Firozabad Shikohabad Vikas Pradhikaran, Firozabad V. A.C.I.T., Caircle-5, Firozabad

ITA 169/AGR/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89192 (ITAT-AGRA)
• Duration Of Justice: 1 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 14-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMIT SHUK LA
• Assessee Lawyers: ALOK FARSAIYA
• Keywords: Opportunity of being heard
• Section: 143(3)

Judgement Text

I.T.A. NO.169/AGRA/2015 ASSESSMENT YEAR: 2006-07 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, SMC, AGRA [CORAM: PRAMOD KUMAR AM] ITA NO.169/AGRA/2015 ASSESSMENT YEAR: 2006-07 FIROZABAD SHIKOHABAD VIKAS PRADHIKARAN, ..... ..................APPELLANT FIROZABAD. [PAN: AAACF 0020 B] VS. ASSTT. COMMISSIONER OF INCOME TAX, ..... .RESPONDENT CAIRCLE-5, FIROZABAD. APPEARANCES BY: ALOK FARSAIYA, FOR THE APPELLANT AMIT SHUKLA, FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : 18 TH JUNE, 2015 DATE OF PRONOUNCING THE ORDER : 24 TH JUNE, 2015 O R D E R 1. BY WAY OF THIS APPEAL, THE ASSESSEE APPELLANT HA S CHALLENGED CORRECTNESS OF THE ORDER DATED 25 TH FEBRUARY, 2015 PASSED BY LD. CIT(A), IN THE MATTER OF ASSESSMENT UNDER SECTION 250 R.W.S. 143(3) AND 254(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) , FOR THE ASSESSMENT YEAR 2006-07, ON THE FOLLOWING GROUNDS :- 1. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANC ES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. AO IN MAKING ADDITION OF RS.726,878/- BEING INTT. ON YEAR MARKED FUNDS (I.E. DEVELOPMENT FUND & INFRASTRUCTURE DEVELOPMENT FUND) 2. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER L D. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT DELETING THE ADDITIONS/D ISALLOWANCES MADE BY LD. AO AS THE ASSESSMENT ORDER IS NOT SUSTAINABLE ON VA RIOUS LEGAL AND FACTUAL GROUNDS AND MORE SO BY RECORDING INCORRECT FACTS AN D FINDING. I.T.A. NO.169/AGRA/2015 ASSESSMENT YEAR: 2006-07 PAGE 2 OF 5 2. IT IS SECOND ROUND OF PROCEEDINGS BEFORE US. IN THE FIRST GROUND, WHEN THIS MATTER CAME UP BEFORE US, IT WAS REMITTED TO THE FILE OF T HE CIT(A), VIDE OUR ORDER DATED 1 ST FEBRUARY, 2013, WITH THE FOLLOWING DIRECTIONS :- 4. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL ON RECORD. THE AO CONSIDERED THE TAXABILITY OF INTEREST ON FDR S IN DETAIL IN THE ASSESSMENT ORDER AND REJECTED THE CONTENTION OF THE ASSESSEE WITH REGARD TO APPLICABILITY OF G.O. FOR THE PURPOSE OF TAXING THE INTEREST ON FDR. THE LD. COUNSEL FOR THE ASSESSEE IN THE PAPER BOOK FILED CO PY OF WRITTEN SUBMISSIONS STATED TO BE FILED BEFORE THE LD. CIT(A), IN WHICH THE ASSESSEE AGITATED THIS ISSUE BEFORE THE