THE ITO 1(1)-4, MUMBAI V. M/S. GODAVARI CORPORATION P. LTD, MUMBAI

ITA 1147/MUM/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 1302 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 14-06-2010
• Assessment Year: 2002-2003
• Appeal Filed On: 14-02-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BALAKRISHNAN
• Assessee Lawyers: VIJAY KOTHARI
• Keywords: Revised return; TDS

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, G, MUMBAI BEFORE SHRI P.M.JAGTAP, ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO, JUDICIAL MEMBER ITA NO. 1147/MUM/2008 (ASSESSMENT YEARS: 2002-03) INCOME TAX OFFICER WARD 1(1)-4 ROOM NO.579/531A AAYAKAR BHAVAN M K ROAD MUMBAI-400020 .APPELLANT V/S GODAVARI CORPORATION P.LTD, 159, INDUSTRY HOUSE, CHURCHGATE MUMBAI-400020 PAN:AAACG1850D RESPONDENT APPELLANT BY : SHRI BALA KRISHNAN RESPONDENT BY : SHRI VIJAY KOTHARI O R D E R PER VIJAY PAL RAO,JM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 16.11.2007 OF CIT(A)-I, MUMBAI FOR THE ASSES SMENT YEAR 2002-03. 2 THE REVENUE HAS RAISED VARIOUS GROUNDS IN THIS A PPEAL, HOWEVER, THE ONLY ISSUE ARISES FOR OUR CONSIDERATIO N AND ADJUDICATION IS WHETHER IN THE FACTS AND CIRCUMSTA NCES OF THE CASE, THE CIT(A) IS JUSTIFIED IN DELETING THE ADDIT ION MADE BY ITA NO. 1147/MUM/2008 (ASSESSMENT YEARS: 2002-03) 2 THE AO OF RS.17,57,348/- ON ACCOUNT OF DIFFERENC E IN INTEREST INCOME OFFERED IN THE RETURN OF INCOME AND INTEREST INCOME AS PER THE TDS CERTIFICATE FILED BY THE ASSESSEE. 3. THE RELEVANT FACTS LEADING TO THIS ISSUE ARE TH AT IN THE REVISED RETURN OF INCOME FILED ON 23.9.2003 THE ASS ESSEE DECLARED A TOTAL INCOME OF RS.1,67,55,460/- FOLLOW ING ITS AMALGAMATION WITH M/S SCIMITAR INVESTMENT AND TRA DING CO.PVT LTD. THE ASSESSEE HAS CREDITED A SUM OF RS.6,97,63,752/- AS INTEREST INCOME IN THE PROFIT A ND LOSS ACCOUNT. THE AO HAS VERIFIED THE TDS CERTIFICATE F ILED ALONG WITH THE RETURN OF INCOME AND FOUND THAT THE TOTAL INTEREST RECEIVED BY THE ASSESSEE AS PER THE TDS DURING THE YEAR IS RS.7,15,21,100. THE AO SOUGHT THE EXPLANATION FROM THE ASSESSEE REGARDING THE DISCREPANCY IN THE INTEREST CREDITED BY THE ASSESSEE AND THE AMOUNT AS PER TDS CERTIFICATE. THE ASSESSEE VIDE ITS LETTER DATED 3.10.2006 EXPLAINED THAT THE DIFFERENCE IS DUE TO CERTAIN INTEREST AMOUNT PERTA INS TO THE EARLIER YEARS AND CREDITED BY THE ASSESSEE IN THE E ARLIER YEARS. WHEREAS THE TDS CERTIFICATE WAS GIVEN TO THE ASSESS EE IN THE CURRENT ASSESSMENT YEAR. THE AO HELD THAT THE TOTA L INTEREST RECEIVED BY THE ASSESSEE DURING THE YEARS IS THE AM OUNT AS PER THE TDS CERTIFICATE AND ACCORDINGLY THE DIFFER ENCE OF RS.17,57,348/- WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. ITA NO. 1147/MUM/2008 (ASSESSMENT YEARS: 2002-03) 3 4. ON APPEAL, THE CIT(A) HAS DELETED THE ADDITION. THE CIT(A) HAS OBSERVED THAT THE AO HAS NOT TAKEN ANY PARTICULAR ITEMS OF INTEREST SHOWN IN THE TDS CERTIFICATE NOT ACCOUNTED BY THE ASSESSEE. THEREFORE, NO SPECIFIC INSTANCE OF N ON DISCLOSURE OF PART OF INTEREST HAS BEEN FOUND BY TH E AO. 5. BEFORE US, THE LEARNED DR SUBMITTED THAT THE CIT (A) ALLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THA T THE ASSESSEE IS FOLLOWING THE MERCANTILE SYSTEM OF ACC OUNTING BUT WITHOUT VERIFYING THESE FACTS THAT THE INTEREST OF RS.15,81,369/- ACCRUED FROM M/S BIRLA LIFESTYLE LTD WAS NOT CREDITED BY THE ASSESSEE IN THE PROFIT AND LOSS AC COUNT THROUGH THE SAME IS VERIFIABLE FROM THE RECORD. TH EREFORE, THE CIT(A) HAS DELETED THE ADDITION AND ALLOWED THE CLA IM OF THE ASSESSEE WITHOUT VERIFICATION OF THE RECORD. HE HA S THUS PLEADED THAT THE MATTER MAY BE REMITTED TO THE FIL E OF THE AO FOR PROPER VERIFICATION