping in view of the aforesaid provision the miscellaneous petition of the A.O is disposed off and appeal is allowed in favour of the appellant as per earlier order.”
The Revenue thereafter filed two appeals against the original order dated 28.12.2015 allowing the appeal of the assessee and the order dated 11.05.2016 rejecting the Miscellaneous application preferred by the Revenue both passed by the CIT(A), Durgapur. 9. During the hearing of the matter the ld. AR submitted before us that the assessee has been granted registration certificate u/s 12AA of the Act by an order dated 16.11.2016 passed by CIT(Exemption). Such registration was granted w.e.f.
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01.04.2009. He further urged before us that the assessee was a local body constituted u/s 11 of the West Bengal Town and country planning and development Act 1979 engaged in the development activities. The income of the assessee was not taxable in terms of Article 289 of the Constitution of India as income of the assessee was the income of the state and therefore it is entitled for exemption. Whether the assessee is entitled to exemption has already been decided by the Coordinate Bench of this Tribunal in ITA No.1328/Kol/2012 and 500/Kol/2016 for A.Y.2009-10 and 2010-11 in the matter of Asansol Development Authority vs DCIT Circle-Durgapur. On the other hand, the ld. DR supports the contentions made by the ld. AO. 10. We have heard the Representatives of the respective parties. We have perused the materials available on records. We find that the moot point of this instant appeal relating to claim of exemption of the assessee from the liability to pay tax has already been decided in favour of the assessee by the Coordinate Bench of this ld. Tribunal as cited by the ld. AR. A copy of the said order is also annexed to the paper book being a part of the records. The relevant portion of the said order is narrated herein below : “3. The issue raised by the assessee in this appeal is that the Id. CIT(A) erred in confirming the order of AO by holding that the income of the assessee is taxable under the Income Tax Act .
The facts in brief are that the assessee in the present case is constituted u/s 11 of the West Bengal Town and Country (Planning and Development) Act, 1979 under the Govt. of West Bengal and engaged in the development activities. The Id. AR at the outset, before us submitted that the income of the assessee is not taxable in terms of Article 289 of the Constitution of India. The income of the assessee is actually the income of the state and therefore it is entitled for exemption from Union tax in terms of clause 3 of Article 289 of the Constitution of India. The Id. AR further submitted that similar issue arose in A.Yrs. 2004-05, 2006-07 and 2007-08 in ITA Nos. 1195,1996 and 1197/KoI/2007 dated 14.08.2015 wherein the Co-ordinate Bench remanded similar issue to the file of AO for fresh adjudication as per law. The Id. AR before us further submitted that no effective order has been passed by the AO till date and accordingly prayed to restore this ground of appeal to the file of AO for fresh adjudication. On the other hand, the Id. DR raised no objection and he agreed to the submission of Ld. AR.
We have heard the rival contentions of the parties and perused materials available on record. At the outset, we find that similar facts and circumstances and in the case of the assessee the Co-ordinate Bench of this Tribunal has
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restored the matter back to the file of AO for fresh adjudication. The relevant extract of the order in ITA's No. 1195,1996 and 1197/Ko1/2007 is extracted below: - "8. We have heard the rival sub missions and perused the material available on record. We find that the Assessing Officer has relied on the decision of the Hon 'ble Supreme Court in the case of Adityapur Industrial Area Development Authority - vs.- Union of India reported in (2006) 283 ITR 97 (SC) 2006-TIOL-43-SC-IT observing that the circumstances were similar as in the present cases, but he has not considered the above noted relevant statutory requirements applicable in the case of assessee. We, therefore, set aside the order of Id. CIT(Appeals) for all the three years and restore the matter back to the file of Assessing Officer for de novo consideration of the entire issues in the light of statutory 'requirements as filed by the assessee in the paper book.
Respectfully folIowing the same we are inclined. to restore this ground to the file of AO for fresh adjudication as per law. Hence, this ground of appeal of the assessee is allowed for statistical purposes.
The Additional ground raised by the assessee is that the Id. CIT(A) erred in holding that the provision of section 11 of the Act are not applicable to the assessee as it is not registered u/s 12A of the Act.
At the outset we find that the assessment was completed for the year under consideration on 29.12.2011 on the presumption that the assessee is not entitled for exemption u/s 11 of the Act. However, on perusal of the records we find that the Id. CIT (Exemption) has granted registration certificate u/s 12AA of the Act vide its order dated 16th November, 2016. It is also important to note that the registration was granted w.e.f .01.04.2009. In view of the above we find that the assessment order has been passed by the AO without considering the fact that the assessee is entitled for exemption u/s 11 of the Act as this fact has not been considered by the AO at the time of assessment. We are inclined to restore this ground of appeal to the AO for fresh adjudication as per law with the direction to frame the assessment u/s 143(3) of the Act de novo. Hence this additional ground of appeal of the assessee is allowed for statistical purposes.”
Keeping in view the registration granted to the assessee u/s 12A with retrospective effect which covers the year under appeal as well as the consequent claim of the assessee for exemption u/s 11, the ld. Counsel for the assessee has contended that the provision of section 43B cannot be invoked to make any disallowance in the assessee’s case. The ld. DR, on the other hand, has contended that this claim made by the assessee for the first time before the Tribunal requires
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verification by the AO. We also note that even the claim of the assessee for exemption u/s 11 has been set aside by the Tribunal to the AO for deciding the same in the light of registration granted to the assessee u/s 12A with retrospective effect. We therefore restore the issue relating to disallowance u/s 43B to the file of the AO for deciding the same afresh after verifying the new claim made by the assessee that the provision of section 43B cannot be invoked in its case in the light of registration granted u/s 12A with retrospective effect. 11.1. As a result of our decision rendered above restoring the issue of disallowance u/s 43B to the file of the AO, the appeal filed by the revenue being ITA No.1448/Kol/2016 challenging the order of CIT(A) not making rectification as sought by the AO has become infructuous and the same is liable to be dismissed. 12. In the result the appeal by the revenue in ITA No.1447/Kol/2016 is treated as allowed for statistical purposes while ITA No.1448/Kol/2016 is dismissed as infructuous. Order pronounced in the Court 6th June, 2018.
Sd/- Sd/- [P.M.Jagtap] [ Madhumita Roy ] Accountant Member Judicial Member Dated : 6th June, 2018. [RG Sr.PS] Copy of the order forwarded to: 1.Asansol Durgapur Development Authority, 1st Administrative Building , City Centre, Durgapur-713216. 2. A.C.I.T., Circle-1, Durgapur. 3. C.I.T.(A)- Durgapur 4. C.I.T-Durgapur. 5. CIT(DR), Kolkata Benches, Kolkata. True Copy By order, Senior Private Secretary Head of Office/D.D.O, ITAT Kolkata Benches
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