M/s H.P. Infrastructure Development Board, Shimla v. Ld Principal Commissioner of Income Tax, Shimla

ITA 426/CHANDI/2016 | 2011-2012
Pronouncement Date: 05-10-2016 | Result: Allowed

Appeal Details

RSA Number 42621514 RSA 2016
Assessee PAN AAALH0040D
Bench Chandigarh
Appeal Number ITA 426/CHANDI/2016
Duration Of Justice 5 month(s) 10 day(s)
Appellant M/s H.P. Infrastructure Development Board, Shimla
Respondent Ld Principal Commissioner of Income Tax, Shimla
Appeal Type Income Tax Appeal
Pronouncement Date 05-10-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted Not Allotted
Tribunal Order Date 05-10-2016
Date Of Final Hearing 28-09-2016
Next Hearing Date 28-09-2016
Assessment Year 2011-2012
Appeal Filed On 25-04-2016
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH CHANDIGARH BEFORE SHRI BHAVNESH SAINI JUDICIAL MEMBER AND SMT. ANNAPURNA GUPTA ACCOUNTANT MEMBER ITA NO.426/CHD/2016 ASSESSMENT YEAR : 2011-12 M/S H.P. INFRASTRUCTURE VS THE PR.CIT DEVELOPMENT BOARD SHIMLA. NEW HIMRUS BUILDING CART ROAD SHIMLA. PAN: AAALH0040D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VISHAL MOHAN RESPONDENT BY : SHRI RAVI SARANGAL DATE OF HEARING : 28.09.2016 DATE OF PRONOUNCEMENT : 05.10.2016 O R D E R PER BHAVNESH SAINI JM THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF LD. CIT SHIMLA DATED 16.03.2016 FOR ASSESSMENT YEAR 2011-12 CHALLENGING THE ORDER UNDER SECTION 263 OF THE INCOME TAX ACT. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE FILED RETURN OF INCOME AT NIL INCOME WHICH WAS SUBJECTED TO SCRUTINY ASSESSMENT UNDER SECTION 143( 3) OF THE ACT VIDE ORDER DATED 10.02.2014 ACCEPTING N IL INCOME. WHILE REVIEWING THE ASSESSMENT ORDER AND 2 EXAMINING THE ASSESSMENT RECORDS THE CIT NOTICED T HAT ASSESSEE HAD ADVANCED A SUM OF RS. 67 CRORES ON 16.11.2005 TO HIMACHAL ROAD TRANSPORT CORPORATION T O DISCHARGE ITS LIABILITY AND THE CLOSING BALANCE ON 31.03.2011 WAS RS. 58.79 CRORES. THIS LOAN WAS APPROVED WITH THE FOLLOWING CONDITIONS : I) AN INTER CORPORATE TRANSFER/LOAN OF RS. 67 CR. F ROM IDB TO HRTC ON BEHALF OF THE STATE GOVERNMENT HAS BEEN APPROVED. II) THAT THE LOAN WILL BE PAID BY HRTC IN TE N YEARS REGULARLY WITH NO MORATORIUM III) THAT THE INTEREST ON THIS LOAN FOR THE F IRST THREE YEARS WILL BE PAID BY THE STATE GOVT. AND AFTER THAT BY THE HRTC REGULAR LY . 3. THE CIT FURTHER NOTED THAT ASSESSEE WAS COMPLETE D WITHOUT MAKING PROPER INQUIRY AND INVESTIGATION INT O THE ISSUE AND FACTS. THE SHOW CAUSE NOTICE UNDER SECTION 263 WAS ISSUED AS TO WHY THE ASSESSMENT ORD ER SO FRAMED UNDER SECTION 143(3) OF THE ACT SHOULD NO T BE MODIFIED. THE REASON IN ISSUE OF NOTICE UNDER SECT ION 263 WAS THAT ASSESSEE WAS LOCAL AUTHORITY HAD FOLL OWED MERCANTILE SYSTEM OF ACCOUNT BUT NO INTEREST WAS CHARGED FROM HRTC ON THE OUTSTANDING LOAN OF RS. 58 .79 CR FOR THE YEAR ENDING ON 31.03.2011. THE INTEREST WAS REQUIRED TO BE ADDED TO THE INCOME OF THE ASSESSEE. 