ITO, WD-1(1), Siliguri, Siliguri v. M/s Associated Contractors, Siliguri, Siliguri

ITA 1127/KOL/2014 | misc
Pronouncement Date: 26-10-2016

Appeal Details

RSA Number 112723514 RSA 2014
Assessee PAN AAFFA1590E
Bench Kolkata
Appeal Number ITA 1127/KOL/2014
Duration Of Justice 2 year(s) 5 month(s) 4 day(s)
Appellant ITO, WD-1(1), Siliguri, Siliguri
Respondent M/s Associated Contractors, Siliguri, Siliguri
Appeal Type Income Tax Appeal
Pronouncement Date 26-10-2016
Appeal Filed By Department
Bench Allotted SMC
Tribunal Order Date 26-10-2016
Date Of Final Hearing 25-08-2016
Next Hearing Date 25-08-2016
Assessment Year misc
Appeal Filed On 22-05-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENC H KOLKATA BEFORE SHRI K. NARASIMHA CHARY JM & DR. A.L.SAINI AM ./ ITA NOS.1127 1128 1129 &1130/KOL/2014 ( / ASSESSMENT YEAR:2008-09 2009-10 2010-11 2011-12 ) ITO WARD-1(1) AAYAKAR BHAWAN PARIBAHAN NAGAR MATIGARA SILIGURI-PIN- 734010 VS. M/S ASSOCIATED CONTRACTORS VIVEKANANDA MINI MARKET HILL CART ROAD SILIGURI ./ ./PAN/GIR NO. : AAFFA 1590 E ( /APPELLANT ) .. ( / RESPONDENT ) /REVENUE BY : SHRI ABHIJIT DUTTA JCIT SR.DR /ASSESSEE BY : SHRI SOMNATH GHOSH ADVOCATE / DATE OF HEARING : 20/10/2016 /DATE OF PRONOUNCEMENT 26/10/2016 / O R D E R PER DR. ARJUN LAL SAINI AM: THE CAPTIONED FOUR APPEALS CITED ABOVE FILED BY T HE REVENUE PERTAINING TO THE ASSESSMENT YEARS 2008-09 2009-10 2010-11 & 2011- 2012 ARE DIRECTED AGAINST ORDERS PASSED BY LD. CO MMISSIONER OF INCOME TAX (APPEALS)-JALPAIGURI IN APPEAL NOS.89 90 91&92 /CIT(A)/SLG/2013- 2014 ALL DATED 11.03.2014 WHICH IN TURN ARISE OUT OF ORDERS PASSED BY THE ASSESSING OFFICER (AO) UNDER SECTION.148/143(3) OF THE INCOME TAX ACT 1961 (IN SHORT THE ACT) DATED 12.12.2013 1 2.12.2013 12.12.2013 & 12.12.2013 RESPECTIVELY. 2. THE FACTS OF THE CASE QUA THE ASSESSEE ARE THAT THE ASSESSEE IS A CIVIL CONTRACTOR WHICH IS IN LITIGATION AGAINST THE GOVT. OF WEST BENGAL IN CONNECTION WITH CONTRACT WORK AWARDED TO THE ASSESS EE DURING THE F.Y.1995-96. ON 30.06.2004 THE ARBITRAL TRIBUNAL HA D MADE AN AWARD OF ITA NOS.1127-1130/14 ASSOCIATED CONTRACTORS 3 11.03.2014. THE LD. CLT(A) HAS RELIED ON THE JUDGEM ENT OF THE BOMBAY HIGH COURT IN DSL ENTERPRISES P. LTD. VS MRS. N.C. CHANDRATRE INCOME TAX OFFICER TDS-1 & OTHERS 20) 3-(355)-ITR-0209-BO M TO CONCLUDE THAT THE RECEIPT OF INTEREST ON THE FIXED DEPOSITS IS NO T INCOME IN THE HANDS OF THE ASSESSEE TILL THE ARBITRATION AWARD ATTAINS FIN ALITY. IN ALLOWING THE ASSESSEE'S APPEAL THE LD. CIT(A) HAS DIRECTED THE AO TO RESTRICT THE TAX TO THE EXTENT OFFERED FOR TAX BY THE ASSESSEE IN RE TURN AND THAT 'THIS NEEDS TO BE ADJUSTED IN THE INCOME WHEN THE ARBITRA TION AWARD IS FINALISED'. 