M/s. Vipul Construction, RAJKOT-GUJARAT V. The Deputy Commissioner of Income Tax, Circle-1, RAJKOT-GUJARAT

ITA 349/RJT/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2307 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 19-01-2016
• Assessment Year: 2002-2003
• Appeal Filed On: 24-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C S ANJARIA
• Assessee Lawyers: DEVYANI PATEL
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH , RAJKOT BEFORE: S H RI PRAMOD KUMAR , ACCOUNTANT MEMBER AND SHR I S. S. GODARA , JUDICIAL MEMBER [CONDUCTED THROUGH E - C OURT AT AHMEDABAD] M/S. VIPUL CONSTRUCTION PARNAKUTIR SOCIETY, PLOT NO. 3, RAJKOT PAN: AFBFV8378H (APPELLANT) VS THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 1, RAJKOT (RESPONDENT) REVENUE BY : S H RI C.S. ANJARIA , SR. D . R. ASSESSEE BY: S H RI DEVYANI PATEL , A.R. DATE OF HEARING : 19 - 01 - 2 016 DATE OF PRONOUNCEMENT : 17 - 02 - 2 016 / ORDER P ER : S. S. GODARA , JUDICIAL MEMBER : - THI S ASSESSEE S APPEAL FOR A.Y. 2002 - 03 , AR ISES FROM ORDER OF THE CIT(A) - II, RAJKOT DATED 22 - 08 - 2013 IN APPEAL NO. CIT(A) - II / RJT/T - I T A NO . 349 / RJT /20 13 A SSESSMENT YEAR 200 2 - 03 I.T.A NO. 349 /RJT /20 13 A.Y. 2002 - 03 PAGE NO M/S. VIPUL CONSTRUCTION VS. DCIT 2 416 /09 - 10, IN PROCEEDINGS UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE ASSESSEE S SOLE SUBSTANTIVE GROUND PLEADS THAT THE CIT(A) HAS ERRED IN UPHOLDING ASSESSING OFFICER S ACTION MAKING ADDITION OF RS. 1,94,462/ - ON ACCOUNT OF ACCRUED INTEREST ON NSCS. THE ASSESSEE - FIRM IS A GOVT. CONTRACTOR IN CONSTRUCTION ACTIVITIES. IT FOLLOWS MERCANTILE SYSTEM OF ACCOUNTING. IT FILED ITS ON 31 - 01 - 2002 ADMITTING INCOME OF RS. 2,75,810/ - . THE ASSESSING OFFICER COMPLETED A REGULAR ASSESSMENT MAKING VARIOUS ADDITIONS THEREBY ASSESSING THE TOTAL IN COME TO RS. 3,92,903/ - . HE NOTICED THEREAFTER THAT ASSESSEE HAD NOT DECLARED ITS ACCRUED INTEREST OF RS. 1,92 ,462/ - FROM NSCS INVESTMENT OF R S. 17,03,200/ - THIS MADE THE ASSESSING OFFICER TO REOPEN THE ABOVE STATED ASSESSMENT. THE ASSESSEE EXPLAINED DUR ING REASSESSMENT THAT IT HAD PURCHASED ABOVE STATED NATIONAL SAVING CERTIFI CATE IN THE NAME OF ITS PARTNERS AND PLACED THE SAME TO GOVT. OF GUJARAT AGAINST EARNEST MONEY FOR GETTING CONTRACT WORK. AND THAT INTEREST INCOME DERIVED THEREF R O M WOULD BE SHOWN ON ACCRUAL BASIS AFTER RECEIPT. THE ASSESSING OFFICER IN HIS ORDER DATED 01 - 12 - 2006 REJECTED THE SAME THEREBY MAKING ADDITION UNDER CHALLENGE OF RS. 1,92,462/ - . 3. THE ASSESSEE PREFERRED APPEAL. IT EXPLAINED IN T HE LOWER APPELLATE PROCEEDINGS THAT NO INTEREST HAD BEEN RECEIVED ON THE ABOVE STATED NATIONAL SAVING CERTIFICATES WHICH WOULD BE DECLARED ON ACCRUAL BASIS ON RECEIPT THEREOF. THE CIT(A) QUOTES ITS FAILURE IN I.T.A NO. 349 /RJT /20 13 A.Y. 2002 - 03 PAGE NO M/S. VIPUL CONSTRUCTION VS. DCIT 3 PLACING ON RECORD ANY COGENT DOCUMENTARY EVIDENCE SO AS TO PROVE THAT THE IMPUGNED IN TEREST STANDS DISCLOSED AS INCOME IN ANY ASSESSMENT YEAR SUBSEQUENT TO THE IMPUGNED ASSESSMENT YEAR. THE IMPUGNED ADDITION STANDS UPHELD. 4 . WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE CASE FILE. THE ASSESSEE REITERATES ITS STAND ALREADY ADOPTED B EFORE THE LOWER AUTHORITIES. IT FURTHER PLACES ON RECORD AUDITED ACCOUNT FOR ASSESSMENT YEAR 2006 - 07 OFFERING INTEREST INCOME ARISING FROM NSCS AMOUNTING TO RS. 9,89,736/ - FOR BEING ASSESSED. THE REVENUE STRONGLY SUPPORTS THE IMPUGNED ADDITION MADE BY THE ASSESSING OFFICER AND CONFIRMED THE LOWER APPELLATE PROCEEDINGS. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RIVAL CONTENTIONS. IT HAS COME ON RECORD BY WAY OF ASSESSEE S PROFIT AND LOSS ACCOUNT AS ON 31 - 03 - 2006 THAT IT HAS ALREADY DECLARED THE IMPUGN ED INTEREST INCOME OF RS. 9,89,736/ - ARISING FROM NSCS STATED HEREINABOVE. WE OBSERVE IN THESE FACTS AND CIRCUMSTANCES THAT THE CIT(A) S SOLE REASON QUO TING ASSESSEE S FAILURE (SUPRA) NO MORE HOLDS GROUND. WE CONCLUDE THAT THE ASSESSEE HAS DECLARED ITS I NTEREST ARISING ON ABOVE STATED NSCS IN THE YEAR OF RECEIPT FOR THE REASON THAT THE SAME DID NOT CARRY ANY INTEREST DURING THE PERIOD OF BEING PLEDGED AGAINST EARNEST MONEY. WE ACCORDING ACCEPT AS SESSEE S ARGUMENT. THE IMPUGNED ADDITION OF RS. 1,92 ,462/ - IS ACCORDINGLY DELETED. THIS ASSESSEE S APPEAL IS ALLOWED. I.T.A NO. 349 /RJT /20 13 A.Y. 2002 - 03 PAGE NO M/S. VIPUL CONSTRUCTION VS. DCIT 4 5 . THIS A SSESSEE S APPEAL IS ALLOWED . ORDER PR ONOUNCED IN THE OPEN C OUR T ON 17 - 02 - 201 6 SD/ - SD/ - (PRAMOD KUMAR ) ( S. S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 1 7 /02 /2016 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, RAJKOT