U.P.Police Avas Vikas Nigam Ltd, Lucknow V. Addl C.I.T., Lucknow

ITA 344/LKW/1999

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8170 (ITAT-LUCKNOW)
• Duration Of Justice: 13 year(s) 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 04-07-2012
• Assessment Year: misc
• Appeal Filed On: 31-03-1999
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Reopening of assessment
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A , LUCKNOW BEFORE SHRI S UNIL KUMAR YADAV , JUDICIAL MEMBER AND SHRI MEHAR SI NGH , ACCOUNTANT MEMBER ITA NO S . 344 & 345/LKW/1999 ASSESSMENT YEAR S : 1988 - 89 & 1994 - 95 U.P. POLICE AVAS NIGAM LTD. A - B1, VIJAY KHAND, GOMTI NAGAR LUCKNOW V. ACIT SPECIAL RANGE II LUCKNOW (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI. RAKESH GARG, ADVOCATE RESPONDENT BY: SHRI. PRAVEEN KUMAR, CIT (DR) DATE OF HEARING: 04.07.2012 DATE OF PRONOUNCEMENT: 22.08.2012 O R D E R PER S UNIL KUMAR YADAV : THESE APPEALS ARE PREFERRED BY THE ASSESSEE AGAINST THE RESPECTIVE ORDER OF THE LD. CIT(A) PERTAINING TO ASSESSMENT YEARS 1988 - 89 AND 1998 - 99. SINCE COMMON ISSUE IS INVOLVED IN THESE APPEALS, THESE WERE HEARD TOGETHER AND ARE BE ING DISPOSED OF THROUGH THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2 . THE COMMON ISSUE INVOLVED IN THESE APPEALS IS WITH REGARD TO THE NATURE OF INTEREST INCOME EARNED ON ADVANCES RECEIVED BY THE ASSESSEE FROM THE GOVERNMENT OF UTTAR PRADESH. SINCE THE FACTS OF BOTH THE CASES ARE ALMOST SIMILAR EXCEPT DIFFERENCE IN QUANTUM OF ADDITION, WE : - 2 - : EXTRACT THE FACTS IN ITA NO. 344/LKW/2009 IN ORDER TO ADJUDICATE THE IMPUGNED ISSUE. 3 . THE ASSESSEE WAS INCORPORATED WITH THE REGISTRAR OF COMPANIES VIDE CERTIFICATE OF INCORPORATION DATED 27.3.1987. IT WAS ESTABLISHED FOR CONSTRUCTION AND MAINTENANCE OF RESIDENTIAL AND NON - RESIDENTIAL BUILDINGS FOR THE POLICE DEPARTMENT. THE ASSESSEE RECEIVED A TOTAL ADVANCE OF ` 4,46,18,000 FOR CONSTRUCTION OF BUILDINGS FOR THE POL ICE DEPARTMENT AS PER GOVERNMENT ORDERS DATED 1.8.1987 AND 12.1.1988. IN THE SANCTION LETTER OF THE GOVERNMENT , IT WAS MENTIONED THAT SEPARATE ACCOUNTS FOR EXPENDITURE WILL BE MAINTAINED AND PROGRESS REPORT OF THE EXPENDITURE TO THE GOVERNMENT WILL BE SEN T. THE ADVANCES WERE KEPT IN THE BANK ACCOUNT OF THE ASSESSEE ON WHICH INTEREST WAS ACCRUED. THE ASSESSEE CLAIMED EXEMPTION OF INTEREST INCOME ON THE GROUND THAT AS PER THE DIRECTIONS OF THE STATE GOVERNMENT, THE INTEREST INCOME EARNED ON THESE ADVANCES IS TO BE RETURNED TO THE GOVERNMENT AND AS SUCH IT WAS SHOWN AS LIABILITY IN THE BALANCE SHEET. THEREFORE, IT IS NOT CHARGEABLE TO TAX IN THE HANDS OF THE ASSESSEE. THE CONTENTION OF THE ASSESSEE WAS NOT ACCEPTED BY THE ASSESSING OFFICER AND HE TREATED T HE INTEREST ACCRUED ON THE DEPO SITS IN THE BANK AS INCOME OF T HE ASSESSEE AND CHARGED TO TAX. 4 . THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), BUT DID NOT FIND FAVOUR WITH HIM. 5 . NOW THE ASSESSEE IS BEFORE THE TRIBUNAL. 6 . THE LD. COUNSEL FOR THE ASSESSE E HAS PLACED RELIANCE UPON VARIOUS ORDERS ISSUED BY THE STATE GOVERNMENT AND ALSO THE SANCTION LETTERS THROUGH WHICH ADVANCES WERE GIVEN TO THE ASSESSEE FOR CONSTRUCTION OF HOUSE AND SUBMITTED THAT IN THESE LETTERS IT HAS BEEN SPECIFICALLY MENTIONED THAT W HATEVER INTEREST IS EARNED ON THE SURPLUS AMOUNTS IN BANK WOULD BE REMITTED BACK TO THE GOVERNMENT. HE INVITED : - 3 - : OUR ATTENTION TO THE LETTER OF THE GOVERNMENT DATED 3.4.1980 APPEARING AT PAGE 26 OF THE COMPILATION OF THE ASSESSEE IN WHICH IT HAS BEEN CATEGO RICALLY MENTIONED THAT THE INTEREST EARNED ON THESE ADVANCES FROM THE BANK WOULD NOT BE THE INCOME OF THE ASSESSEE , I T WAS RATHER TO BE REMITTED BACK TO THE GOVERNMENT. THESE DIRECTIONS WERE REITERATED THROUGH VARIOUS LETTERS OF THE GOVERNMENT, THEREFORE , INTEREST INCOME WAS SHOWN AS LIABILITY IN THE BALANCE SHEET OF THE ASSESSEE. IN THE AUDITED BALANCE SHEET, IT WAS ALSO MENTIONED THAT THE INTEREST EARNED ON THE ADVANCES IS TO BE PAID TO THE GOVERNMENT. THEREFORE , THE LOWER AUTHORITIES HAVE WRONGLY TREA TED THIS INTEREST INCOME TO BE THE INCOME OF THE ASSESSEE. HE HAS ALSO FILED THE COPY OF THE LEDGER ACCOUNT IN SUPPORT OF HIS CONTENTION THAT THE INTEREST INCOME ACCRUED TO THE ASSESSEE WAS REMITTED TO THE GOVERNMENT FROM TIME TO TIME. 7 . THE LD. CIT ( D.R. ) , SHRI. PRAVEEN KUMAR, ON THE OTHER HAND, HAS CONTENDED THAT THE IMPUGNED ISSUE IS SQUARELY COVERED BY THE ORDER OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEARS 1995 - 96 TO 1998 - 99 AND 2002 - 03 & 20023 - 04 , IN WHICH THE TRIBUNAL HAS TREATED THE INTEREST INCOME EARNED ON ADVANCES FROM THE GOVERNMENT AS INCOME OF THE ASSESSEE. A COPY OF THE ORDER OF THE TRIBUNAL IS PLACED ON RECORD. BESIDES, THE LD. CIT (DR) HAS CONTENDED THAT THERE IS NO EVIDENCE THAT THE ASSESSEE HAS EVER REMITTED THE INTEREST INCOME TO THE GOVERNMENT. THEREFORE, IT WAS RIGHTLY TREATED TO BE AN INCOME IN THE HANDS OF THE ASSESSEE. 8 . HAVING GIVEN A THOUGHTFUL CONSIDERATION TO THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF RECORD, WE FIND THAT THE TRIBUNAL HAS EXAMINED THIS I SSUE IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEARS 1995 - 96 TO 1998 - 99 AND 2002 - 03 & 2003 - 04 VIDE ITS ORDER DATED 14.3.2008 IN WHICH THE TRIBUNAL HAS DISALLOWED THE CLAIM OF THE ASSESSEE : - 4 - : FOR THE REASON THAT THE ASSESSEE COULD NOT PLACE RELEVANT EVIDENCE O N RECORD IN SUPPORT OF ITS CONTENTION THAT THE ADVANCES WERE GIVEN TO THE ASSESSEE WITH A RIDER THAT THE INTEREST INCOME WOULD BE REMITTED TO THE GOVERNMENT. BUT IN THE INSTANT CASE, THE ASSESSEE HAS FILED ENORMOUS EVIDENCE IN SUPPORT OF IT S CONTENTION TH AT THE ADVANCES WERE GIVEN TO THE ASSESSEE WITH A CONDITION THAT INTEREST EARNED THEREON FROM THE BANK WOULD NOT BE THE INCOME OF THE ASSESSEE , IT WOULD BE RATHER REMITTED BACK TO THE GOVERNMENT. RELIANCE WAS PLACED UPON THE LETTER DATED 12.1.1988 OF THE JOINT SECRETARY OF THE GOVERNMENT OF U.P. ADDRESSED TO THE D.G. POLICE THROUGH WHICH ADVANCES WERE SANCTIONED TO THE ASSESSEE FOR CONSTRUCTION OF THE RESIDENTIAL HOUSE. IN THIS LETTER, IT HAS BEEN SPECIFICALLY MENTIONED THAT WHATEVER INTEREST INCOME IS AC CRUED ON THE ADVANCES FROM THE BANK, IT WOULD BE REMITTED TO THE GOVERNMENT. OUR ATTENTION WAS ALSO INVITED TO ANOTHER LETTER DATED 3.4.1980 AVAILABLE AT PAGE 26 OF THE COMPILATION OF THE ASSESSEE WRITTEN BY THE FINANCE