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Income Tax Appellate Tribunal, DELHI ‘A’ BENCH,
Before: SHRI B.P. JAIN, & SHRI KULDIP SINGH
PER B.P. JAIN, ACCOUNTANT MEMBER,
This is an appeal filed by the assessee against the order dated 2nd June, 2014 passed by the Learned CIT(A) - IV, New Delhi.
The assessee company derives income from the business of maintenance and operation of air traffic and airports. It filed its return of income for the year under consideration on 13th October, 2010 declaring an income of Rs. 16,28,64,64,616/-. The AO while completing the assessment made addition of Rs. 4,90,88,000/- under Section 14A and of Rs. 15,64,06,238/- on account of interest on income tax refund and also an addition of 167.61 crore on account of interest no more payable on commencing capital of erstwhile National Airport Authority i.e. interest no more payable in respect of provisions made in earlier years. Aggrieved by the order of the AO, the assessee filed appeal before the CIT(A).
The CIT(A) vide impugned order dated 2nd June, 2014 deleted the 3. addition of Rs. 4,90,88,000/- made by the AO by invoking the provisions of Section 14A. The CIT(A) also reduced the addition on account of interest written back on commencing capital of National Airport Authority by a sum of Rs. 61.43 crore on the ground that the interest to that extent claimed by the assessee in earlier years was disallowed by the AO/assessee itself. The CIT(A) thus, confirmed the addition of Rs. 15,64,06,238/- on account of interest on income tax refund and interest of Rs. 106.18 crore no longer payable by the assessee.
Aggrieved by the order of the CIT(A), the assessee is in appeal before us and has raised the following grounds of appeal:
1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals) [CIT(A)] is bad both in the eye of law and on facts. 2(i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming addition of Rs.15,64,06,238/- being excess interest charged under Section 234B of the Act and refunded to the assessee consequent to the relief granted in the appellate proceeding. (ii) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law that the sum of Rs.15,64,06,238 has been received by the appellant company as interest on the income tax refund. (iii) That the findings of the learned CIT(A) on this issue are perverse and against the facts on record. 3(i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming addition of Rs.106.18 Crore made by the AO.
(ii) That the above said addition has been confirmed ignoring the explanation and the evidences brought on record by the appellant company in support of its contention. (iii) In the alternative and without prejudice to the above, the learned CIT(A) has erred both on facts and in law in not giving direction to the AO to reduce the income of the appellant company for the assessment year 2011-12 by a sum of Rs.106.18 Crore being the amount included by the assessee as income. (iv) On the facts and circumstances of the case, the learned CIT(A) has erred in ignoring the contention of the appellant that the amount of Rs.106.82 Crore cannot be taxed twice i.e. in assessment year 2010-11 and 2011-12.”
4. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in not allowing credit of the TDS of Rs.503.21 Crore as against Rs.459.20 Crore allowed by the AO.
On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in not allowing credit of the advance tax paid of Rs.124 Crore as against Rs.109 Crore allowed by the AO.
The appellant craves leave to add, amend or alter any of the grounds of appeal.
5. Ground No. 1 and 6 are general in nature and hence need no adjudication.
6. Ground No. 2 is regarding addition of Rs. 15,64,06,238/-. It was submitted by the Ld. AR that this addition has been made without appreciating the correct facts. It was contended that during the year under consideration the assessee has received a refund of Rs. 146.34 Crores from the department which comprises of interest of Rs. 15.64 crores paid by it to the department under section 234A, 234B, & 234D and Rs. 130.70 Crores interest on excess tax paid by it. The assessee has added Rs. 130,70,02,857/- as its income in its return of Income as is evident from financials (computation at PB. Pg. 2). The amount of Rs. 15,64,06,238/- received was not added as its income as it was the amount of interest refunded by the department which was paid by the assessee in earlier years on account of interest charged under Section 234B/234A, Thus, it was not income of the assessee but refund of interest paid by it to the Department.
It was submitted that the assessee under the law was not entitled to claim deduction of such interest and has also never claimed these interests charged u/s 234A/B/C/D in their respective assessment years which is clearly evident from the computation of income for assessment year 2007-08 at PB. Pg. 19 and assessment year 2004-05 at PB. Pg. 31 and the same being not an income chargeable to tax, cannot be added in the hands of the assessee.
The Ld. AR submitted that there is no denying the fact that whenever the department charged these interest u/s 234A, 234B, 234C and 234D, same were getting reflected in the P&L A/c of the assessee but being added back in the computation of income. Thus the assessee never claimed the deduction of the same under the Income Tax Act. Since the amount received back was the amount paid by the assessee and deduction of which was never been claimed in the Income Tax Act by the assessee in the previous years the same cannot be considered as income in the current year.
The Ld. DR submitted that this is a factual issue and can be decided on merit.
We have perused the assessment order as well as order passed by the CIT(A) and the paper book filed by the assessee. Ongoing through the same, we note that during the year the assessee has received a sum of Rs. 146.34 crore as refund from the Department of earlier years. Out of this, a sum of Rs. 130,70,02,857/- has been included in its income as is evident from the computation of income placed at PB. Pg. 2. The balance amount Rs. 15,64,06,238/- was not included as this was not the income but refund of interest levied by the department under Section 234 A, 234B and 234D of the Act. In this regard, as per the PB. Pg. 16-17 which is a computation sheet i.e. ITNS 150 dated 20th March, 2007 for the A.Y. 1997-98, an interest of Rs. 92,76,895/- has been levied. This amount has been added back by the assessee in its computation of income for A.Y. 2007-08 as is evident from the PB. Pg. 19. Thus, this is an interest levied by the Department which has been paid back. Thus, the same cannot be considered as income, more so, when deduction of the same was not claimed, as is evident from computation of income for A.Y. 2007-08. Similarly, an interest of 14,71,29,345/- under Section 234B was levied for A.Y. 1998-99 as is evident from the ITNS 150 i.e. computation sheet dated 29th November, 2000 for A.Y. 1998-99. This amount has now been refunded hence, the same cannot be considered as income.
In view of the above facts, we are of the view that AO and CIT(A) have fell into error while making this addition. This amount is refund of the interest paid by the assessee to the department and hence cannot be considered as income and accordingly AO is directed to delete the same. Ground no. 2 is accordingly allowed.
Ground No. 3 is regarding addition of Rs. 106.18 crore on account of reversal of interest. It was submitted by the Ld. AR that the assessee company had debited interest of Rs. 167.61 crore on account of loan during the period from 1st June 1986 to 31st March, 1999. Out of this interest debited in the profit and loss account, a sum of Rs. 61.43 crore was disallowed by the AO/assessee itself while completing assessment of the relevant assessment years. The balance amount of Rs. 106.18 crore has been offered by the assessee in the return for the A.Y. 2011-12 as is evident from computation of income placed at PB. Pg. 33. It was further submitted that this amount has been accepted and assessed by the AO for the A.Y. 2011-12 under Section 143(3) as is evident from the order placed at PB. Pg. 34 to 47. The assessee having offered this amount for taxation in the A.Y. 2011-12, there was no reason for the AO to tax the same again in A.Y. 2010-11.
The Ld. DR submitted that this interest ceased to be a liability during the year under consideration and as such the same has to be taxed in this year only. He further submitted that AO was justified in bringing this amount to tax in this year and it does not make any difference if the assessee has offered this amount in subsequent year and the same has been accepted and assessed by the AO also.
We have considered the rival submissions and perused the assessment order and the order passed by the CIT(A). As per the facts on record, during the course of the assessment, the AO raised this issue. The assessee vide letter dated 14th March, 2013 clarified to the AO that it has debited interest of Rs. 167.61 crore on loan portion on commencing capital of erstwhile National Airport Authority in different financial years which was not paid. The C&AG objected to this amount being shown as liability and the same was accordingly reversed by showing this amount below the line as it was not pertaining to the financial year 2009-10. The C&AG still did not agree with the explanation of the assessee with regard to the disclosure of interest below the line and made observations in the audit report. Since, these observations of C&AG were received after finalization of the account and the audit on 7th October, 2010, this amount was included in the income in the relevant financial year 2010-11.
As regards the taxability of the same, it was submitted in this letter dated 14th March, 2013 to the AO that income tax department has disallowed the amount of interest debited in the profit and loss account in the assessment proceedings, the same on being written back is not chargeable to tax. In support thereof, the assessee company submitted orders passed by the CIT(A) for A.Y. 1997-98, 1998-99 and 2000-01 wherein the CIT(A) has confirmed the action of the AO in disallowing the provision for interest on commencing capital loans of erstwhile National Airport Authority. The assessee also submitted computation of A.Y. 2001-02 where the assessee itself has added back the provision of interest of the above loan of Rs. 15,22,50,000/-. In this letter it was also clarified that details of the balance interest provision being not claimed are not available. In the absence of evidence being available for the balance amount of Rs. 106.8 crore has been declared suo motto in the revised return as income in the assessment year 2011-12 considering the fact that the C&AG observation was received only on 7th October, 2010.
The AO however was not satisfied with the above reply and made addition of entire amount of Rs. 167.61 crore. The CIT(A) considering the above facts was of the view that a sum of Rs. 61.43 crore for which the assessee has filed necessary evidences for demonstrating that the same has not been allowed as expenditure in the earlier year cannot be added back. However, in the absence of evidences for the balance amount, he sustained the addition of Rs. 106.18 crore in the AY 2010- 11.