LD. CIT(A). MOREOVER, SINCE IT IS AN ISSUE OF TAXABILITY OF INCOME IN THE HANDS OF THE ASSESSEE, WHICH IS ARISI NG OUT OF 3 ITA NO. 498/AGRA/2012 THE ASSESSMENT ORDER, THEREFORE, IT W AS INCUMBENT ON THE PART OF THE LD. CIT(A) TO HAVE CONSIDERED AND DISCU SSED THIS ISSUE IN DETAIL ON MERITS. ACCORDING TO SECTION 250(6) OF THE IT ACT, THE LD. CIT(A) SHALL HAVE TO GIVE REASONS FOR DECISION IN THE APPELLATE ORDER WH ILE DECIDING THE ISSUE. IT, THEREFORE, APPEARS THAT THE ORDER OF THE LD. CIT(A) IS CONTRARY TO THE SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE AND COPY OF THE WRITTEN SUBMISSIONS FILED IN THE PAPER BOOK AND IS A NON-SP EAKING ORDER ON THIS ISSUE. THE IMPUGNED ORDER, THEREFORE, CANNOT BE SUS TAINED IN LAW. I ACCORDINGLY SET ASIDE THE ORDER OF THE LD. CIT(A) A ND RESTORE THIS ISSUE TO HIS FILE WITH THE DIRECTION TO REDECIDE THIS ISSUE ON M ERIT BY GIVING REASONABLE SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. THE LD. CIT(A) SHALL PASS REASONED ORDER ON THIS ISSUE. ACCORDINGLY, THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. 3. WHEN THE MATER THUS RAVELLED BACK TO THE LD. CIT (A) HE ONCE AGAIN HELD THE FIXED DEPOSIT INTEREST TO BE TAXABLE IN THE HANDS OF THE ASSESSEE AND HELD AS FOLLOWS :- 4. THE ABOVE WRITTEN SUBMISSION HAS BEEN CONSIDER ED BY ME. THE SIMILAR ISSUE HAS ALREADY BEEN DEALT BY ME IN ASSES SEE'S OWN CASE FOR AY 2010-11 IN THE APPEAL ORDER A.NO.49/CIT(A)-II/AGRAJ DCIT- 5/FIROZABAD/2013-14 DATED 07.04.2014. IN THE ABOVE MENTIONED APPELLATE ORDER AFTER EXAMINING THE G.O. DATED 15.01.1998 REL IED UPON BY THE LD. AR OF THE ASSESSEE(APPELLANT) PUTTING UP ARGUMENT FOR NON TAXABILITY OF INTEREST ACCRUED ON FDR, I HAVE FOUND THAT THE ASSESSEE(APPE LLANT) HAS NOT MAINTAINED INFRASTRUCTURE DEVELOPMENT FUND ACCOUNT AS PER NORMS LAID DOWN IN THE G.O. DATED 15.01.1998 BECAUSE SUCH FUND S ARE NOT FOUND DEPOSITED IN A SEPARATE BANK ACCOUNT OPENED FOR THE PURPOSE OF INFRASTRUCTURE DEVELOPMENT FUND TO BE UTILISED FOR DEVELOPMENT OF THE CITY. INSTEAD OF DEPOSITING OF AMOUNT IN INFRASTRUCTURE D EVELOPMENT FUND ACCOUNT MAINTAINED SEPARATELY IN A BANK OUT OF MONE Y COLLECTED IN FORM OF I.T.A. NO.169/AGRA/2015 ASSESSMENT YEAR: 2006-07 PAGE 3 OF 5 DEVELOPMENT CHARGES AND FEE, IT HAS MADE INVESTMENT OF SURPLUS FUND IN FDRS. THE ASSESSEE (APPELLANT) IS IN FACT MAINLY MAKING I NVESTMENT OF SURPLUS MONEY AVAILABLE WITH IT IN VARIOUS FDRS AND NOT DEPOSITING SUCH FUND IN ANY INFRASTRUCTURE DEVELOPMENT FUND ACCOUNT MAINTAINED SEPARATELY IN A BANK, IF ANY, OPENED BY IT IN A BAN K FOR THE PURPOSE OF DEVELOPMENT OF CITY AND HENCE, THERE IS NO UTILIZAT ION OF