SCHENECTADY INDIA HOLDINGS P.LTD, NAVI MUMBAI V. ITO 3(3)(2), MUMBAI

ITA 1044/MUM/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79055 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-06-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 14-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VIVYESH I SHAH
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'SMC' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT ITA NO. 1044/MUM/2014 (ASSESSMENT YEAR: 2010-11) M/S. SI GROUP INDIA LTD. INCOME TAX OFFICER- 3(3)(2 ) (FORMERLY SCHENECTADY INDIA HOLDINGS P. LTD. PLOT NO. 2/1, T.T.C. INDL. AREA THANE BELAPUR ROAD, OPP. JUI NAGAR RLY STN., NAVI MUMBAI 400705 VS. MUMBAI PAN - AACCS2571D APPELLANT RESPONDENT APPELLANT BY: SHRI VIVYESH I. SHAH RESPONDENT BY: SHRI JAVED AKHTAR DATE OF HEARING: 03.06.2014 DATE OF PRONOUNCEMENT: 03.06.2014 O R D E R PER D. MANMOHAN, V.P. THIS IS AN APPEAL FILED AT THE INSTANCE OF THE ASSE SSEE COMPANY AND IT PERTAINS TO A.Y. 2010-11. 2. ADDITION OF ` 90,738/- REFERABLE TO BANK INTEREST ON FIXED DEPOSI T IS THE SUBJECT MATTER OF DISPUTE BEFORE THE TRIBUNAL. 3. ADMITTEDLY, THE ASSESSEE MADE FIXED DEPOSIT WITH TH E BANK OF NOVA SCOTIA FOR A PERIOD OF 90 DAYS WHICH ENDS ON 31.03. 2009. HOWEVER, INTEREST WAS PAID BY THE BANK ON 02.04.2009. THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. THEREFORE, THE IMPUGNED SUM W AS OFFERED TO TAX IN THE PREVIOUS YEAR RELEVANT TO A.Y. 2009-10 AND ASSESSME NT WAS COMPLETED ACCORDINGLY. THE AO IS, HOWEVER, OF THE VIEW THAT T HE BANK DEDUCTED THE TAX AT SOURCE ON 02.04.2009 AND CREDITED TO ASSESSEES ACCOUNT WITHIN THE PREVIOUS YEAR RELEVANT TO A.Y. 2010-11. THEREFORE I NTEREST ACCRUES TO THE ASSESSEE ONLY IN THE YEAR 2010-11. IN THIS REGARD H E OBSERVED THAT THE INTEREST WAS CREDITED TO ASSESSEES ACCOUNT IN THIS YEAR AND, THEREFORE, THE ASSESSEE WAS REQUIRED TO RECONCILE THE INTEREST INC OME. IN REPLY THE ASSESSEE CLAIMED TDS OF ` 45,417/- PERTAINING TO THE TOTAL INTEREST INCOME OF ITA NO. 1044/MUM/2014 SCHENECTADY INDIA HOLDINGS P. LTD. 2 ` 2,60,619/-. WITH REGARD TO TDS OF ` 4705/- IT WAS STATED THAT THE ASSESSEE COMPANY HAS NOT RECEIVED THE TDS CERTIFICATES AND, THEREFORE, IT DID NOT CLAIM TDS IN THE RETURN OF INCOME FOR A.Y. 2011-12. A CAREFUL SCRUTINY REVEALS THAT THE ASSESSEE CREDITED THE INTEREST INC OME OF ` 2,60,619/- WHEREAS IN THE P & L ACCOUNT, THE INCOME CREDITED I S ` 2,16,935/- ONLY. SINCE THE ASSESSEE FOLLOWED MERCANTILE SYSTEM OF AC COUNTING, THE INTEREST INCOME AMOUNTING TO ` 3,07,673/- AS PER 26AS SHOULD BE BROUGHT TO TAX IN THE YEAR UNDER CONSIDERATION. IN OTHER WORDS, ADDIT ION AMOUNTING TO ` 90,738/- WAS MADE TO THE TOTAL INCOME. 