ACIT, VILLUPURAM vs. M/S. KALLAKURICHI CO-OPERATIVE SUGAR MILLS LTD., KALLAKURICHI

The only issue arises for consideration in all these appeals is disallowance made by the Assessing Officer under Section 43B of the Income-tax Act, 1961 (in short 'the Act') in respect of interest payment.

We heard Shri N. Madhavan, the Ld. Departmental Representative and Shri S. Venugopalan and Shri B. Gowthaman, the Ld. representatives of the assessees. The assessee-co- operative societies were allotted working capital by Government of Tamil Nadu. In fact, National Co-operative Development Corporation has sanctioned the loan under Corporation Sponsored Scheme to Government of Tamil Nadu. The payment of interest was disallowed by the Assessing Officer under Section 43B of the Act. The Assessing Officer was under the impression that the loan was sanctioned by a financial institution, namely, National Co-op. Development Corporation, New Delhi. Referring to a Government Order in RcNo.16890/Cane-1/2001 dated 15.03.2002, the Ld. representatives of the assessees brought to the notice of the Bench that the loan was sanctioned to Government of Tamil Nadu which is to be utilised as working capital by co-operative sugar mills in the State. Therefore, according to the Ld. representatives, the repayment has to be made to Government of Tamil Nadu by the assessees and not to National Co-op. Development Corporation.

An identical issue came before this Tribunal in the assessees’ own case for assessment years 2008-09, 2009-10, 2010-11 and 2012-13. This Tribunal by placing its reliance on another order of this Tribunal in DCIT v. The Kallakurichi Co-op. Sugar Mills Ltd., Unit-II in dated 14.12.2012, found that the repayment of loan by the assessee to Government of Tamil Nadu would not fall under Section 43B of the Act. Since the facts are identical to that of assessment years 2008- 09, 2009-10, 2010-11 and 2012-13 in the assessees’ own case, this Tribunal is of the considered opinion that the decision of the co- ordinate Bench of this Tribunal dated 28.09.2016 is squarely applicable to the facts of the case. In view of the above, the CIT(Appeals) has rightly followed the order of this Tribunal. Hence, this Tribunal does not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.

In the result, all the four appeals filed by the Revenue stand dismissed.