SUCH FUND FOR THE PURPOSE OF DEVELOPMENT OF THE INFRASTRUCTURE OF THE CITY. I HAVE FOUND THAT ONE BANK ACCOUNT IN DISTRICT CO-OPERATIVE BANK IS O PENED MARKED AS INFRASTRUCTURE DEVELOPMENT FUND ACCOUNT BUT ONLY A NOMINAL AMOUNT OF RS.4,23,361/IS KEPT IN THIS BANK ACCOUNT AND SURPLU S MONEY IS INVESTED IN FDRS. THEREFORE, BECAUSE OF NOT KEEPING THE FUND IN THIS ACCOUNT, THE FUNDS ARE NOT READILY AVAILABLE FOR DEVELOPMENT OF CITY A ND SURPLUS FUNDS ARE BEING USED FOR THE PURPOSE OF INVESTMENT RATHER BEING USE D IN DEVELOPMENT OF CITY. THEREFORE, ON THE BASIS OF DETAILS FURNISHED BY THE ASSESSEE (APPELLANT), IT CANNOT BE SAID THAT THE AMOUNTS INVESTED IN FDRS BY THE ASSESSEE IS MADE OUT OF INFRASTRUCTURE DEVELOPMENT FUND ACCOUNT. SIN CE, THE ASSESSEE IS NOT UTILIZING THE INFRASTRUCTURE DEVELOPMENT FUND ACCOU NT OPENED IN DISTRICT COOPERATIVE BANK, KEEPING THE FUND RECEIVED OUT OF DEVELOPMENT CHARGES AS PER DIRECTION CONTAINED IN G.O. AND RATHER, IT HAS INVESTED SURPLUS MONEY AVAILABLE WITH IT IN FDRS FOR THE PURPOSE OF EARNIN G INTEREST, I AGREE WITH THE AO THAT THE INTEREST RECEIVED BY THE ASSESSEE ON FD RS IS A REVENUE RECEIPT IN THE HAND OF THE ASSESSEE BEING EARNED ON INVESTMENT MADE BY IT AND SUCH INCOME CANNOT BE SAID TO BE PART OF THE INFRASTRUCT URE DEVELOPMENT FUND BECAUSE THIS INTEREST AMOUNT IS NOT ACCRUED ON THE MONEY DEPOSITED IN A SEPARATE BANK ACCOUNT MAINTAINED FOR THE PURPOSE OF INFRASTRUCTURE DEVELOPMENT FUND TO BE UTILIZED FOR INFRASTRUCTURE DEVELOPMENT OF THE CITY. THERE IS ONLY A NOMINAL AMOUNT OF RS.4,23,361/- KEP T IN THE BANK ACCOUNT WITH DISTT. COOPERATIVE BANK OPENED FOR INFRASTRUCT URE DEVELOPMENT OF THE CITY AND THEREFORE, INTEREST ACCRUING ON SUCH DEPOS ITS WITH DISTT. COOPERATIVE BANK OPENED FOR THE PURPOSE OF INFRASTRUCTURE DEVEL OPMENT OF THE CITY CAN BE CONSIDERED AS PART OF THE INFRASTRUCTURE DEVELOP MENT FUND. HOWEVER, INTEREST ACCRUING ON FDRS CANNOT BE CONSIDERED AS P ART OF INFRASTRUCTURE DEVELOPMENT FUND BECAUSE SUCH FDRS ARE NOT FOUND TO HAVE BEEN MADE BY WITHDRAWING MONEY FROM DISTT. COOPERATIVE BANK ACCO UNT MAINTAINED FOR THE PURPOSE OF INFRASTRUCTURE DEVELOPMENT FUND. CON SIDERING THE ABOVE POSITION OF THE AVAILABILITY OF SURPLUS FUND WITH T HE ASSESSEE (APPELLANT) AND MAKING OF FDR OUT OF SUCH FUND, THE AO HAS BEEN FOU ND JUSTIFIED IN TREATING INTEREST ON FDRS AS REVENUE RECEIPT TAXABLE IN THE HAND OF THE ASSESSEE. DECISION CITED BY THE LD. AR IN THE CASE OF CIT VS. LUCKNOW DEVELOPMENT AUTHORITY (SUPRA) AND SAHARANPUR DEVELO PMENT AUTHORITY VS. CIT (SUPRA) WOULD NOT APPLY IN THE PRESENT CASE UNDER APPEAL BECAUSE IN THE FIRST