Income Tax Appellate Tribunal - Kolkata
Dcit, Circle-12, Kolkata, Kolkata vs M/S. Selvel Advertising Pvt. Ltd., ... on 13 September, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL "C" BENCH : KOLKATA
[Before Hon'ble Sri N.V.Vasudevan, JM & Shri Waseem Ahmed, AM]
I.T.A No. 1887/Kol/2014
Assessment Year : 2011-12
D.C.I.T., Circle-12, -vs.- M/s. Selvel Advertising Pvt. Ltd.
Kolkata Kolkata
[PAN : AAECS 8398 C]
(Appellant) (Respondent)
For the Appellant : Shri G.Mallikarjuna, CIT(DR)
For the Respondent : Shri T.K.Banerjee, AR
Date of Hearing : 04.092017.
Date of Pronouncement : 13.09.2017.
ORDER
Per N.V.Vasudevan, JM
This is an appeal by the Revenue against the order dated 11.07.2014 of C.I.T(A)- XII, Kolkata relating to A.Y.2011-12.
2. Ground No.1 raised by the revenue reads as follows :-
1. "That is the facts and in law of the case the Ld. CIT(A) erred in allowing depreciation at a rate of 100% on Hoardings Structure."
3. The Assessee is a company. It carries on business of out-door advertising, i.e., it erects and displays advertisement hoardings in places where public can see those advertisement. The Assessee had claimed 100% depreciation on hoardings. The Assessee considered hoardings as temporary structure. According to the AO the hoardings had to be considered as plant and machinery because the hoardings had a cement/iron base on which an iron structure is fabricated. On such iron structure wooden/plastic/flex/glow sign boards are erected which display advertisement. According to the AO the iron hoarding has life time for a considerable period and it is 2 ITA No.1887/Kol/2014 M/s. Selvel Advertising Pvt. Ltd.
A.Yr.2011-12 only the wooden/plastic/glow sign board that gets damaged by rain or sun shine. According to the AO the major part of the hoarding is a permanent structure and not a temporary structure. The AO accordingly disallowed depreciation @100% on hoardings as claimed by the assessee on the ground that the hoardings were purely temporary structure such as wooden structures and allowed depreciation at 15% treating them as plant and machinery.
4. On appeal by the assessee CIT(A) directed the AO to allow 100% depreciation on hoardings and in doing so the CIT(A) followed the decision of ITAT in assessee's own case on an identical issue for A.Y.2005-06 in ITA No.820/Kol/2008 order dated 11.12.2009 wherein it was held that the assessee is entitled to 100% depreciation on hoardings.
5. Aggrieved by the order of CIT(A) the revenue has raised ground no.1 before the Tribunal.
6. At the time of hearing it was agreed by the parties before us that identical issue had been decided in assessee's own case for A.Y.2009-10 and 2010-11 in ITA No.1094/Kol/2012 and ITA No.2115/Kol/2013 vide order dated 01.01.2015. The following are the relevant observations of the Tribunal :
"27. The next common issue in ITA NO.1094/Kol/2012 and ITA No.2115/Kol/2013 is against the order of CIT(A) deleting the disallowance of depreciation @ 100% on hoardings treated as temporary structures as against the treatment given by AO as plant and machinery allowing depreciation at 15%. The facts and circumstances in both the year are exactly identical i.e. AY 2009-10 and 2010-11, hence we will take up the facts from AY 2009-10.
28. We find that the CIT(A) deleted the disallowance of depreciation for the reason that the issue is covered in the assessment year 2005-06. For ths CIT(A) observed in para 4 as under:2 3 ITA No.1887/Kol/2014
M/s. Selvel Advertising Pvt. Ltd.