SECRETARY, UTTAR PRADESH IN WHICH I T HAS BEEN CATEGORICALLY STATED THAT THE INCOME EARNED FROM THE BANK ON THESE ADVANCES WOULD NOT BE THE INCOME OF THE ASSESSEE, IT WOULD BE RATHER REMITTED TO THE GOVERNMENT. SIMILAR LETTER IS ALSO AVAILABLE AT PAGE 30 OF THE PAPER BOOK, WRITTEN BY THE FI NANCE SECRETARY, UTTAR PRADESH IN WHICH IT HAS BEEN STATED THAT THE INTEREST EARNED ON ADVANCES TO VARIOUS PUBLIC SECTORS WOULD BE THE INCOME OF THE GOVERNMENT AND IS TO BE DEPOSITED IN THE GOVE RNMENT TREASURY. BESIDES, COPY OF LEDGER ACCOUNT OF THE ASSES SEE IS ALSO PLACED BEFORE US, IN WHICH IT HAS BEEN SHOWN THAT THE INTEREST INCOME EARNED ON THE ADVANCES WAS REMITTED TO THE GOVERNMENT. 9 . IN THE LIGHT OF THESE ENORMOUS FACTS, WE ARE OF THE CONSIDERED OPINION THAT THE INTEREST ACCRUED ON THE ADVANCES RECE IVED BY THE ASSESSEE FROM THE GOVERNMENT FOR CONSTRUCTION OF GROUP HOUSING, ETC. : - 5 - : WOULD BE THE INCOME OF THE GOVERNMENT AND NOT OF THE ASSESSEE. ON ITS ACCRUAL, IT BECOMES A LIABILITY TO THE GOVERNMENT WHICH IS TO BE REMITTED BY THE ASSESSEE TO THE GOVERNM ENT IN DUE COURSE. SINCE THE INCOME HAS NOT BEEN ACCRUED TO THE ASSESSEE, IT CANNOT BE CHARGED TO TAX IN ITS HANDS. HOWEVER , ALL THESE FACTS ARE PLACED FIRST TIME BEFORE THE TRIBUNAL AND HENCE IT WAS NOT EXAMINED BY THE LOWER AUTHORITIES OR BY THE TRIBUN AL IN EARLIER ASSESSMENT YEARS. THEREFORE, THIS ISSUE REQUIRES FRESH ADJUDICATION BY THE ASSESSING OFFICER. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND REMIT THE MATTER BACK TO THE ASSESSING OFFICER WITH A DIRECTION TO RE - ADJUDICATE THE ISS UE AFRESH IN THE LIGHT OF THE EVIDENCE PLACED BEFORE US. IF THE ASSESSEE SUCCEEDS IN BRINGING OUT THAT THE INTEREST INCOME IN FACT BELONGS TO THE GOVERNMENT AND IT WAS REMITTED TO THE GOVERNMENT IN DUE COURSE, THE SAME WOULD NOT BE CHARGED TO TAX IN THE H ANDS OF THE ASSESSEE. 10 . THE OTHER GROUND S RAISED IN ITA NO. 344/LKW/1999 RELATE TO THE VALIDITY OF REOPENING OF ASSESSMENT AND CHARGING OF INTEREST UNDER SECTION 139(8) AND 217 OF THE ACT. 11 . IN THIS REGARD, WE HAVE CAREFULLY EXAMINED THE ORDER OF THE LD. CIT(A ) AND WE FIND THAT THE LD. CIT(A) HAS ADJUDICATED THESE ISSUES IN DETAIL IN HIS ORDER. SINCE NO INFIRMITY H AS BEEN POINTED OUT BY THE LD. COUNSEL FOR THE ASSESSEE IN THE ORDER OF THE LD. CIT(A), WE CONFIRM HIS ORDER AND REJECT THESE GROUNDS OF APPEAL. 12 . IN ITA NO. 345/LKW/1999, THE OTHER GROUND S RAISED BY THE ASSESSEE RELATE TO DISALLOWANCE OF CLAIM OF DEDUCTION UNDER SECTION 80G(IIIG) OF THE ACT AND CHARGING OF INTEREST UNDER SECTION 234B AND 234C OF THE ACT. 13 . THESE GROUNDS WERE PROPER LY ADJUDICATED BY THE L D. CIT(A) IN HIS ORDER AND NO INFIRMITY HAS BEEN POINTED OUT BY THE LD. COUNSEL FOR THE : - 6 - : ASSESSEE. FINDING NO MERIT IN THE CONTENTIONS OF THE LD. COUNSEL FOR THE ASSESSEE, WE SUBSCRIBE THE ORDER OF THE LD. CIT(A) ON THESE ISSUES AND REJECT THE GROUNDS OF A PPEAL. 14 . IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON 22.8.2012. S D/ - S D/ - [ MEHAR SINGH ] [ S UNIL KUMAR Y ADAV ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 22.8.201 2 JJ: 1207 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR ASSISTANT REGISTRAR