Calcutta High Court
Commissioner Of Income Tax vs Binani Industries Ltd on 3 March, 2014
Author: Girish Chandra Gupta
Bench: Girish Chandra Gupta
ORDER SHEET
IN THE HIGH COURT AT CALCUTTA
Special Jurisdiction
[Income Tax]
ORIGINAL SIDE
GA No. 3214 of 2013
ITAT No. 174 of 2013
COMMISSIONER OF INCOME TAX, CENTRAL-I, KOL.
Versus
BINANI INDUSTRIES LTD.
BEFORE:
The Hon'ble JUSTICE GIRISH CHANDRA GUPTA
The Hon'ble JUSTICE SUDIP AHLUWALIA
Date : 3rd March, 2014.
For Appellant : Md. Nizumuddin, Advocate
For Respondent : Mr. J. P. Khaitan, Senior Advocate with
Mr. Moloy Dhar and Mr. A.K. Dey, Advocates The Court : Revenue has come up in appeal against a judgment and order dated 15th March, 2013 passed by the Appellate Tribunal dismissing an appeal preferred by the revenue. The facts and circumstances, briefly stated, are as follows:
For the assessment year 2005-06 a notice under Section 148 of the Income Tax Act, hereinafter referred to as the said Act, was issued on 26th August, 2009. The reasons for reopening indicated in the notice are as follows:
"On perusal of the assessment records that the following discrepancies are found:2
It is seen from the record that the assessee had paid interest to the tune of Rs.8,59,78,653/- to Binani Cement Ltd. No TDS has been deducted in payment of such intrest.
As per section 40(a)(ia) such payment becomes no deductible on which TDS; as required by IT Act has not been deducted."
The Assessing Officer by his order dated 24th December, 2009 passed under Section 143(3)/147 disallowed interest under Section 40(a)(ia) for a sum of Rs.8,59,78,653/-. Challenging the order of the Assessing Officer, an appeal was preferred before the CIT(A) by the assessee.
From the judgment and order dated 9th March, 2011 passed by the CIT(A) allowing the appeal of the assessee, it appears that the assessee contended that no tax was deductible at source for the following reasons:
"The holding company is utilizing the money on account of the back-to- back loan availed by BCL. In other words, due to the restructuring of the company from time to time and as BIL has stood as a guarantor for loan utilized from the Bank.
In essence, the company BIL is paying the interest on the loan taken from the Bank(s) by subsidiary company BCL. Therefore it is merely an extended arm of the banking loan in holding company and subsidiary company. Similar principle has been accepted and in view of the back-to-back loan and the transactions being extended are of the company, it is submitted that no TDS on the interest payment is applicable as bank loan obtained by BCL was only advanced to BIL."
The CIT(A) did not, however, go into the contention raised by the assessee and proceeded to allow the appeal on the ground that the case was reopened by the A.O. on a mere change of opinion.
3
Aggrieved by the order of the CIT(A), the revenue preferred an appeal. The learned Tribunal by its judgment and order dated 15th March, 2013 without going into the contention of the assessee, indicated above, endorsed the views taken by the CIT(A). In the circumstances, the revenue has come up in appeal before this Court.
Whether the power under Section 148 was exercised by the Assessing Officer due to any change of opinion or the income had really escaped assessment was essentially a question of fact. The contention of the assessee was that tax was not deducted because it was not deductible. Therefore, some amount of exercise in order to find out whether the contention of the assessee was correct was required both on the part of the CIT(A) and the Tribunal, regard being had to the fact that they are the fact finding authorities. Surprisingly they did not think it necessary to do any such thing and proceeded to dispose of the matter merely on the basis that the exercise of power was based on change of opinion.
We have no doubt in our mind that without application of mind they had disposed of the matter. In the circumstances, both the orders passed by the CIT(A) and the Tribunal are set aside. The matter is remanded to the CIT(A) for a decision afresh. The CIT(A) shall decide the question as regards the legality of exercise of power under Sections 147 and 148 after going into the claims and contentions raised by the assessee including the submission that no tax was deductible at source.
The appeal is thus disposed of.
(GIRISH CHANDRA GUPTA, J.) (SUDIP AHLUWALIA, J.) sm AR[CR]