Commissioner of Income-tax - IV , Kolkata v. K. N. D. Engineerins Technologies Ltd
[Citation -2014-LL-0915-55]

Citation 2014-LL-0915-55
Appellant Name Commissioner of Income-tax - IV , Kolkata
Respondent Name K. N. D. Engineerins Technologies Ltd.
Court HIGH COURT OF CALCUTTA
Relevant Act Income-tax
Date of Order 15/09/2014
Assessment Year 1992-93
Judgment View Judgment
Keyword Tags determination of loss
Bot Summary: Appearance : MR.P.K.BHOWMIK,ADVOCATE FOR APPELLANT/REVENUE MR.V.MURARKA,ADVOCATE MS.SUTAPA ROYCHOWDHURY,ADVOCATE FOR RESPONDENT. The Court : Though the appeal was admitted on a particular question on 29th March, 2012, we reframe it in the following manner : 2 Whether the Tribunal was justified in law in holding that the loss occurred in the assessment year 1992-93 and not in the assessment year 1996-97 when arbitration proceedings were concluded. There is no dispute that pursuant to a contract signed on 24th February, 1988 between CIWTC and the assessee, the assessee was entrusted to construct a jetty for Inland Water Port at Pandu, Guwahati, Assam. The Assessing Officer disallowed the claim holding it could not be allowed during the assessment year in question, that is 1992-93, as the assessee had followed the completed contract method regularly. The assessee has reported that in assessment year 1996-97 the amount received by the assessee on account of arbitration proceedings had been brought to tax. Taking into consideration the totality of the facts and the decisions of various judicial pronouncements relied upon by the asuthorized representative, on behalf of the assessee, we have no hesitation in deciding that the loss in the present case arose to the assessee during assessment year 1992-93 and thus determination of loss has got nothing to do with the receipt of compensation by the assessee through arbitration proceedings in assessment year 1996-97. 4 In our view, since the contract was terminated in December, 1991, that is, in the assessment year 1992-93, we hold that the loss had occurred in the said assessment year. The finding of the Assessing Officer that the loss has to be included in the year of its completion as the assessee followed the completed contract method, cannot be accepted as the contract was terminated in December, 1991.


ORDER SHEET ITA 285 of 2004 IN HIGH COURT AT CALCUTTA Special Jurisdiction (Income Tax) ORIGINAL SIDE COMMISSIONER OF INCOME TAX - IV , KOLKATA VS. KND ENGINEERING TECHNOLIGIES LTD BEFORE: Hon'ble JUSTICE SOUMITRA PAL Hon'ble JUSTICE DEBANGSU BASAK Date : 15TH SEPTEMBER, 2014. Appearance : MR.P.K.BHOWMIK,ADVOCATE FOR APPELLANT/REVENUE MR.V.MURARKA,ADVOCATE MS.SUTAPA ROYCHOWDHURY,ADVOCATE FOR RESPONDENT. Court : Though appeal was admitted on particular question on 29th March, 2012, we reframe it in following manner : 2 Whether Tribunal was justified in law in holding that loss occurred in assessment year 1992-93 and not in assessment year 1996-97 when arbitration proceedings were concluded. Heard Mr.P.K.Bhowmik, learned advocate for appellant and Mr. V. Murarka, learned advocate for respondent. There is no dispute that pursuant to contract signed on 24th February, 1988 between CIWTC and assessee, assessee was entrusted to construct jetty for Inland Water Port at Pandu, Guwahati, Assam. During construction, due to severe flood entire machinery got washed away. contract was terminated in December, 1991. issue relating to contract and payment thereof was before arbitrator. In assessment proceedings before Assessing Officer, assessee claimed loss of Rs.1,42,53,925/-. Assessing Officer disallowed claim holding it could not be allowed during assessment year in question, that is 1992-93, as assessee had followed completed contract method regularly. Aggrieved, assessee preferred appeal before CIT(A) but without success. Further aggrieved, assessee preferred appeal before learned Tribunal. Tribunal, after hearing parties, allowed appeal by holding, inter alia, as follows : ..The question that is to be decided is whether it is allowable in year 1992-93 or in 1996-97 when arbitration proceedings were concluded having considered factual 3 position, it is abundantly clear that loss occurred to assessee during assessment year 1992-93. There is no question about genuineness of loss incurred due to floods in river Brahmaputra. What happened in 1996-97 is only determination of extent of claim receivable by assessee through process of arbitration. assessee has reported that in assessment year 1996-97 amount received by assessee on account of arbitration proceedings had been brought to tax. Therefore, taking into consideration totality of facts and decisions of various judicial pronouncements relied upon by asuthorized representative, on behalf of assessee, we have no hesitation in deciding that loss in present case arose to assessee during assessment year 1992-93 and thus determination of loss has got nothing to do with receipt of compensation by assessee through arbitration proceedings in assessment year 1996-97. It is to be noted that during pendency of proceedings before CIT, learned Arbitrator on 14th November, 1995 had passed his award directing CIWTC to make payment of Rs.10.35 lakhs after adjustments. question is whether loss had occurred in assessment year 1992-93 or in 1996-97, year in which award was made. 4 In our view, since contract was terminated in December, 1991, that is, in assessment year 1992-93, we hold that loss had occurred in said assessment year. finding of Assessing Officer that loss has to be included in year of its completion as assessee followed completed contract method, cannot be accepted as contract was terminated in December, 1991. Hence, we uphold order passed by learned Tribunal. We, therefore, answer question by holding that Tribunal was justified in holding that loss had occurred in assessment year 1992-93. Thus, question is answered in affirmative and in favour of assessee and against revenue. Hence, appeal is dismissed. Let copy of award dated 6th November, 1995 filed by Mr. Murarka be kept on record. Urgent certified copy of this order, if applied for, be furnished to parties on priority basis. (SOUMITRA PAL, J.) (DEBANGSU BASAK, J.) ssaha AR(CR) Commissioner of Income-tax - IV , Kolkata v. K. N. D. Engineerins Technologies Ltd
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