Shri. Sanjay Ballambat Pai, Bangalore V. ACIT Circle-14(1), Bangalore

ITA 1824/BANG/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8532 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 16-02-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 25-10-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Deemed to accrue or arise in india; Additional evidence; TDS
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 234B; 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC - B BENCH : BANGALORE BEFORE SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.1824/BANG/2016 ASSESSMENT YEAR : 2010-11 SHRI SANJAY BALLAMBAT PAI, # 220, INLAND EVERGLADES APARTMENTS, DASARAHALLI MAIN ROAD, HEBBAL, BANGALORE 560 085. PAN: AXAPP 9840Q VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 14(1), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : MS. AKSHAYA K.S., CA RESPONDENT BY : SHRI AR.V. SREENIVAS, JCIT(DR) DATE OF HEARING : 16.02.2017 DATE OF PRONOUNCEMENT : 23.02.2017 O R D E R PER A.K. GARODIA, ACCOUNTANT MEMBER THIS IS AN APPEAL OF THE ASSESSEE DIRECTED AGAINS T THE ORDER OF THE LD. CIT (APPEALS)-V, BENGALURU DATED 28.04.2016 FOR THE ASSESSMENT YEAR 2010-11. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER :- 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME -TAX APPEALS, PASSED UNDER SECTION 250 OF THE ACT IN SO FAR AS IT IS AGAINST THE APPELLANT IS OPPOSED TO LAW, EQUITY, WE IGHT OF EVIDENCE, PROBABILITIES AND THE FACTS AND CIRCUMSTA NCES IN THE ITA NO.1824/BANG/2016 PAGE 2 OF 5 APPELLANTS CASE. THE LEARNED CIT (A) HAS ERRED IN DISMISSING ALL THE GROUNDS OF APPEAL FAILING TO TAKE ON ACCOUN T THE SUBMISSIONS MADE BY THE APPELLANT ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE GROUNDS OF THE APPELLANT ON THE MERITS OF TH E MATTER ARE AS UNDER- A) THE LEARNED CIT(A) FAILED TO UNDERSTAND THAT THE LEARNED AO ERRED IN PASSING THE ASSESSMENT ORDER WITHOUT CONSI DERING THE EXPLANATIONS AND SUBMISSION MADE AND REVISED COMPUT ATION PROVIDED TO SUPPORT THE APPELLANTS CLAIMS, WHICH IS BAD IN LAW. B) THE LEARNED CIT (A) HAS ERRED IN HOLDING THAT P ROVISIONS OF SECTION 198 ARE TO BE APPLIED ONLY WHEN THE ASSESSE E HAS NO OTHER INCOME TO SHOW AND THE TDS MADE ON THE INCOME WOULD BE SHOWN AS DEEMED INCOME AND ACCORDINGLY, CR EDIT WOULD BE CLAIMED AS INCOME WOULD BE EXEMPTED FROM T AX. THUS, THE ORDER OF THE CIT (A) IS UNJUSTIFIED AND B AD IN LAW. C) THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE LEARNED AO ERRED IN PASSING THE ASSESSMENT ORDER BY TREATING A ND TAXING THE INTEREST INCOME ON FIXED DEPOSITS LYING WITH KA RNATAKA BANK ON ACCRUAL BASIS INSTEAD OF CASH BASIS ON RECEIPT AS OPTED BY THE APPELLANT. D) THE LEARNED CIT(A) FAILED TO APPRECIATE THAT TH E SAID INTEREST INCOME WAS ALREADY BEING TAXED IN THE LATER YEARS O N CASH BASIS, BASED ON THE ADDITIONAL EVIDENCES PRODUCED B EFORE HIM. E) THE LEARNED CIT (A) FAILED TO NOTE AND CONSIDER THE GROUND RELATING TO EXEMPTION U/S 10(4) (II) RELATING TO IN TEREST INCOME RECEIVED ON SAVINGS BANK NRE ACCOUNT AS SOUGHT BY T HE APPELLANT, WHICH IS BAD IN LAW. F) THE LEARNED CIT(A) FAILED TO CONSIDER THE GROUND AND TO UNDERSTAND THAT THE LEARNED AO HAS ERRED BY COMPUTI NG THE TAX PAYABLE WITHOUT GIVING CREDIT TO TDS ON INTERES T INCOME AMOUNTING TO RS. 90,018/-, WHICH IS BAD IN LAW. G) ON RELIEF OF THE ABOVE, WE PRAY TO THE LEARNED TRIBUNAL THAT THE INTEREST U/S 234B BE RECOMPUTED ACCORDINGLY. ITA NO.1824/BANG/2016 PAGE 3 OF 5 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, DELET E OR SUBSTITUTE ANY OF THE GROUNDS URGED ABOVE. 4. IN THE VIEW OF THE ABOVE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF THE HEARING OF THE APPEAL, THE APPELLANT PRAYS THAT THE APPEAL MAY BE ALLOWED IN THE INTEREST OF J USTICE AND EQUITY. 3. IT WAS SUBMITTED BY THE LD. AR OF ASSESSEE THAT AS PER COMPUTATION OF INCOME AVAILABLE ON PAGES 51 & 52 OF PB, THE ASS ESSEE IS OFFERING INCOME FROM OTHER SOURCES ON CASH BASIS, WHICH IS P ERMITTED U/S. 145 OF THE I.T. ACT. HE THEREAFTER SUBMITTED THAT AN AMOUNT O F RS.90,018 WAS DEDUCTED AS TDS IN RESPECT OF INTEREST ON 3 FDRS. HE FURTHER SUBMITTED THAT ASSESSEE HAS CONSIDERED ONLY THE TDS AMOUNT AS INTEREST INCOME IN THE PRESENT YEAR BUT THE AO HAS MADE ADDITION OF TH E ENTIRE AMOUNT OF INTEREST ON WHICH ITDS WAS DEDUCTED BY THE BANK. H E SUBMITTED THAT THIS ADDITION MADE BY THE AO IS NOT JUSTIFIED. AT THIS JUNCTURE, A QUERY WAS RAISED BY THE BENCH THAT IF ONLY TDS AMOUNT IS OFFE RED AS INCOME ON THE BASIS OF CASH BASIS OF ACCOUNTING, THEN HOW THE ASS ESSEE CAN CLAIM THE CREDIT OF ENTIRE AMOUNT OF TDS IN VIEW OF RULE 37BA (3)(II), AS PER WHICH WHERE THE INCOME ON WHICH TAX IS DEDUCTED IS ASSESS ABLE OVER A NUMBER OF YEARS, CREDIT FOR TAX DEDUCTED AT SOURCE SHALL BE A LLOWED ACROSS THOSE YEARS IN THE SAME PROPORTION IN WHICH THE INCOME IS ASSES SABLE TO TAX. IN REPLY, THE LD. AR OF ASSESSEE HAD NOTHING TO SAY. ITA NO.1824/BANG/2016 PAGE 4 OF 5 4. THEREAFTER, HE SUBMITTED THAT IN RESPECT OF GROU ND NO.2(E) OF THE ASSESSEE IN RESPECT OF EXEMPTION U/S. 10(4)(II) IN RESPECT OF INTEREST INCOME RECEIVED ON SAVINGS BANK NRE ACCOUNT, THE MATTER MA Y BE RESTORED TO THE FILE OF CIT(APPEALS) BECAUSE THIS ISSUE HAS NOT BEE N DECIDED BY THE CIT(APPEALS). 5. THE LD. DR OF REVENUE SUPPORTED THE ORDER OF CIT (APPEALS). 6. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. I FIND THAT ALTHOUGH ASSESSEE HAS RAISED SEVERAL GROUNDS BUT THE ISSUES INVOLVED ARE TWO ONLY. THE FIRST ISSUE IS REGARDING ADDITION MADE BY THE A O OF RS.8,79,492 ON ACCOUNT OF FD INTEREST FROM KARNATAKA BANK. ON THI S ASPECT, I FIND THAT THE ADDITION MADE BY THE AO IS NOT JUSTIFIED BECAUSE AD MITTEDLY, THE ASSESSEE IS FOLLOWING CASH SYSTEM OF ACCOUNTING IN RESPECT O F INCOME FROM OTHER SOURCES AND IT IS PERMITTED BY SECTION 145 OF THE A CT. HENCE THE ADDITION MADE BY THE AO IS NOT JUSTIFIED. BUT AT THE SAME T IME, THE CLAIM OF ASSESSEE REGARDING CREDIT OF TDS TO THE EXTENT OF E NTIRE AMOUNT OF TDS IS NOT ALLOWABLE IN VIEW OF RULE 37BA(3)(II) OF THE IN COME-TAX RULES, 1962. HENCE I DELETE THE ADDITION BUT AT THE SAME TIME, D IRECT THE AO TO ALLOW CREDIT OF TDS IN RESPECT OF INTEREST ON FD FROM KAR NATAKA BANK AS PER RULE 37BA(3)(II) OF THE I.T. RULES, 1962. 7. REGARDING THE SECOND ISSUE RAISED BY THE ASSESSE E AS PER GROUND NO.2(E), I FIND THAT THIS ISSUE WAS RAISED BY THE A SSESSEE BEFORE THE CIT(APPEALS) ALSO, BUT THE CIT(A) HAS NOT DECIDED T HIS ISSUE AND HENCE, ON ITA NO.1824/BANG/2016 PAGE 5 OF 5 THIS ASPECT, I RESTORE THE MATTER BACK TO THE FILE OF CIT(APPEALS) FOR A DECISION. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED IN THE TERMS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT ON THIS 23 RD DAY OF FEBRUARY, 2017. SD/- ( A.K. GARODIA ) ACCOUNTANT MEMBER BANGALORE, DATED, THE 23 RD FEBRUARY, 2017. / D ESAI S MURTHY / COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.