Income Tax Appellate Tribunal - Kolkata
Riga Sugar Co. Ltd., Kolkata vs Department Of Income Tax on 19 June, 2012
आयकर अपीलीय अधीकरण, Ûयायपीठ - " B ", कोलकाता,
IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH "B" CALCUTTA
(सम¢)Before ौी ूमोद कुमार, लेखा सदःय एवं/and
Shri Pramod Kumar, Accountant Member
ौी जॉज[ म1थान, Ûयायीक सदःय)
Shri George Mathan, Judicial Member
आयकर अपील संÉया / ITA Nos. 1424 & 1425/Kol/2011
िनधॉरण वषॅ/Assessment Years: 2006-07 & 2007-08
DCIT, Circle-10, Kolkata -वनाम- M/s. Riga Sugar Co. Ltd
PAN: AABCR 3554J
-Versus-
(अपीलाथȸ/APPELLANT ) . (ू×यथȸ/RESPONDENT)
अपीलाथȸ कȧ ओर से/ ौी/Shri Ajoy Kumar Singh, ld.CIT/DR
For the Appellant/Department:
ू×यथȸ कȧ ओर से/ ौी/Shri Manoj Kataruka, Advocate, ld.AR
For the Respondent/Assessee:
सुनवाई कȧ तारȣख/Date of Hearing : 19-06-2012
घोषणा कȧ तारȣख/Date of Pronouncement: 19-06-2012
आदे श/ORDER
ौी जॉज[ म1थान, Ûयायीक सदःय) Shri George Mathan, Judicial Member:
The appeal in ITA No.1424/Kol/2011 is filed by the revenue against the order of the learned Commissioner of Income-tax (Appeals),XII, Kol in Appeal No.446/XII/Cir-10/08-09 dated 04-07- 2011 and the appeal in ITA No.1425/Kol/2011 is filed by the revenue against the order of the learned Commissioner of Income-tax (Appeals),XII, Kol in Appeal No.822/XII/Cir-10/07-08 dated 01-07- 2011 for the assessment years 2006-07 and 2007-08 respectively.
2. As both the appeals of revenue involve identical issues, the same are disposed of by this common order for the sake of convenience.
3. Shri Ajoy Kumar Singh, ld.CIT/DR represented on behalf of the revenue and Shri Manoj Kataruka, Advocate, ld.AR represented on behalf of the assessee.
ITA No.1424/Kol/2011 A.Y 2006-07 (by the revenue)4. In this revenue's appeal, the revenue has raised following ground of appeal:-
1. On the facts and circumstances of the case, the CIT(A) has erred in deleting the addition of Rs.2,91,12,682/- made by the Assessing Officer on account of excise duty pertaining to furnished goods, in accordance with the provision of section 145A.
5. It was fairly agreed by both the sides that the issue in this revenue's appeal was squarely covered by the decision of the co-ordinate bench of this Tribunal in assessee's own case in ITA No.2252/Kol/2005 & C.O No.220/Kol/05 for the A.Y 2002-03 dated 09-06-2006 as also the decision of the co-ordinate bench of this Tribunal in assessee's own case in ITA Nos.1244/Kol/06 & 1448/Kol/06 for the A.Y 2003-04 dated 22-9-2006, wherein the co-ordinate bench of this Tribunal has held as follows:-
"6. At the time of hearing .before us, it was pointed out by the ld. counsel that this issue is covered in favour of the assessee by the decision of ITAT in assessee's own case for assessment year 2002-03 vide ITA No.2252/Kol/20O5 and CO No.220/KoI/2005. Copy of the order is filed before the Tribunal wherein the ITAT has held as under :-
"Now coming to the cross objection of the assessee, it is hereby found that undisputedly the assessee is following consistently the method of paying excise duty on the products only at the time of sale and including the same in the cost of the product. Therefore, the addition of excise duty to the closing stock valued by the assessee does not at all arise, More so, in the light of the• Hon'ble Apex Court's decision in the case of Berger Paints reported in 266 ITR 99 though the assessee has paid excise duty during the period and part of it relating to the closing stock is not includible in the closing stock. Hence, the finding of the A.O. that the excise duty relatable to the closing stock is to be included in the closing stock value arrived at by the assessee is not at all tenable under law and hence the same is hereby directed to be deleted."
7. The facts of the case of the year under consideration are admittedly, identical Therefore, the ratio of the above decision would be squarely app1icable. We, therefore, respectfully following the same hold that the additions of Rs.2,87,62,000/- made by the AO to the value of closing stock u/s.145A was not justified and accordingly the same is deleted. As we have deleted the addition made by the AO to the value of closing stock on account of excise duty payable thereon, consequently we cancel the direction of the CIT(A) to allow the deduction of excise duty u/s. 43B if the payment is made before the due date for filing of the return. Accordingly, Ground No. of the assessee's appeal is allowed and of revenue's appeal is rejected."
In the circumstances, respectfully following the decisions of the co-ordinate bench of this Tribunal, the finding of the learned Commissioner of Income-tax (Appeals) on this issue stands ITA Nos.1424 & 1425/Kol/11-B-GM2 confirmed. This issue of revenue's appeal is dismissed. In the circumstances, the appeal of revenue in ITA No.1424/Kol/2011 stands dismissed.
