The DCIT, Circle-10, Ahmedabad V. Jethiben K. Patel Discretionery Family Turst, Ahmedabad

ITA 1559/AHD/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 8974 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 15-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GOVIND SINGHAL
• Assessee Lawyers: HEEMANSHU SHAH
• Keywords: Notional interest; Revised return
• Section: 260A

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL : A BENCH : AHMEDABAD (BEFORE HONBLE SHRI T.K. SHARMA, J.M. & HONBLE SH RI D.C. AGARWAL, A.M.) I.T.A. NO. 1561 & 1562/AHD./2009 ASSESSMENT YEARS : 2005-2006 & 2004-2005 DEPUTY COMMISSIONER OF INCOME TAX, -VS.- KA RSANBHAI KHODIDAS PATEL HUF, CIRCLE-10, AHMEDABAD. AHMEDABAD (P.A. NO. AA VPP 9688 G) (APPELLANT) (R ESPONDENT) & I.T.A. NOS. 1564 & 1817/AHD./2009 ASSESSMENT YEAR : 2005-2006 & 2004-2005 DEPUTY COMMISSIONER OF INCOME TAX, -VS.- SH IVA SPECIFIC FAMILY TRUST, CIRCLE-10, AHMEDABAD. AHMEDABAD (P.A. NO. AA NHS 5646 J) (APPELLANT) (R ESPONDENT) & I.T.A. NO. 1565/AHD./2009 ASSESSMENT YEAR : 2005-2006 DEPUTY COMMISSIONER OF INCOME TAX, -VS.- HA RSIDDH SPECIFIC FAMILY TRUST, CIRCLE-10, AHMEDABAD. AHMEDABAD (P.A. NO. AA ATJ 1941 D) (APPELLANT) (R ESPONDENT) & I.T.A. NO. 1560/AHD./2009 ASSESSMENT YEAR : 2004-2005 DEPUTY COMMISSIONER OF INCOME TAX, -VS.- KISA N DISCRETIONARY FAMILY TRUST, CIRCLE-10, AHMEDABAD. AHMEDABAD (P.A. NO. AA AKT 2653 D) (APPELLANT) (R ESPONDENT) & I.T.A. NO. 1563/AHD./2009 ASSESSMENT YEAR : 2004-2005 DEPUTY COMMISSIONER OF INCOME TAX, -VS.- SMT . SHANTABEN K. PATEL,, CIRCLE-10, AHMEDABAD. AHMEDABAD (P.A. NO. AG GPP 2908 J) (APPELLANT) (R ESPONDENT) & I.T.A. NO. 1559/AHD./2009 ASSESSMENT YEAR : 2004-2005 2 DEPUTY COMMISSIONER OF INCOME TAX, -VS.- JETHIBEN K. PATEL DISCRETIONARY FAMILY TRUST, CIRCLE-10, AHMEDABAD. AHMEDABAD (P.A. NO. AAATJ 0260 F) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI GOVIND SINGHAL, SR. D.R. RESPONDENT BY : SHRI HEEMANSHU SHAH O R D E R PER BENCH : ALL THESE APPEALS FILED BY THE REVENUE IN RESPECT OF DIFFERENT ASSESSEES ARE AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS ), ALL DATED 09.03.2009.SINCE THE ISSUES INVOLVED IN ALL THESE APPEALS ARE COMMON ONLY EXCEP T IN VARIANCE IN ADDITIONS, THEREFORE, WE HAVE DECIDED TO DISPOSE OF THE SAME BY A COMMON ORDER FO R THE SAKE OF CONVENIENCE. 2. THE GROUNDS RAISED IN I.T.A. NO. 1561/AHD./2009 FOR THE ASSESSMENT YEAR 2005-06 ARE AS UNDER :- (1) THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN HOLDING THAT INTEREST INCOME CANNOT BE ASSESSED ON ACCRUAL BASIS EVEN THOUGH ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. (2) THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS.19,09,240/- MADE TOWARD S INTEREST ACCRUED ON BONDS AND OPTIONALLY FULLY CONVERTIBLE PREMIUM N OTES ISSUED BY RURAL ELECTRIFICATION CORPORATION, RELYING ON THE D ECISION OF ITAT IN THE KISAN DISCRETIONARY FAMILY