4. AGGRIEVED, ASSESSEE CONTENDED BEFORE THE FIRST APPE LLATE AUTHORITY THAT THE AO ERRED IN MAKING ADDITION OF ` 90,738/- BEING INTEREST DIFFERENCE BETWEEN INTEREST AS PER P & L ACCOUNT AND INTEREST AS PER 26AS. IT WAS FURTHER CLARIFIED THAT INTEREST OF ` 90,738/- HAS BEEN ACCRUED IN THE YEAR 2009-10 AND THE SAME HAS BEEN ASSESSED TO TAX IN A. Y. 2009-10 AND, THEREFORE, BRINGING THE SAME AMOUNT TO TAX IN THIS YEAR WOULD AMOUNT TO DOUBLE ADDITION. 5. THE LEARNED CIT(A) DID NOT DISCUSS THE ISSUE IN DET AIL BUT MERELY OBSERVED AS UNDER: - GROUND NO. III: THE APPELLANT BEING A COMPANY IS R EQUIRED TO FOLLOW THE MERCANTILE SYSTEM OF ACCOUNTING AND THEREFORE T HE INTEREST ACCRUED DURING THE RELEVANT PREVIOUS YEAR IS REQUIR ED TO BE CREDITED TO THE P&L A/C OF THE SAME PERIOD. THE AO IS THEREFORE JUSTIFIED IN MAKING AN ADDITION OF RS.90,738/- I.E. THE DIFFEREN CE IN INTEREST INCOME. THE SAME IS CONFIRMED. 6. FURTHER AGGRIEVED, ASSESSEE COMPANY IS IN APPEAL BE FORE THE TRIBUNAL. AT THE TIME OF HEARING THE LEARNED COUNSEL FOR THE ASSESSEE ADVERTED ATTENTION OF THE BENCH TO PAGES 53 TO 65 OF THE PAP ER BOOK TO HIGHLIGHT THAT THE IMPUGNED INTEREST INCOME WAS OFFERED TO TAX IN THE EARLIER YEAR SINCE THE INTEREST IS FOR THE PERIOD ENDING 31.03.2009 AND AS PER MERCANTILE SYSTEM OF ACCOUNTING IT ACCRUES ON THE LAST DATE. 7. THE LEARNED D.R. WAS NOT ABLE TO CONTROVERT THE CON TENTION OF THE ASSESSEE AND NO MATERIAL, WHATSOEVER, WAS FURNISHED BEFORE ME TO SHOW THAT AS PER THE TERMS OF FIXED DEPOSIT SCHEME THE INTERE ST ACCRUES ONLY ON 02.04.2009. IT IS ALSO NOT IN DISPUTE THAT THE IMPU GNED AMOUNT WAS ALREADY ITA NO. 1044/MUM/2014 SCHENECTADY INDIA HOLDINGS P. LTD. 3 OFFERED TO TAX IN THE EARLIER YEAR AND ASSESSMENT W AS COMPLETED UNDER SECTION 143(3) OF THE ACT FOR A.Y. 2009-10 ACCEPTING THE IM PUGNED INTEREST AS INCOME OF THAT YEAR. HAVING REGARD TO THE CIRCUMSTANCES OF TH E CASE I AM OF THE VIEW THAT EVEN AS PER MERCANTILE SYSTEM OF ACCOUNTING THE IMP UGNED INTEREST ACCRUES ON 31.03.2009 AND, THEREFORE, ASSESSABLE TO TAX IN A.Y . 2009-10. I THEREFORE DIRECT THE AO TO DELETE THE ADDITION MADE IN THE YEAR UNDE R CONSIDERATION. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD JUNE, 2014. SD/- (D. MANMOHAN) VICE PRESIDENT MUMBAI, DATED: 3 RD JUNE, 2014 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 7, MUMBAI 4. THE CIT 3, MUMBAI CITY 5. THE DR, SMC BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.