Principal Commissioner Of Income ... vs West Bengal Housing Board (Pan: ...
2021 Latest Caselaw 1519 Cal/2

Form No.(J2)



                        IN THE HIGH COURT AT CALCUTTA
                      SPECIAL JURISDICTION (INCOME TAX)
                                ORIGINAL SIDE


Present :

THE HON'BLE JUSTICE T.S. SIVAGNANAM

                     A N D

THE HON'BLE JUSTICE HIRANMAY BHATTACHARYYA



                                 IA NO.GA/1/2017
                               (Old GA/2815/2017)
                                  ITAT/298/2017

               PRINCIPAL COMMISSIONER OF INCOME TAX-11, KOLKATA
                                      -Versus-
                     WEST BENGAL HOUSING BOARD (PAN: AAAJW0019K)


For the Appellant:    Mr. P. K. Bhowmick, Adv.

For the Respondent: Mr. Subhabrata Dutta. Adv.

Mr. Debashis Sarkar, Adv.

Mr. Avra Majumdar, Adv.

Heard on : 06.12.2021

Judgment on : 06.12.2021

T. S. SIVAGANANAM, J. : The appeal filed by the revenue under

Section 260A of the Income Tax Act, 1961 (the 'Act' in brevity) is

directed against the order dated 22nd March, 2017 passed by the

Income Tax Appellate Tribunal, Kolkata "A" Bench (the 'Tribunal'

in short) in ITA No.284/Kol/2014 for the assessment year 2009-10.

The revenue has raised the following substantial questions

of law for consideration:

"(a) Whether on the facts and in the circumstances of the case and under the law, the Learned Tribunal was justified in law in upholding the decision of the CIT(A) and reversing the decision of the assessing officer whereby the Learned Tribunal allowed deduction in full the assessee's claim of the entire income from the interest from fixed deposits made out of accumulated profits and reserves as income derived from the industrial undertaking for deduction, which the assessee claimed as its business income by filing a revised return subsequently?

(b) Whether on the facts and in the circumstances of the case and under the law the Learned ITAT erred in allowing the interest income earned on fixed deposits made out of accummulated profits and reserves of the assessee as income derived from business and allowing the same to be deducted under Section 80IB of the Income Tax Act?"

(c) Whether the Learned Income Tax Appellate Tribunal was correct in facts as well as in law in giving a correct interpretation of the phrase "derived from" appearing in Section 80IA of the Income Tax Act, 1961?"

We have Mr. P. K. Bhowmick, learned counsel for the

appellant/revenue and Mr. Subhabrata Dutta, learned counsel

assisted by Mr. Debashis Sarkar and Mr. Avra Majumdar, learned

Advocates for the respondent/West Bengal Housing Board, the

assessee.

The short issue which falls for consideration is whether

the accrued interest in the hands of the respondent/assessee is to

be treated as income from business thereby entitling the

respondent/assessee for exemption under Section 80IB(10) of the

Act. Assessing Officer though did not have any material to show

that the respondent/assessee had income from other sources, on a

technical issue that such relief was not claimed by the assessee

in its original return but only in the revised return, was of the

view that this is an after-thought and denied the relief. Apart

from that fact certain other observations were made by the

assessing officer. The assessee being aggrieved carried the

matter in appeal to the Commissioner of Income Tax (Appeals)-XIX,

Kolkata (CIT(A)). The CIT(A) by the order dated 12th December,

2013 allowed the appeal. Aggrieved by the same, the revenue

preferred appeal to the tribunal which was dismissed by the

impugned order.

We have elaborately heard learned counsel for the parties

and carefully perused the materials placed on record. We find that

the order passed by the CIT(A) is sustainable both in law as well

as on facts. The CIT(A) rightly construed the factual position

and held that the interest earned by the assessee accrued from

fixed deposits which were made out of business income of the

assessee. Apart from that the assessee had no other source of

income. The assessee is a Government of West Bengal undertaking

and is engaged in the development of housing projects which was

initially done by the housing Department of the Government of West

Bengal and in the year 1972 the respondent was established and

projects were developed by the respondent by constructing LIG/MIG

and HIG flats for sale to the general public. The CIT(A) on going

through the facts found that the income of the respondent/assessee

is only from sale of flats. The CIT(A) also examined as to

whether the observation of the assessing officer that the assessee

did not make such a claim in the original return but only in the

revised return was considered for its correctness as to whether

the same could have been a ground to reject the revised return and

deny the claim for exemption. The CIT(A) noted that the earning

of interest was not from the 'first degree source' and the same

could not be shown by the assessee as 'income from other sources'

in the original computation and hence revised computation was

filed by the assessee during the course of assessment proceedings

and that the reason for rejecting the same as assigned by the

assessing officer was incorrect. The CIT(A) rightly noted the

decision of the Hon'ble Supreme Court in CIT vs. Calcutta National

Bank Ltd. reported in (1959) 37 ITR 171(SC) wherein the Supreme

Court held that "business" is a word of very wide connotation and

applying the said decision to the facts of the case it was held

that the income should be treated as business income. The

tribunal on its part, examined the correctness of finding recorded

by the CIT(A) and approved by same. More importantly, the

tribunal noted that the assessing officer himself has allowed

deduction under similar circumstances while completing the

assessment for the assessment year 2006-07 under Section 143(3) of

the Act.

Thus, we find that the tribunal was right in rejecting the

revenue's appeal. In the result, the appeal fails and is

dismissed and the substantial questions of law are answered

against the revenue.

The connected application for stay (IA No.GA/1/2017, old

No.GA/2815/2017)) also stands closed.

(T.S. SIVAGNANAM, J.)

I agree.

(HIRANMAY BHATTACHARYYA, J.)

A/s./bp