TRUST THOUGH ITAT HA S NOT CONSIDERED ALL THE RELEVANT ISSUES IN PROPER PERSPECTIVE AND A PPEAL TO HIGH COURT WAS FILED U/S. 260A AGAINST THE DECISION OF ITAT IN THAT CASE. (3) THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN FAILING TO ANALYSE AND APPRECIATE THE FACTS IN DETA IL AND PROPER PERSPECTIVE IN DELETING THE ADDITION MADE BY ASSESS ING OFFICER TOWARDS ACCRUED INTEREST ON OFCP NOTES & BONDS OF R EC. THE GROUNDS RAISED IN I.T.A. NO. 1562/AHD./2009 FOR THE ASSESSMENT YEAR 2004-05 ARE AS UNDER :- 3 1) THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN HOLDING THAT INTEREST INCOME CANNOT BE ASSESSED ON ACCRUAL BASIS EVEN THOUGH ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. (2) THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS.17,90,779/- MADE TOWARD S INTEREST ACCRUED ON BONDS AND OPTIONALLY FULLY CONVERTIBLE P REMIUM NOTES ISSUED BY RURAL ELECTRIFICATION CORPORATION, RELYIN G ON THE DECISION OF ITAT IN THE KISAN DISCRETIONARY FAMILY TRUST THOUGH ITAT HAS NOT CONSIDERED ALL THE RELEVANT ISSUES IN PROPER PERSPECTIVE AND APPEAL TO HIGH COURT WAS FILED U/S. 260A AGAINST THE DECISION OF ITAT IN THAT CASE. (3) THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN FAILING TO ANALYSE AND APPRECIATE THE FACTS IN DETA IL AND PROPER PERSPECTIVE IN DELETING THE ADDITION MADE BY ASSESS ING OFFICER TOWARDS ACCRUED INTEREST ON OFCP NOTES & BONDS OF R EC. THE GROUNDS RAISED IN I.T.A. NO. 1564/AHD./2009 FOR THE ASSESSMENT YEAR 2005-06 ARE AS UNDER :- (1) THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN HOLDING THAT INTEREST INCOME CANNOT BE ASSESSED ON ACCRUAL BASIS EVEN THOUGH ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. (2) THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS.77,43,931/- MADE TOW ARDS INTEREST ACCRUED ON BONDS AND OPTIONALLY FULLY CONV ERTIBLE PREMIUM NOTES ISSUED BY RURAL ELECTRIFICATION CORPO RATION, RELYING ON THE DECISION OF ITAT IN THE KISAN DISCRE TIONARY FAMILY TRUST THOUGH ITAT HAS NOT CONSIDERED ALL THE RELEVANT ISSUES IN PROPER PERSPECTIVE AND APPEAL TO HIGH COU RT WAS FILED U/S. 260A AGAINST THE DECISION OF ITAT IN THA T CASE. (3) THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN FAILING TO ANALYSE AND APPRECIATE THE FACTS IN D ETAIL AND PROPER PERSPECTIVE IN DELETING THE ADDITION MADE BY ASSESSING OFFICER TOWARDS ACCRUED INTEREST ON OFCP NOTES & BO NDS OF REC. THE GROUNDS RAISED IN I.T.A. NO. 1817/AHD./2009 FOR THE ASSESSMENT YEAR 2004-05 ARE AS UNDER :- 4 (1) THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN HOLDING THAT INTEREST INCOME CANNOT BE ASS ESSED ON ACCRUAL BASIS EVEN THOUGH ASSESSEE IS FOLLOWING MER CANTILE SYSTEM OF ACCOUNTING. (2) THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS.89,74,158/- MA DE TOWARDS INTEREST ACCRUED ON BONDS AND OPTIONALLY FU LLY CONVERTIBLE PREMIUM NOTES ISSUED BY RURAL ELECTRIFI CATION CORPORATION, RELYING