INCOME TAX OFFICER, WARD-3(1)(1), AHMEDABAD, VEJALPUR V. NANA LAYJA POWER COMPANY LIMITED, AHMEDABAD

ITA 1457/AHD/2024

AI Insights

The case involves an appeal by the Income Tax Officer against Nana Layja Power Company Ltd., concerning the assessment year 2014-15. The core issue was the addition of Rs.1,17,75,568 as interest income on temporarily parked project funds, which the Assessing Officer (AO) had deemed taxable under 'Income from Other Sources'. However, the Commissioner of Income Tax (Appeals) reversed this decision, categorizing the interest income as capital in nature and related to project funds, thus not taxable under the said head. The Revenue's appeal to the Income Tax Appellate Tribunal was dismissed based on the monetary threshold for tax effect set by the CBDT, which was not met in this case.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 472304 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-11-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 11-11-2024
• Assessment Year: 2014-2015
• Appeal Filed On: 08-08-2024
• Other Referred Cases: Tuticorin Alkali Chemicals & Fertilizers Ltd. v. CIT, Adani Power Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SU RENDRA KUMAR
• Keywords: Tax effect
• Section: 143(3); 56

Judgement Text

" आयकर अपीलीय अिधकरण, अहमदा बा द \u0012ा यपीठ “डी“, अहमदा बा द । IN THE INCOME TAX APPELLATE TRIBUNAL “ D ” BENCH, AHMEDABAD सु\u0018ी सुिच\u001aा का \u001bले, \u0012ा ियक सद\u001d एवं \u0018ी मकरंद वसंत महा देवकर, लेखा सद\u001d क े सम#। ] ] BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI MAKARAND V. MAHADEOKAR, ACCOUNTANT MEMBER आयकर अपील सं /ITA No.1457/Ahd/2024 िनधा \u0010रण वष\u0010 /Assessment Year : 2014-15 The Income Tax Officer Ward-3(1)(1) Ahmedabad बनाम/ v/s. Nanalayja Power Company Ltd. 301-303, Kaivanna Complex Panchwati, Ahmedabad - 380 006 (Gujarat) \u0014थायी लेखा सं./PAN: AADCN 45111 F अपीलाथ&/ (Appellant) '( यथ&/ (Respondent) Assessee by : -None- Revenue by : Shri Surendra Kumar, Sr.DR सुनवाई की तारीख/Date of Hearing : 11/11/2024 घोषणा की तारीख /Date of Pronouncement: 12/11/2024 आदेश/O R D E R PER MAKARAND V. MAHADEOKAR, AM: This appeal by the Revenue arises from the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC) [hereinafter referred to as “CIT(A)”], dated 11/06/2024, for the Assessment Year (AY) 2014-15, wherein the CIT(A) deleted the addition of Rs.1,17,75,568/- made by the Assessing Officer [hereinafter referred to as “AO”] u/s.56 of the Act in the assessment order passed under Section 143(3) r.w.s. 147 of the Income Tax Act, 1961 [hereinafter referred to as “the Act”], dated 27/11/2019. ITA No.1457/Ahd/2024 ITO vs. Nana Layja Power Company Ltd. Asst. Year : 2014-15 2 Facts of the case: 2. The AO had reopened the assessment under Section 147 of the Act on the grounds that interest income of Rs.1,17,75,568/-, earned on temporarily parked project funds, had escaped assessment. During the reassessment proceedings, the AO concluded that this interest income was liable to tax under the head \"Income from Other Sources,\" relying on the principles laid down in the case of Tuticorin Alkali Chemicals & Fertilizers Ltd. v. CIT [(1997) 227 ITR 172 (SC)]. 3. In appeal, the CIT(A) held that the interest income was capital in nature, directly related to the funds used for project purposes and, hence, should be adjusted against the capital work-in-progress (CWIP). The CIT(A) relied on precedents, such as, decision of Co-ordinate Bench in the case of Adani Power Ltd. reported at (2015) 155 ITD 239, distinguishing the facts from Tuticorin Alkali Chemicals & Fertilizers Ltd. (supra) and deleting the addition. 4. The Revenue's primary ground before us is that the CIT(A) erred in deleting the addition made by the AO, treating the interest income as “Income from Other Sources” under Section 56 of the Act. Additionally, the Department sought leave to amend or add grounds before the final hearing, but no amendments were introduced. 5. During the course of the hearing, none appeared on behalf of assessee. The Departmental Representative (DR) confirmed that the tax effect in this ITA No.1457/Ahd/2024 ITO vs. Nana Layja Power Company Ltd. Asst. Year : 2014-15 3 appeal is below the threshold prescribed in Circular No. 09/2024, issued by the Central Board of Direct Taxes (CBDT) on 17th September 2024. The Circular raised the monetary limits for filing appeals before various appellate authorities, with the revised limit for appeals before the Income Tax Appellate Tribunal (ITAT) being Rs.60 lakhs. 5.1. The DR further submitted that the Assessing Officer had verified and confirmed that this appeal falls within the scope of the CBDT Circular on low tax effect, and no exceptions under Paragraph No. 3.1 or 3.2 of Circular No. 5/2024 were applicable. 6. In view of the CBDT Circular No. 09/2024, which prescribes a threshold of Rs.60 lakhs as the minimum tax effect for filing appeals before the ITAT, and given that the tax effect in this case is below this threshold, we find that the Revenue’s appeal is not maintainable. 6.1. In the absence of any exceptions as outlined in Circular No. 5/2024, we find that this appeal does not warrant further adjudication. 6.2. Based on the above facts and the confirmation by the DR and AO, the appeal filed by the Revenue is dismissed as non-maintainable in light of CBDT Circular No. 09/2024 on low tax effect. ITA No.1457/Ahd/2024 ITO vs. Nana Layja Power Company Ltd. Asst. Year : 2014-15 4 7. In the result, the appeal of the Revenue stands dismissed. Order pronounced in the Open Court on 12th November, 2024 at Ahmedabad. Sd/- Sd/- (SUCHITRA KAMBLE) JUDICIAL MEMBER (MAKARAND V. MAHADEOKAR) ACCOUNTANT MEMBER अहमदाबाद/Ahmedabad, िदनांक/Dated 12/11/2024 टी.सी.नायर, व.िन.स./T.C. NAIR, Sr. PS आदेश की #ितिलिप अ$ेिषत/Copy of the Order forwarded to : 1. अपीलाथ% / The Appellant 2. #&थ% / The Respondent. 3. संबंिधत आयकर आयु' / Concerned CIT 4. आयकर आयु' ) अपील ( / The CIT(A)-(MFAC), Delhi 5. िवभागीय #ितिनिध , आयकर अपीलीय अिधकरण , राजोकट/DR,ITAT, Ahmedabad, 6. गाड\u0010 फाईल / Guard file. आदेशानुसार/ BY ORDER, स&ािपत #ित //True Copy// सहायक पंजीकार (Asstt. Registrar) आयकर अपीलीय अिधकरण, ITAT, Ahmedabad 1. Date of dictation (word processed by Hon’ble AM in his laptop) : 11.11.2024 2. Date on which the typed draft is placed before the Dictating Member. : 11.11.2024 3. Date on which the approved draft comes to the Sr.P.S./P.S : 4. Date on which the fair order is placed before the Dictating Member for pronouncement. : 5. Date on which fair order placed before Other Member : 6. Date on which the fair order comes back to the Sr.P.S./P.S. : 12.11.24 7. Date on which the file goes to the Bench Clerk. : 12.11.24 8. Date on which the file goes to the Head Clerk. : 9. The date on which the file goes to the Assistant Registrar for signature on the order. : 10. Date of Despatch of the Order : "