The ACIT, Circle-10, Ahmedabad V. Nima Specific Family Trust, Ahmedabad

ITA 3162/AHD/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67851 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 10-10-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 29-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P BATHEJA
• Assessee Lawyers: S N SOPARKAR
• Section: 260A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMADABAD BEFORE SHRI D.K.TYAGI , JUDICIAL MEMBER AND SHRI T.R. MEENA, ACCOUNTANT MEMBER ITA NO. 3162/AHD/2010 ASSESSMENT YEAR :2007-08 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-10, AHMADABAD. V/S . NIMA SPECIFIC FAMILY TRUST, NIRMA HOUSE, ASHRAM ROAD, AHMADABAD. PAN NO. A A BTN0269J (APPELLANT) .. (RESPONDENT) BY APPELLANT SHRI O. P. BATHEJA, SR. D.R. /BY RESPONDENT SHRI S. N. SOPARKAR, A.R. /DATE OF HEARING 10.10.2013 /DATE OF PRONOUNCEMENT 25.10.2013 O R D E R PER : SHRI T.R.MEENA, ACCOUNTANT MEMBER THIS IS AN APPEAL AT THE BEHEST OF REVENUE WHICH HA S EMANATED FROM THE ORDER OF CIT(A)-XVI, AHMEDABAD, DATED 20.09.201 0 FOR ASSESSMENT YEAR 2007-08. THE EFFECTIVE GROUNDS OF APPEAL ARE AS UN DER: (1) THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DE LETING THE ADDITION OF RS. 16,61,086/- MADE TOWARDS INTEREST A CCRUED ON OPTIONALLY FULLY CONVERTIBLE PREMIUM NOTES ISSUED B Y AKSHAT FINSTOCK PVT. LTD. RELYING ON THE DECISION OF THE I TAT IN THE ASSESSEES OWN CASE FOR A.Y. 2003-04 AND THE CIT(A) S DECISION FOR A.YS. 2004-05 & 2005-06. ITA NO. 3162/AHD/10 A.Y. 07-08 PAGE 2 (2) THE LD. CIT(A) HAS ERRED IN LAW IN NOT ANALYZIN G AND APPRECIATING THE FACTS IN DETAIL AND IN PROPER PERS PECTIVE WHILE DELETING THE ADDITION MADE BY AO TOWARDS ACCRUED IN TEREST ON OFCP NOTES ISSUED BY AKSHAT FINSTOCKS PVT LTD. (3) THE LD. CIT(A) HAS ERRED IN LAW IN NOT APPRECIA TING THAT THE DECISION OF THE HONBLE ITAT HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AND APPEAL TO HIGH COURT WAS FILED U/S. 260A OF THE ACT AGAINST THE DECISION OF ITAT IN THIS CASE FOR A.Y. 2003-04 AND IN ALMOST ALL CASES OF THE GROUP ON IDENTICAL ISSUES. 2. ALL THREE GROUND ARE REVOLVING AROUND DELETING T HE ADDITION OF RS.16,61,086/- MADE TOWARDS INTEREST ACCRUED ON OPT IONALLY FULLY CONVERTIBLE PREMIUM NOTES ISSUED BY AKSHAT FINSTOCK PVT. LTD. THE A.O. OBSERVED THAT THE ASSESSEE HAD NOT FOLLOWED THE CIRCULAR NO. 2 OF 2002 DATED 15.02.2002. THE A.O. STATED THAT THE ASSESSEE HAD NOT SHOWN INC OME FROM INVESTMENT IN THESE BONDS ON ACCRUAL BASIS AND HAD NOT FOLLOWED C IRCULAR NO. 2 OF 2002, DATED 15.02.2002 IN RESPECT OF THESE BONDS. THE AS SESSEE REPLIED THAT THE INCOME FROM THESE BONDS IS