ON THE DECISION OF ITAT IN THE KISAN DISCRETIONARY FAMILY TRUST THOUGH ITAT HAS NOT CONSIDERED ALL THE RELEVANT ISSUES IN PROPER PERSPE CTIVE AND APPEAL TO HIGH COURT WAS FILED U/S. 260A AGAINS T THE DECISION OF ITAT IN THAT CASE. (3) THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN FAILING TO ANALYSE AND APPRECIATE THE FACT S IN DETAIL AND PROPER PERSPECTIVE IN DELETING THE ADDIT ION MADE BY ASSESSING OFFICER TOWARDS ACCRUED INTEREST ON OF CP NOTES & BONDS OF REC & PNS OF ADESH FINSTOCK (P) LT D.. THE GROUNDS RAISED IN I.T.A. NO. 1565/AHD./2009 FOR THE ASSESSMENT YEAR 2005-06 ARE AS UNDER :- (1) THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN HOLDING THAT INTEREST INCOME CANNOT BE ASSESSED ON ACCRUAL BASIS EVEN THOUGH ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. (2) THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS1,29,47,047 /- MADE TOWARDS INTEREST ACCRUED ON BONDS AND OPTIONAL LY FULLY CONVERTIBLE PREMIUM NOTES ISSUED BY RURAL ELECTRIFICATION CORPORATION, RELYING ON THE DECISIO N OF ITAT IN THE KISAN DISCRETIONARY FAMILY TRUST THOUGH ITAT HAS NOT CONSIDERED ALL THE RELEVANT ISSUES IN PROPER PERSPECTIVE AND APPEAL TO HIGH COURT WAS FIL ED U/S. 260A AGAINST THE DECISION OF ITAT IN THAT CASE . (3) THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN FAILING TO ANALYSE AND APPRECIATE THE FACTS IN DETAIL AND PROPER PERSPECTIVE IN DELETING THE ADDITION MADE BY ASSESSING OFFICER TOWARDS ACCRUED INTEREST ON OFCP NOTES & BONDS OF REC. 5 THE GROUNDS RAISED IN I.T.A. NO. 1560/AHD./2009 FOR THE ASSESSMENT YEAR 2004-05 ARE AS UNDER :- (1) THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN HOLDING THAT INTEREST INCOME CANNOT BE ASSESSED ON ACCRUAL BASIS EVEN THOUGH ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. (2) THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS.24,14,672/- MADE TOWARDS INTEREST ACCRUED ON BONDS AND OPTIONALLY FULLY CONVERTIBLE PREMIUM NOTES ISSUED BY RURAL ELECTRIFICATION CORPORATION, RELYING ON THE DECISION OF ITAT IN THE KISAN DISCRETIONARY FAMILY TRUST THOUGH ITAT HAS NOT CONSIDERED ALL THE RELEVANT ISSUES IN PROPER PERSPECTIVE AND APPEAL TO HIGH COURT WAS FILED U/S. 260A AGAINST THE DECISION OF ITAT IN THAT CASE. (3) THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN FAILING TO ANALYSE AND APPRECIATE THE FACTS IN DETAIL AND PROPER PERSPECTIVE IN DELETING THE ADDITION MADE BY ASSESSING OFFICER TOWARDS ACCRUED INTEREST ON OFCP NOTES & BONDS OF REC. THE GROUNDS RAISED IN I.T.A. NO. 1563/AHD./2009 FOR THE ASSESSMENT YEAR 2004-05 ARE AS UNDER :- (1) THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN HOLDING THAT INTEREST INCOME CANNOT BE ASSESSED ON ACCRUAL BASIS EVEN THOUGH ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. (2) THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS.2,21,93,559/- MADE TOWARDS INTEREST ACCRUED ON BONDS AND