Ongoing through the assessment order for the A.Y. 2011-12 we however note that the assessee has included the balance amount of Rs. 106.18 crore in the assessment year 2011-12 and the same has been assessed also. The AO in that order had also discussed this issue in the assessment order placed at PB. Pg. 34 to 47. On going through this order for A.Y. 2011-12, we note that the assessee made a request to the AO that it has included a sum of Rs. 106.18 crore as its income in this assessment year 2011-12 which has been also taxed in the preceding assessment year 2010-11 and accordingly, the income for the assessment year 2011-12 be reduced by this amount of Rs. 106.18 crore as the same tentamounts to double taxation. The AO however has rejected this contention of the assessee as is evident form the assessment order for A.Y. 2011-12. In these circumstances, the amount of Rs. 106.18 crore has been taxed twice i.e. in Assessment year under consideration 2010-11 and assessment year 2011-12. We are of the view that this is not permissible. An income cannot be taxed twice that too on substantive basis. The AO being an adjudicating officer has a duty to assess correct income. In these circumstances we have two options, either to confirm the addition in this year and direct the AO to delete the addition in the subsequent A.Y. 2011-12. However, considering the fact that the reversal of interest has happened consequent to the C&AG observation on 7th October, 2010 which falls in the F.Y. 2010-11 i.e. A.Y. 2011-12, we are of the view that this amount should not be taxed in this assessment year and be included in the income of the assessment year 2011-12. Accordingly, we direct the AO to delete the addition in this assessment year i.e. A.Y. 2010-11.
It may be relevant to point out that assessee is a public sector undertaking and it has shown positive income (A.Y. 2010-11 Rs. 1628,64,64,616/- and A.Y. 2011-12 Rs. 1692,04,65,647/-) and liable for the same tax rate. Thus, the whole exercise is by and large revenue neutral. On this issue we may quote the observations made by Delhi High Court in the case of Commissioner of Income Tax Vs. Dinesh Kumar Goel 331 ITR 10(Del), where an issue has arisen about the year in which income has accrued. The Hon’ble High Court has considered the issue of tax rate being the same in both the assessment years and still the Revenue agitating the taxability of particular income in year different than the year in which the tax payer has accounted for such income. Relevant observations of the Hon’ble High Court reads as under: “29. Though our discussion on the issue is complete, the parting comments need to be made. The receipts relate to the unexecuted packages, which are not shown in the instant year would be shown in the succeeding year. Rate of tax in respect of companies remains the same in all these years. Therefore, the Revenue does not lose anything, as it would receive the tax on this income in the succeeding year. Still issues are raised and much outcry is made for nothing.
In a decision rendered about 50 years ago, the Bombay High Court, speaking through Chief Justice Tendolkar in CIT v. Nagri Mills Co. Ltd. [1958] 33 ITR 681 (Bom) observed as under (page 684) :
"We have often wondered why the income-tax authorities, in a matter such as this where the deduction is obviously a permissible deduction under the Income-tax Act, raise disputes as to the year in which the deduction should be allowed. The question as to the year in which a deduction is allowable may be material when the rate of tax chargeable on the assessee in two different years is different ; but in the case of income of a company, tax is attracted at a uniform rate, and whether the deduction in respect of bonus was granted in the assessment year 1952-53 or in the assessment year corresponding to the accounting year 1952, that is in the assessment year 1953-54, should be a matter of no consequence to the Department ; and one should have thought that the Department would not fritter away its energies in fighting matters of this kind. But, obviously, judging from the references that come up to us every now and then, the Department appears to delight in raising points of this character which do not affect the taxability of the assessee or the tax that the Department is likely to collect from him whether in one year or the other."
In this court, in its decision dated May 6, 2008 in I. T. R. No. 229 of 1988 entitled CIT v. Vishnu Industrial Gases P. Ltd. had quoted the aforesaid passage and thereafter remarked that the situation does not seem to have changed over the last fifty years and the Revenue continue to agitate the question whether tax is leviable in a particular year or in some other year. Alas ! The aforesaid words of wisdom of the Bombay High Court reminded to the Revenue authorities more than two years ago again have not made any dent on the psyche of the Revenue.”
In view of the above facts, Ground No. 3 is allowed.
Ground No. 4 is regarding allowing credit of TDS of Rs. 503.21 crores as against Rs. 459.20 crores allowed by the AO. The AO in this regard is directed to verify the claim of the assessee and pass the order in accordance with law. Thus, Ground No 4 is allowed for statistical purposes.
Ground No. 5 is regarding credit of the advance tax paid of Rs. 124 crores as against Rs. 109 crores allowed by the AO. In this regard the AO is directed to verify the claim of the assessee and pass the order in accordance with law. Thus, Ground No. 5 is allowed for statistical purposes.
In the result the appeal of the assessee is partly allowed for statistical purposes.
The order is pronounced in the open court on 23.02.2018.