The DCIT, Circle-10, Ahmedabad V. Punitaben K.Patel, Ahmedabad

ITA 1929/AHD/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9376 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 11-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M C PANDIT
• Keywords: Set aside

Judgement Text

IN THE INCOME_TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI H.L.KARWA AND SHRI D.C.AGRAWAL ITA NO.1929/AHD/2009 (ASSESSMENT YEAR : 2005-06 ) DY. COMMISSIONER OF INCOME- TAX, CIRCLE-10, AHMEDABAD. VS. PUNITABEN K. PATEL, NIRMA HOUSE, ASHRAM ROAD, AHMEDABAD. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M.C.PANDIT, SR. D.R. RESPONDENT BY : SHRI HIMANSHU SHAH, A.R. ( (( ( )/ )/)/ )/ ORDER PER KARWA, JM: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST T HE ORDER OF CIT(A)-XVI, AHMEDABAD DATED 06.4.2009 RELATING TO A SSESSMENT YEAR 2005-06. 2. THE ONLY EFFECTIVE GROUND RAISED BY THE REVENUE IN THIS APPEAL READS AS UNDER: THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETI NG THE ADDITION OF RS.7,.50,000/- MADE ON ACCOUNT OF ACCRUED INTEREST ON REC BOND, THOUGH A.O. HAS GIVEN A CLEAR FINDINGS THAT THE ASSESSEE IS NOT ELIGIBLE FOR THE DEDUCTION. 3. WHILE FRAMING THE ASSESSMENT, THE ASSESSING OFFICER MADE AN ADDITION OF ACCRUED INTEREST OF RS.7,50,000/- BEING INV ESTMENT IN BONDS ON RURAL ELECTRIFICATION CORPORATION LTD.. 4. ON APPEAL, THE CIT(A) DELETED THE ADDITION FOLLO WING HIS ORDER PASSED IN THE CASE OF RAJALBEN H. PATEL AND HENCE, THE RE VENUE IS IN APPEAL BEFORE THE TRIBUNAL. 2 5. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND THAT T HE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE DECISION OF I.T.A.T. A BENCH AHMEDABAD DATED 15 .5.2009 PASSED IN THE CASE OF RAJALBEN H. PATEL IN ITA NO.3132/AHD/2007 RELATING TO ASSESSMENT YEAR 2003-04. THE ORDER OF THE CIT(A) PASSED I N THE CASE OF RAJALBEN H. PATEL HAS BEEN UPHELD BY THE TRIBUNAL. TH E RELEVANT FINDINGS OF THE TRIBUNAL IN THE CASE OF RAJALBEN H. PATEL (SUPRA ) ARE AS UNDER: 6. HAVING HEARD BOTH SIDES, WE HAVE CAREFULLY GONE T HROUGH THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW AND DECISIONS R ELIED ON BY THE LEARNED AR OF THE ASSESSEE. THERE IS NO DISPUTE OF T HE FACT THAT THE INVESTMENT IN BONDS OF REC LTD WAS MADE ON 13.9.20 02 AND INVESTMENT MADE IN OFCPNS OF NIRMA INDUSTRIES LTD., WA S ON 25.3.2002. WE FIND THAT THE ISSUE IN CONTROVERSY IS COVE RED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE ITAT IN TH E CASE OF KISAN DISCRETIONARY FAMILY TRUST VIDE ITA NO.L850/AHD/2 007 DT.2.11.2007 FOR ASSESSMENT YEAR 2003-04 AND IN THE CASE OF NAVIN ASSOCIATES VIDE ITA NO.L248/AHD/2006 DT.31.12.2008FOR T HE ASSESSMENT YEAR 2002-03, IN WHICH SIMILAR ADDITIONS HAVE BEEN DELETED BY THE TRIBUNAL. IN THE CASE OF NAVIN ASSOCIATES , NIRMA HOUSE (SUPRA) THE TRIBUNAL HAS FOLLOWED THE DECISION OF T HE ITAT IN THE CASE OF NAMAN ASSOCIATES V. DCIT IN ITA NO.L621/AHD/2 007 DT.4.4.2008 PERTAINING TO THE ASSESSMENT YEAR 2002-03, WHEREIN THE TRIBUNAL HAS HELD IN FAVOUR OF THE ASSESSEE. THE RE LEVANT PORTION OF THE SAID ORDER IS REPRODUCED AS UNDER: '7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AN D, PERUSED THE MATERIAL ON RECORD. WE HAVE ALSO GONE THRO UGH THE DECISION OF THE TRIBUNAL MUMBAI BENCH IN THE CASE OF M/S KULGAM HOLDINGS P LTD. (SUPRA). IN THIS CASE THE TRIBUN AL VIDE PARA-7 OF THE ORDER HAS HELD AS UNDER: '7. WE HEARD THE RIVAL SUBMISSIONS. CIRCULAR OF CBDT NO. 2 OF 2002 DATED 15.02.2002 AND PRESS NOTES HAS BEEN PLACED ON RECORD BY THE ASSESSEE AT PAGE 38 TO 47 OF THE PAPER BOOK CLAUSE 3 OF CIRCULAR NO. 2 OF 2002 WHICH READS AS UNDER: '3. THE MATTER HAS NOW BEEN EXAMINED IN CONSULTATION WITH THE RESERVE BANK OF INDIA AND THE MINISTRY OF LAW. THE PRACTICE FOLLOWED IN SEVERAL COUNTRIES OUTSIDE INDIA HAS ALSO BEEN 3 EXAMINED. WITH A VIEW TO REMOVE THE ANOMALIES IN THE EXISTING SYSTEM OF TAXATION OF INCOME FROM DEEP DISCOUNT BONDS, AND TO FORMULATE A SYSTEM WHICH IS MORE IN LINE WITH INTERNATIONAL PRACTICE, THE BOARD HAVE DECIDED THAT SUCH INCOME MAY HEREAFTER BE TREATED AS FOLLOWS ' MAKES IT CLEAR THAT THE CLARIFICATION IS APPLICABLE AND COULD BE APPLIED ONLY SUBSEQUENT TO THE ISSUE OF THIS CIRCULAR AND NOT BEFORE. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN THE SUBSEQUENT YEAR THE ASSESSEE SOLD THE BONDS AND WHATEVER SURPLUS WAS OFFERED TO TAX AND IT WAS ACCEPTED AS WELL. LEARNED COUNSEL AGAIN BROUGHT OUR ATTENTION TO PAGE 43 OF THE PAPER BOOK, WHICH IS THE PRESS NOTES/RELEASE FOR TAX TREATMENT OF DEEP DISCOUNT BONDS AND STRIPS. THIS PRESS NOTE DATED 20TH MARCH, 2002, MAKES IT CLEAR THAT THE AMOUNT RECEIVED ON REDEMPTION WOULD BE OFFERED TO TAX AS PER THE GUIDELINES OF THE RBI OR A PUBLIC FINANCIAL INSTITUTION. IT IS NOT DISPUTED THAT THE ASSESSEE HAD OFFERED IT AND ACCEPTED BY THE REVENUE. UNDER THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THERE IS NO SCOPE OF DISTURB THE ORDER OF THE LEARNED FIRST APPELLATE AUTHORITY. HENCE, THE APPEAL OF THE REVENUE FAILS AND DISMISSED.' WE HAVE ALSO GONE THROUGH THE DECISION OF THE ITAT AHMEDABAD BENCH IN THE CASE OF KISAN DISCRETIONARY FAMILY TRUST (SUPRA). IN THIS CASE WE FIND THAT THERE IS A CLEAR CUT FINDING UNDER PARA 50(V) AT PAGE 99 OF THE ORDER TH AT THE CIRCULAR NO.2 OF 2002 IS NOT APPLICABLE ONLY TO THE D DES PURCHASED AFTER 15/02/2002. THE LEARNED ACCOUNTANT MEMB ER HAS ALSO AGREED WITH THIS FINDING OF THE LEARNED JUDICI AL MEMBER UNDER PARA 67 THAT THE CIRCULAR IS APPLICABLE O NLY TO DDBS ACQUIRED AND OR AFTER 15/02/2002. SINCE THE JUDGM ENT OF THE COORDINATE BENCH IS BINDING ON US, WE ACCORDINGL Y HOLD THAT THE CIRCULAR NO. 2 OF 2002 IS APPLICABLE ONLY IN RESPECT OF DEEP DISCOUNT BONDS PURCHASED PRIOR TO 15/02/2002. SINCE THE ASSESSEE IN THIS CASE HAS PURCHASED THE STRIPS ON 23-02- 2000 I.E. PRIOR TO 15/02/2002, THEREFORE, THE CIRCUL AR NO. 2 OF 2002 IS NOT APPLICABLE IN THE CASE OF THE ASSESSEE REQUIRIN G THE ASSESSEE TO RETURN THE INTEREST INCOME ON ACCRUAL BASIS. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) AND DELETE THE ADDITION OF RS.2,93,823/-. ' 4 SIMILAR VIEW HAS ALSO BEEN TAKEN IN THE CASE OF ITO V . M/S. KULGAM HOLDINGS '. LTD. (SUPRA), BY THE ITAT, MUMBAI. 7. IN VIEW OF THE ABOVE, RESPECTFULLY FOLLOWING THE ABOVE DECISIONS OF THE ITAT REFERRED TO IN THE FOREGOING PAR AGRAPH, WE SET ASIDE THE IMPUGNED ORDER OF THE AUTHORITIES BELOW AND DELETE THE IMPUGNED ADDITION OF RS.35,341 MADE ON ACCOUNT OF ACCRUE D INTEREST ON INVESTMENT IN THE BONDS OF REC LTD AND OF RS.45,82,968 MADE ON ACCOUNT OF ACCRUED INTEREST ON INVESTMENT IN OFCP NS OF NIRMA INDUSTRIES LTD. FACTS ARE SIMILAR AND, THEREFORE, RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL IN THE CASE OF RAJALBEN H. PATEL(SUPRA), WE HO LD THAT THE CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS.7,50,000/ - MADE ON ACCOUNT OF ACCRUED INTEREST ON INVESTMENT IN THE BONDS OF REC LTD. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMI SSED. THE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 21.8. 2009. SD/- (D.C.AGRAWAL) ACCOUNTANT MEMBER SD/- (H.L.KARVA) JUDICIAL MEMBER AHMEDABAD, DATED: 21.8.2009 PSP* COPY TO : (1) THE ASSESSEE (2) THE ASSESSING OFFICER (3) THE CIT(A) CONCERNED, (4) THE CIT, CONCERNED, (5) THE DR, ITAT, AHMEDABAD, (6) GUARD FILE. BY ORDER ASSTT. REGISTRAR / D EPUTY REGISTRAR ITAT, AHMEDABAD BENCHES AHMEDABAD.