OPTIONALLY FULLY CONVERTIBLE PREMIUM NOTES ISSUED BY RURAL ELECTRIFICATION CORPORATION, RELYING ON THE DECISION OF ITAT IN THE KISAN DISCRETIONARY FAMILY TRUST THOUGH ITAT HAS NOT CONSIDERED ALL THE RELEVANT ISSUES IN PROPER PERSPECTIVE AND 6 APPEAL TO HIGH COURT WAS FILED U/S. 260A AGAINST THE DECISION OF ITAT IN THAT CASE. (3) THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN FAILING TO ANALYSE AND APPRECIATE THE FACTS IN DETAIL AND PROPER PERSPECTIVE IN DELETING THE ADDITION MADE BY ASSESSING OFFICER TOWARDS ACCRUED INTEREST ON OFCP NOTES & BONDS OF REC. THE GROUNDS RAISED IN I.T.A. NO. 1559/AHD./2009 FOR THE ASSESSMENT YEAR 2004-05 ARE AS UNDER :- (1) THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN HOLDING THAT INTEREST INCOME CANNOT BE ASSESSED ON ACCRUAL BASIS EVEN THOUGH ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. (2) THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS.2,76,07,579/- MADE TOWARDS INTEREST ACCRUED ON BONDS AND OPTIONALLY FULLY CONVERTIBLE PREMIUM NOTES ISSUED BY RURAL ELECTRIFICATION CORPORATION, RELYING ON THE DECISION OF ITAT IN THE KISAN DISCRETIONARY FAMILY TRUST THOUGH ITAT HAS NOT CONSIDERED ALL THE RELEVANT ISSUES IN PROPER PERSPECTIVE AND APPEAL TO HIGH COURT WAS FILED U/S. 260A AGAINST THE DECISION OF ITAT IN THAT CASE. (3) THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN FAILING TO ANALYSE AND APPRECIATE THE FACTS IN DETAIL AND PROPER PERSPECTIVE IN DELETING THE ADDITION MADE BY ASSESSING OFFICER TOWARDS ACCRUED INTEREST ON OFCP NOTES & BONDS OF REC. 3. AT THE OUTSET, SHRI HIMANSHU SHAH, LD. COUNSEL A PPEARING ON BEHALF OF ALL THE ASSESSEES POINTED OUT THAT BOTH THE CONTROVERSIES INVOLVED IN ALL THE APPEALS ARE COVERED. HE POINTED OUT THAT IN THE CASE OF KARSANBHAI KHODIDAS PATEL, HUF, THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR 2005-06 HAS HELD THAT THE ASSESSEE IS FOLLOWIN G CASH METHOD OF ACCOUNTING. 7 WITH REGARD TO INVESTMENT IN REC BONDS, THE LD. CO UNSEL OF THE ASSESSEE SUBMITTED THAT THIS WAS MADE ON 13.09.2002. THE A.O. ASSESSED THE INCOME ON REC BOND ON MERCANTILE BASIS ON THE BASIS OF CIRCULAR NO. 2 OF 2002 DATED 15.02. 2002. THE LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT BOTH THE ISSUES ARE FULLY COVERED BY THE EARLIER DECISION OF HON'BLE ITAT, A BENCH, AH MEDABAD IN THE CASE OF RAKESHBHAI K. PATEL VS.- ACIT VIDE ORDER DATED 02.11.2007 IN I.T.A. NO . 1855/AHD./2007 FOR THE ASSESSMENT YEAR THE DECISION OF ITAT, A BENCH, AHMEDABAD DATED 02 .11.2007 IN THE CASE OF RAKESHBHAI K. PATEL FOR THE ASSESSMENT YEAR 2003-04 IN ITA NO. 18 55/AHD./2007, WHEREIN THE ITAT HAS ACCEPTED THE METHOD OF ACCOUNTING AS CASH SYSTEM. T HE RELEVANT DISCUSSION IS CONTAINED AT PARA 17 IN PAGE 62 READS AS UNDER :- 17. TO REITERATE, WE IN VIEW OF AFORESAID FACTS AND CIRCUMSTANCES OF THE CASE, ARE OF THE OPINION THAT (I) THE ASSESSEES SYSTEM OF ACCOUNTING FOR