A.Yr.2011-12 "Ground Nos 1 10 5 of the appeal are related 10 the addition made by denying 100% depreciation on hoarding structures. I have considered the findings of the AO on this issue and the submission made by the A.R. In fact this issue has been considered by my predecessor the Ld. CIT (A) for A.Y. 2005-06 Appeal. No. 518/XII/DClT-12/07-08) dated 26.02.2008. the Hon'ble ITAT has also considered this issue for AY 2005-06 (ITA 820/Kol/2008 dt. 1 1.1 2. 2009 when the department had gone in appeal. Since this issue is covered, 1 don't find any reason to interfere in it. Therefore, addition made on this ground is deleted. As a result, the appeal is allowed.
We find that this issue is now covered by the decision of this Tribunal in AY 2005- 06 in ITA NO.820/Ko1l2008 of revenue's appeal ': wherein 100% depreciation on hoarding structure was claimed under the head temporary erections and Tribunal vide order dated I 1.12.2009 vide para 13 directed the AO to allow depreciation and held as under: -
"13. In view of the above submissions of both the parties, we reverse the order of the Ld. CIT(A) on this point and restore that of the AO. However, we direct the AO to work out the written down value of the temporary structure from the cost of the temporary structure, the depreciation allowed in the year under consideration will be reduced and the remaining amount would be written down value under the head 'temporary structure' upon which the AO will allow the depreciation in the succeeding year as per provisions of the Act. Subject to the above direction, ground no. 2 of the department's appeal for A. Y 2005-06 is allowed. "
In view of the above. we are of the view that the assessee is entitled for depreciation on hoardings. which are temporary structures, and CIT(A) has rightly allowed the same. This common issue of both the appeals of revenue is dismissed."
7. Respectfully following the decision of the Tribunal on an identical issue and on the same set of facts we dismiss ground no.1 raised by the revenue.
8. Ground No.2 raised by the revenue reads as follows :-
"2. "That on the facts and in the circumstances of the case and as per law Ld. CIT(A) erred by allowing the deduction claimed by the assessee u/ s 80IA amounting Rs. 1,33,40,998/- even though the assessee is not fulfilling the condition of 80lA."3 4 ITA No.1887/Kol/2014
M/s. Selvel Advertising Pvt. Ltd.
A.Yr.2011-12
9. This ground relates to the claim of assessee for deduction u/s 80IA(4) of the Income Tax Act, 1961 (Act). Under Sec.80IA(4) of the Act, a deduction of income derived from the business of developing and infrastructural facility while computing total income of an Assessee is allowed. The assessee derived income from display of advertisement on road and foot bridges. It developed these facilities and was permitted to display advertisement hoardings as consideration for costs it incurred in developing infrastructure facilities. The Assessee operated and maintained the roads and foot bridges. The income derived from display of advertisement hoardings is referred to as revenue derived from maintaining roadside amenities. According to the AO profits derived from developing, operating and maintaining roadside amenities cannot be considered as income derived from the business of providing infrastructural facility and he therefore denied the claim of the assessee for deduction u/s 80IA(4) of the Act.
10. On appeal by the assessee CIT(A) directed the AO to allow the deduction claimed by the assessee by following the order of CIT(A)-XII/Kol dated 23.04.2013 in appeal No.209/12-13 for A.Y.2010-11 wherein CIT(A) held that income derived by the assessee was from the business of providing infrastructural facility.
11. Aggrieved by the order of CIT(A) the revenue has raised ground no.2 before the Tribunal.
12. At the time of hearing it was agreed by the parties that identical issue considered by the Hon'ble ITAT in assessee's own case for A.Y.2004-05 in ITA NO.610/Kol/2009 order dated 30.09.2009 and this decision of ITAT was followed by the tribunal in A.Y.2006-07 to 2010-11 in ITA Nos. 657 to 659/Kol/2011, 1094/Kol/2012 and 2115/Kol/2013 vide its order dated 01.0.12015. The Tribunal in the aforesaid order held as follows :-
4 5 ITA No.1887/Kol/2014M/s. Selvel Advertising Pvt. Ltd.
