DCIT, VILLUPURAM vs. M/S. KALLAKURICHI CO-OP. SUGAR MILLS LTD., VILLUPURAM

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ITA 2990/CHNY/2016Status: DisposedITAT Chennai04 May 2017AY 2012-134 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the CIT(Appeals) rightly followed the previous order as the facts were identical. The loan was sanctioned to the State Government, which then distributed it to co-operative sugar mills, recovering interest from them.

What were the facts?

The Assessing Officer disallowed interest payable on loans from the National Co-operative Development Corporation under Section 43B. The CIT(Appeals) deleted this addition, relying on a previous Tribunal order in the assessee's own case.

What were the issues?

Whether interest paid on loans routed through the State Government from the National Co-operative Development Corporation is disallowable under Section 43B.

Which sections of the Income-tax Act were involved?

Section 43B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI

Before: SHRI N.R.S. GANESAN & SHRI D.S. SUNDER SINGH

For Respondent: Shri S. Venogopalan, FCA
Hearing: 17.04.2017Pronounced: 04.05.2017

आदेश /O R D E R

PER N.R.S. GANESAN, JUDICIAL MEMBER:

1.

This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals)- Puducherry, Chennai, dated 05.07.2016 and pertains to assessment year 2012-13.

2.

Shri Sasikumar, the Ld. Departmental Representative, submitted that the assessee-co-operative society established and running a sugar mill. According to the Ld. D.R., during the year under consideration, the Assessing Officer disallowed `1,79,81,500/- being the interest payable on loans from National Co-operative Development Corporation under Section 43B of the Income-tax Act, 1961 (in short 'the Act'). However, according to the Ld. D.R., the CIT(Appeals) deleted the addition made by the Assessing Officer on the basis of the order of this Tribunal in the assessee's own case in dated 14.12.2012 for the assessment year 2006-07. According to the Ld. D.R., the interest was paid to National Co-operative Development Corporation and not to State Government. Therefore, the CIT(Appeals) ought not to have deleted the addition.

3.

On the contrary, Shri S. Venugopalan, the Ld. representative for the assessee, submitted that National Co-operative Development Corporation sanctioned loan to the State of Tamil Nadu and released to the extent of `50 Crores which is obvious from the letter of National Co-operative Development Corporation.

By letter dated 31.07.2004, the Director of Sugar distributed the loan amount on the basis of the sanction granted by the State Government to various co-operative sugar mills for clearing the cane price arrears as on 30.09.2003. This Tribunal examined this issue in the assessee's own case for assessment year 2006-07 and found that Government of India permitted the Government of Tamil Nadu to go for open market and raise funds. After availing loan from National Co-operative Development Corporation, Government of Tamil Nadu distributed the amount to various co-operative sugar mills in the State of Tamil Nadu. The Government of Tamil Nadu, in fact, recovered interest from the respective co-operative sugar mills.

Therefore, this Tribunal found that interest paid to the Government is not subject provisions of Section 43B of the Act.

4.

We have considered the rival submissions on either side and perused the relevant material available on record. We have also gone through the order of this Tribunal in the assessee's own case for assessment year 2006-07. Since facts are identical for year under consideration, this Tribunal is of the considered opinion that the CIT(Appeals) has rightly followed the order of this Tribunal.

Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.

5.

In the result, the appeal filed by the Revenue stands dismissed.

Order pronounced on 04th May, 2017 at Chennai.

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