IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH “B”, KOLKATA
[Before Hon’ble Sri N.V.Vasudevan, JM & Hon’ble Sri M.Balaganesh, AM]
Assessment Year : 2001-02
West Bengal Infrastructure Development Finance Corporation, Kolkata -vs- A.C.I.T., Circle-6,
Facts of the case
The assessee is a Government company wholly owned by the Government of West Bengal. It is a non banking finance company registered with the Department of Non-Banking Supervision, Kolkata Regional Office of Reserve Bank of India. During the previous year relevant to A.Y.2001-02 i.e. on 18.9.2000 and 18.11.2000 the assessee paid EMI to ICICI bank in respect of term of loan taken by the assessee. The EMI comprised of both repayment of principal and interest. The interest component on the payment of EMI was a sum of Rs.1,40,77,397/-. Due to inadvertence the interest payment had not been claimed as deduction in the profit and loss account, as the entire payment in question was mistakenly taken as re-payment of principal. This mistake was however noticed and rectified in the following financial year.
In the appeal filed by the assessee for A.,Y.2001-02, the assessee raised additional ground before CIT(A) and pointed out that u/s 43B(d) of the Act any payment of interest on any loan or borrowing from a financial institution shall be allowed as deduction in computing the income from business only in the year in which the interest is actually paid.
The assessee also pointed out that there was no requirement of debiting the interest expenses in question to the profit and loss account and in this regard the decision of the Hon’ble Calcutta High Court in the case of Associated Pigments Ltd. Vs 234 ITR 589 (Cal) wherein it was held that the provision in the books was not necessary for the purpose of claiming deduction u/s 43B of the Act on the basis of actual payment.
CIT(A) however rejected the claim of the assessee on the ground that the amount in question was not debited in the profit and loss account and no revised return was filed by the assessee nor was the interest expenses in question shown as allowable or disallowable u/s 43B of the Act.
Held by ITAT :
It is not in dispute that the provision of section 43B of the Act will apply to such interest payment and therefore the interest expenditure in question cannot be claimed by the assessee as deduction in any other assessment year in view of the specific bar contained in section 43B(d) of the Act. In other words irrespective of the method of accounting following by the assessee, interest, expenses of the nature referred to section 43B(d) of the Act can be allowed as a deduction only in the year in which such interest are actually paid.
The debit to the profit and loss account of an amount which is claimed as deduction u/s 43B of the Act is not a requirement and the decision of the Hon’ble Calcutta High Court in the case of Associated Pigments Ltd. Vs CIT (supra) supports the plea of the assessee in this regard.
The only objection which remains for consideration is as to whether in the absence of a revised return of income filed by the assessee making claim for deduction on account of interest expenses the deduction can be allowed. The reliance placed by the revenue in this regard is on the decision of the Hon’ble Supreme Court in the case of Goetze India Ltd. (supra) wherein it has laid down that the AO cannot consider a claim made by an Assessee before him, in the absence of such claim being made in the return of income or a revised return of income.
As rightly contended by the ld. Counsel for the assessee, such a bar does not extend to the appellate authorities under the Act. The decisions referred to by the ld. Counsel for the assessee squarely support the stand of the assessee in this regard. We, therefore, hold that a sum of Rs..1,40,77,397/- should be allowed as deduction. We hold and direct accordingly and allow the grounds raised by the assessee in this regard.