M/s. Western Electricity Supply Company of Odisha Ltd., Sambalpur V. DCIT, Bhubaneswar

ITA 289/CTK/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7191 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 08-03-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 11-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K PRADHAN
• Assessee Lawyers: P V RAODINAKAR MOHANTY
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK SMC BENCH, CUTTACK BEFORE SHRI N.S SAINI, ACCOUNTANT MEMBER ITA NO. 289/CTK/2015 ASSESSMENT YEAR : 2010 - 2011 M/S. WESTERN ELECTRICITY SUPPLY COMPANY OF ODISHA LTD., CORPORATE OFFICE, BURLA, SAMBALPUR. VS. DCIT, CIRCLE - 2 (2), BHUBANESWAR. PAN/GIR NO. AAACW 3510 C (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI P.V.RAO/DINAKAR MOHANTY, AR REVENUE BY : SHRI D.K. PRADHAN , DR DATE OF HEARING : 08 /03 / 2017 DATE OF PRONOUNCEMENT : 08 /03 / 2017 O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 1, BHUBANESWAR, DATED 18.3.2015 FOR THE ASSESSMENT YEAR 2010 - 2011 . 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL IS THAT THE LD CIT(A) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER ASSESSING THE INTEREST INCOME EARNED ON FIXED DEPOSITS OF RS.16,30,14,270/ - UNDER THE HEAD INCOME FROM OTHER SOURCES IN PLACE OF NCOME FROM BUSINESS AND PROFESSION SHOWN BY THE ASSESSEE. 2 ITA NO. 289/CTK/2015 ASSESSMENT YEAR :2010 - 2011 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER O BSERVED THAT THE ASSESSEE HAS SHOWN INTEREST INCOME FROM BANK ON FIXED DEPOSITS OF RS.16,30,14,270/ - . THE ASSESSEE HAS CLAIMED TO HAVE RECEIVED SECURITY DEPOSITS FROM ITS CUSTOMERS TO WHOM THE ASSESSEE SUPPLIES ELECTRICITY. THE ASSESSEE HAS KEPT THIS SEC URITY DEPOSITS IN FIXED DEPOSITS WITH BANK. THE ASSESSEE ALSO PAYS INTEREST TO ITS CUSTOMERS ON THE SECURITY DEPOSITS RECEIVED FROM THEM. THE ASSESSEE EARNED INTEREST FROM BANK ON FIXED DEPOSITS OF RS.16,30,14,270/ - AND HAS ALSO CLAIMED EXPENSES AS INTER EST PAID ON SECURITY DEPOSITS OF RS.15,80,33,663/ - . THE ASSESSING OFFICER OBSERVING THAT THE ASSESSEE FAILED TO SHOW ANY NEXUS OF INTEREST INCOME EARNED ON SECURITY DEPOSITS WITH THE BUSINESS OF THE ASSESSEE HELD THAT THE INTEREST INCOME WAS TO BE ASSESSE D UNDER THE HEAD INCOME FROM OTHER SOURCES AND NOT UNDER THE HEAD BUSINESS INCOME. 4. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 5. BEFORE ME, LD AUTHORISED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT IN THE ASSESSMENT YEAR 2007 - 08, THE ASSESSEE HAD SHOWN INTEREST INCOME EARNED FROM SECURITY DEPOSITS KEPT WITH THE BANK AS FIXED DEPOSITS OF RS.1,80,75,192, WHICH WAS ASSESSED BY THE ASSESSING OFFICER IN AN ASSESSMENT MADE U/S.143(3) OF THE ACT VIDE ORDER DATED 21.4.2009 UNDER THE HEAD BUSINESS INCOME. FURTHER, IN THE ASSESSMENT YEAR 2008 - 09, THE ASSESSEE HAD SHOWN INTEREST INCOME EARNED FROM SECURITY DEPOSITS KEPT WITH THE BANK AS FIXED DEPOSITS OF RS.4,25,80,370, WHICH WAS ASSESSED BY THE ASSESSING OFFI CER IN AN ASSESSMENT MADE U/S.143(3) OF THE ACT VIDE 3 ITA NO. 289/CTK/2015 ASSESSMENT YEAR :2010 - 2011 ORDER DATED 28.12.2010 UNDER THE HEAD BUSINESS INCOME. HE FURTHER SUBMITTED THAT IN THE ASSESSMENT YEAR 2009 - 10, THE ASSESSEE HAD SHOWN INTEREST INCOME EARNED FROM SECURITY DEPOSITS KEPT WITH THE BANK AS FIXED DEPOSITS OF RS.15,11,97,105/ - , WHICH WAS ASSESSED BY THE ASSESSING OFFICER IN AN ASSESSMENT MADE U/S.143(3) OF THE ACT UNDER THE HEAD BUSINESS INCOME. HE ARGUED THAT IN THE YEAR UNDER APPEA L ONLY , THE INTEREST EARNED ON SECURITY DEPOSITS WITH THE BANK AS FIXED DEPOSITS HAS BEEN ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES. HE SUBMITTED THAT THOUGH THE PRINCIPLE OF RES - JUDICATA ARE NOT APPLICABLE TO INCOME TAX PROCEEDINGS BUT IT HAS BEEN HELD BY THE HONBLE SUPREME COURT IN THE CASE OF R ADHASOAMI SATSANG VS. COMMISSIONER OF INCOME TAX, 193 ITR 321 (SC ) WHERE A FUNDAMENTAL ASPECT PERMEATING THROUGH THE DIFFERENT ASSESSMENT YEARS HAS BEEN FOUND AS A FACT ONE WAY OR THE OTHER AND PARTIES HAVE ALLOWED THAT POSITION TO BE SUSTAINED BY NOT CHA LLENGING THE ORDER, IT WOULD NOT BE AT ALL APPROPRIATE TO ALLOW THE POSITION TO BE CHANGED IN A SUBSEQUENT YEAR. HENCE, IT WAS HIS PRAYER THAT THE ORDERS OF LOWER AUTHORITIES SHOULD BE REVERSED AND THE APPEAL OF THE ASSESSEE SHOULD BE ACCEPTED. 