3. AGGRIEVED FROM THE ASSESSMENT ORDERS THE ASSESS EE FILED FOUR APPEALS BEFORE THE LD CIT(A) JALPAIGURI WHO HAS A LLOWED THE APPEALS OF THE ASSESSEE OBSERVING THE FOLLOWINGS :- 8. CONCLUSION- OUT OF ALL THE JUDGEMENTS CITED BY THE ASSESSEE THE FACTS OF ASSESSEE'S CASE ARE SIMILAR TO THE FACTS I N THE CASE DSL ENTERPRISES P. LTD. V. MRS. N. C. CHANDRATRE INCOM E- TAX OFFICER TDS - 1 AND OTHERS 2013-(355)-ITR -020 9 - BOM - [ WRIT PETITION NO. 1473 OF 2013 DECIDED ON FEBRUARY 21 2013]. THE HON HIGH COURT HAD ORDERED IN THIS CASE AS UNDER- 'THE SUBMISSION OF THE REVENUE IS THAT THE ORDER O F THE SUPREME COURT ONLY REQUIRED THE PETITIONER TO FURNISH A BAN K GUARANTEE OF RS. 65 CRORES IN RESPECT OF THE AMOUNT WHICH WAS DEPOSI TED BY THE MSEDC AND WITHDRAWN. HOWEVER IT IS URGED THAT THER E WAS NO DIRECTION IN REGARD TO THE INTEREST WHICH WOULD ACC RUE ON THE AMOUNT OF RS. 65 CRORES AND THERE IS NO LINK AS SUCH BETWE EN THE FIXED DEPOSIT UPON WHICH INTEREST HAS BEEN EARNED AND THE BANK GUARANTEE WHICH WAS REQUIRED TO BE FURNISHED FOR TH E WITHDRAWAL OF RS.65 CRORES. IN OUR VIEW IT WOULD NOT BE POSSIBLE TO ACCEDE TO THE SUBMISSION FOR THE SIMPLE REASON THAT THE INTEREST ON THE FIXED DEPOSIT DOES NOT REPRESENT A CRYSTALLISED ENTITLEME NT OF THE PETITIONER DURING THE FINANCIAL YEAR IN QUESTION. T HE PETITIONER WOULD HAVE AN INDEFEASIBLE ENTITLEMENT IN RESPECT OF THE PRINCIPAL AMOUNT OF RS. 65 CRORES AS WELL AS THE INTEREST EARNED ONL Y IF THE PROCEEDINGS WHICH ARE PENDING IN REGARD TO THE CHAL LENGE TO THE ARBITRAL AWARD CONCLUDE IN ITS FAVOUR. UNLESS THOSE PROCEEDINGS ITA NOS.1127-1130/14 ASSOCIATED CONTRACTORS 5 OFFICER TDS-L & OTHERS 2013-(355)-ITR-0209-BOM WH EREIN THE FACTS AND CIRCUMSTANCES OF THE CASE ARE FUNDAMENTAL LY DIFFERENT FROM THAT OF THE INSTANT CASE. 2. THAT THE ORDER OF THE LD. CIT(A) JALPAIGURI DI RECTING THE ASSESSING OFFICER TO 'RESTRICT THE TAX TO THE EXTEN T OFFERED FOR TAX BY THE ASSESSEE IN RETURN AND THAT 'THIS NEEDS TO BE ADJUSTED IN THE INCOME WHEN THE ARBITRATION AWARD IS FINALISED' IS SELF- CONTRADICTORY IN THAT SINCE THE ENTIRE INTEREST RE CEIPT ON THE FIXED DEPOSITS HAS ALREADY BEEN DECLARED BY THE ASSESSEE AS INCOME FROM BUSINESS THE ASSESSEE WOULD HAVE EVERY RIGHT TO CLAIM THAT THE ENTIRE INTEREST RECEIPT HAS ALREADY BEEN A SSESSED TO TAX AND HENCE THE SCOPE OF FURTHER ADJUSTMENT ON FINALIZATION OF ARBITRATION WOULD NOT EXIST. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE LD. CIT(A) WAS JUSTIFIED LAW IN ENTIRELY IGNORING THE PRIMARY ISSUE ON WHICH THE ASSESSMENT IS BASED I.E. WHETHER THE INTEREST RECEIPTS ON FIXED DEPOSITS ARE BUSINESS RE CEIPTS OR INCOME FROM OTHER SOURCES. 4. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE LD. CLT(A) WAS JUSTIFIED IN DIRECTING THAT THE TAX OFFERED BY THE ASSESSEE SHOULD BE ADJUSTED WITH THE INCOME ON FINA LIZATION OF ARBITRATION AWARD WHILE REMAINING SILENT ON HOW OR IN WHICH ASSESSMENT YEAR SUCH INTEREST INCOME SHOULD BE ASSE SSED. 5. THAT THE APPELLANT CRAVES LEAVE TO ADD AMEND O R ALTER THE GROUNDS OF APPEAL IF ANY. 6. THE ABOVE CITED FOUR APPEALS PERTAIN TO SAME ASS ESSEE DIFFERENT ASSESSMENT YEARS SAME FACTS AND CIRCUMSTANCES COM MON ISSUES INVOLVED THEREFORE THESE HAVE BEEN CLUBBED AND HE ARD TOGETHER AND A CONSOLIDATED ORDER IS BEING PASSED FOR THE SAKE OF BREVITY AND CONVENIENCE. 7. THE APPEAL IN ITA NO.1127/KOL/2014 PERTAINING T O AY 2008-09 IS TAKEN AS THE LEAD CASE. THE GROUNDS RAISED IN THIS CASE ARE IDENTICAL AND SIMILAR WITH OTHER ASSESSMENT YEARS/APPEAL NOS. CIT ED ABOVE. IN THESE APPEALS ALTHOUGH THE ASSESSEE HAS RAISED MULTIPLE GROUNDS OF APPEAL ITA NOS.1127-1130/14 ASSOCIATED CONTRACTORS 7 I).THE RELIANCE ON THE JUDGEMENT OF THE BOMBAY HIGH COURT IN DSL ENTERPRISES P. LTD. VS MRS N.C. CHANDRATRE INCOME TAX OFFICER TDS-1 & OTHERS 2013-(355)-ITR- 0209-BOM IS FOUND TO BE MIS PLACED.THE ASSESSEE HAS ASSERTED THAT THE INTEREST RECEIPT IS NOT INCOME TILL ARBITRATION IS FINALIZED WHEREAS THE ITO HAD TREATED THE INTERE ST RECEIPT AS INCOME. IN THE INSTANT CASE THE ASSESSEE HAS ITSELF DECLARED THE INTEREST RECEIPTS AS INCOME IN INCOME-TAX RETURNS FILED U/S 148 AND THE LD.CIT(A) HAS ALSO TAKEN NOTE OF THIS FACT. THUS THE DECISION IN THE C ITED CASE DOES NOT APPLY TO THE INSTANT CASE. (II).THE DIRECTION TO THE AO TO RESTRICT THE TAX TO THE EXTENT OFFERED FOR TAX BY THE ASSESSEE IN RETURN AND THAT THIS NEEDS TO B E ADJUSTED IN THE INCOME WHEN THE ARBITRATION AWARD IS FINALISED IS APPARENTLY SELF- CONTRADICTORY. THE LD.CIT (A) HAS FAILED TO APPRECI ATE THE FACT THAT THE ENTIRE INTEREST RECEIPTS ON THE FIXED DEPOSITS HAVE ALREADY BEEN DECLARED BY THE ASSESSEE AS INCOME FROM BUSINESS. IN THE EVE NT OF THE ARBITRATION BEING FINALIZED IN FAVOUR OF THE ASSESSEE THE ASSE SSEE WOULD HAVE EVERY RIGHT TO CLAIM THAT THE ENTIRE INTEREST RECEIPTS HA VE ALREADY BEEN ASSESSED TO TAX. HENCE THE SCOPE OF FURTHER ADJUSTMENT WOUL D NOT EXIST. (III).THE ORDER OF THE LD.CIT(A) IS ENTIRELY SILENT ON THE BASIS OF THE ASSESSMENT U/S 147/143(3) UNDER APPEAL. THE ISSUE B EING WHETHER THE INTEREST ON THE FIXED DEPOSITS SHOULD BE TREATED AS BUSINESS RECEIPTS AS CLAIMED IN THE RETURNS OF THE ASSESSEE OR AS INCOME FROM OTHER SOURCES AS ASSESSED BY THE AO. IV) THE LD.CIT(A) HAS DIRECTED THAT THE TAX ASSESSE D SHOULD BE ADJUSTED WITH THE INCOME WHEN THE ARBITRATION AWARD IS FINAL IZED. HOWEVER THE ORDER IS SILENT ON THE YEAR IN WHICH THE INCOME OF THE ASSESSEE SHOULD BE ASSESSED IN THE EVENTUALITY OF THE ARBITRATION BEIN G FINALIZED IN THE ASSESSEE'S FAVOUR. LD. DR HAS FURTHER SUBMITTED THAT F ROM COMPUTATION OF INCOMES FILED BY ASSESSEE AS SUBMITTED WITH RETURN OF INCOMES (FILED AGAINST NOTICES U/S 148 ISSUED BY THE AO) OF THE FOUR RELEVANT AYS THE FOLL