CASE, THE ASSESSEE WAS MAINTAINING A SEPARATE INFRASTRUCTURE DEVELOPMENT FUND ACCOUNT IN A BANK I N WHICH, AMOUNT SET APART BY THE ASSESSEE AS PER G.O. DATED 15.01.1998 WAS BEING DEPOSITED AND IN THE SECOND CASE, THE AMOUNT WAS BEING KEPT IN A NARELA REVOLVING FUNDS. THESE FUNDS WERE NOT INVESTED BY THE ASSESSEE IN FD RS FOR THE PURPOSE OF EARNING OF INTEREST AS IT HAS BEEN FOUND IN CASE OF THE PRESENT ASSESSEE IN I.T.A. NO.169/AGRA/2015 ASSESSMENT YEAR: 2006-07 PAGE 4 OF 5 APPEAL. THEREFORE, I FIND THAT THE FACTS OF THE CAS E OF PRESENT ASSESSEE(APPELLANT) IN APPEAL IS DISTINGUISHABLE FR OM THE FACTS OF THE ABOVE MENTIONED TWO CASE LAWS CITED BY THE LD. AR . AND D ECISION OF THE ABOVE MENTIONED TWO CASES CANNOT BE APPLIED IN THE CASE O F PRESENT ASSESSEE( APPELLANT). 5. CONSIDERING THE ABOVE FACTS AND CIRCUMSTANCES O F THE CASE OF THE ASSESSEE (APPELLANT), I CONFIRM THE ADDITION OF RS.7,26,878/- MADE BY THE AO ON ACCOUNT OF INTEREST EARNED ON FDRS CONSIDERIN G THESE AMOUNTS IN THE HAND OF THE ASSESSEE AS REVENUE RECEIPT. ACC ORDINGLY, GROUND NO.5 IS DISMISSED. 4. THE ASSESSEE IS AGGRIEVED AND IS IN APPEAL BEFOR E US 5. I HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE AP PLICABLE LEGAL POSITION. 6. I HAVE NOTICED THAT THE CIT(A) HAS GIVEN TOO MUC H OF EMPHASIS ON HOW THE MONIES ARE INVESTED IN A CURRENT ACCOUNT WITH DIS TRICT CO-OPERATIVE BANK OR IN FIXED DEPOSITS ELSEWHERE. THAT IS NOT MATERIAL IN THE PR ESENT CONTEXT. WHAT IS MATERIAL IS THAT INCOME FROM INTEREST ON THESE FUNDS DOES NOT ACCRUE TO THE ASSESSEE AND EVEN INTEREST RECEIPTS ARE AT THE DISPOSAL ONLY IN ACCORDANCE WIT H GOVERNMENT DIRECTIONS ON DISPOSAL OF THE FUNDS RELATING TO INFRASTRUCTURE DEVELOPMENT . THE ASSESSEE DOES NOT GET ANY UNFETTERED DISCRETION TO USE SUCH INTEREST EARNINGS , BUT THESE EARNINGS ONLY ADD UP TO THE CORPUS WHICH CAN BE USED IN TERMS OF GOVERNMENT DIRECTIVES AND FOR THE PURPOSE OF INFRASTRUCTURE DEVELOPMENT. THAT ASPECT OF THE MAT TER BEING UNDISPUTED BEFORE ME, I AM OF THE CONSIDERED VIEW THAT INTEREST IN QUESTION CANNOT BE TREATED AS INCOME OF THE ASSESSEE. I, THEREFORE, DIRECT THE ASSESSING OFFIC ER TO DELETE THE IMPUGNED ADDITION OF RS.7,26,878/-. THE ASSESSEE GETS THE RELIEF ACCORD INGLY. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED.. PRONOUNCED IN THE OPEN COURT TODAY ON 24TH JUNE, 2015. SD/- PRAMOD KUMAR (ACCOUNTAN T MEMBER) AGRA, THE 24 TH JUNE, 2015 PBN/* I.T.A. NO.169/AGRA/2015 ASSESSMENT YEAR: 2006-07 PAGE 5 OF 5 COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) CIT(A) CONCERNED (4) CIT CONCERNE D (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA