Calcutta High Court
C I T W B-Iv vs M/S. Orissa Synthetics Ltd on 4 March, 2009
Author: Pinaki Chandra Ghose
Bench: Pinaki Chandra Ghose
ITA No. 124 of 2000
IN THE HIGH COURT AT CALCUTTA
Constitutional Writ/Civil Appellate/Ordinary Original Civil Jurisdiction
ORIGINAL SIDE
C I T W B-IV,CAL. Plaintiff/Petitioner/Applicant
Versus
M/S. ORISSA SYNTHETICS LTD. Defendant/Respondent
BEFORE:
The Hon'ble JUSTICE PINAKI CHANDRA GHOSE The Hon'ble JUSTICE RUDRENDRA NATH BANERJEE Date : 4th March, 2009.
The Court : - This appeal is admitted on the following questions of law:
"Whether on the facts and circumstances of the case the Income-tax Appellate Tribunal correctly interpreted the section 43B of the Income Tax Act and deleting addition of Rs.11,94,072 made by the Assessing Officer under section 43B of the Act?"
We have heard learned Counsel for the parties. It appears in this matter that the only point in dispute is disallowance of Rs.11,94,072/- under section 43B of the Income Tax Act. Loan was granted by the financial institution to the assessee. The Assessing Officer took into account the claim of the assessee that the amount in question was permissible as a deduction as and by way of mutual agreement with the financial institution. The unpaid interest has been converted into a term loan. However, it was held by the Assessing Officer that the prohibition contained in section 43B was absolute and prohibited deductions in computation of the total income of any assessee where any amount payable to the financial institutions was not actually paid during the year.
The matter went up to the Tribunal and the Tribunal held as follows:
"In view of the above three judgments of the ITAT, as far as the instant case is also concerned, we are of the opinion that on conversion of the outstanding interest amount to loan, the financial Institution considered the interest amount as having been paid. The provisions of Sect. 43B should not, therefore, be attracted to the outstanding interest which cannot be considered to have remained outstanding any further once the same was converted to loans. We, therefore, uphold the order of the ld. CIT(A) in deleting the disallowance made under section 43B."
It appears to us and has fairly conceded by Dr. Pal the learned Senior Advocate for the assessee/respondent that after the amendment of section 43B and which came into effect retrospectively therefore it cannot be said that the amount of interest which has been converted into loan as a term loan by the financial institution the assessee can get any benefit since it has not actually paid the amount and the said section has been amended with retrospective effect. In view of that Dr. Pal submitted that he can not stand in the way of the department.
Accordingly, the appeal is allowed in favour of the appellant department and the question is answered in the negative in favour of the department.
All parties concerned are to act on a xerox signed copy this order on the usual undertakings.
Urgent xerox certified copy of this order, if applied for, be supplied to the parties subject to compliance with all requisite formalities.
(PINAKI CHANDRA GHOSE, J.) (RUDRENDRA NATH BANERJEE, J.) dg/