OWING MANNER OF COMPUTATION OF TOTAL INCOME IS NOTED. ITA NOS.1127-1130/14 ASSOCIATED CONTRACTORS 9 2) ITO VS HINDUSTAN HOUSING & LAND DEVELOPMENT TRUS T LTD (1986) 1611TR (SC): THE RELEVANT ISSUE IN THAT CASE WAS WHETHER ENHANCE D COMPENSATION AMOUNT RECEIVED/RECEIVABLE BY ASSESSEE WHICH WAS ST ILL DISPUTED IN APPEAL WAS TO BE TREATED AS INCOME OF ASSESSEE WH ICH WAS DECIDED IN FAVOUR OF ASSESSEE.THE PRESENT CASE IS TOTALLY DIFF ERENT AS THE ISSUE HERE IS INTEREST RECEIVED ON DEPOSIT MADE OUT OF COMPENS ATION AMOUNT INCLUDING ENHANCED COMPENSATION AND THE INTEREST E ARNED FROM CENTURIAN BANK OF PUNJAB DO NOT FORM PART OF THE AW ARD AT ALL. 3) CIT VS SHOORJI VALLABHDAS B & CO (1962) 46 ITR 1 44 (SC) 4) POONA ELECTRIC SUPPLY CO LTD VS CIT (1965)57 ITR 521 (SC) 5) GODHRA ELECTRICITY CO LTD VS CIT (1997) 225 ITR 746 ALL THE THREE CASES ABOVE ONLY LAYS DOWN THE PRINCI PLE OF DETERMINATION OF REAL INCOME OF AN ASSESSEE WHILE TAKING CARE OF EX ISTING CONSTRAINTS AND EXIGENCIES THAT IT MAY BE SUBJECT TO. IN THE INSTAN T CASE THE ASSESSEE ITSELF HAS DECLARED THE INTEREST INCOMES AS BUSINES S RECEIPTS IN THE RETURNS OF INCOME FILED AGAINST NOTICES U/S 148 AND THEREFORE THERE REMAINS NO FURTHER SCOPE FOR REFERRING TO ANY CONTI NGENCY OF HAVING TO FOREGO SUCH INTEREST INCOME AT ANY LATER DATE AND T HEREFORE IT IS OBVIOUS THAT THE AO HAD RIGHTLY CONSIDERED THE INTEREST INC OME OF ASSESSEE AS TAXABLE IN THE RESPECTIVE ASSESSMENT YEARS. 6) ITO VS DSL ENTERPRISES (P) LTD (2013) 35 TAXMAN N. COM. 477(BOMBAY HC) THE LD CITIA) DECIDED THE ASSESSEE'S APPEAL IN FAVO UR OF ASSESSEE PRIMARILY RELYING ON THE CASE OF ITO VS DSL ENTERPR ISES (P) LTD (2013 )35 TAXMANN. COM. 477(BOMBAY ) WHICH HELD THAT INTEREST ON DEPOSIT OF ARBITRAL AWARD IS NOT LIABLE FOR TDS ON THE REASONI NG THAT IT IS CONSIDERED AS NOT ASSESSABLE TO TAX UNLESS' THE-' ARBITRAL PRO CEEDINGS HAVE ATTAINED FINALITY SINCE EVEN INTEREST AMOUNT MAY HAVE TO BE REFUNDED BY ASSESSEE FOLLOWING PROVISION OF SECTION 144 OF THE CIVIL PRO CEDURE CODE 1908 IF THE ARBITRAL AWARD IS REVISED AT A LATER DATE. THE DECISION ABOVE IS NOT THAT OF THE JURISDICTIONA L HIGH COURT AND NO DECISION OF THE HON'BLE SUPREME COURT IS AVAILABLE. THEREFORE IT IS REITERATED THAT SINCE THE ASSESSEE ITSELF HAS DECLA RED THE INTEREST INCOMES AS BUSINESS RECEIPTS IN THE RETURNS OF INCOME FILED AGAINST NOTICES U/S 148 HENCE THERE REMAINS NO SCOPE FOR REFERRING TO THE FACT THAT SINCE THE ARBITRAL AWARD IS STILL SUB-JUDICE THE INTEREST EA RNED ON DEPOSIT OF ARBITRAL AWARD AMOUNT WAS NOT YET ASSESSABLE TO TAX. ITA NOS.1127-1130/14 ASSOCIATED CONTRACTORS 11 THE ASSESSEE AND THE GOVERNMENT THEREFORE HE REFE RRED THE MATTER TO THE ARBITRATOR. THE RELEVANT PARA OF THE ARBITRATO R AWARD READS AS FOLLOWS :- I FURTHER AWARD AND DIRECT THAT IF THE RESPONDENT