The Dy. Commissioner of Income Tax, Vadodara V. M/s. Vadodara Enviro Channel Ltd., Vadodara

ITA 2031/AHD/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1814 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 9 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 08-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M ANAND KUMAR
• Assessee Lawyers: M J SHAH
• Keywords: Rule of consistency; Capital receipt; TDS; Set aside

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ ITA NO.2031/AHD/2017 / ASSTT. YEAR: 2013-14 THE DCIT, CIR.1(1)(2) BARODA. VS. M/S.VADODARA ENVIRO CHANNEL LTD. 304/1, 317 & 318, POST-DHANORA DIST. BARODA 391 346. ./ ITA NO.2095/AHD/2017 / ASSTT. YEAR: 2013-14 M/S.VADODARA ENVIRO CHANNEL LTD. 304/1, 317 & 318, POST-DHANORA DIST. BARODA 391 346. VS. THE DCIT, CIR.1(1)(2) BARODA. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI M.J. SHAH, AR REVENUE BY : SHRI M.ANAND KUMAR, SR.DR. ! / DATE OF HEARING : 06/06/2019 '#$ ! / DATE OF PRONOUNCEMENT: 17 /06/2019 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THESE ARE CROSS APPEALS BY THE REVENUE AND THE ASSE SSEE AGAINST ORDER OF THE LD.CIT(A)-1, VADODARA DATED 16 .6.2017 PASSED FOR THE ASSTT.YEAR 2013-14. 2. FIRST WE TAKE REVENUES APPEAL. ITA NO.2031 AND 2095/AHD/2018 2 3. IN THIS APPEAL, THE GRIEVANCE OF THE REVENUE IS THAT THE LD.CIT(A) HAS ERRED IN RESTRICTING THE ADDITION IN THE CURRENT YEAR ONLY TO THE EXTENT OF 1/5 TH OF MEMBERSHIP CONTRIBUTION RECEIVED. 4. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS ENGA GED IN THE BUSINESS OF TREATMENT OF INDUSTRIAL WASTE-WATER DIS CHARGED BY THE PARTICIPATING MEMBER COMPANIES AND CONVEYANCE OF IN DUSTRIAL EFFLUENT & MAINTENANCE OF CHANNEL IN THE INDUSTRIAL AREA OF VADODARA. IT HAS FILED ITS RETURN OF INCOME FOR TH E ASSTT.YEAR 2013-14 ON 29.9.2013 DECLARING TOTAL INCOME AT RS.3 ,44,25,430/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND NOTICE UNDER SECTION 143(2) WAS ISSUED AND SERV ED UPON THE ASSESSEE. IN THE ASSESSMENT PROCEEDINGS, IT WAS NO TICED BY THE AO THAT THE ASSESSEE HAS RECEIVED CAPITAL CONTRIBUT ION OF RS.2,52,73,456/- FROM PARTICIPATING MEMBERS AS CONT RIBUTION TOWARDS LIFE TIME MEMBERSHIP FOR AVAILING OF EFFLUE NT DISPOSAL FACILITY OFFERED BY THE ASSESSEE COMPANY. ASSESSEE COMPANY CLAIMED THE SAME AS CAPITAL RECEIPTS AND NOT REVENU E RECEIPTS. THE AO CONFRONTED THE ASSESSEE AS TO WHY ENTIRE REC EIPT OF CONTRIBUTION AMOUNT SHOULD NOT BE TREATED AS REVENU E. IT WAS EXPLAINED BY THE ASSESSEE THAT THE CONTRIBUTIONS FR OM THE MEMBERS WERE BEING UTILIZED ON CONSTRUCTING CHANNEL AND PURCHASING MECHANICAL EQUIPMENTS, AND THEREFORE, TH IS CONTRIBUTION HAD TO BE TREATED AS CAPITAL RECEIPTS, AS THE BENEFIT OF WHICH ACCRUED TO THE PARTICIPATING MEMBERS WERE OF ENDURING NATURE. THEREFORE, ENTIRE INCOME COULD NOT BE TREA TED AS REVENUE INCOME. THE ASSESSEE TREATED THE SAME AS REVENUE R ECEIPT IN THE FIRST YEAR, BUT RECOGNIZED THE INCOME TO THE EXTENT OF 1/5 