Principal Commissioner Of Incometax, Kolkata-4, Kolkata v. Eveready Industries India Limited

ITAT/96/2017IA No.GA/2/2017 (Old No.GA/830/2017) IN THE HIGH COURT AT CALCUTTASpecial Jurisdiction (Income Tax)ORIGINAL SIDE PRINCIPAL COMMISSIONER OF INCOMETAX, KOLKATA-4, KOLKATA -Versus- EVEREADY INDUSTRIES INDIA LIMITED Appearance:Mr. Smarajit Roychowdhury, Adv.Mr. Madhu Jana, Adv....for the appellant.Mr. Asim Choudhury, Adv....for the respondent. BEFORE: The Hon’ble JUSTICE T.S. SIVAGNANAM -And- The Hon’ble JUSTICE HIRANMAY BHATTACHARYYA The Court : This appeal by the revenue filed under Section 260A of the Income Tax Act (the ‘Act’ in brevity) isdirected against the order dated 3[rd] February, 2016 passed by theIncome Tax Appellate Tribunal, B-Bench, Kolkata (the ‘Tribunal’)in ITA No.94/Kol/2012 for the assessment year 2005-06. The revenue has raised the following substantial questions of law for consideration: “a)Whether on the facts and in the circumstances ofthe case the Learned Income Tax Appellate Tribunal, “B” Bench Kolkata was justified in law in upholding the order of theCommissioner of Income Tax (Appeals) in deleting thedisallowances of Rs.31.76 lacs made by the Assessing Officerunder Section 43B of Income Tax Act, 1961 on account ofprovision for leave encashment written back and Rs.256.32lacs on account of foreign exchange fluctuation, a contingentliability and its purported finding in this regard arearbitrary, unreasonable and perverse?b) Whether on the facts and in the circumstances of thecase the Learned Income Tax Appellate Tribunal, “B” BenchKolkata was justified in law in upholding the order of theCommissioner of Income Tax (Appeals) in deleting thedisallowances of Rs.31,30,99,581/- on account of obsoletestocks written off, Rs.1,57,42,006/- on account of expensesfor shifting Chennai Plant and Rs.4,06,77,996/- on account ofupfront fees paid to ICICI Bank thought that the same was notrouted through Profit and Loss Account nor claimed asdeduction out of profit but claimed as deduction in revisedcomputation of income filed with revised return and itspurported findings in this regard are arbitrary, unreasonableand perverse? c) Whether on the facts and in the circumstances of thecase the Learned Income Tax Appellate Tribunal, “B” BenchKolkata was justified in law in upholding the order of theCommissioner of Income Tax (Appeals) in holding that sale offactory land at Guindy, Chennai gave rise to capital gainsand not business profit and its purported findings in thisregard are arbitrary, unreasonable and perverse?” We have heard Mr. Smarajit Roychowdhury, learned Counselfor the appellant/revenue and Mr. Asim Choudhury, learned counselfor the respondent/assessee. c) Whether on the facts and in the circumstances of thecase the Learned Income Tax Appellate Tribunal, “B” BenchKolkata was justified in law in upholding the order of theCommissioner of Income Tax (Appeals) in holding that sale offactory land at Guindy, Chennai gave rise to capital gainsand not business profit and its purported findings in thisregard are arbitrary, unreasonable and perverse?” We have heard Mr. Smarajit Roychowdhury, learned Counselfor the appellant/revenue and Mr. Asim Choudhury, learned counselfor the respondent/assessee. On going through the order passed by the tribunal, wefind that the tribunal was considering six issues in all. Therevenue has raised three substantial questions of law before uswhich are covered in the six issues which were before thetribunal. The first of the issues was whether the Commissioner ofIncome Tax (Appeals) (in short CIT(A)) was correct in deleting thedisallowance made by the assessing officer under Section 43B ofthe Act on account of provisions for leave encashment writtenback. The tribunal had re-appreciated the factual position andexamined the consistent practice followed by the assessee inobtaining valuation report for ascertaining the incremental leaveencashment liability and after taking note of the entire facts,came to the conclusion that the final statements drawn by theassessee are in compliance with the statutory requirements, suchas, the Companies Act and the computation of the total income hasbeen done in accordance with the Act. Furthermore, the tribunalrightly noted that the liability was contingent in nature and hasnot crystallised into actual liability and will not be allowed asdeduction while computing the total income. Thus the tribunalafter re-examining the facts upheld the finding of the CIT(A).Thus, we find that no substantial question of law arisingtherefrom.The second issue was with regard to whether the CIT(A)was correct in deleting the disallowance on account of foreignexchange fluctuation. On this issue, the tribunal perused the facts, the profit and loss accounts of the assessee and upheld thefinding rendered by the tribunal by taking note of the decision ofthe Hon’ble Supreme Court in Commissioner of Income Tax, Delhi vs.WoodwardGovernor India (P). Ltd. reported in [2009]179 Taxman 326(SC). Thus, there is no error in the finding rendered by thetribunal.The tribunal was considering three other issues togetherand recorded its finding in paragraph 15 of the impugned order.The three issues being whether the CIT(A) was correct in deletingdisallowance of obsolete stock written offby the assessee;whether the CIT(A) was right in deleting the disallowance ofexpenses for shifting of Chennai plant; and, whether CIT(A) wascorrect in deleting the disallowance on account of upfront fees,paid to ICICI Bank. We have perused the finding recorded by thetribunal and we find that the tribunal has elaborately discussedthe facts before affirming the view taking by CIT(A). We findthat no question of law much less substantial question of lawarising for consideration.The last ground was with regard to whether CIT(A) wascorrect in holding that the sale of factory land at Guindy,Chennai gave rise to capital gain and not to business profit. Onthis issue, the tribunal after noting the finding rendered by theassessing officer, as to how the CIT(A) reversed the same, on itspart, re-examined the factual position and elaborately consideredthe matter, took note of the decision of the Hon’ble Supreme Court in CIT vs. G. Venkataswami Naidu reported in 35 ITR 594(SC)wherein the Hon’ble Supreme Court held that the question whethergain made out of purchase and sale of the land, is an accretionorcapital profit which may depend on particular facts andcircumstances. After noting the said decision, the tribunal onfacts, held that the view taken by the CIT(A) was fully justified.Thus, we find that there is no error in the manner in which thetribunal has approached the matter on all the aforementionedissues and we find that there is no question of law much lesssubstantial questions of law arising for consideration in thisappeal.In the result, the appeal (ITAT/96/2017) fails and standsdismissed. Consequently, the stay petition (IA No.GA/2/2017 (OldNo.GA/830/2017) is also dismissed. (T.S. SIVAGNANAM, J.) (HIRANMAY BHATTACHARYYA, J.) A/s./skc.