The ACIT(OSD)-I., Range-4, Ahmedabad V. Karnavati Infrastructure Pvt. Ltd., Ahmedabad

ITA 1285/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 76696 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 22-05-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 29-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIVEK OJHA
• Keywords: Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, A HMEDABAD (BEFORE SHRI KUL BHARAT, J.M. & SHRI T.R. MEENA, A .M.) I.T. A. NO. 1285/AHD/2011 (ASSESSMENT Y EAR: 2007-08) THE ACIT (OSD)-I, RANGE- 4, AHMEDABAD V/S KARNAVATI INFRASTRUCTURE PVT. LIMITED D-501, STUTUS, DRIVE IN RODE, THALTEJ, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AAACK 4583D APPELLANT BY : SHRI VIVEK OJHA, SR. D.R. RESPONDENT BY : SHRI SAKAR SHARMA ( )/ ORDER DATE OF HEARING : 22-05-201 4 DATE OF PRONOUNCEMENT : 23-05-2014 PER SHRI T.R. MEENA, A.M. 1. THE REVENUES APPEAL IS EMANATING FROM THE ORDER OF CIT(A)-XX, AHMEDABAD DATED 31.01.2011 FOR A.Y. 2007-08. 2. THE SOLE GROUND OF REVENUE APPEAL IS AGAINST DELETI NG THE ADDITION OF RS. 11,93,810/- MADE BY THE A.O ON ACCOUNT OF ESTIMATIO N OF INCOME FROM FDR, VISNAGAR BANK. THE A.O OBSERVED THAT ASSESSEE HAD FDR OF RS. 1,90,38,100/- IN VISNAGAR BANK. BUT NO INTEREST INC OME FROM THESE FDR HAD BEEN OFFERED BY THE ASSESSEE. THE LD. A.O GAVE REASONABLE OPPORTUNITY OF BEING HEARD ON THIS ISSUE. AFTER CON SIDERING THE ASSESSEES ITA NO 1285/AH D/2011 . A.Y. 2007- 08 2 REPLIED IT WAS HELD THAT THE APPELLANT HAD NOT FURN ISHED ANY DOCUMENTARY EVIDENCE TO SUBSTANTIATE ITS CLAIM THAT THE BANK HA D GONE INTO LIQUIDATION AND THERE WAS NO CHANCE OF RECOVERY, THUS HE ESTIMA TED INTEREST INCOME @ 10% ON FD RS. 1,19,38,100/- AT RS. 11,93,810/-. 3. BEING AGGRIEVED BY THE ORDER OF A.O, ASSESSEE CARRI ED THE MATTER BEFORE CIT(A) WHO HAD DELETED THE ADDITION BY OBSERVING AS UNDER:- I HAVE GONE THROUGH THE ASSESSMENT ORDER AND THE SU BMISSIONS OF THE AR. OF THE APPELLANT CAREFULLY. IT IS SEEN FROM THE DOCUMENTS SUBMITTED BY THE AR THAT THE VISNAGAR NAGRIK SAHAKARI BANK LTD. IS IN LIQUIDATIO N AS PER THE DIRECTIONS OF THE RBI. IN' VIEW OF THE ABOVE, THE CHANCES OF RECOVERY OF T HE PRINCIPAL AMOUNT OF THE FDR MADE-BY THE APPELLANT WITH VISNAGAR NAGRIK SAHAKARI BANK LTD., WAS DOUBTFUL. WHEN THE RECOVERY OF THE PRINCIPAL AMOUNT ITSELF WAS DOU BTFUL, THEN, THE QUESTION OF RECOVERY OF INTEREST WAS ALMOST IMPOSSIBLE. IN SUCH A SITUATION, THE APPELLANT WAS JUSTIFIED IN NOT ACCOUNTING THE INTEREST INCOME ON ACCRUAL BASIS IN THE INCOME FOR THE YEAR. RELIANCE IN THIS REGARD IS PALCED ON THE DECISION O F THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CIT VS. FEROZEPUR FINANCE PVT. LTD. REPORTED IN (1980) 124 ITR 619 (PUN.) WHEREIN THE PUNJAB HIGH COURT UPHELD THE ABOVE PROPOSITION SLP FILED BY THE DEPARTMENT AGAINST THE SAID DECISION H AS BEEN DISMISSED BY THE SUPREME COURT AND IS REPORTED IN (1983) 144 ITR (ST.) 507 ( SC). IN VIEW OF THE ABOVE, THE ADDITION MADE BY THE A.O IS DELETED. 4. NOW REVENUE IS BEFORE US THE LD. D.R. SUPPORTED THE ORDER OF A.O AND LD. A.R. FOR THE ASSESSEE SUPPORTED THE ORDER OF CIT(A) . 5. WE HAVE HEARD THE RIVAL CONTENTION AND PERUSED THE MATERIAL ON RECORD. THE ASSESSEE HAD SUBMITTED IN EARLIER YEAR THAT VIS NAGAR BANK HAD BEEN GONE IN LIQUIDATION AND RBI HAD CANCELLED THE BANKI NG LICENSE WITH EFFECT FROM 11.07.2003. THE ASSESSEE IN EARLIER YEAR ALSO HAD NOT DISCLOSED INTEREST INCOME ON THESE FDRS WHICH HAS BEEN ACCEPT ED BY THE REVENUE. WHEN PRINCIPAL AMOUNT ITSELF WAS DOUBTFUL WHETHER I T WOULD RECOVER OR NOT THAN THE QUESTION OF RECOVERY OF INTEREST WAS A LMOST IMPOSSIBLE. THE ITA NO 1285/AH D/2011 . A.Y. 2007- 08 3 APPELLANT WAS RIGHT NOT TO BOOK INTEREST INCOME ON THE BASIS OF ACCRUAL. IN REAL TERM, THERE WAS NO INCOME IN FORM OF INTEREST ON FDRS. ACCORDINGLY WE CONFIRM THE ORDER OF CIT(A). 6. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 23 - 05 - 2014. SD/- SD/- (KUL BHARAT) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT, AHMEDABAD