TH AND REST OF THE AMOUNT WAS TO BE TAXED ON DEFERRED BASI S FOR NEXT FOUR YEARS. HOWEVER, THE LD.AO DID NOT ACCEPT THIS TREA TMENT OF ITA NO.2031 AND 2095/AHD/2018 3 INCOME BY THE ASSESSEE, AND HE HELD THAT ENTIRE SUC H RECEIPT FROM NEW MEMBERS WAS REVENUE IN NATURE, AND ACCORDING, T HE AO ADDED THE ENTIRE AMOUNT TO THE TOTAL INCOME OF THE ASSESSEE. DISSATISFIED WITH THIS ACTION OF THE AO, THE ASSESS EE WENT IN APPEAL BEFORE THE LD.CIT(A), WHO AFTER FOLLOWING THE DECIS ION OF ITAT IN THE ASSESSEES OWN CASE FOR THE ASSTT.YEAR 2011-12 IN ITA NO.1945/AHD/2011, DIRECTED THE AO TO RESTRICT THE A DDITION MADE IN THE CURRENT YEAR TO 1/5 TH OF RS.2,52,73,456/- I.E.RS.50,54,691/- , AND THE BALANCE AMOUNT WAS DIRECTED TO BE TAXED I N THE ASSESSEES HAND ON DEFERRED BASIS. AGGRIEVED WITH THIS ACTION OF THE FIRST APPELLATE AUTHORITY, REVENUE IS IN APPEAL BEFORE US. 5. BEFORE US, THE LD.DR SUPPORTED THE ORDER OF THE A O, WHILE LD.COUNSEL FOR THE ASSESSEE RELIED UPON THE ORDER O F THE LD.CIT(A). HE FURTHER SUBMITTED THAT ITAT IN THE ASSESSEES CA SE IN ITA NO.766/AHD/2016 FOR THE ASSTT.YEAR 2012-13 ALLOWED SIMILAR CLAIM, AND THEREFORE, FACTS AND CIRCUMSTANCES BEING IDENTICAL IN THIS YEAR AS WELL EXCEPT QUANTUM, THERE IS NO REASO N TO DISALLOW THE CLAIM OF THE ASSESSEE BY DEVIATING THE VIEW TAK EN BY THE TRIBUNAL IN THE EARLIER YEARS. THE LD.COUNSEL FOR THE ASSESSEE HAS PLACED ON RECORD A COPY OF ABOVE ORDER OF THE ITAT. 6. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND GONE TH ROUGH THE RECORD CAREFULLY. WE FIND THAT SIMILAR CLAIM OF T HE ASSESSEE WAS ALLOWED IN EARLIER YEARS I.E. ASSTT.YEAR 2011-12 AN D 2012-13 BY THE LD.CIT(A) WHICH WAS UPHELD BY THE TRIBUNAL. W E HAVE PERUSED ORDERS OF ITAT FOR BOTH THE YEARS. THERE I S NO DISPARITY ON FACTS POINTED OUT BY THE LD.DR. THEREFORE, APPL YING PRINCIPLE OF CONSISTENCY, WE UPHOLD THE ORDER OF THE LD.CIT(A) O N THIS ISSUE AND REJECT THE GROUND OF APPEAL OF THE REVENUE. ITA NO.2031 AND 2095/AHD/2018 4 7. NOW WE TAKE ASSESSEES APPEAL. 8. THE GRIEVANCE OF THE ASSESSEE IS THAT THE REVENU E AUTHORITIES HAVE ERRED IN MAKING ADDITION OF RS.12, 60,252/- AS UNDISCLOSED RECEIPTS OF BANK AND OTHER INTEREST INC OME. 9. BRIEF FACTS OF THE CASE ARE THAT AS PER THE DETAI LS SUBMITTED BY THE ASSESSEE, THE AO NOTICED THAT THERE WAS DIFF ERENCE IN THE AMOUNTS SHOWN AS PER FORM NO.26AS AND THE INCOME SH OWN IN THE BOOKS OF ACCOUNTS. THIS AMOUNT WAS ADDED AS IN COME OF THE ASSESSEE. IN APPEAL BEFORE THE LD.FIRST APPELLATE A UTHORITY, ASSESSEE SUBMITTED THAT ON RECONCILING THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND FORM NO.26AS THERE WERE INSTANCES OF DIFFERENCES, WHICH WAS HAPPENED DUE TO LATE UPDATIO N. FOR EXAMPLE, FOR THE ASSTT.YEAR 2013-14 (F.Y.2012-13), THE DETAILS WERE ADDED/UPDATED IN THE TDS EVEN AFTER SEPTEMBER, 2013 I.E. AFTER FILING OF THE RETURN OF INCOME, THEREFORE, IT WAS LIKELY THAT SUCH INCOME BEING LEFT OUT FOR CONSIDERATION IN THA T YEAR, HOWEVER, SHORT