ITA No.1425/Kol/2011 A.Y 2007-08 (by the revenue)7. In this revenue's appeal, revenue has raised following grounds of appeal :-
1) On the facts and in the circumstances of the case, the CIT(A) has erred in deleting the addition of Rs. 1,88,32,108/-
made by the Assessing Officer on account of excise duty pertaining to finished goods, in accordance with the provision of section 145A.
2) Whether, on the facts & in the circumstances of the case, Ld. CIT(A) is justified in deleting disallowance of interest of Rs. 93,31,487/- where the assessee failed to discharge its primary onus of proving that no part of the capital work-in-progress was made out of borrowed funds.
8. In regard to ground no.1, it was submitted that it was identical to ground no.1 in ITA No.1424/Kol/2011 of revenue's appeal. In the circumstances, our finding in regard to ground no.1 in ITA No.1424/Kol/2011 would apply to ground no.1 also in ITA No.1425/Kol/11 for the assessment year 2007-08. In the circumstances, the ground no.1 in ITA No.1425/Kol/2011 of revenue's appeal is dismissed.
09. In regard to ground no.2, it was submitted by the learned CIT/DR that this issue was against the action of the learned Commissioner of Income-tax (Appeals) in deleting the disallowance of interest of Rs.93,31,487/-, where the assessee has failed to discharge the onus of proving that no part of the capital work in progress was made out of the borrowed funds. It was submitted that in the course of assessment it was noticed that there was substantial capital work in progress to which the Assessing Officer had asked the assessee to show cause as to why the interest expenditure was not liable to be disallowed in view of provisions of section 36(1)(iii) of the I.T Act 1961. It was submitted that interest as claimed by the assessee was allowable as the loan had been drawn for the purpose of business. It was further submitted that the assessee had capitalised the interest as bridge loan of Rs.57,37,280/- and had shown it to be included in the capital work in progress. It was the submission that the assessee was not able to show how the balance of interest was not on account of the capital work in progress. It was the submission that the learned Commissioner of Income-tax (Appeals) had deleted the addition by holding that there was a decrease in secured loan as compared to the previous year and in respect of unsecured loan the increase was on account of loan taken for agricultural purposes specifically called agricultural loan. It was submitted that the learned Commissioner of Income-tax (Appeals) had held that no ITA Nos.1424 & 1425/Kol/11-B-GM3 part of the unsecured loans have been utilised for work in progress. It was further submitted that the assessee was having substantial cash credit loans.. It was the submission that the learned Commissioner of Income-tax (Appeals) has failed to appreciate that the assessee had not shown that the capital work in progress was not made out of the borrowed funds.
10. In reply, the learned AR has vehemently supported the order of the learned Commissioner of Income-tax (Appeals). He drew our attention to page 13 of para 7 of the order of the learned Commissioner of Income-tax (Appeals). It was submitted that as on 31-3-2006 the total loan fund was 103 crores and as on 31-3-07 was Rs. 107 crores. It was further submitted that the assessee was having own capital of Rs. 27 crores including reserve and surplus and capital work in progress as on 31-3-06 was of Rs.3.8 crores and as on 31-3-07 was only Rs. 16.75 crores. It was the submission that the assessee had substantial own interest free funds for capital work in progress and consequently, no disallowance was called for.
11. We have considered the rival submissions. A perusal of the order of the learned Commissioner of Income-tax (Appeals) clearly shows that the learned Commissioner of Income- tax (Appeals) has taken into consideration the fact that the mixed funds were used comprising of own funds and loan funds. The assumption is that own funds have been utilised unless and until anything contrary is brought on record. It is further noticed that the learned Commissioner of Income-tax (Appeals) has taken into consideration the fact that the assessee was having substantial own funds in the form of capital, which was much more than the capital work in progress. In the circumstances, we are of the view that the finding of the order of the learned Commissioner of Income-tax(Appeals) in deleting the disallowance is on a right footing and does not call for any interference. In the circumstances, this issue of revenue's appeal is dismissed.
12. In the result, both the revenue's appeals being ITA Nos. 1424/Kol/2011 & 1425/Kol/2011 for the assessment years 2006-07 & 2007-08 are dismissed as stated above.
यह आदे श खुले Ûयायालय मɅ सुनाया गया है
THIS ORDER IS PRONOUNCED IN OPEN COURT ON Dt. 19-6-2012
Sd/- Sd/-
( ूमोद कुमार, लेखा सदःय ) ( जॉज[ म1थान, Ûयायीक सदःय )
( Pramod Kumar, Accountant Member) (George Mathan, Judicial Member)
(तारȣख)
तारȣख)Date 19-06-2012
ITA Nos.1424 & 1425/Kol/11-B-GM4
*PP/SPSआदे श कȧ ूितिलǒप अमेǒषतः/ Copy of the order forwarded to:
1.. अपीलाथȸ / The Appellant : DCIT, Cir-10, P-7 Chowringhee Sq, 3rd fl., Kol-69. 2 ू×यथȸ / The Respondent- M/s. Riga Sugar Co. Ltd 14 N.S Road, Kol-1 3 आयकर किमशनर/The CIT,
4.. आयकर किमशनर (अपील)/The CIT(A)
5. वभािगय ूितनीधी / DR, Kolkata Bench
6. Guard file.
स×याǒपत ूित/True Copy, आदे शानुसार/ By order, सहायक पंजीकार/Asstt Registrar ITA Nos.1424 & 1425/Kol/11-B-GM5