4. THE ASSESSEE FILED A WRITTEN REPLY BEFORE CIT AN D IT WAS SUBMITTED THAT A SUM OF RS. 67 CR WAS ADVANCED TO HRTC ON BEHALF OF THE STATE GOVERNMENT VIDE SANCTIO N 3 LETTER DATED 30.11.2005. THE HRTC SHALL PAY INTERE ST DIRECTLY TO THE STATE GOVERNMENT THEREFORE RECIPI ENT WAS THE GOVERNMENT AND NO INTEREST ACCRUED TO THE ASSESSEE. THEREFORE THERE IS NO QUESTION OF MAKIN G ANY ADDITION AGAINST THE ASSESSEE. THE SAME VIEW HAVE BEEN ACKNOWLEDGED BY ITAT CHANDIGARH BENCH IN ASSESSEE'S CASE FOR ASSESSMENT YEAR 2007-08 COPY OF WHICH IS ALREADY PLACED ON RECORD THEREFORE NO ADVERSE INFERENCE IS CALLED FOR IN THE MATTER. 5. THE CIT HOWEVER DID NOT ACCEPT CONTENTION OF T HE ASSESSEE AND NOTED THAT THE CIT HAS JURISDICTION TO INTERFERE WHEN TWO CONDITIONS ARE SATISFIED I.E. TH E ORDER PASSED IS ERRONEOUS AND IN SO FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE. SINCE ASSESSING OFFICER HAS T AKEN A MISTAKEN VIEW OF LAW AND HAS NOT APPLIED HIS MIND THEREFORE ORDER IS LIABLE TO BE SET ASIDE. IT WAS FURTHER NOTED THAT ORDER OF ITAT FOR ASSESSMENT YEAR 2007-0 8 HAVE BEEN CHALLENGED BY THE REVENUE BEFORE HON'BLE HIGH COURT AND THE MATTER IS STILL PENDING. THE AP PEAL FOR ASSESSMENT YEAR 2009-10 HAS ALSO BEEN FILED BY THE REVENUE WHICH IS ALSO PENDING. IT WAS THEREFORE NOTED THAT SINCE ASSESSING OFFICER FAILED TO MAKE PROPER INQUIRY AND INVESTIGATION INTO THE ISSUE THEREFORE ISSUE REMAINED UNVERIFIED. THE ASSESSMENT ORDER WAS THEREFORE SET ASIDE THE ASSESSING OFFICER WAS DIRE CTED TO MAKE ASSESSMENT AFRESH IN ACCORDANCE WITH LAW. 4 6. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE CIT ISSUED SHOW CAUSE NOTICE ON THE FACT THAT ASSESSEE HAD ADVANCED A SUM OF RS. 67 CR TO HRTC ON CERTAIN CONDITIONS MENTIONED ABOVE. THE ASSESSING OFFICER DID NOT MAK E PROPER ENQUIRY ON THIS ISSUE AND INTEREST INCOME WA S NOT ADDED BACK TO THE INCOME OF THE ASSESSEE. HOWE VER THE ASSESSMENT ORDER UNDER SECTION 143(3) OF THE AC T DATED 10.02.2014 CLEARLY REVEALED THAT ASSESSING OF FICER HAD TAKEN UP SIMILAR ISSUE IN ASSESSMENT PROCEEDING S AFTER CALLING FOR EXPLANATION OF THE ASSESSEE AND VERIFYING THE CONDITIONS OF GRANT OF AMOUNT IN QUES TION TO HRTC. THE ASSESSEE STATED BEFORE ASSESSING OFFI CER THAT VIDE BOARD RESOLUTION DATED 15.07.2010 IT WAS FURTHER DECIDED THAT HRTC SHALL PAY INTEREST DIRECT LY TO THE STATE GOVERNMENT. AS THE RECIPIENT AND PAYER W ERE GOVERNMENT NO INTEREST ACCRUED TO THE ASSESSEE WHATEVER AND AS SUCH NO QUESTION OF CREDITING THE SAME AROSE AT ALL. THE ASSESSING OFFICER AFTER CONSIDE RING THE REPLY OF THE ASSESSEE AND MATERIAL ON RECORD ACCEPTED EXPLANATION OF THE ASSESSEE AND DID NOT MA KE ANY ADDITION ON ACCOUNT OF ACCRUAL OF INTEREST ON L OAN TO HRTC. THE NIL INCOME WAS ACCEPTED. 6(I) THE ASSESSEE SUBMITTED BEFORE CIT THAT THE SIM ILAR MATTER IN THE CASE OF THE ASSESSEE WAS CONSIDERED B Y ITAT CHANDIGARH BENCH IN ITA 1434/2010 FOR ASSESSMENT YEAR 2007-08 VIDE ORDER DATED 30.03.2011 5 COPY OF WHICH IS FILED AT PAGE 40 OF THE PAPER BOOK . THE TRIBUNAL IN THE CASE OF SAME ASSESSEE CONSIDERED T HE ISSUE OF ACCRUAL OF INTEREST ON THE SAME AMOUNT AND HAS GIVEN THE FOLLOWING FINDING WE FIND MERIT IN THE CLAIM OF ASSESSEE THAT THE SAID INTEREST IF ANY ACCRUED TO THE STATE GOVERNMENT AS INCOME OF THE ASSESSEE BOARD AF TER EXPENDITURE WAS THE INCOME OF THE STATE GOVERNMENT AND WHERE THE SAME IS TO BE RECEIVED BY THE STATE