Assistant Commissioner Of Income Tax,Circle - 4(1)(1), Bangalore V. M/s. KAPPEC Limited, Bangalore

ITA 1348/BANG/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3424 (ITAT-BANGALORE)
• Duration Of Justice: 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-03-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 02-03-2020
• Assessment Year: 2014-2015
• Appeal Filed On: 30-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A RAMESH KUMAR JCITD R
• Section: 143(3); 142(1); 250; 201; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES A BENCH: BANGALORE BEFORE SHRI A.K. GARODIA , ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO. 1348/BANG/2019 (ASSESSMENT YEAR: 201 4 - 15 ) ASST. COMMISSIONER OF INCOME TAX, CIRCLE 4(1)(1), BANGALORE - 560 095 .APPELLANT VS. M/S. KAPPEC LTD., NO.17, GENERAL K S THIMMAIAH ROAD, RICHMOND ROAD, BANGALORE. RESPON DENT. ASSESSEE BY: NONE. REVENUE BY: SHRI A. RAMESH KUMAR, JCIT(D.R) DATE OF HEARING : 02.03 .20 20 DATE OF PRONOUNCEMENT : 06 .03 .20 20 O R D E R PER SHRI PAVAN KUMAR GADALE, JM : THE REVENUE HAS FILED AN APPEAL AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 12, BANGALORE PASSED UNDER SECTION 143(3) AND 250 OF THE INCOME TAX ACT, 1961 ('THE ACT'). 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 2 ITA NO. 1348/BANG/2019 3. THE BRIEF FACTS OF THE CASE ARE THAT , THE ASSESSEE COMPANY IS ENGAGED IN TRADING OF AGRICULTURAL PRODUCTS AND FILED THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2014 - 15 ON 1 7.09.2014 WITH TOTAL INCOME OF RS.5,79,23,958 / - .SUBSEQUENTLY THE CASE WA S SELECTED FOR S CRUTINY AND N OTICE UNDER SECTION 143(2) AND 142(1) OF THE ACT WERE ISSUED. IN COMPLIANCE, THE LEARNED AUTHORIZED REPRESENTATIVE APPEARED FROM TIME TO TIME AND FILED THE DETAILS. T HE ASSESSEE COMPANY IS A PUBLIC SECTOR COMPANY ESTABLISHED BY THE GOVERNMENT OF KARNATAKA TO TRADE ON 3 ITA NO. 1348/BANG/2019 AGRICULTURAL PRODUCTS AND THROUGH APPROV ED CHANNELIZED AGENTS OF SEEDS, ONIONS ETC. THE ASSESS ING OFFICER BASED ON THE DETAILS FILED BY THE ASSESSEE , FOUN D THAT THE ASSESSEE HAS A BANK BALANCE AS PER BALANCE SHEET OF RS.34.71 CRORE S INCLUDING DEPOSITS WITH BANKS OF RS.33.11 CRORES. THE ASSESSING OFFICER ISSUED SHOW CAUSE NOTICE TO TREAT THE INTEREST ON FIXED DEPOSITS (FDS) AS INCOME FROM OTHER SOURCES. FURT HER , THE ASSESSING OFFICER OBSERVED THAT THE INTEREST COMPONENT CANNOT BE TREATE D AS GRANT - IN - AID AND DEALT AT PARA 4 TO 4.3 OF THE ORDER AND TAXED THE ENTIRE INTEREST EARNED BY THE ASSESSEE ON FDS ARE OUT OF THE GRANT - IN - AID AS INCOME FROM OTHER SOURCES A ND ASSESSED THE TOTAL INCOME OF RS.9,03,66,445 / - AND PASSED THE ORDER UNDER SECTION 143(3) OF THE ACT DT.28.12.2016. AGGRIEVED BY THE ORDER, THE ASS ESSEE HAS FILED AN APPEAL WITH THE CIT(APPEALS) , WHEREAS THE CIT(APPEALS) CONSIDERING THE GROUNDS OF APPEAL , FINDINGS OF ASSESSING OFFICER AND SUBMISSIONS OF THE ASSESSEE ON THE DISPUTED ISSUE OBSERVED THAT THE INTEREST ON FDS CANNOT BE TREATED AS INCOME FROM OTHER SOURCES RELIYING ON THE JUDICIAL DECISIONS AND ALLOWED THE ASSESSEE APPEAL. AGGRIEVED BY THE ORDER OF CIT(APPEALS), THE REVENUE HAS FILED AN APPEAL BEFORE THE TRIBUNAL. 4. AT THE TIME OF HEARING, THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE CIT(APPEALS) HAS ERRED IN DELETING THE DISALLOWANCE OF INTEREST MADE BY THE AS SESSI NG OFFICER AS THE DECISION OF HON'BLE HIGH COURT OF KARNATAKA IN THE CASE OF CIT & ANR. VS. KARNATAKA URBAN INFRASTRUCTURE & FINANCE 4 ITA NO. 1348/BANG/2019 CORPORATION (KARNATAKA) (284 ITR 582) RELIED ON BY THE CIT(APPEALS) WAS CHALLENGED BY THE REVENUE AND THE REVENUE HAS FILED SLP BE FORE THE HON'BLE SUPREME COURT. CONTRA, THE LDAR SUPPORTED THE ORDERS OF CIT(APPEALS). 5. WE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON REC ORD. THE SOLE DISPUTED ISSUE ARGUED BY THE LD. DR THAT THE CIT(APPEALS) HAS GRANTED RELIEF WI THOUT APPRECIATING THE FACT THAT THE INTEREST ON FIXED DEPOSITS WITH BANK ARE OUT OF THE GRANT - IN - AID RECEIVED FROM T HE GOVT. OF KARNATAKA AND IS TAXABLE IN THE HANDS OF THE ASSESSEE . F URTHER THE DECISION RELIED BY THE CIT(APPEALS) OF HON'BLE HIGH C OURT O F KARNA TAKA IS C HALLENGED BEFORE THE HON'BLE SUPREME COURT IN SLP BY THE REVENUE. WE FOUND THAT THE REVENUE HAS RELIED ONLY ON THE SLP FILED BEFORE THE HON'BLE SUPREME COURT AND THE THE OBSERVATIONS OF THE CIT(APPEALS) AT PAGE 3 PARA 9 TO 15 OF THE ORDER IS READ AS UNDER : 5 ITA NO. 1348/BANG/2019 6 ITA NO. 1348/BANG/2019 7 ITA NO. 1348/BANG/2019 8 ITA NO. 1348/BANG/2019 9 ITA NO. 1348/BANG/2019 6. THE LD. DR COULD NOT CONTROVERT THE OBSERVATIONS OF THE CIT(APPEALS) WITH ANY NEW EVIDENCE OR COGENT MATERIAL. ACCORDINGLY, WE ARE NOT INCLINED TO INTERFERE WITH THE ORDER OF CIT (APPEALS) AND CONFIRM THE SAME AND DISMISS THE GROUNDS OF APPEAL OF REVENUE. 10 ITA NO. 1348/BANG/2019 7. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE. S D / - S D / - ( A.K. GARODIA ) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 0 6 .03.2 0 20 . *REDDY GP COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT (A) 4. PR. CIT 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLATE TRIBUNAL BANGALORE