A.Yr.2011-12 "3. Briefly stated facts are that the assessee claimed deduction u/s. 80l.A of the Act and in support of the same filed a certificate from Chartered Accountant in Form No.10CCB in all the assessment years, The assessee claimed deduction on profit derived from the business of development of infrastructural facilities such as Traffic Signals and foot Over Bridges, but the AO after examining in detail disallowed the claim by observing as under :
"On perusal of the explanation offered shows that the A/R did not adduce any cogent explanation to support the assessee's claim that it was engaged in the business of development: operation & maintenance of an infrastructure facility as contemplated in S 80IA(4) In the assessment order for AY 2005-06,117), predecessor elaborately discussed the reasons for concluding that installation of Traffic Signal System or construction of Foot Overbridge in lieu of obtaining Advertisement/Display rights did not amount to development: operation & maintenance of Road or Bridges as envisaged in S. 801A(4). Traffic Signal System is a facility which assists in regulating vehicular & pedestrian traffic on the road but by itself installation of such system does not amount to development of Roads, Applying the functional test one can say that installation. operation & maintenance of traffic signal system does not constitute business of development of Roads, Infrastructure facility such as Road can function sans Electric traffic signaling system also. It is not necessary for the developer of the road to install signaling system because roads can be used as Infrastructure facility even without sophisticated electronic system. In the assessee's case, it was not all involved in construction or development of roads but it installed traffic signaling system on the preexisting road network & therefore assessee 's business cannot be equated with business development. operation & maintenance of roads as envisaged in S. 801A(4). "
4. Aggrieved. assessee preferred appeal before CIT(A), who allowed the claim of assessee on the basis of assessment year 2004-05, which was initial year. wherein the Tribunal allowed the claim of the assessee vided para 5 of its order by quashing the Revision order passed by CIT-IV. Kolkata u/s. 263 of the Act in ITA No, 610/Kol/2009 for AY 2004-05 vide dated 30.09.2009, which reads as under:
"5 After hearing the rival submissions, perusing the material available on record and the case laws cited by the Ld. counsel, we find that during the assessment proceedings the AO issued a notice u/s 142( 1) on 13.12.2006, which is available at pages 16 to 19 of the paper book in which specific 5 6 ITA No.1887/Kol/2014 M/s. Selvel Advertising Pvt. Ltd.
A.Yr.2011-12 query in respect of claim of the assessee u/s. 801A was raised. which reads as under:
"(xxvi) With regard to the claim of deduction u/s 80IA, please furnish the following details.
(a) Nature of infrastructural facilities maintained clearly mentioning the details (no. .. size etc.) of structures all which advertisement are displayed.
(b) A chart showing the duration of each advertisement and the relevant income front "publicity charges ..
(c) Please state whether common head office expenses have been apportioned to these infrastructural facilities if yes, please furnish the head wise details giving the basis of apportionment. If not, the reasons thereof. ,.
In response to this notice. the assessee company submitted the details regarding the nature of infrastructural facilities maintained which included road automatic traffic signals and foot bridge vide its letter 20.11.2006 (available at pages 47 and 48 of the paper book) Para 12 of this letter reads as under.
"12. Nature of infrastructural facilities maintained-
(i) Road automatic traffic signals located at different parts of Kolkata City as mentioned in the schedules of the Agreements dated 03.10.1944, 12.11.1995 and 03.12.1997 already filed along with the ret urn. The Advertisements are displayed on structures of the said automatic traffic signals on the Road
(ii) Two numbers foot over bridges at Ranchi as per details given in the agreement dated 30.08.2001 already filed with the Return The advertisements ore displayed on the structures of the said Bridges.
The details of the income of the publicity charges received on account of the Road automatic traffic signals and footover Bridges are given under Paragraph No. 19 and 21 and in the Profit & Loss Account attached to Form No. 10CCB (Audit Report u/s. 801A(7) ] as filed with the return. "
The assessee vide its letter dated 27. 11.2006 further submitted the details of nature of infrastructural facilities maintained i.e. no. location and size of these facilities in response to item No. (xxvi-a) of AO's letter dated 13. 12.2006 and details of publicity charges front infrastructural facilities showing no. location, , bill date, period and amount of publicity charges in response to item no. (xxvi-b) of the same letter of the A.O. The details are available 01 pages 21 to 27 of the paper book. The assessee company vide its letter dated 20.12.2006 also submitted the 6 7 ITA No.1887/Kol/2014 M/s. Selvel Advertising Pvt. Ltd.