S FAIL TO MAKE PAYMENT OF THE AWARDED SUM OF RS.2 76 97 205.00 WIT H 10% INTEREST AS AFORESAID WITHIN THE PERIOD OF FOUR MONTHS FROM THE DATE OF THIS AWARD THE CLAIMANT WILL BE ENTITLED TO FURTHER INT EREST @18%(EIGHTEEN PERCENT) PER ANNUM AS PER SECTION 31 SUB-SECTION 7( B) OF THE ARBITRATION AND CONCILIATION ACT 1996 FROM THE DAT E NEXT TO THE DATE OF THE AWARD TILL PAYMENT. FURTHER THE LD. AR RELIED ON THE FOLLOWING JUDGMENT S :- I) DSL ENTERPRISES (P) LTD. VS. MRS. N.C.CHANDRATRE ITO & ORS. (2013) 258 CTR (BOM) 155 : TDS-CERTIFICATE UNDER S.197-INTEREST ON ARBITRAL AW ARD-SO LONG AS THE CHALLENGE TO THE ARBITRAL AWARD IS ALIVE AND IS PENDING AND THE LEGALITY OF THE ARBITRAL AWARD HAS NOT ATTAINED FIN ALITY THE AMOUNT WHICH HAS BEEN AWARDED DOES NOT REPRESENT INCOME WH ICH HAS ACCRUED-UNLESS THOSE PROCEEDINGS ATTAIN FINALITY T HE ASSESSEE WOULD BE SUBJECT TO A POSSIBLE ORDER OF RESTITUTION NOT MERELY IN RESPECT OF THE PRINCIPAL AMOUNT OF RS. 65 CRORES B UT ALSO THE INTEREST WHICH HAS BEEN GENERATED ON THE AMOUNT WIT HDRAWN IN VIEW OF THE MANDATE OF S. 144 OF THE CPC 1908 TO PROVID E RESTITUTION IF A DECREE IS MODIFIED IN APPEAL. II) CIT VS. HINDUSTAN HOUSING AND LAND DEVELOPMENT TRUST LTD. 161 ITR 524 (SC): ADDITIONAL COMPENSATION FIXED BY ARBITRATOR-APPEAL BY GOVERNMENT AGAINST AWARD-AMOUNT DEPOSITED IN COURT-ASSESSEE PE RMITTED TO WITHDRAW ONLY ON FURNISHING SECURITY-ADDITIONAL COM PENSATION DOES NOT ACCRUE AND NOT TAXABLE AS PROFIT AT THAT STAGE. III) PARAGON CONSTRUCTIONS (INDIA) (P.) LTD. VS. CI T [2005] 142 TAXMAN 215 (DELHI) : IN THE INSTANT CASE IT WAS VERY CLEAR THAT IT WAS ONLY IN VIEW OF THE ORDER MADE BY THE HIGH COURT THAT THE AMOUNT WAS PE RMITTED TO BE WITHDRAWN AND THAT TOO ON THE FURNISHING OF A BANK GUARANTEE OF A NATIONALISED BANK AND THE APPELLANT WAS REQUIRED TO REFUND THE AMOUNT WITH INTEREST TO THE RESPONDENT IN CASE THE RESPONDENT SUCCEEDED. THEREFORE THE DETERMINATIVE DATE WOULD BE THE DATE ON WHICH THE DECISION WAS RENDERED BY THE HIGH COURT A ND IT WAS FOR THAT RELEVANT YEAR THAT THE INCOME-TAX WOULD HAVE T O BE ASSESSED AS IT COULD BE SAID THAT THE AMOUNT ACCRUED ON THAT DATE ONLY. [PARA 11] ITA NOS.1127-1130/14 ASSOCIATED CONTRACTORS 13 11. IN THE RESULT ALL THE APPEALS OF REVENUE (I.E. ITA NOS.1127 1128 1129 & 1130/KOL/2014) ARE DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 26/1 0/2016. S D/ - (NARASIMHA CHARY) S D/ - (DR. A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA ; $% DATED 26/10/2016 & ()* /PRAKASH MISHRA . / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER / ( ASSTT. REGISTRAR) & ' / ITAT 1. / THE APPELLANT-ITO WARD-1(1) SILIGURI 2. / THE RESPONDENT.-M/S ASSOCIATED CONTRACTORS 3. 4 ( ) / THE CIT(A) KOLKATA. 4. 4 / CIT 5. 56 7 8 8 / DR ITAT KOLKATA 6. 7 9 / GUARD FILE. 5 //TRUE COPY//