Principal Commissioner Of Income Tax-2, Kolkata v. Apex Enterprises (I) Limited

ITAT/205/2017 IA NO: GA/2/2017(Old No.GA/1801/2017)IN THE HIGH COURT AT CALCUTTASPECIAL JURISDICTION (INCOME TAX)ORIGINAL SIDE PRINCIPAL COMMISSIONER OF INCOME TAX-2, KOLKATAVERSUSAPEX ENTERPRISES (I) LIMITED BEFORE : THE HON’BLE JUSTICE T.S. SIVAGNANAMAnd THE HON’BLE JUSTICE HIRANMAY BHATTACHARYYADate : 7[th] March, 2021 Appearance:- Mr. S.N. Dutta, Adv.Mr. Soumen Bhattacharya, Adv.… For AppellantMr. R.K. Murarka, Adv. Ms. Sutapa Roychowdhury, Adv.Ms. Aratrika Roy, Adv. … For Respondent The Court : This appeal by the revenue filed under Section 260Aof the Income Tax Act, 1961 (the Act, for brevity) is directed againstthe composite order dated 18[th] March, 2016, passed by the IncomeTax Appellate Tribunal, “A” Bench, Kolkata (Tribunal) in ITANo.1796/Kol/2008 and ITA No.285/Kol/2008 for assessment year2001-02. The revenue has raised the following questions of law forconsideration :- I.Whether on the facts and in the circumstances of the case, theLearned Tribunal erred in facts as well as in law in holding thatthe principal business of the assessee is granting of loans and II. not trading in shares and therefore explanation to section 73 ofthe Income Tax Act will not apply in the facts of the instantcase? Whether on the facts and in the circumstances of the case, theLearned Tribunal erred in law and in facts in dismissing theappeal filed by the revenue in not treating the interest ofRs.3,04,18,767/- receivable by the assessee for the Assessmentyear 2001-02 as income following the mercantile system ofaccounting when interest payable by the assessee has beenclaimed and allowed under the system on accrual basis and noton actual basis? We have heard Mr. S.N. Dutta, learned standing Counselappearing for the appellant and Mr. R.K. Murarka, learned Counselappearing for the respondent/assessee. Learned Counsel for the respondent/assessee submitted thatthe present appeal cannot be pursued by the revenue on the ground oflow tax effect. In this regard, the learned Counsel has drawn ourattention to the order of assessment dated 31[st] March, 2004, the orderof re-assessment dated 11[th] October, 2006 and the findings renderedby the Commissioner of Income Tax (Appeals)-IV, Kolkata [CIT(A)] toshow that the tax effect is nil. Mr. S.N. Dutta, learned standing counsel appearing for theappellant/revenue submitted that he has been instructed by thedepartment to state that the notional tax effect is Rs.3,20,14,745/-. Itwas not clear as to why the authorities have mentioned the overall tax effect to be notional. Therefore, we heard the matter in detail and wefind that the CIT(A) as well as the Tribunal granted relief to theassessee upon examining the total facts. In this regard, it isworthwhile to note the following finding recorded by the CIT(A): “On these facts therefore, I find force in submissions of the A/Rthat the debtors did not ever accept their liability to pay interestand what was accounted in assessee’s books was a hypotheticalincome being unilateral claim for interest. I also note that inReturn for A.Y. 2007-08 the assessee did not claim deductionsfor bad debts as assessee is agitating the assessment of suchincome in appeal for A.Y.2001-02. Considering the totality ofthe facts, I am therefore inclined to accept submissions of theA/R that Rs.3,04,18,767/- did not represent assessee’s realincome and therefore not chargeable to tax in A.Y 2001-02. TheAO is accordingly directed to exclude interest ofRs.3,04,18,767/- from assessee’s total income. Ground Nos. 3to 6 allowed.” The correctness of the above factual finding was examined bythe Tribunal and the Tribunal concurred with the CIT(A) and also tooknote of the decision of Hon’ble Supreme Court in the case ofCommissioner of Income Tax –versus- Vasisth Chay Vyapar Ltd.,reported in (2018) 90 taxmann.com 365 (SC) and by which thedecision in the case of Commissioner of Income Tax –versus- VasisthChay Vyapar Ltd., reported in (2011) 330 ITR 440 (Delhi) wasaffirmed. The finding rendered by the Tribunal on the said issue is asfollows: The correctness of the above factual finding was examined bythe Tribunal and the Tribunal concurred with the CIT(A) and also tooknote of the decision of Hon’ble Supreme Court in the case ofCommissioner of Income Tax –versus- Vasisth Chay Vyapar Ltd.,reported in (2018) 90 taxmann.com 365 (SC) and by which thedecision in the case of Commissioner of Income Tax –versus- VasisthChay Vyapar Ltd., reported in (2011) 330 ITR 440 (Delhi) wasaffirmed. The finding rendered by the Tribunal on the said issue is asfollows: “From the above discussion, we understand that assessee hasshown interest income in its books of account but while framing of assessment before AO requested to exclude the income fromassessment on the ground that it was never realized byassessee. From the submission of Ld. AR we find that assesseewas able to recover the principal amount during financial yearin which loan was given to above parties concerned. But AO didnot agree with the plea taken by assessee and AO added it tothe total income of assessee. In our considered view there hasto be real income before charging the tax. In the present casethe ld. DR has not brought anything on record to controvert thefindings of the ld. CIT(A). The AO has not taken theconfirmation by exercising his power under section 133(6) of theAct from the loan parties.” Thus, we find that both the CIT(A) and the Tribunal afterconsidering the factual position granted relief to the assessee and wefind that no questions of law, much less substantial questions of law,have arisen for consideration in this appeal. Accordingly, the appeal stands dismissed. With the dismissal of the appeal, the application for stay, beingIA No. GA/2/2017(Old No.GA/1801/2017), stands closed. (T.S. SIVAGNANAM, J.) (HIRANMAY BHATTACHARYYA, J.)