ACIT, CHENNAI V. Sri C. Aryama Sundaram (Indl0, CHENNAI

ITA 238/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86240 (ITAT-CHENNAI)
• Duration Of Justice: 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 20-01-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 27-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI .. , ! , '#$ BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ./ ITA NO.238/MDS/2014 ' % &% / ASSESSMENT YEAR : 2006-07 THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE VIII, CHENNAI 600 006. V. SHRI C. ARYAMASUNDARAM (INDL), C/O R. BALASUBRAMANIAN, NEW NO.108, ARMENIAN STREET, CHENNAI - 600 001. PAN : AJYPS 1233 N (!(/ APPELLANT) (*+!(/ RESPONDENT) !( , - / APPELLANT BY : SHRI P. RADHAKRISHNAN, JCIT *+!(,- / RESPONDENT BY : NONE . ,/ / DATE OF HEARING : 20.01.2015 01& ,/ / DATE OF PRONOUNCEMENT : 20.01.2015 / O R D E R PER B.R. BASKARAN, ACCOUNTANT MEMBER: THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER DATED 30.10.2013, PASSED BY LD. COMMISSIONER OF INC OME TAX (APPEALS)-V, CHENNAI AND IT RELATES TO ASSESSMENT YEAR 2006-07. THE REVENUE IS AGGRIEVED BY THE DECISION OF LD. CIT (APPEALS) IN DELETING THE ADDITION OF ` 10,00,000/- RELATING TO INTEREST ACCRUED ON KISANVIKASPATRAS (KVPS). 2 I.T.A. NO. 238/MDS/2014 2. THE LD. COUNSEL FOR THE ASSESSEE HAS MOVED AN AP PLICATION SEEKING ADJOURNMENT OF THE CASE. AFTER HEARING THE LD. D.R., WE HAVE PROCEEDED TO DISPOSE OF THIS APPEAL EX PARTE, WITHOUT THE PRESENCE OF THE ASSESSEE. 3. THE A.O. NOTICED THAT THE ASSESSEE HAS BORROWED A LOAN OF ` 9 CRORES FROM A BANK AND INVESTED THE ENTIRE AMOUNT IN PURCHASING KVP CERTIFICATES. THE ASSESSEE DID NOT DECLARE ANY INTEREST INCOME FROM KVP CERTIFICATES, WHEREAS, HE HAD CLAIMED DED UCTION TOWARDS PAYMENT OF INTEREST ON THE BANK BORROWINGS. THE AS SESSEE HAD PURCHASED KVP CERTIFICATES ON 24.1.2006. HENCE, TH E ASSESSING OFFICER ESTIMATED THE INTEREST ACCRUED ON KVP CERTI FICATES AT ` 10,00,000/- FOR TWO MONTHS ENDING 31.03.2006 AND AD DED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 4. THE ASSESSEE CHALLENGED THE SAID ADDITION BY FIL ING APPEAL BEFORE LD. CIT(APPEALS). BEFORE THE LD. CIT(APPEAL S), THE ASSESSEE SUBMITTED THAT THE INTEREST IS PAID ON KVP CERTIFICATES ONLY AT THE TIME OF MATURITY OF THE SAME AND HENCE, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN ASSESSING THE ACCRUED INTEREST FOR A PERIOD OF TWO MONTHS. THE LD. CIT(APPEALS) WAS CONVINCED WIT H THE CONTENTION OF THE ASSESSEE AND ACCORDINGLY DELETED THE ADDITION OF ` 10,00,000/- MADE BY THE ASSESSING OFFICER. 3 I.T.A. NO. 238/MDS/2014 5. AGGRIEVED, THE REVENUE HAS FILED APPEAL BEFORE U S. THE LD. D.R. PLACED RELIANCE ON THE DECISION OF HON'BLE KER ALA HIGH COURT IN THE CASE OF DR. R.P. PATEL V. CIT (2009) 182 TAXMAN 305 (KER.) AND SUBMITTED THAT THE HON'BLE KERALA HIGH COURT HAS HE LD THAT THE INTEREST ON INDIRA VIKAS PATRAS ( ANOTHER TYPE OF DEPOSIT CERTIFICATES ISSUED BY THE POST OFFICE) HAVE TO BE OFFERED BY EV ERY INVESTOR EVERY YEAR ON ACCRUAL BASIS AND THE INVESTORS CANNO T CONTEND THAT INTEREST INCOME ON INDIRA VIKASPATRAS CAN BE ASSESS ED TO TAX ONLY ON MATURITY AND AFTER ENCASHMENT. THE LD. D.R. ALS O PLACED RELIANCE ON CIRCULAR NO.687 DATED 19.08.1994 ISSUED BY CBDT WHEREIN THE YEARLY INTEREST ACCRUAL HAS BEEN GIVEN ON TABLE. THE LD. D.R. SUBMITTED THAT THE ASSESSEE HAS TO OFFER T HE INTEREST ON KISANVIKAS PATRA CERTIFICATES ALSO ON ACCRUAL BASIS IN VIEW OF THE CIRCULAR ISSUED BY CBDT AS WELL AS IN VIEW OF THE D ECISION OF THE HON'BLE KERALA HIGH COURT REFERRED ABOVE. 6. WE HAVE HEARD LD. D.R. AND PERUSED THE RECORD. WE HAVE ALREADY NOTICED THAT THE ASSESSEE HAD INVESTED IN K ISAN VIKAS PATRA ONLY ON 24.01.2006. A REFERENCE TO THE CBDT CIRCUL AR (SUPRA) WOULD SHOW THAT THE INTEREST ON KISANVIKASPATRA IS ACCUMU LATED ON HALF- YEARLY BASIS, MEANING THEREBY THE INTEREST SHALL AC CRUE FOR THE FIRST TIME AFTER COMPLETION OF SIX MONTHS FROM THE DATE O F PURCHASE. IN 4 I.T.A. NO. 238/MDS/2014 THE INSTANT CASE, THE INTEREST SHALL ACCRUE FOR THE FIRST TIME ON 24.07.2006. ACCORDINGLY, IN OUR VIEW, IT CANNOT BE SAID THAT THE INTEREST HAS ACCRUED IN THE INSTANT CASE WITHIN A P ERIOD OF TWO MONTHS FROM THE DATE OF PURCHASE OF KVP, I.E. FROM 24.01.2006. ACCORDINGLY, WE AGREE WITH THE VIEW OF THE LD. CIT( APPEALS) IN DELETING THE IMPUGNED ADDITION FOR THE REASONS STAT ED ABOVE. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED ON THE 20 TH DAY OF JANUARY, 2015 AT CHENNAI. SD/- SD/- ( ! ) ( .. ) (VIKASAWASTHY) (B.R. BASKARAN) ' /JUDICIAL MEMBER /ACCOUNTANT MEMBER /CHENNAI, A /DATED, THE 20 TH JANUARY, 2015. KRI. B , *'/C D &/ /COPY TO: 1. !( /APPELLANT 2. *+!( /RESPONDENT 3. . E/ () /CIT(A)-V, CHENNAI 4. . E/ /CIT-X, CHENNAI-34 5. FG *'/' /DR 6. GH% I /GF.