ASST. YEAR 2003-04 WAS CASH SYSTEM. (II) IN VIEW OF OUR CONCLUSION, AS AFORESAID, AND THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AS WELL AS VARIO US DECISIONS DISCUSSED HEREINABOVE, WE ARE OF THE OPINION THAT INCOME/INTE REST FROM DDBS, WHICH, ADMITTEDLY, WERE HELD BY THE ASSESSEE AS INV ESTMENTS, WAS NOT TAXABLE ON ACCRUAL BASIS AND, THEREFORE, INCOME OF RS.1,39,38,824/- HAVING BEEN ASSESSED ON ACCRUAL BASIS IS DELETED. (III) THE CIRCULAR NO.2 OF 2002 IS AN INVALID C IRCULAR AND, THEREFORE, INCOME/INTEREST FROM DDBS AS WELL AS OFCPN IN ASS ESSEES CASE WHO HAS HELD THE SAME AS INVESTMENTS, CANNOT BE TAXED O N ACCRUAL AS PROPOSED BY THIS CIRCULAR. CONSEQUENTLY, THE INTER EST INCOME OF RS.1,39,38,824/- AS WELL AS THE INCOME ON ACCOUNT O F SO-CALLED NOTIONAL INTEREST ON INVESTMENT IN OPTIONALLY FULLY CONVERT IBLE PREMIUM NOTE OF NIRMA INDUSTRIES LTD. AMOUNTING TO RS.1,16,37,023/- WHICH WAS DECLARED BY THE ASSESSEE IN THE REVISED RETURN, IS DELETED. (IV) WITHOUT PREJUDICE TO OUR FINDINGS IN AT SL.NO .(III) ABOVE, EVEN IF THE CIRCULAR IS CONSIDERED TO BE VALID, THEN ALSO THE S AME BEING, IN OUR OPINION, APPLICABLE ONLY TO THE DDBS/OFCPN PURCHAS ED AFTER 15/02/2002, THE INCOME/INTEREST FROM DDBS/OFCPN PUR CHASED PRIOR TO 15/02/2002, IN ASSESSEES CASE, WHO HAS HELD THE SA ME AS INVESTMENT, WAS NOT LIABLE TO BE TAXED ON ACCRUAL BASIS. (V) THE INCOME/INTEREST FROM OPTIONALLY FULLY CONV ERTIBLE PREMIUM NOTE OF NIRMA INDUSTRIES LTD. COULD NOT BE TAXED ONLY BE CAUSE THE ASSESSEE 8 HAD DECLARED THE SAME IN THE REVISED RETURN. ONCE T HE ASSESSEES SYSTEM OF ACCOUNTING HAS BEEN HELD TO BE CASH SYSTEM, T HE CIRCULAR NO.2 OF 2002, SO FAR AS ASSESSEES CASE IS CONCERNED, WILL NOT BE APPLICABLE TO THE DDBS OR OFCPN PURCHASED EVEN AFTER 15/02/2002. THE INCOME OF RS.1,16,37,023/- ALSO, THEREFORE, STANDS DELETED . THE LD. COUNSEL OF THE ASSESSEES ALSO POINTED OUT T HAT IF THE INCOME IS ASSESSED ON ACCRUAL BASIS IN THE EARLIER YEAR, THEN THE SAME SHOULD BE EXCLUDED IN THE YEAR OF RECEIPT. THE LD. COUNSEL FURTHER SUBMITTED THAT THE FACTS OF REMAINING CASE ARE IDEN TICAL IN ALL THESE CASES. IN THE IMPUGNED ORDER, THE DECISION TAKEN BY THE LEARNED COMMISSIONER OF I NCOME TAX(APPEALS) IS IN CONFORMITY WITH THE VIEW TAKEN BY THE TRIBUNAL. THEREFORE, THE ORDE R OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IN RESPECT OF ALL THE ASSESSEES BE UPH ELD. 4. SHRI GOVIND SINGHAL, DEPARTMENTAL REPRESENTATIVE COULD NOT CONTROVERT THE AFORESAID SUBMISSIONS MADE BY THE LD. COUNSEL OF THE ASSESSEE S. HOWEVER, HE SUBMITTED THAT THE DECISIONS OF THIS TRIBUNAL, WHICH ARE RELIED BY THE LD. COUNS EL OF THE ASSESSEES, ARE BEING CONTESTED BY THE REVENUE IN APPEALS, WHICH WERE FILED UNDER SECTION 260 OF THE INCOME TAX ACT AGAINST THE DECISION OF ITAT IN THOSE CASES. 