INTEREST INCOME WAS RECOGNIZED IN THE SUCCEED ING ASSESSMENT YEAR. IT WAS ALSO SUBMITTED THAT INTERE ST INCOME FROM BANK OF BARODA FOR F.Y.2012-13 WAS RECEIVED IN F.Y.2 013-14, BUT THE SAME WAS OFFERED FOR TAXATION IN THE ASSTT.YEAR 2014-15, AND THEREFORE, THERE WAS NO LOSS TO THE REVENUE. IT WA S ALSO SUBMITTED THAT THE INTEREST INCOME FROM DGVCL WAS A DJUSTED TOWARDS ELECTRICITY BILL RAISED BY THE DGVCL, WHICH WAS PROPERLY ACCOUNTED FOR. HOWEVER, THE LD.CIT(A) DID NOT ACCEP T THE SUBMISSIONS OF THE ASSESSEE, BECAUSE ACCORDING TO T HE LD.CIT(A), THERE WAS NO SUPPORTING DOCUMENTARY EVIDENCES AND D ETAILS. HE ITA NO.2031 AND 2095/AHD/2018 5 FURTHER HELD THAT ANY INCOME HAS TO BE TAXED IN COR RECT ASSESSMENT YEAR ON ACCRUAL BASIS. ASSESSEE IS NOW B EFORE US. 10. BEFORE US, THE LD.COUNSEL FOR THE ASSESSEE REITE RATED SUBMISSIONS MADE BEFORE THE REVENUE AUTHORITIES. H E FURTHER SUBMITTED THAT DIFFERENCE OF INTEREST INCOME WAS DU E TO LATE REFLECTION OF DETAILS IN TDS CERTIFICATE, THAT TOO AFTER FILING OF THE RETURN. WHATEVER DIFFERENTIAL AMOUNT WAS THERE, H AS BEEN RECOGNIZED IN THE SUCCEEDING ASSESSMENT YEAR I.E. 2 014-15 AND OFFERED FOR TAXATION, THEREFORE, THERE IS NO QUESTI ON PAYING DOUBLE TAX ON THE INCOME ALREADY OFFERED. ON THE OTHER HA ND, THE LD.DR RELIED 11. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND GONE T HROUGH THE RECORD CAREFULLY. WE FIND PRIMA FACIE THAT THERE IS A DIFFERENCE OF INTEREST INCOME SHOWN IN THE FORM 26AS AND INTEREST REFLECTED IN THE BOOKS OF ACCOUNTS. THIS IS DUE TO LATE UPDATIO N OF FIGURES IN THE FORM NO.26AS. HOWEVER, THE ASSESSEE HAS CLAIME D THAT THE DIFFERENTIAL AMOUNT HAS BEEN OFFERED TO TAX IN THE NEXT ASSESSMENT YEAR I.E. 2014-15, AND THEREFORE THERE IS NO QUESTI ON MAKING ADDITION IN THE ASSESSMENT YEAR 2013-14. THE ASSE SSEE HAS FILED THE DETAILS OF INTEREST EARNED DURING THE ASSTT.YEA R 2014-15 AND SHORT INTEREST OF THE ASSTT.YEAR 2013-14, WHICH WAS RECOGNIZED IN THE ASSTT.YEAR 2014-15 AND OFFERED FOR TAXATION. SINCE ASSESSEE HAS CLAIMED THAT IT HAS ALREADY OFFERED THE DIFFERE NTIAL INTEREST INCOME FOR TAXATION IN THE NEXT ASSESSMENT YEAR, WE ARE OF THE VIEW THAT THE AO SHOULD VERIFY THESE DETAILS, AND F IND OUT WHETHER THE SAME WAS OFFERED FOR TAXATION OR NOT. FOR THIS PURPOSE, WE SET ASIDE THE ISSUE TO THE FILE OF THE AO FOR RECONSIDE RATION ON THE BASIS OF THE DETAILS FURNISHED BY THE ASSESSEE, AND IN CASE THE ITA NO.2031 AND 2095/AHD/2018 6 ASSESSEE HAS OFFERED THE IMPUGNED INTEREST INCOME F OR TAXATION, THEN THE ASSESSEE SHOULD BE GIVEN PROPER RELIEF, AN D NO ADDITION SHOULD BE CALLED FOR. OTHERWISE, THE AO MAY MAKE ADDITION IN ACCORDANCE WITH LAW. ASSESSEE MAY FILE ALL THE DET AILS TO SUPPORT ITS CLAIM BEFORE THE AO. 12. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED, AND THAT OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE COURT ON 17 TH JUNE, 2019. SD/- SD/- (AMARJIT SINGH) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 17/06/2019