Ratan Saha, Kolkata v. ITO, WD-22(4), KOLKATA, Kolkata

ITA 296/KOL/2016 | 2012-2013
Pronouncement Date: 29-11-2017 | Result: Partly Allowed

Appeal Details

RSA Number 29623514 RSA 2016
Assessee PAN AMAPS3981Q
Bench Kolkata
Appeal Number ITA 296/KOL/2016
Duration Of Justice 1 year(s) 9 month(s) 3 day(s)
Appellant Ratan Saha, Kolkata
Respondent ITO, WD-22(4), KOLKATA, Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 29-11-2017
Appeal Filed By Assessee
Tags No record found
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 29-11-2017
Assessment Year 2012-2013
Appeal Filed On 26-02-2016
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : KOLKATA [BEFORE HONBLE SHRI ABY. T. VARKEY JM & SHRI M. BALAGANESH AM ] I.T.A NO. 296/KOL/201 6 ASSESSMENT YEAR : 2012-1 3 RATAN SAHA -VS- ITO WARD-22(4) KOLKATA [PAN: AMAPS 3981 Q] (APPELLANT) (RESPONDE NT) FOR THE APPELLANT : SHRI MIRAJ D. SHAH FOR THE RESPONDENT : SHRI ARINDAM BHATTACHARJ EE ADDL. CIT DATE OF HEARING : 07.11.2017 DATE OF PRONOUNCEMENT : 29.11.2017 ORDER PER M.BALAGANESH AM 1. THIS APPEAL BY THE REVENUE ARISES OUT OF THE ORD ER OF THE LD. COMMISSIONER OF INCOME TAX(APPEALS)-6 KOLKATA [IN SHORT THE LD. CI T(A)] IN APPEAL NO. 389/CIT(A)-6/KOL/2014-15 AGAINST THE ORDER PASSED BY THE ITO WARD-22(4) KOLKATA [IN SHORT THE LD. AO] U/S 143(3) OF THE INC OME TAX ACT 1961 [HEREINAFTER REFERRED TO AS THE ACT] DATED 28.01. 2015 FOR THE ASSESSMENT YEAR 2012-13. 2. THE FIRST ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN UPHOLDING THE DISALLOWANCE OF INTEREST IN THE SUM OF RS. 16 25 347/- IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSESS EE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF RUNNING OF CINEMA HALLS. THE ASSESSEE R UNS AJANTA CINEMA IN KOLKATA 2 ITA NO.296/KOL/2016 RATAN SAHA A.YR.2012-13 2 AND RUPASI CINEMA AT AGARTALA. THE ASSESSEE HAS DEB ITED INTEREST OF RS. 21 75 966/- ON ITS BORROWED FUNDS WHICH HAD BEEN IN VESTED IN RUPASI CINEMA AT AGARTALA. THE TOTAL AMOUNT INVESTED AS ON 31.03.20 12 IN RUPASI CINEMA BY THE ASSESSEE WAS RS. 1 41 86 935/-. SINCE THE CONSTRUC TION OF RUPASI CINEMA HALL WAS NOT COMPLETED BEFORE 31.03.2012 THE ASSESSEE H AD REFLECTED THE AMOUNTS INVESTED THEREON UNDER THE HEAD CAPITAL WORK IN PRO GRESS IN THE BALANCE SHEET OF M/S AJANTA CINEMA. THE LD. AO OBSERVED THAT THE ASS ESSEE IN THE BALANCE SHEET OF AJANTA CINEMA (PROPRIETARY CONCERN) HAD TAKEN LOAN OF RS. 1 88 12 487/- AND THAT THE OWN FUNDS AVAILABLE IN THE BALANCE SHEET OF AJA NTA CINEMA BY WAY OF PROPRIETORS CAPITAL WAS INSUFFICIENT TO COVER UP T HE INVESTMENT IN RUPASI CINEMA AT AGARTALA. THE LD. AO APPLIED THE PROVISO TO SECT ION 36(1)(III) OF THE ACT AND HELD THAT THE INTEREST ON BORROWED FUNDS ATTRIBUTAB LE TO RUPASI CINEMA SHOULD BE CAPITALIZED BY THE ASSESSEE AND ACCORDINGLY HE ARR IVED AT THE PROPORTIONATE INTEREST FIGURE OF RS. 16 25 347/- AS THE FIGURE TO BE CAPITALIZED AND HENCE DISALLOWED THE SAME IN THE ASSESSMENT. THE ACTION O F THE LD. AO WAS UPHELD BY THE LD. CIT(A). AGGRIEVED THE ASSESSEE IS IN APPEA L BEFORE US ON THE FOLLOWING GROUNDS: 2. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE C ASE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UPHOLDING THE ADDI TION OF RS. 16 25 347/- ON ACCOUNT OF INTEREST ON LOAN. THE ADDITION WAS NOT C ALLED FOR AND HENCE THE SAME BE DELETED. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND THAT THE LD. AR FILED THE BALANCE SHEET OF AJANTA CINEMA AS ON 31.03.2011 AND AS ON 31.03.2012 BEFORE US WHICH IS ALREADY ON RECORD BEFORE THE LOWER AUTHORI TIES. FROM THE SAID BALANCE SHEET AS ON 31.03.2012 HE ARGUED THAT THE ASSESSEE IS HAVING OWN FUNDS AS UNDER: (I) CAPITAL ACCOUNT 11 92 926/- (II) INTEREST FREE UNSECURED LOAN 19 00 000/- 3 ITA NO.296/KOL/2016 RATAN SAHA A.YR.2012-13 3 (III) CURRENT LIABILITIES 83 50 699/- TOTAL 1 14 43 625/- HE ARGUED THAT THE LD. AO HAD NOT PROVED ONE ON ONE NEXUS OF BORROWED FUNDS BEING UTILIZED FOR MAKING INVESTMENT IN RUPASI CINE MA. HENCE PRESUMPTION WOULD RELY IN FAVOUR OF THE ASSESSEE THAT OWN FUNDS HAD BEEN USED BY THE ASSESSEE FOR INVESTMENT IN RUPASI CINEMA. THOUGH WE ARE IN AGREEMENT WITH THIS ARGUMENT OF THE LD. AR TO BE IN CONSONANCE WITH THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. BR ITANNIA INDUSTRIALS LTD. REPORTED IN 280 ITR 525 (CAL) WE FIND THAT FROM THE PERUSAL OF THE BALANCE SHEET OF THE ASSESSEE AS ON 31.03.2012 THAT THE ASSESSEE IS VE STED WITH OWN FUNDS ONLY TO THE EXTENT OF RS. 1 14 43 625/-. THE ASSESSEE HAS GOT I NTEREST BEARING LOANS TO THE TUNE OF RS. 1 94 28 964/-. THE TOTAL INVESTMENT MADE IN RUPASI CINEMA AS ON 31.03.2012 IS 1 41 86 935/-. HENCE FROM THE REVIEW AND FINANCIAL STATEMENT OF THE ASSESSEE IT COULD BE SEEN THAT PART OF THE BOR ROWED FUNDS I.E. RS. 27 43 310/- (14186935-11443625) HAS BEEN DIVERTED FOR INVESTMEN T IN RUPASI CINEMA BY THE ASSESSEE AND INTEREST PAID PROPORTIONATELY TO THE E XTENT OF REMAINING INVESTMENT OF RS. 27 43 310/- SHOULD BE CAPITALIZED AND NOT ELIGI BLE TO BE CLAIMED AS REVENUE EXPENDITURE IN ACCORDANCE WITH THE PROVISO TO SECTI ON 36(1)(III) OF THE ACT. HENCE WE DIRECT THE LD. AO TO DETERMINE THE PROPOR TIONATE DISALLOWANCE OF INTEREST ACCORDINGLY. ACCORDINGLY GROUND NO. 2 RAI SED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 5. THE LAST GROUND TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN UPHOLDING THE ADDITION OF RS. 25 6 1 012/- ON ACCOUNT OF AMUSEMENT TAX IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 4 ITA NO.296/KOL/2016 RATAN SAHA A.YR.2012-13 4 6. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSESS EE HAS SHOWN AN AMOUNT OF AMUSEMENT TAX PAYABLE UNDER THE HEAD CURRENT LIABI LITIES TO THE TUNE OF RS. 40 83 681/- AS ON 31.3.2012. THIS SUM REPRESENTS AM USEMENT TAX COLLECTED BY THE ASSESSEE FROM THE VARIOUS CINE GOERS ALONG WITH THE SALE OF TICKETS AND SINCE THE MATTER WAS SUB JUDICE BEFORE THE COURT OF LAW WITH REGARD TO LIABILITY T O PAY THE SAID AMUSEMENT TAX TO THE COMPETENT AUTHORITY THE ASSESSEE CHOSE TO RETAIN THE SAME AS LIABILITY IN ITS BOOKS OF ACCOUNTS. THE LD. AO HOWEVER SOUGHT TO TREAT THE SAID LIABILITY OF RS. 40 83 681/- AS INCOME OF THE ASSESSEE. HOWEVER HE FOUND THAT THE ASSESSEE HAD DULY REMITTED THE SUM OF RS. 15 25 669/- TOWARDS AMUSEMENT TAX ON OR BEFORE 30.09.2012 AND ACCORDINGLY GRANTED DED UCTION FOR THE SAME U/S 43B OF THE ACT. HENCE HE ADDED THE SUM OF RS. 25 61 01 2/- TO THE TOTAL INCOME OF THE ASSESSEE. THIS ACTION OF THE LD. AO WAS UPHELD BY T HE LD. CIT(A). AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US ON THE FOLLOWIN G GROUNDS: 3. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE C ASE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UPHOLDING THE ADDI TION OF RS. 25 61 012/- ON ACCOUNT OF AMUSEMENT TAX. THE ADDITION WAS NOT CALL ED FOR AND HENCE THE SAME BE DELETED. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS. AT THE OUTS ET WE FIND THAT THE COLLECTION OF AMUSEMENT TAX BY THE ASSESSEE FROM THE VARIOUS CINE GOERS ALONG WITH SALE OF TICKETS CONSTITUTES A TRADING RECEIPT LIABLE TO BE TAXED IN TERMS OF THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF CH OWRINGHEE SALES BUREAU PVT. LTD. VS. CIT REPORTED IN [1973] 87 ITR 542 (SC ). HOWEVER WE FIND THAT THE ASSESSEE HAD SHOWN AMUSEMENT TAX LIABILITY AS ON 31 .03.2011 AT RS. 29 77 066/- AND AS ON 31.03.2012 AT RS. 40 83 681/-. HENCE THE AMUSEMENT TAX CALCULATED DURING THE YEAR IS ONLY RS. 11 06 615/- (4083681-29 77066) WHICH IS TO BE TAXED AS A TRADING RECEIPT FOR ASSESSMENT YEAR 2012-13. I T IS NOT IN DISPUTE THAT THE ASSESSEE HAS ALREADY REMITTED A SUM OF RS. 15 25 66 9/- TOWARDS AMUSEMENT TAX ON 5 ITA NO.296/KOL/2016 RATAN SAHA A.YR.2012-13 5 OR BEFORE THE DUE DATE OF FILING THE RETURN OF INCO ME U/S 139(1) OF THE ACT AND HENCE THE ASSESSEE IS ELIGIBLE FOR DEDUCTION OF TH E SAME U/S 43B OF THE ACT. THE DECISION AS TO WHETHER TO TREAT THE AMUSEMENT TAX L IABILITY AS ON 31.03.2011 AMOUNTING TO RS. 29 77 066/- AS TRADING RECEIPT CAN NOT BE CONSIDERED IN ASSESSMENT YEAR 2012-13 AS IT PERTAINS TO ASSESSMEN T YEAR 2011-12. ACCORDINGLY GROUND NO. 3 RAISED BY THE ASSESSEE IS PARTLY ALLO WED. 8. GROUND NOS. 1 AND 4 RAISED BY THE ASSESSEE ARE GENERAL IN NATURE AND DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION. 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 29.11.2017 SD/- SD/- [A.T. VARKEY] [ M.BALAGANESH ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 29.11.2017 SB SR. PS COPY OF THE ORDER FORWARDED TO: 1. RATAN SAHA C/O D J SHAH & CO. KALYAN BHAVAN 2 ELGIN ROAD KOLKATA-700020. 2. ITO WARD-22(4) KOLKATA 3. C.I.T(A)- KOLKATA 4. C.I. T.- KOLKATA. 5. CIT(DR) KOLKATA BENCHES KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O. ITAT KOLKATA BENCHE S 6 ITA NO.296/KOL/2016 RATAN SAHA A.YR.2012-13 6