6. ON THE OTHER HAND, LD DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF LOWER AUTHORITIES. 7. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE UNDISPUTED FACTS OF THE CAS E ARE THAT THE ASSESSEE EARNED INTEREST ON 4 ITA NO. 289/CTK/2015 ASSESSMENT YEAR :2010 - 2011 SECURITY DEPOSITS RECEIVED FROM ITS CUSTOMERS KEPT WITH THE BANK AS FIXED DEPOSIT OF RS. 16,30,14,270/ - , WHICH WAS SHOWN BY THE ASSESSEE IN ITS RETURN OF INCOME FILED UNDER THE HEAD BUSINESS INCOME. THE ASSESSING OFFICER ASSESSED THE SAME UNDER THE HEAD INCOME FROM OTHER SOURCES, WHICH WAS CONFIRMED IN APPEAL BY THE CIT(A). THE CONTENTION OF THE LD A.R. OF THE ASSESSEE IS THAT IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR 2007 - 08, THE INTEREST INCOME EARNED ON SECURITY DEPOSITS OF THE ASSESSEE OF RS.1,80,75,192/ - , IN THE ASSESSMENT YEAR 2008 - 09, THE INTEREST INCOME EARNED FROM SECURITY DEP OSITS OF RS.4,25,80,370 AND IN THE ASSESSMENT YEAR 2009 - 10, THE INTEREST INCOME EARNED FROM SECURITY DEPOSITS OF RS.15,11,97,105/ - , HAS BEEN ASSESSED UNDER THE HEAD BUSINESS INCOMEBY THE ASSESSING OFFICER IN ASSESSMENT MADE U/S.143(3) OF THE ACT . THERE FORE CONSISTENCY SHOULD BE MAINTAINED IN THE PRESENT YEAR UNDER APPEAL AND THE INTEREST INCOME SHOULD BE ASSESSED UNDER THE HEAD BUSINESS INCOME. FOR THIS PROPOSITION, RELIANCE IS PLACED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF RADHASOAMI SATSANG (SUPRA), WHEREIN, IT WAS HELD AS UNDER: WHERE A FUNDAMENTAL ASPECT PERMEATING THROUGH THE DIFFERENT ASSESSMENT YEARS HAS BEEN FOUND AS A FACT ONE WAY OR THE OTHER AND PARTIES HAVE ALLOWED THAT POSITION TO BE SUSTAINED BY NOT CHALLENGING THE ORD ER, IT WOULD NOT BE AT ALL APPROPRIATE TO ALLOW THE POSITION TO BE CHANGED IN A SUBSEQUENT YEAR. HENCE, IT WAS HIS PRAYER THAT THE ORDERS OF LOWER AUTHORITIES SHOULD BE REVERSED AND THE APPEAL OF THE ASSESSEE SHOULD BE ACCEPTED. 5 ITA NO. 289/CTK/2015 ASSESSMENT YEAR :2010 - 2011 8. I FIND TO THE SAME EFF ECT IS THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. EXCEL INDUSTRIES LTD. 358 ITR 295 (SC ), WHEREIN, IT HAS BEEN HELD AS UNDER: THAT A CONSISTENT VIEW HAD BEEN TAKEN IN FAVOUR OF THE ASSESSEE ON THE QUESTIONS RAISED, STARTING WITH THE ASSESSMENT YEAR 1992 - 93, THAT THE BENEFITS UNDER THE ADVANCE LICENCES OR UNDER THE DUTY ENTITLEMENT PASS BOOK DID NOT REPRESENT THE REAL INCOME OF THE ASSESSEE. THERE WAS NO REASON FOR THE COURT TO TAKE A DIFFERENT VIEW UNLESS THERE WERE VERY CONVINCING R EASONS, WHICH THERE WERE NOT. 9. THEREFORE, RESPECTFULLY FOLLOWING THE ABOVE DECISION S OF HONBLE SUPREME COURT AND KEEPING IN VIEW THE FACT NO CHANGE IN FACTS HAS BEEN B ROUGHT ON RECORD BY THE REVENUE DURING THE YEAR UNDER APPEAL, I SET ASIDE THE ORDERS OF LOWER AUTHORITIES AND DIRECT THE ASSESSING OFFICER TO ASSESS THE INTEREST INCOME EARNED FROM SECURITY DEPOSITS RECEIVED FROM ITS CUSTOMERS UNDER THE HEAD BUSINESS INCOME AND ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 10. IN T HE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRO NOUNCED IN THE OPEN COURT ON 08 /03 /2017 IN THE PRESENCE OF PARTIES. SD/ - ( N.S SAINI) A CCOUNTANT MEMBER CUTTACK; DATED 08 /03 /2017 B.K.PARIDA, SPS 6 ITA NO. 289/CTK/2015 ASSESSMENT YEAR :2010 - 2011 COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PRIVATE SECRETARY ITAT, CUTTACK 1. THE APPELLANT : M/S. WESTERN ELECTRICITY SUPPLY COMPANY OF ODISHA LTD., CORPORATE OFFICE, BURLA, SAMBALPUR 2. THE RESPONDENT. DCIT, CIRCLE - 2 (2), BHUBANESWAR. 3. THE CIT(A) - 1, BHUBANESWAR 4. CIT - 1, BHUBANESWAR. 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//