ACIT, Circle - 27, Kolkata, Kolkata V. Smt. Naina Lal Kidwai, Kolkata

ITA 1491/KOL/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48116 (ITAT-KOLKATA)
• Duration Of Justice: 9 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 05-04-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 26-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K MISHRA
• Assessee Lawyers: P B CHHAPGAR
• Section: 145

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : K OLKATA [ ( (( ( ) )) ) . .. . . . . . , ,, , , , , , ! ! ! ! . .. .'# '#'# '#. .. . , , , , $% $% $% $% ] ]] ] [BEFORE HONBLE SRI B. R. MITTAL, JM & HONBLE SR I C. D. RAO, AM] !' !' !' !' / I.T.A NO. 1491/KOL/2010 () *+ () *+ () *+ () *+/ // / ASSESSMENT YEAR : 2007-08 ASSTT. COMMISSIONER OF INCOME TAX -VS.- SMT. NAINA LAL KIDWAI CIRCLE-27, KOLKATA. KOLKATA [PAN : AFNPK 546 2 N] [ -. /APPELLANT ] [ /0-./ RESPONDENT ] -. / FOR THE APPELLANT : SHRI P. K. MISHRA, SR. D.R. /0-. / FOR THE RESPONDENT : SHRI P. B. CHHAPGAR $1 /ORDER . .. .'# '#'# '#. .. . , ,, , $% PER C. D. RAO, A. M. THIS APPEAL FILED BY REVENUE IS PREFERRED AGAINST ORDER OF LD. CIT(A)-XIV, KOLKATA DATED 21.04.2010, PERTAINING TO ASSESSMENT YEAR 20 07-08. 2. THE ONLY GROUND TAKEN BY THE REVENUE IS AS UNDER :- THE LD. CIT(A) ERRED IN FACTS AND IN LAW IN DELETI NG THE ADDITION OF RS.16,72,000/- BEING THE ACCRUED INTEREST ON GOVT. OF INDIA 8% TAXABLE BONDS (RBI BONDS) DISREGARDING THE FACT THAT THE ASSESSEE WAS MAINTAINING HER ACCOUNTS ON MERCANTILE BASIS AND DID NOT DISCLOSE T HE ACCRUED INTEREST ON SAID BONDS IN THE INCOME FOR THE RELEVANT ASSESSMENT YEA R ON ACCRUAL BASIS AND TREATING THE SAID INCOME ON RECEIPT BASIS IN VIOLAT ION OF THE PROVISION OF SECTION 145 OF THE INCOME TAX ACT, 1961. 3. BRIEF FACTS OF THE ISSUE ARE THAT WHILE DOING S CRUTINY ASSESSMENT ASSESSING OFFICER HAS ADDED AN AMOUNT OF RS.16,72,000/- BY OBSERVING AS U NDER :- IT WAS NOTED FROM DETAILS & DOCUMENTS FURNISHED/P RODUCED DURING THE COURSE OF HEARING THAT THE ASSESSEE HAD INVESTED IN RS.2,09,00,000/- ON RBI 8% TAXABLE BONDS (THROUGH HDFC) IN EARLIER YEARS. BUT THE ACCRUED INTEREST ON THE SAID INVESTMENT I.E. RS.16,72,000/- WAS NOT TAKEN I NTO ACCOUNT DURING THE YEAR ITA NO. 1491/KOL/20 10 2 UNDER CONSIDERATION. THE MATTER WAS POINTED OUT THE A/R DURING THE COURSE OF HEARING ON 14.12.2009 AND THE A/R CLAIMED THAT THE SAID AMOUNT WOULD BE TAKEN ON RECEIPT BASIS AS THE ASSESSEE MAINTAINED HER A CCOUNTS ON CASH BASIS AS PER SECTION 145 OF THE I.T. ACT. BUT IT WAS NOTED FROM THE COPY OF BALANCE SHEET AS ON 31.03.2007 (VIDE SCHEDULE 6 OF THE WRITTEN SUBMISSI ON OF A/R DATED 10.11.2009) THAT THE ASSESSEE HAD SHOWN PROVIDENT FUND EMPLOYEE S CONTRIBUTION OF RS.1,42,14,859/-. AS PER DETAILS OF SAID CONTRIBUTI ON VIDE SCHEDULE-8 OF BALANCE SHEET, IT WAS NOTED THAT THE ASSESSEE HAD SHOWN EMP LOYEES CONTRIBUTION AS RS.57,29,880/- AND INTEREST ACCRUED ON THE SAID AMO UNT TILL 31.03.2007 WAS SHOWN AS RS.84,84,979/- AND THE TOTAL OF BOTH AMOUN T I.E. RS.1,42,14,859/- {57,29,880 + 84,84,979) WAS CONSIDERED BY THE ASSES SEE IN THE BALANCE SHEET AS ON 31.03.2007. FROM THE ABOVE FACT, IT CLEARLY INDI CATES THAT THE CONTENTION MADE BY THE A/R OF THE ASSESSEE THAT THE ASSESSEE MAINTA INED HER A/CS. ON RECEIPT BASIS IS NOT ACCEPTABLE AS SHE HAD ALREADY CONSIDE RED THE INTEREST ACCRUED ON PF CONTRIBUTION ON ACCRUAL BASIS. IN THE ABOVE CONTE XT, INTEREST ACCRUED ON RBI BONDS OF RS.16,72,000/- AS STATED EARLIER IS ADDED WITH THE INCOME OF THE ASSESSEE. 4. ON APPEAL, AFTER TAKING INTO CONSIDERATION OF TH E FACTS OF THE CASE, LD. CIT(A) HAS DELETED THE SAME BY OBSERVING AS UNDER :- I HAVE CAREFULLY CONSIDERED THE ARGUMENTS GIVEN BY THE A.O. AND THE SUBMISSION MADE BY THE A/R OF THE ASSESSEE. HERE, WE HAVE TO SEE THAT THE ASSESSEE IS MAINLY A SALARIED EMPLOYEE . SHE DOES NOT MAINTAIN ANY REGULAR BOOKS OF ACCOUNT BUT MAKES A B ALANCE SHEET AT THE END OF THE YEAR TO KEEP TRACK OF HER FINANCIAL TRAN SACTIONS. IN THIS BALANCE SHEET WHILE RECORDING THE PROVIDENT FUND BALANCE AT THE END OF THE YEAR SHE INCLUDES THE INTEREST ACCRUED ON HER PF BALANCE S TO KEEP A RECORD OF THE BALANCE UNDER THIS HEAD. THIS DOES NOT MEAN THA T SHE COMPUTES HER INCOME FROM OTHER SOURCES BY MERCANTILE SYSTEM OF A CCOUNTING. IN FACT THE A/R OF THE ASSESSEE HAS SHOWN THAT IN EARLIER Y EARS THE ASSESSEE HAS BEEN SHOWING HER INCOME FROM OTHER SOURCES ON CASH SYSTEM OF ACCOUNTING BASIS. IN RESPECT OF THE GOI TAXABLE BON DS THE ASSESSEE HAS NOT RECEIVED ANY INTEREST DURING THE PREVIOUS YEAR UNDER CONSIDERATION. THEREFORE, THE INTEREST ON THESE BANDS WILL BE TAXA BLE ON RECEIPT BASIS ONLY AND NOT ON ACCRUAL BASIS AS DONE BY THE A.O. I N VIEW OF THE ABOVE DISCUSSION, I DELETE THE ADDITION OF RS.16,72,000/- MADE BY THE ASSESSING OFFICER. 5. AGGRIEVED BY THIS, NOW THE REVENUE IS IN APPEAL BEFORE US. 6. AT THE TIME OF HEARING BEFORE US, LD. DEPARTMENT AL REPRESENTATIVE BY REFERRING TO THE OBSERVATIONS MADE BY ASSESSING OFFICER CONTENDED TH AT THE ACTION OF THE ASSESSING OFFICER IS JUSTIFIABLE IN THE FACTS AND CIRCUMSTANCES OF THE CASE SINCE ASSESSEE HAS CONSIDERED THE INTEREST ACCRUED ON P.F. CONTRIBUTION ON ACCRUAL BASIS. THE INTEREST ACCRUED ON RBI 8% SAVINGS (TAXABLE) ITA NO. 1491/KOL/20 10 3 BOND IS ALSO BE TREATED AS INCOME OF THE ASSESSEE. IT IS REQUESTED TO RESTORE THE ORDER OF THE ASSESSING OFFICER THAT OF THE LD. CIT(A). 7. ON THE OTHER HAND, LD. COUNSEL APPEARING ON BEHA LF OF THE ASSESSEE BY REFERRING TO THE NOTIFICATION ISSUED BY GOVERNMENT OF INDIA, MINISTR Y OF FINANCE IN RESPECT OF 8% SAVINGS (TAXABLE) BONDS, 2003 IN CLAUSE 13 & 14 AND BY REFE RRING TO ORDER OF I.T.A.T., BANGALORE BENCH, IN THE CASE OF K. NAGENDRASA & ORS. VS. DCIT (2010 ) 48 DTR (BANG) (TRIB) 492, COPY OF WHICH HAS BEEN PLACED ON RECORD, CONTENDED THAT THE ACTIO N OF THE LD. CIT(A) IS JUSTIFIABLE IN THE FACTS AND CIRCUMSTANCES OF THE CASE . THEREFORE, HE REQUESTED TO CONFIRM THE ACTION OF THE LD. CIT(A). 8. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CAREF UL PERUSAL OF THE MATERIAL AVAILABLE ON RECORD, WE CONSIDER IT FIT TO REPRODUCE CLAUSE 13 & 14 OF GOVERNMENT OF INDIAS NOTIFICATION IN RESPECT OF 8% SAVINGS (TAXABLE) BONDS IS AS UNDER : - 13. INTEREST : THE BONDS WILL BEAR INTEREST AT THE RATE OF 8% PER ANNUM. INTEREST ON NON- CUMULATIVE BONDS WILL BE PAYABLE AT HALF-YEARLY INT ERVALS FROM THE DATE OF ISSUE IN TERMS OF PARAGRAPH 7 ABOVE OR INTEREST ON CUMULA TIVE BONDS WILL BE COMPOUNDED WITH HALF-YEARLY RESTS AND WILL BE PAYAB LE ON MATURITY ALONGWITH THE PRINCIPAL, AS THE SUBSCRIBER MAY CHOOSE. IN THE LAT TER CASE, THE MATURITY VALUE OF THE BONDS SHALL BE RS.1601.00 (BEING PRINCIPAL AND INTEREST) FOR EVERY RS.1,000/- (NOMINAL). INTEREST TO THE HOLDERS OPTING FOR NON-C UMULATIVE BONDS WILL BE PAID FROM DATE OF ISSUE IN TERMS OF PARAGRAPH 7 ABOVE UP TO 30 TH SEPTEMBER/31 ST MARCH AS THE CASE MAY BE AND THEREAFTER HALF-YEARLY FOR P ERIOD ENDING 1 ST OCTOBER/1 ST APRIL. INTEREST ON BONDS IN THE FORM OF BONDS LEDG ER ACCOUNT WILL BE PAID BY CHEQUE/WARRANT OR THROUGH ECS BY CREDIT TO BANK ACC OUNT OF THE HOLDER AS PER THE OPTION EXERCISED BY THE INVESTOR/HOLDER. 14. TAX DEDUCTION AT SOURCE TAX WILL BE DEDUCTED AT SOURCE WHILE MAKING PAYMENT OF INTEREST ON NON- CUMULATIVE BONDS FROM TIME TO TIME AND CREDITED TO GOVERNMENT ACCOUNT. TAX ON THE INTEREST PORTION OF THE MATURITY VALUE W ILL BE DEDUCTED AT SOURCE AT THE TIME OF PAYMENT OF THE MATURITY PROCEEDS ON THE CUM ULATIVE BONDS AND CREDITED TO GOVERNMENT ACCOUNT. HOWEVER, TAX WILL NOT BE DEDUCTED WHILE MAKING PAYM ENT OF INTEREST/MATURITY PROCEEDS AS THE CASE MAY BE, TO INSTITUTIONS WHICH HAVE MADE A DECLARATION IN THE APPLICATION FORM THAT THEY HAVE OBTAINED EXEMPTION FROM TAX UNDER THE RELEVANT PROVISIONS OF THE I.T. ACT AND HAVE SUBMITTED A TRU E COPY OF THE CERTIFICATE FROM I.T. AUTHORITIES. ITA NO. 1491/KOL/20 10 4 KEEPING IN VIEW OF THE ABOVE CLAUSES AND THE ORDER OF THE TRIBUNAL, BANGALORE BENCH IN THE CASE OF K. NAGENDRASA & ORS. (SUPRA) WHEREIN THE TRIBUNA L HAS CATEGORICALLY HELD THAT ASSESSEE IS ENTITLED TO RECOGNIZE THE INTEREST INCOME ATTRIBUTA BLE TO 8% RBI SAVINGS (TAXABLE) BONDS ON CASH BASIS TO BE RECKONED AT THE TIME OF REDEMPTION OF B ONDS ONLY. THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF LD. CIT(A) TO BE INFERRED WITH. HENCE, WE UPHOLD THE SAME. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. $1 $1 $1 $1 2 3( 4 56 2 3( 4 56 2 3( 4 56 2 3( 4 56 ORDER PRONOUNC ED IN THE COURT ON 20. 05. 2011. SD/- SD/- [ .. , ] [ . .. .'# '#'# '#. .. . , ,, , $% ] [ B. R. MITTAL ] [ C. D . RAO ] JUDICIAL MEMBER ACCOUNTANT MEMBER (#%) DATED : 20TH MAY, 2011. $1 7 /8 9$8*/ COPY OF THE ORDER FORWARDED TO: 1. -. /APPELLANT- ASSTT. COMMISSIONER OF INCOME TAX, CI RCLE-27, 169, A.J.C. BOSE ROAD, KOLKATA-70 0 014. 2 /0-. / RESPONDENT : NAINA LAL KOIDWAI, C/O. KCT & BROS. LTD., THAPAR HOUSE, 25, BRABOURNE RO AD, KOLKATA-700 001. 3. 1(/ THE CIT, 4. 1( ()/ THE CIT(A), KOLKATA. 5. ?4 /(/ DR, KOLKATA BENCHES, KOLKATA [08 // TRUE COPY] $1(3 / BY ORDER, A / !B /DEPUTY/ASSTT REGISTRAR. [KKC CD (EB F /SR.PS]