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2018 (6) TMI 413 - AT - Income TaxAddition under the head interest on Government loan - whether the same does not fall under the purview of section 43B where the registration has been granted to the assessee u/s 12A - Held that - In view the registration granted to the assessee u/s 12A with retrospective effect which covers the year under appeal as well as the consequent claim of the assessee for exemption u/s 11, the assessee has contended that the provision of section 43B cannot be invoked to make any disallowance in the assessee s case. DR, on the other hand, has contended that this claim made by the assessee for the first time before the Tribunal requires verification by the AO. Even the claim of the assessee for exemption u/s 11 has been set aside by the Tribunal to the AO for deciding the same in the light of registration granted to the assessee u/s 12A with retrospective effect. We therefore restore the issue relating to disallowance u/s 43B to the file of the AO for deciding the same afresh after verifying the new claim made by the assessee that the provision of section 43B cannot be invoked in its case in the light of registration granted u/s 12A with retrospective effect.
Issues:
1. Condonation of delay in filing the appeal by the Revenue. 2. Whether the deletion of addition under the head interest on Government loan by the CIT(A) was correct. 3. Whether the CIT(A) erred in giving contradictory findings in the assessee's case. 4. Exemption of the assessee from tax liability under Article 289 of the Constitution. 5. Applicability of section 43B in disallowing interest deduction. Issue 1: Condonation of Delay: The Revenue filed an appeal with a delay of 109 days due to a pending rectification application. The Tribunal allowed the application, considering the Revenue's explanation reasonable for the delay. Issue 2: Deletion of Addition - Interest on Government Loan: The CIT(A) deleted the addition of ?4,42,23,282 under interest on Government loan, stating it did not fall under section 43B of the Income Tax Act. The assessee argued that the loan was not covered by section 43B, as the State Govt. did not fall under the entities mentioned in the section. The Tribunal upheld the CIT(A)'s decision. Issue 3: Contradictory Findings by CIT(A): The CIT(A) was criticized for giving contradictory findings in the assessee's case, not maintaining judicial consistency. However, the Tribunal upheld the CIT(A)'s decision based on the specific circumstances and legal provisions. Issue 4: Tax Exemption under Article 289: The assessee, a local body under the West Bengal Town and Country Planning Act, claimed exemption under Article 289 of the Constitution. The Tribunal referred to a previous decision in favor of the assessee, supporting the exemption claim. Issue 5: Applicability of Section 43B: The Tribunal restored the issue of disallowance under section 43B to the Assessing Officer due to new claims by the assessee regarding exemption under section 11 and registration under section 12A. The Tribunal directed the AO to reevaluate the applicability of section 43B in light of the new claims. Conclusion: The Tribunal allowed the appeal by the Revenue in one case for statistical purposes and dismissed the other as infructuous. The decision was pronounced on June 6, 2018. This detailed analysis covers the key issues addressed in the legal judgment, providing a comprehensive understanding of the Tribunal's decision on each matter.
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