TAXABLE ON ACTUAL REALIZ ATION AT THE TIME OF REDEMPTION. THE REDEMPTION DATE HAS BEEN EXTENDED FROM 30/06/2006 TO 30/06/2011. THESE TERMS WERE REVISED ON 30/03/2005 BY THE COMPANY WITH THE CONSENT OF HOLDERS OF THESE BONDS. THE A.O. DI D NOT ACCEPT THIS EXPLANATION AND STATED THAT SINCE ASSESSMENT YEAR 2 002-03 AND TILL LAST YEAR, THE INTEREST HAD BEEN ADDED ON ACCRUAL BASIS IN THE ASSESSMENT ORDERS. THE AO, THEREFORE, ADDED THE INTEREST PERTAINING TO THE CURRENT YEAR, AMOUNTING TO RS.16,61,086/-. ITA NO. 3162/AHD/10 A.Y. 07-08 PAGE 3 3. THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A ) WHO HAD ALLOWED THE APPEAL BY OBSERVING AS UNDER: 2.3 I HAVE CONSIDERED THE SUBMISSION MADE BY THE A PPELLANT AND OBSERVATION OF THE A.O. SINCE SIMILAR ADDITIONS HA VE BEEN DELETED BY THE HON ITAT AHMADABAD FOR A.Y. 2003-04 AND BY THE CIT APPEAL FOR THE A.YS 2004-05 AND 2005-06 AND BECAUSE THE FACTS HAVE REMAINED THE SAME IN THE CURRENT YEAR, THE ADD ITION IN THIS YEAR IS ALSO DELETED. 4. NOW THE REVENUE IS BEFORE US. LD. SR. D.R. VEHE MENTLY RELIED UPON THE ORDER OF THE A.O. AT THE OUTSET, LD. COUNSEL FOR T HE APPELLANT ARGUED THAT THE ASSESSEE HAS FOLLOWED CASH METHOD OF ACCOUNTING AND HONBLE ITAT VIDE ITS ORDER DATED 02.11.2007 IN ASSESSEES OWN CASE FOR A .Y. 2003-04 DELETED THE ADDITION OF THE ACCRUED INTEREST ON OFCPNS OF AKSHA T FINSTOCK PVT. LTD. THE SIMILAR FINDINGS VIDE ORDER DATED 30.06.2009 FOR A. Y. 2005-06 HAS GIVEN BY THE HONBLE BENCH AND REVENUES APPEAL HAS BEEN DISMISS ED. THEREFORE, THE SAME MAY BE DISMISSED. SIMILAR DECISION HAS BEEN D ELIVERED IN A.Y. 02-03 AND 04-05 BY THE HONBLE ITAT. THUS, HE PRAYED TO UPHOLD THE ORDER OF THE CIT(A). 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THE ASSESSEES ISSUED IS IDENTICAL AND THE REVENUES APPEAL REPEATEDLY HAD BEEN DISMISSED BY THE CO-ORDINATE BE NCH ON THIS ISSUE. THEREFORE, RESPECTFULLY FOLLOWING THE A BENCH DEC ISION IN A.Y. 03-04 IN ITA NO. 1854/A.2007 ORDER DATED 02.11.2007 AND FOR A.Y. 05-06 IN ITA NO. 1342/AHD/2009 AND CONCLUDED THAT THE APPELLANT FOLL OWED CASH SYSTEM OF ITA NO. 3162/AHD/10 A.Y. 07-08 PAGE 4 ACCOUNTING AND INCOME IS NOT TAXABLE ON THE BASIS O F ACCRUAL. THUS, REVENUES APPEAL IS DISMISSED. 6. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . THIS ORDER PRONOUNCED IN OPEN COURT ON 25.10.2013 SD/- SD/- ( D.K.TYAGI ) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER TRUE COPY S.K.SINHA ! ! ! ! '! '! '! '! / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. '(' ) * / CONCERNED CIT 4. *- / CIT (A) 5. !./ ), ) , 12( / DR, ITAT, AHMEDABAD 6. /45 67 / GUARD FILE. BY ORDER/ , 8/ 1 ': ) , 12( ;