A.Yr.2011-12 details regarding the apportionment of all the expenses to the infrastructural facilities which are available at pages 28 and 29 of the paper book. The apportionment of all the expenses have been shown in the P&L Account which is evident from item no.(xxi) of Form No. 10CCB of the Audit report u/s 80IA(7) of the Act. This report is also part of the paper book from pages 6 10 15. It is clear from this that there was application of mind on the part of AO before he accepted the claim of the assessee Company u/s. 80IA of the Act. In respect of automatic traffic signals and pedestrian fee bridge this view of the A.O is in conformity with the ratio laid down by this Tribunal in the cases of Vantage Advertising Pvt. Ltd ITA No.1054 & 1055/KoI/2008 and Selvel Media Services Pvt. Ltd. In ITA No. 1065/Kol/2008, wherein bus shelters and foot bridges were considered to be part of infrastructural facilities for claiming deduction u/s. 801A of the Act. Thus , in our considered opinion, the AO has taken a possible view on the facts available on record. The law is well settled that if the AO has taken a possible view and the Ld. CIT has a different opinion on the same facts provisions of section 263 cannot be invoked and the order passed by the AO cannot be held to be erroneous and prejudicial to the interest of revenue.. Since the Ld. CIT has done the same. the order passed hi hint is not sustainable in law and hence. is hereby quashed."
Aggrieved. revenue came in second appeal before Tribunal.
5. Ld. CIT. DR. Shri Varinder Mehta relied on the decision of Hon'ble Karnataka High Court in the case of CIT Vs. Skyline Advertising Pvt. Ltd. (2015) 45 Taxrnan.com 532 (Kar). wherein it is held that the benefit u/s. 801A of the Act can be extended only to those assessees who have developed infrastructure facility as defined u/s. 801A(4) of the Act. Hon'ble High Court discussed the fact of the case that the assessee has not developed road or a toll road. bridge. highway or a rail system. However. it had developed the existing road median. erected bus shelters and light poles for its advertisement business. which. in any case cannot be treated as infrastructure development. Accordingly. Hon'ble High Court decided the question of Jaw in favour of revenue and against assessee.
6. Ld. Counsel for the assessee Shri J. P. Khaitan filed copy of judgment of Hon "ble Calcutta High Court in assessee's own case in ITAT No.49 of 2010 for the assessment year 2004-05, GA No.894 of 2010 dated 22.04.2010 whereby quashing of revision order u/s. 263 of the Act by tribunal was upheld as under:
The Court :- The Revenue has preferred this appeal under Section 260A of Income Tax Act, 1961 against the order dated 30.9.2010 of the Income Tax Appellate Tribunal 'A' Bench. Kolkata for the assessment year 2004-
05. 7 8 ITA No.1887/Kol/2014
M/s. Selvel Advertising Pvt. Ltd.
A.Yr.2011-12 The appellant proposed the following substantial questions of law :-
i) "Whether, on the facts and in the circumstances of the case, the Income-
tax Appellate Tribunal is correct in quashing the revision order under section 263 of the GA NO.894 of 2010 Income-Tax Act, 1961, passed by the Commissioner of Income-tax, on the ground that the Assessing Officer had taken one of the possible views wile, in fact. the question is one of law and not fact and incorrect appreciation of law by the Assessing Officer is amenable to correction through the instrumentality of revision order under section 263 of the Act?"
ii) "Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is correct in holding that automatic traffic signal and pedestrian foot bridge would constitute infrastructure facility defined ill clause (a) of Explanation below sub-section (4) of section 80-
1A of the Income-tax Act, 1961 ? "
Since. we are inclined to take the view that the Tribunal was right in holding that the automatic traffic signal and pedestrian foot bridge would constitute infrastructure facility as contemplated in clause (a) of the explanation to sub section (4) of Section 80-IA of the Income Tax Act, 1961, it is not necessary to answer question no. 1.
Section 80-IA provides that where the gross total income of an assessee includes any profit and gains derived by all undertaking or an from any business referred to in sub-section (4) (such business being hereinafter referred to as the eligible business"), there shall. in accordance with and subject to the provisions of this section, be allowed. In computing the total income of the assessee. a deduction of an amount equal to hundred per cent of the profits and gains derived from such business for ten consecutive assessment years.
The relevant portion of sub-section (4) reads as under.:
"(4) This section applies to-
(i) any enterprise carrying on the business [ of ( i ) developing or (ii) operating and maintaining or (iii) developing. operating and maintaining] any infrastructure facility which fulfills all the following conditions.
namely.:
(a) to (c) ...................8 9 ITA No.1887/Kol/2014
M/s. Selvel Advertising Pvt. Ltd.
A.Yr.2011-12 Explanation defines infrastructure facility as under:-
"(a) road including toll road, a bridge or a rail system:"
The Tribunal took the view that installation of automatic traffic signal and pedestrian footbridge would be an integral part of road including a bridge. We do not find any fault with the interpretation placed by the Tribunal on Clause (a) of explanation to sub-section (4) of Section 80-IA of the Income-lax Act, 1961.
In view of the above, the proposed question no.1 is academic and. Therefore we Are inclined to entertain this appeal in respect of question no.1 The appeal is. therefore. summarily dismissed ..
On this, Ld. Counsel for the assessee stated that the first AY for allowance of deduction u/s. 80lA of the Act in the case of the assessee was AY 2004-05 and this has become final after the decision of Honble Calcutta High Court confirming the order of ITAT in quashing revision order passed by CIT u/s 263 of the Act.
10. We have gone through the provision of section 80lA of the Act and the relevant sub sections (2) gives mandate to the assessee that deduction as specified in sub- section (1) may at the option of the assessee be claimed by him for any ten consecutive assessment years out of fifteen years beginning from the year in which the undertaking or the enterprise develops or begins to operate any infrastructure facility. Sub-section (5) says about initial assessment year and thereafter in subsequent assessment years for claim of deduction under this section by putting a ceiling of ten years. The period will be counted from the initial assessment year and the enterprise or the undertaking will be allowed to choose the initial year from which it wants to avail deduction for further years. The concession has to be availed within a span of 12 years beginning with the year of operation. This means that an enterprise or undertaking which chooses the fourth year of operation as the initial yea/will get deduction starting from that year. The revenue can see the pre- requisite condition for allowance of deduction to an enterprise or an undertaking in the very first year the initial year of claim of deduction. In the present ease before us, the assessee claimed deduction u/s. 80lA of the act in the assessment year 2004-05 i.e. that was the initial assessment year and in that year the matter regarding the claim of deduction has become final for the reason that Hon'ble Calcutta High Court has confirmed the allowance of deduction and revenue has not carried the matter before Hon'ble Supreme Court. Whereas the revenue has 9 10 ITA No.1887/Kol/2014 M/s. Selvel Advertising Pvt. Ltd.
A.Yr.2011-12 referred the decision of Hon'ble Karnataka High Court in the case of Skyline Advertising Pvt. Ltd .. supra. but that cannot be considered as precedent because jurisdictional High Court has taken a view in favour of assessee and that also in assessee's own case. That means the initial AY i.e. 2004-05. once the claim of deduction in respect to pre-requisite conditions for allowance of deduction has been satisfied. the same cannot be questioned in future years unless and until the revenue disturbs the initial assessment year. Hon'ble Delhi High Court in the case of Delhi Press Patra Prakashan Ltd. (No.2), supra has considered this issue by following the decision of Hon'ble Supreme Court in the case of Radhasoami Satsang. supra and of Hon'ble Bombay High Court in the case of Paul Brothers. supra and also Saurashtra Cement & Chemical Industries Ltd .. supra. Similar are the facts in the case of sister concerns of the assessee i.e. Selvel Transit Advertising Pvt. Ltd. In term of the above. we confirm the order of CIT(A) on this issue and dismiss this common issue of revenue's appeals.
13. Respectfully following the order of the Tribunal referred to above, we upheld the order of CIT(A) and dismiss ground no.2 raised by the revenue.
14. Ground No.3 raised by the revenue reads as follows :-
"3. "That is the facts and in law of the case the Ld. CIT(A) erred in allowing TDS payment made by assessee company for hoarding advertisement charges u/ s 194C instead of 194I."
15. The assessee pays Hoarding Advertisement Charges to advertisement agencies. The advertisement agencies allowed the assessee space for display of assessee's advertisement. The assessee deducted tax on the payments made to advertising agencies treating the payment as payment to a contractor within the meaning of section 194C of the Act. The case of the AO is that the payment made to the agency was in the nature of rent and therefore the Assessee ought to have been deducted at source u/s 194I of the Act. The rate of deduction of tax at source u/s 194C of the Act is less than the tax deductible at source u/s 194I of the Act. According to the AO there was a short deduction of tax. The payment made to the Advertisement Agencies were claimed as deduction while computing income from business. Since the assessee had not deducted tax at the appropriate rate, the AO invoked the provision of section 40(a)(ia) of the Act 10 11 ITA No.1887/Kol/2014 M/s. Selvel Advertising Pvt. Ltd.
A.Yr.2011-12 and disallowed the payment made to Advertisement Agencies claimed as deduction by the Assessee in computing income from business on the ground that such payment was made without deduction of tax at source at the appropriate rate and added a sum of Rs.11,41,40,674/- to the total income of the Assessee which is a payment made to the advertising agencies.
16. On appeal by the assessee the CIT(A) deleted the addition made by observing as follows :-
"It is also brought to my notice that similar disallowance of Site Hire Charges paid to traders (Advertising Agencies) was made by the Addl. Commissioner of Income Tax, range-12, Kolkata for the A.Y.2009-10 & by the Deputy Commissioner of Income tax Cir.12 Kolkata for the A.Y.2010-11 on identical grounds and the same disallowances were fully deleted by the ld. CIT(A)XII-Kolkata vide his orders for the AY 2009-10 in Appeal No.459/CIT(A)XII/12/2011-12) dated 19-04-2012 and for A.Y. 2010-11 in Appeal No.209/CIT(A)-XII/Cir-12/2012-13) dated 23-04- 2013. I also find nothing new in facts and circumstances on this issue in the present appeal case before me for the relevant AY 2011-12. Moreover, it is an established position in law that an incident of mere lower deduction of TDS doe not make an assessee in default u/s 201 of the I.T.Act, 1961.
In the light of the above discussion & findings, after perusing the entire facts of the case and following the decision & findings of my predecessor on the issue for assessment years 2009-10 & 2010-11 in the appellant's own case referred above, I am of the view that the AO was not justified in making the impugned disallowance of Rs.11,41,40,674/- on account of Higher Charges paid to traders/Advertising Agencies during the year and hence addition made on this ground is deleted and the appeal of the appellant is allowed. "
17. At the time of hearing it was agreed by the parties before us that identical issue was considered and decided by the Hon'ble ITAT on identical issue in assessee's own case for A.Y.2009-10 and 2010-11 in TA NO.1094/Kol/.2012 and 2115/Kol/2013 order dated 01.01.2015. The Tribunal held as follows :-
"31.We have heard rival submissions and gone through facts and circumstances of the case. The first contention of the assessee was that there is no change in facts since AY 2003-04 and assessee is paying these payments to co-traders and claiming the expenses. The assessee is deducting TDS qua these payments u/s.11 12 ITA No.1887/Kol/2014
M/s. Selvel Advertising Pvt. Ltd.