GOVERNMENT AND ALSO PAID BY THE STATE GOVERNMENT NO SUCH INTEREST ACCRUES OR IS TO BE ACCOUNTED FOR BY THE ASSESSEE BOARD. HENCE NO SUCH INTEREST IS ASSESSA BLE IN THE HANDS OF THE ASSESSEE. THE TRIBUNAL ALLOWED THE APPEAL OF THE ASSESSEE AND DELETED THE ENTIRE ADDIT ION ON ACCOUNT OF INTEREST ON ADVANCE TO HRTC. THE ORDE R OF THE TRIBUNAL HAVE NOT BEEN ACCEPTED BY THE REVENUE BECAUSE APPEAL IS FILED BEFORE HON'BLE HIGH COURT W HICH IS STILL PENDING. HON'BLE MADHYA PRADESH HIGH COUR T IN THE CASE OF GOVINDRAM SEKSARIA CHARITY TRUST V ITO 168 ITR 387 HELD AS UNDER : HELD THAT TILL THE ORDER PASSED BY THE TRIBUNAL WAS SET ASIDE THE REVENUE WAS BOUND BY THE ORDER PASSED BY THE TRIBUNAL. THEREFORE THE NOTICE AND THE DRAFT ASSESSMENT ORDERS ISSUED BY THE INCOME-TAX OFFICER WERE LIABLE TO BE QUASHED. AND IN THE CASE OF CIT VS DARSHAN TALKIES 217 ITR 7 44 HELD AS UNDER : 6 THE DECISION OF THE HIGH COURT IS BINDING AND THE PENDENCY OF A PETITION FOR SPECIAL LEAVE TO APPEAL TO THE SUPREME COURT FROM SUCH A DECISION CANNOT OBLITERATE ITS IMPACT. IT IS BINDING UNTIL IT IS REVERSED OR OVERRULED. 7. IT IS ADMITTED FACT THAT THE ORDER OF THE TRIBUN AL FOR ASSESSMENT YEAR 2007-08 (SUPRA) HAVE NOT BEEN REVERSED BY THE HON'BLE HIGH COURT TILL DATE THERE FORE THE ORDER OF THE TRIBUNAL ON IDENTICAL FACT AND ISS UE IS BINDING ON INCOME TAX AUTHORITIES. TILL THE ORDER PASSED BY THE TRIBUNAL WAS SET ASIDE REVENUE WAS BOUND BY THE ORDER PASSED BY THE TRIBUNAL. 8. IN THIS CASE THE TRIBUNAL PASSED ORDER ON 30.03.2011 WHICH IS STILL IN FAVOUR OF THE ASSESSEE ON IDENTICAL ISSUE AND ASSESSING OFFICER PASSED THE ASSESSMENT ORDER ON 10.02.2014 WHICH WAS ON SIMILAR LINE AS HAVE BEEN DIRECTED BY THE TRIBUNAL THAT NO INTEREST ACCRUED TO THE ASSESSEE. THEREFORE THE O RDER PASSED BY THE ASSESSING OFFICER WAS STRICTLY IN ACCORDANCE WITH LAW AND AS SUCH THE ASSESSMENT ORD ER CANNOT BE TREATED AS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE. FURTHER C IT IS NOT JUSTIFIED IN HOLDING THAT ASSESSING OFFICER HAS NOT APPLIED HIS MIND TO THE FACTS OF THE CASE AND HENCE ALSO PASSED ASSESSMENT ORDER WITHOUT MAKING PROPER INQUIRIES. THE ASSESSING OFFICER EXAMINED THE ISSU E IN DETAIL AND FINDINGS HAVE BEEN GIVEN BY THE ASSESSIN G OFFICER ON THE SIMILAR WAY AS HAVE BEEN CONSIDERED BY 7 THE TRIBUNAL. MERE PENDENCY OF THE DEPARTMENTAL AP PEAL BEFORE HON'BLE HIGH COURT IS NO GROUND TO TAKE A CONTRARY VIEW. SINCE NO INTEREST INCOME IS ASSESSA BLE IN THE HANDS OF THE ASSESSEE THEREFORE CIT WAS NOT JUSTIFIED IN INITIATING THE PROCEEDINGS UNDER SECTI ON 263 OF THE ACT. THE PROCEEDINGS UNDER SECTION 263 OF T HE ACT IN FACTS AND CIRCUMSTANCES OF THE CASE ARE CLEA RLY ABUSE OF THE PROCESS OF LAW AND CANNOT BE SUSTAINED IN LAW. 9. IN THIS VIEW OF THE MATTER WE SET ASIDE THE IMPUGNED ORDER UNDER SECTION 263 OF THE ACT AND RES TORE THE ASSESSMENT ORDER UNDER SECTION 143(3) DATED 10.02.2014. 10. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (ANNAPURNA GUPTA) (BHAVNESH SA INI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 5 TH OCTOBER 2016. POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT DR ASSISTANT REGISTRAR ITAT/CHD