5. WE HAVE GIVEN OUR CAREFUL CONSIDERATION TO THE R IVAL SUBMISSIONS MADE BEFORE US AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW. WE HA VE ALSO GONE THROUGH THE EARLIER ORDER OF THIS TRIBUNAL IN ITA NO.1855/AHD/2007 DATED 02.11.2007 ( SUPRA). IT IS PERTINENT TO NOTE THAT THE ITAT IN THE CASE OF KISAN DISCRETIONARY FAMILY TRUS T FOR THE ASSESSMENT YEAR 2003-04 AND RAKESHBHAI K. PATEL FOR THE ASSESSMENT YEAR 2004-0 5 HAS HELD THAT METHOD OF ACCOUNTING SHOULD BE TAKEN AS CASH SYSTEM AND NOT MERCANTILE SYSTEM. THE FACTS OF ALL THE CASES BEFORE US ARE IDENTICAL WITH THE FACTS OF CASES DECIDED BY ITAT I N ITA NO. 1855/AHD,/2007 DATED 02.11.2007 (SUPRA). THEREFORE, IN OUR CONSIDERED OPINION, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IS LEGALLY AND FACTUALLY CORRECT TO DI RECT THE A.O. TO ADOPT CASH METHOD OF ACCOUNTING IN THE CASE OF ALL THE ASSESSEES. WITH R EGARD TO DELETION OF ACCRUED INTEREST ON OFCP NOTES & BONDS OF REC & PNS OF ADESH FINSTOCK (P) LT D., ETC., THE A.O. ASSESSED THE INCOME ON MERCANTILE BASIS ON THE BASIS OF CIRCULAR NO. 2 OF 2002 DATED 15.02.2002. THE ITAT IN THE CASE OF KISAN DISCRETIONARY FAMILY TRUST IN ITA NO. 1850 /AHD./2007, ORDER DATED 02.11.2007 FOR THE 9 ASSESSMENT YEAR 2003-04 HAS HELD THAT THIS CIRCULAR CANNOT BE APPLIED IN RESPECT OF THOSE ASSESSEES, WHO ARE FOLLOWING THE CASH SYSTEM OF ACC OUNTING AND ALSO IN RESPECT OF SECURITIES ISSUED PRIOR TO 15.02.2002. ADMITTEDLY SECURITIES I N ALL THE ASSESSEES BEFORE US WERE ISSUED PRIOR TO 15.02.2002. THEREFORE, BY CONSIDERING THE TOTALI TY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LEARNE D COMMISSIONER OF INCOME TAX(APPEALS) FOLLOWING THE DECISION OF ITAT, A BENCH, AHMEDABA D IN THE CASE OF KISAN DISCRETIONARY FAMILY TRUST AND DIRECT THE A.O. TO DELETE THE ADDI TION OF ACCRUED INTEREST. AS A NATURAL COROLLARY, IF THE INCOME IS ASSESSED ON ACCRUAL BASIS IN EARLI ER YEARS, THEN A.O. WILL EXCLUDE THE SAME IN THE YEAR OF RECEIPT. 6. FOR THE FOREGOING REASONS, WE ARE INCLINED TO UP HOLD THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IN RESPECT OF ALL THE ASSESS EES. 7. IN THE RESULT, ALL THE APPEALS OF THE REVENUE AR E DISMISSED. THE ORDER WAS PRONOUNCED IN THE COURT ON 18 . 09.2009 SD/- SD/- (D.C. AGRAWAL) (T.K. SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 18 / 09 / 2009 COPY OF THE ORDER IS FORWARDED TO : (1)KARSANBHAI KHODIAS PATEL, HUF, NIRMA HOUSE, ASHR AM ROAD, AHMEDABAD (2) SHIVA SPECIFIC FAMILY TRUST, NIRMA HOUSE, ASHRAM RO AD, AHMEDABAD (3) HARSIDDH SPECIFIC FAMILY TRUST, NIRMA HOUSE, ASHRAM ROAD, AHMEDABAD (4) KISAN DISCRETIONARY FAMILY TRUST, NIRMA HOUSE, ASHR AM ROAD, AHMEDABAD (5) SMT. SHANTIBEN K. PATEL, NIRMA HOUSE, ASHRAM ROAD, AHMEDABAD (6) JETHIBEN K. PATEL DISCRETIONARY FAMILY TRUST, NIRMA HOUSE, ASHRAM ROAD, AHMEDABAD (7)DCIT, CIRCLE-10, AHMEDABAD, 8) CIT(A)- ,AHMEDABAD, (9) CIT- ,AHM EDABAD (10) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER LAHA/SR.P.S. DEPUTY REGISTRAR, ITAT, AHMEDA BAD