A.Yr.2011-12 194C of the Act and the AO making assessment u/s. 143(3) of the Act for the relevant assessment years 2003-04. 2004-05 and 2005-06 before survey and subsequent to survey also in AY 2006-07. 2007-08 and 2008-09 the position was accepted by the AO as it is. All the assessments were completed u/s. 143(3) of the Act. No disallowance of these expenses was made all through. But in this year and in subsequent AY 2010-11 this disallowance was made. Ld. counsel for the assessee first of all argued for the consistency as well as on merits that the revenue has accepted this as a contractual payment and there is no change in facts and circumstances. hence. the disallowance be deleted. On the other hand. Ld. SI'. DR accepted the argument of Ld. counsel qua the facts of the case. Once this is the position, we accept the contention of the assessee's counsel as regards to consistency that once on similar facts the revenue has accepted the payments as contractual payments now they cannot deviate. This issue has been dealt with at length in para 10 above and following the same proposition. we confirm the order of CIT(A) allowing the expenses.
32. The Ld. counsel for the assessee also made argument that on short deduction of TDS. no disallowance can be made by invoking the provisions of section 40(a)(ia) of the Act in view of the decision of Hon'ble Calcutta High Court in the case of CIT Vs. S. K. Tekriwal (2014) 361 ITR 432 (Cal). wherein it is held that the no disallowance can be made due to short deduction of TDS.
33. In view of the above two propositions. we confirm the order of CIT(A) allowing the expenses. This common issue of revenue' s appeals is dismissed."
18. In view of the aforesaid decision of the Hon'ble ITAT in assessee's own case we are of the view that there is no merit in ground no.3 raised by the revenue.
19. Ground No.4 raised by the revenue reads as follows :-
"4. "That is the facts and in law of the case the Ld. CIT(A) erred in allowing interest on delay payment of TDS as allowable expenditure u/ s. 37 of IT Act."
20. The AO noticed that the assessee had paid a sum of Rs.7,82,561/- as interest on delayed payment of tax that was deducted at source. The aforesaid sum was claimed s deduction while computing income from business. Under section 40(a)(ii) of the Act any sum paid on account of any tax levied on the profits and gains of business or profession shall not be allowed as deduction in computing income chargeable under the 12 13 ITA No.1887/Kol/2014 M/s. Selvel Advertising Pvt. Ltd.
A.Yr.2011-12 head "profit and gains of business or profession". The AO was of the view that interest on delayed payment was akin to tax levied and paid by the assessee on profits and gains of business or profession and therefore cannot be allowed as deduction.
21. On appeal by the assessee the CIT(A) was of the view that the disallowance made by the AO was not justified and the interest expenses was allowable u/s 37(1) of the Act.
22. Aggrieved by the order of CIT(A) the revenue has raised ground no.4 before the Tribunal.
23. The ld. DR relied on the order of AO. The ld. Counsel for the assessee relied on the order of CIT(A).
24. After considering the rival submissions we are of the view that the amount in question cannot be equated to a sum paid on account of tax levied on profits and gains of business or profession and therefore could not have been disallowed u/s 40(a)(ii) of the Act. It cannot be disputed that otherwise the payment of interest was wholly and exclusively for the purpose of carrying on the business of the assessee and therefore allowable as deduction u/s 37(1) of the Act. We therefore uphold the order of CIT(A) and dismiss ground no.4 raised by the revenue.
25. In the result the appeal by the revenue is dismissed.
Order pronounced in the Court on 13.09.2017.
Sd/- Sd/-
[Waseem Ahmed] [ N.V.Vasudevan ]
Accountant Member Judicial Member
Dated : 13.09.2017.
[RG PS]
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ITA No.1887/Kol/2014
M/s. Selvel Advertising Pvt. Ltd.
A.Yr.2011-12
Copy of the order forwarded to:
1. M/s. Selvel Advertising Pvt. Ltd., 10/1B, Diamond Harbour Road, Kolkata-700027.
2. D.C.I.T., Circle-12, Kolkata.
3. C.I.T.(A)- XII, Kolkata. 4. C.I.T.- IV, Kolkata.
5. CIT(DR), Kolkata Benches, Kolkata.
True copy By Order Senior Private Secretary Head of Office/D.D.O., ITAT Kolkata Benches 14