OF THE FACTS THAT THE DIFFE RENCE BETWEEN THE TDS CERTIFICATE AND INTEREST CREDITED BY THE AS SESSEE IN THIS YEAR. 6. ON THE OTHER HAND, THE LEARNED AR HAS SUBMITTED THAT WHEN THE ASSESSEES HAS BEEN FOLLOWING THE MERCANTI LE SYSTEM OF ACCOUNTING AND CREDITED THE INTEREST WHENEVER AC CRUED THEN DIFFERENCE BETWEEN THE TDS AND INTEREST CREDITED F OR THIS YEAR IS DUE TO THE FACT THAT CERTAIN AMOUNT OF INTEREST WAS ACCRUED IN THE EARLIER YEARS IN WHICH THE CERTIFICATES WERE ISSUED ONLY IN THE SUBSEQUENT YEARS. THEREFORE, WH EN THE ITA NO. 1147/MUM/2008 (ASSESSMENT YEARS: 2002-03) 4 INTEREST WAS ALREADY CREDITED BY THE ASSESSEE IN T HE EARLIER YEARS THEN THE SAME CANNOT BE CREDITED FOR THIS YE AR. HE POINTED OUT THAT THE AO HIMSELF HAS TAKEN INSTANCE WHEN THE CERTIFICATE PERTAINS TO THE FINANCIAL YEAR ENDING ON 31.3 2001 WERE ISSUED ONLY IN THE MONTH OF JUNE AND OCTOBER 2 001. HE HAS FURTHER SUBMITTED THAT IN THE EARLIER YEARS THE CIT(A) HAS EXAMINED THE ACCOUNTING OF INTEREST BY THE ASSESSEE AND FOUND TO BE CORRECT AND EVEN FOR THE ASSESSMENT YEA R 2004-05, THE CIT(A) HAS EXAMINED THE ACCOUNTING OF INTEREST BY THE ASSESSEE AND FOUND THE SAME IN ORDER. THUS, THERE IS NO NEED OF FURTHER VERIFICATION OF THE FACT WHEN THE A SSESSEE HAS ALREADY EXPLAINED AND SUBMITTED ALL THE RELEVANT FA CTS BEFORE THE AO. 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND REL EVANT RECORD. WHEN THE ASSESSEE WAS ASKED TO EXPLAIN THE DISCREPANCY BETWEEN THE AMOUNT AS PER THE TDS CERTI FICATE AND AMOUNT CREDITED BY THE ASSESSEE AS INTEREST INC OME IN THE PROFIT AND LOSS ACCOUNT, THE ASSESSEE VIDE LETTER D ATED 03.10.2006 PRODUCED THE DETAILS BEFORE THE AO ABOU T THE INTEREST ACCRUED DURING THE CURRENT YEAR AND THE IN TEREST INCOME AS PER TDS CERTIFICATE. WE FURTHER NOTED THAT THE AO HERSELF HAS TAKEN NOTE OF THE INSTANCES OF INTERES T PERTAINS TO THE PERIOD BETWEEN 01.04.2000 TO 31.03.2001 IN CASE OF M/S VIKING TRAVELS P.LTD. WHEREAS THE TDS CERTIFICATES WERE ISSUED AND SIGNED ON 12.10.2001. THE AO INSTEAD OF ITA NO. 1147/MUM/2008 (ASSESSMENT YEARS: 2002-03) 5 CONSIDERING THE FACT THAT THE SAID AMOUNT OF INTER EST ACCRUED AND PERTAIN TO THE EARLIER ASSESSMENT YEAR, TAKEN IN TO ACCOUNT ONLY THE DIFFERENCE BETWEEN THE INTEREST CREDITED IN THIS YEAR AND INTEREST AS PER TDS CERTIFICATE AND ACCORDINGLY MADE THE ADDITION. ONCE THE AO HAS TAKEN NOTE OF THE FACT THAT CERTAIN AMOUNT OF INTEREST ACCRUED IN THE EAR LIER YEAR BUT TDS CERTIFICATE WAS ISSUED DURING THIS YEAR AND WHE N THE ASSESSEE WAS FOLLOWING THE MERCANTILE SYSTEM OF ACC OUNTING AND CREDITED THE INTEREST WHEN EVER IT ACCRUED THE N THERE IS NO JUSTIFICATION OF MAKING THE ADDITION BASED ON TH E DATE OF TDS CERTIFICATE. IN VIEW OF THE FACT THAT THE AO HAS ALREADY EXAMINED AND FOUND THAT TDS CERTIFICATE ISSUED THIS YEAR WERE RELATING TO THE INTEREST ACCRUED IN THE EARLIER YE ARS, WE DO NOT FIND ANY MERIT OR SUBSTANCE IN THE CONTENTION OF TH E LEARNED DR THAT THE MATTER NEED VERIFICATION AND EXAMINATION AT THE LEVEL OF THE AO. ACCORDINGLY, WE DO NOT FIND ANY ERROR O R ILLEGALITY IN THE ORDER OF THE CIT(A). THE SAME IS UPHELD. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. PRONOUNCED IN THE OPEN COURT ON 25.06.2010 SD SD (P.M.JAGTAP) (VIJAY PAL RAO) ACCOUNTANT MEMBER JUDICIAL MEMB ER MUMBAI, DATED 25 TH JUNE 2010 SRL:23610 ITA NO. 1147/MUM/2008 (ASSESSMENT YEARS: 2002-03) 6 COPY TO: 1. INCOME TAX OFFICER WARD 1(1)-4 ROOM NO.579/531A AAYAKAR BHAVAN M K ROAD MUMBAI-400020 2. GODAVARI CORPORATION P.LTD, 159, INDUSTRY HOUSE, CHURCHGATE MUMBAI-400020 3. CIT -I, MUMBAI. 4.CIT (A)-III, MUMBAI. 6. DR G BENCH BY ORDER TRUE COPY ASSTT. REGISTRAR, ITAT, MUMBAI