Ratan Saha Vs. ITO (ITAT Kolkata)
At the outset, we find that the collection of amusement tax by the assessee from the various cine goers along with sale of tickets constitutes a trading receipt liable to be taxed in terms of the ratio laid down by the Hon’ble Supreme Court in the case of Chowringhee Sales Bureau Ltd. vs. CIT reported in [1973] 87 ITR 542 (SC). However, we find that the assessee had shown amusement tax liability as on 31.03.2011 at Rs. 29,77,066/- and as on 31.03.2012 at Rs. 40,83,681/-. Hence, the amusement tax calculated during the year is only Rs. 11,06,615/- (4083681- 2977066) which is to be taxed as a trading receipt for assessment year 2012-13. It is not in dispute that the assessee has already remitted a sum of Rs. 15,25,669/- towards amusement tax on or before the due date of filing the return of income u/s 139(1) of the Act and hence, the assessee is eligible for deduction of the same u/s 43B of the Act.
Full Text of the ITAT Order is as follows:-
This appeal by the Revenue arises out of the order of the Ld. Commissioner of Income Tax(Appeals)-6, Kolkata [in short the Ld. CIT(A)] in appeal No. 389/CIT(A)-6/Kol/2014-15 against the order passed by the ITO, Ward-22(4), Kolkata [in short the Ld. AO] u/s 143(3) of the Income Tax Act, 1961 [hereinafter referred to as the ‘Act’] dated 28.01.2015 for the assessment year 2012-13.
2. The first issue to be decided in this appeal is as to whether the Ld. CIT(A) was justified in upholding the dis allowance of interest in the sum of Rs. 16,25,347/-, in the facts and circumstances of the case.
3. The brief facts of this issue is that the assessee is an individual engaged in the business of running of cinema halls. The assessee runs Ajanta Cinema in Kolkata and Rupasi Cinema at Agartala. The assessee has debited interest of Rs. 21,75,966/- on its borrowed funds which had been invested in Rupasi Cinema at Agartala. The total amount invested as on 31.03.2012 in Rupasi Cinema by the assessee was Rs. 1,41,86,935/-. Since, the construction of Rupasi Cinema Hall was not completed before 31.03.2012, the assessee had reflected the amounts invested thereon under the head capital work in progress in the balance sheet of M/s Ajanta Cinema. The ld. AO observed that the assessee in the balance sheet of Ajanta Cinema (proprietary concern) had taken loan of Rs. 1,88,12,487/- and that the own funds available in the balance sheet of Ajanta Cinema by way of proprietor’s capital was insufficient to cover up the investment in Rupasi Cinema at Agartala. The Ld. AO applied the proviso to Section 36(1)(iii) of the Act and held that the interest on borrowed funds attributable to Rupasi Cinema should be capitalized by the assessee and accordingly he arrived at the proportionate interest figure of Rs. 16,25,347/- as the figure to be capitalized and hence, disallowed the same in the assessment. The action of the Ld. AO was upheld by the Ld. CIT(A). Aggrieved, the assessee is in appeal before us on the following grounds:
2. For that in the facts and circumstances of the case the learned Commissioner of Income Tax (Appeals) erred in upholding the addition of Rs. 16,25,347/- on account of interest on loan. The addition was not called for and hence, the same be deleted.
4. We have heard the rival submissions. We find that the Ld. AR filed the balance sheet of Ajanta Cinema as on 31.03.2011 and as on 31.03.2012 before us, which is already on record before the lower authorities. From the said balance sheet as on 31.03.2012 he argued that the assessee is having own funds as under:
