DCIT, CIRCLE-1, PATNA V. M/S ASHOK & CO.NIWAS PVT LTD, PATNA

ITA 120/PAT/2020

AI Insights

The case involves the Income Tax Department (Revenue) appealing against the decision of the Commissioner of Income-tax (Appeals)-1, Patna, which deleted the addition of Rs. 5,94,435/- to the income of M/s. Ashok And Co Niwas Private Limited for the Assessment Year 2013-14. The addition was initially made by the Assessing Officer (AO) treating the interest income from FDR/NSC as income from other sources. However, the CIT(A) reclassified this income as business income, arguing that it was related to security deposits made for contract work. The Tribunal upheld the CIT(A)'s decision, referencing a relevant High Court judgment that supported the assessee's position.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 132804 (ITAT-PATNA)
• Duration Of Justice: 1 year(s) 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 02-11-2022
• Assessment Year: 2013-2014
• Appeal Filed On: 21-12-2020
• Other Referred Cases: M/s, Shyam Bihari vs. 345 ITR 283
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Revision of order
• Section: 250

Judgement Text

आयकर अपीलीय अधिकरण पटना 'डीबी' पीठ, कोलकाता म ें IN THE INCOME TAX APPELLATE TRIBUNAL PATNA ‘DB’ BENCH AT KOLKATA [वर् च ु अल कोट ु ] [Virtual Court] डॉ. मनीष बोरड, ल े खा सदस्य एवं श्री अधनक े श बनर्जी, न्याधयक सदस्य क े समक्ष Before DR. MANISH BORAD, ACCOUNTANT MEMBER & SRI ANIKESH BANERJEE, JUDICIAL MEMBER I.T.A. No.: 120/Pat/2020 Assessment Year: 2013-14 DCIT, Circle-1, Patna...............................................Appellant Vs. M/s. Ashok And Co Niwas Private Limited..............Respondent [PAN: AADCA 7107 N] Appearances by: Sh. Rupesh Agrawal, Sr. D/R, appeared on behalf of the Revenue. Sh. R.N. Bedi, C.A., appeared on behalf of the Assessee. Date of concluding the hearing : November 3 rd , 2022 Date of pronouncing the order : November 23 rd , 2022 आद े श ORDER Per Manish Borad, Accountant Member: This appeal filed by the Revenue pertaining to the Assessment Year (in short “AY”) 2013-14 is directed against the I.T.A. No.: 120/Pat/2020 Assessment Year: 2013-14 M/s. Ashok And Co Niwas Private Limited. Page 2 of 4 order passed u/s 250 of the Income Tax Act, 1961 (in short the “Act”) by ld. Commissioner of Income-tax (Appeals)-1, Patna [in short ld. “CIT(A)”] dated 13.08.2020 arising out of the assessment order framed u/s 263/144 of the Act dated 27.11.2018. 2. The Revenue is in appeal before this Tribunal raising the following grounds: “1. On the facts and circumstances of the case, the Ld. CIT(A) erred in law in deleting the addition of Rs. 5,94,435/- ignoring the fact that interest income from FDR/NSC deposited in bank cannot be said to be attributable to the business of the assessee and hence it is assessable under the head income from other sources. 2. Any other grounds that may be urged at the time of hearing.” 3. Revenue’s sole grievance is against the deletion of addition of Rs. 5,94,435/- which was made by ld. AO treating the interest income from FDR/NSC as income from other sources. Ld. D/R supported the order of the lower authorities and ld. Counsel for the assessee relied on the detailed finding of ld. CIT(A). 4. We have heard rival contentions and perused the records placed before us. Revenue’s grievance relates to interest income of Rs. 5,94,435/- which ld. AO treated as income from other sources whereas ld. CIT(A) deleted the same holding it to be a business income. We notice that the assessee is a private limited company engaged in the civil construction business and income of Rs. 1,17,94,590/- was declared in the e-return filed on 18.09.2013 for AY 2013-14. Case selected for scrutiny through CASS and during the course of scrutiny proceedings ld. AO examined the details filed by the assessee. The assessee has declared turnover of Rs. 18.11 Cr. Assessee’s claim that on being granted the contracts by the I.T.A. No.: 120/Pat/2020 Assessment Year: 2013-14 M/s. Ashok And Co Niwas Private Limited. Page 3 of 4 Government, the assessee has to deposit the amount as security in the form of FDR/NSC. Interest on such deposits amounted to Rs. 5,94,435/-. Ld. AO treated the same as income from other sources. However, on perusal of the details filed by the assessee before the lower authorities, and the submissions made by the ld. Counsel for the assessee, we are satisfied that the alleged interest amount is on security deposits given by the assessee for the purpose of procuring the contract work and therefore, such interest income has rightly been treated as part of the business income and our this view is duly supported by the judgment of Hon'ble Jurisdictional High Court, Patna in the case of M/s, Shyam Bihari reported in 345 ITR 283 wherein the Hon'ble Court has held that interest accrued on the security deposits to the extent used for the purpose of securing the contract work would be assessable as business income. Respectfully following the same, the finding of ld. CIT(A) is confirmed. 5. In the result, the appeal filed by the Revenue is dismissed. Kolkata, the 23 rd November, 2022. Sd/- Sd/- [Anikesh Banerjee] [Manish Borad] Judicial Member Accountant Member Dated: 23.11.2022 Bidhan (P.S.) I.T.A. No.: 120/Pat/2020 Assessment Year: 2013-14 M/s. Ashok And Co Niwas Private Limited. Page 4 of 4 Copy of the order forwarded to: 1. DCIT, Circle-1, Patna. 2. M/s. Ashok And Co Niwas Private Limited, 301, Hytech Arcade, Rajendra Path, Kadamkuan, Patna-800 003. 3. CIT(A)-1, Patna. 4. CIT- 5. CIT(DR), Patna Bench, Patna. True copy By order Assistant Registrar ITAT, Kolkata Benches Kolkata