COMMISSIONER OF INCOME TAX Vs. ORIENT BEVERAGES LTD

JUDGEMENT

(1.) ON the application of the CIT, West Bengal-III, Calcutta, the following question has been referred by the Tribunal for decision by this Court :

(2.) THE reference arises out of the assessment of M/s Orient Beverages Ltd. for the asst. yrs. 1984- 85 and 1988-89. THE company (hereinafter referred to as the assessee), is engaged in the business of purchasing land or taking the same on lease putting up construction thereon and letting out the building for rent. THE two main properties held by the assessee at the material time were at No. 50, Chowringhee Road, Calcutta, and the building was known as Tiveli Park Building, 225C, A.J.C. Bose Road, Calcutta. In the assessment order for the asst. yr. 1984-85, the AO allowed a deduction of Rs. 5,61,042 being payable to Calcutta Municipal Corporation on the amount of municipal taxes outstanding. THE rent received in respect of the Tiveli Park building was considered as "Property income" whereas, the rent received from the building at Chowringhee Road was assessed as "business income". THE CIT initiated a proceeding under s. 263 of the IT Act and held that the AO was wrong in allowing deduction in respect of interest payable to the Calcutta Municipal Corporation since the interest was part of the municipal tax itself, and was liable to be disallowed under s. 43B of the IT Act, (hereinafter referred to as the Act) as the same had not been actually paid. In respect of the asst. yrs. 1988-89, the ITO himself disallowed the interest of Rs. 8,83,503 under s. 43B of the Act. THE disallowance was upheld by the CIT(A).

(3.) MR. Agarwal, learned Advocate appearing for the Department however, submits that although the aforesaid question was only framed by the Tribunal, even then the Department would be entitled to argue before this Court relating to the other two questions which were heard by the Tribunal. To give an answer to this submission, we examined the entire materials on record, and also the judgments and orders passed by the AO, CIT(A) and also the Tribunal. After a perusal of the aforesaid judgments and orders and considering the fact the said questions were already decided by the Tribunal and excepting the question as referred to hereinabove, nothing was urged before the Tribunal, we are not inclined to permit MR. Agarwal, to raise the questions which were already decided by the Tribunal, Let us now come back to the question already framed by the Tribunal which has been referred for our decision. Before we proceed to consider the decisions cited by the learned counsel for the parties, it would not be out of place to reproduce s. 43B of the IT Act which is as follows: