CIT, Kolkata-III v. Greater Calcutta Gas Supply Corporation Ltd
[Citation -2015-LL-0417-2]

Citation 2015-LL-0417-2
Appellant Name CIT, Kolkata-III
Respondent Name Greater Calcutta Gas Supply Corporation Ltd.
Court HIGH COURT OF CALCUTTA
Relevant Act Income-tax
Date of Order 17/04/2015
Assessment Year 2002-03, 2003-04
Judgment View Judgment
Keyword Tags depreciation on plant and machinery • interest on government loan
Bot Summary: The following two questions were formulated at the time ofadmission of the appeal I ) Whether on the facts and in the circumstances of the case Tribunal has erred inallowing assessees claim of Rs. 6,98,21,526/- in Financial year 2001-02 on account ofdepreciation on plant and machinery which was disallowed by the Assessing Officer andconfirmed by the CIT, by disregarding the admitted position that the authority tocapitalise the assets in question was obtained on 9th October, 2002 2 II) Whether on the facts and in the circumstances of the case Tribunal has erred inallowingAssessees claim of interest in respect of Assessment year 2003-04, amounting to Rs. 9,63,85,616/-on loan obtained from Govt. Of West Bengal which was disallowed by the Assessing Officer underSection 43B of Income Tax Act, 1961, by holding that by mere creation of a provision of liabilitythat has not yet been ascertained is not allowable under the Income Tax Act, 1961, and which wasconfirmed by the CIT Mr. Nizamuddin has not disputed that the authority to capitalise was received on11.09.2002 as would appear from the judgment of the learned Tribunal. The Board of Directors ofthe assessee company in its 70th meeting held on 24.09.2002 approved the capitalisation. There is nothing before us to show thatthe authorisation was received for the resolution to capitalise the assets after expiry of the last dateof filing of the return for the financial year 2001-02 corresponding to Assessment Year 2002-03.The assets were admittedly installed and the assessee company was utilising the same. The contention raised was that benefit of such interest couldnot be claimed by the assessee unless the interest had actually been paid, under Section 43B of theIncome Tax Act. The learned Tribunal repelled the submissions on the basis of the followingreasoning:- 3 Moreover, as interest on Government loan is not hit by section 43B, the disallowance ofinterest on Government loan to the tune of Rs. 9,63,85,616/- is not called for. The State of West Bengal or for that matter any loan from the State Government is notcovered by Section 43B of the Income Tax Act.


IN HIGH COURT AT CALCUTTA
Special Jurisdiction (Income Tax)
Original Side
Present :
Hon’ble Justice Girish Chandra Gupta
And
Hon’ble Justice Arindam Sinha
17th April, 2015
ITA 791 of 2008
CIT, Kolkata-III, Kolkata
Vs.
Greater Calcutta Gas Supply Corporation Ltd.
Md. Nizamuddin, Advocate for appellant
Mr. Avratosh Majumdar, Advocate with
Mr. P. Dudheria, Advocate for respondent
Court :- subject matter of challenge in this appeal is judgment and order dated
28th June, 2008 passed by learned Income Tax Appellate Tribunal pertaining to Assessment
Years 2002-03 and 2003-04. following two questions were formulated at time of
admission of appeal
“I ) Whether on facts and in circumstances of case Tribunal has erred in
allowing assessee’s claim of Rs. 6,98,21,526/- in Financial year 2001-02 on account of
depreciation on plant and machinery which was disallowed by Assessing Officer and
confirmed by CIT (Appeals), by disregarding admitted position that authority to
capitalise assets in question was obtained on 9th October, 2002 ?
2
II) Whether on facts and in circumstances of case Tribunal has erred in
allowing
Assessee’s claim of interest in respect of Assessment year 2003-04, amounting to Rs. 9,63,85,616/-
on loan obtained from Govt. of West Bengal which was disallowed by Assessing Officer under
Section 43B of Income Tax Act, 1961, by holding that by mere creation of provision of liability
that has not yet been ascertained is not allowable under Income Tax Act, 1961, and which was
confirmed by CIT (Appeals) ?”
Mr. Nizamuddin has not disputed that authority to capitalise was received on
11.09.2002 as would appear from judgment of learned Tribunal. Board of Directors of
assessee company in its 70th meeting held on 24.09.2002 approved capitalisation. On or
about 9th October, 2002 Board adopted accounts. Therefore, it is not fact that the
authorisation was received on 9th October, 2002. Moreover, there is nothing before us to show that
authorisation was received for resolution to capitalise assets after expiry of last date
of filing of return for financial year 2001-02 corresponding to Assessment Year 2002-03.
assets were admittedly installed and assessee company was utilising same. There is as
such no reason why depreciation should not have been allowed. first question is in the
circumstances answered in negative and against revenue.
It is not in dispute that assessee incurred its liability to pay interest as indicated in
question no.2 formulated above. contention raised was that benefit of such interest could
not be claimed by assessee unless interest had actually been paid, under Section 43B of the
Income Tax Act. learned Tribunal repelled submissions on basis of following
reasoning:-
3
“Moreover, as interest on Government loan is not hit by section 43B, disallowance of
interest on Government loan to tune of Rs. 9,63,85,616/- is not called for”.
It was never in dispute that loan was obtained by assessee from State of West
Bengal. State of West Bengal or for that matter any loan from State Government is not
covered by Section 43B of Income Tax Act. Therefore, view taken by learned Tribunal
is unexceptionable . In circumstances question no.2 is answered in negative and against
revenue.
appeal is, therefore, dismissed.
(Girish Chandra Gupta, .)
(Arindam Sinha, J.)
ANC. CIT, Kolkata-III v. Greater Calcutta Gas Supply Corporation Ltd
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