ACIT, UDAIPUR V. M/s. Devganga Enterprises, UDAIPUR

ITA 492/JODH/2010

• Counselvise Citation: 49223314 RSA 2010
• Duration Of Justice: 3 year(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 27-08-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 08-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL: JODHPUR BENCH : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 492/JODH/2010 (A.Y. 2007-08) ACIT, CIRCLE-1, VS M/S. DEVGANGA ENTERPRISES, UDAIPUR. 1 ST FLOOR, MEHTA JI KI BARI, NEAR KRISHNA PALACE HOTEL, UDAIPUR. PAN NO. AADFD9115E (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. AMIT KOTHARI. DEPARTMENT BY : SH. N.A. JOSHI- DR. DATE OF HEARING : 27/08/2013. DATE OF PRONOUNCEMENT : 12/09/2013. O R D E R PER HARI OM MARATHA, J.M. : IN THIS APPEAL OF THE REVENUE FOR A.Y. 2007-08, FI LED AGAINST THE ORDER OF LD. CIT(A), UDAIPUR, DATED 18/06/2010, ONL Y ONE ISSUE REGARDING THE HEAD UNDER WHICH INTEREST INCOME FROM FDRS HAS TO BE ASSESSED, IS INVOLVED. 2 2. THE ASSESSEE IS A CIVIL CONTRACTOR WHO HAD TO MA KE FIXED DEPOSIT IN ORDER TO GET CONTRACTS FROM THE GOVERNMENT, AS S ECURITY. THE FDRS ARE MADE FOR A SPECIFIED PERIOD WHICH IS USUALLY BE YOND THE CONTRACTED PERIOD. ONE SUCH CONTRACT AWARDED TO THE ASSESSEE-F IRM ENDED IN THE MONTH OF APRIL, 2006. THE FIXED DEPOSITS WERE NOT R ELEASED TILL THE MONTH OF MARCH, 2007 AS PER THE TERMS OF THE CONTRA CT. UNDISPUTEDLY, THE DEPOSITS WERE MADE FOR THE PURPOSE OF ASSESSEE S BUSINESS. THE ASSESSEE HAS TREATED INTEREST INCOME RELATED TO ITS BUSINESS BUT THE A.O. HAS ASSESSED IT UNDER THE HEAD INCOME FROM OT HER SOURCES. HOWEVER, LD. CIT(A) BY FOLLOWING ORDERS OF THE APPE LLATE TRIBUNLA HAS REVERSED A.O.S FINDING AND HAS ACCEPTED THE STAND OF THE ASSESSEE. THE REVENUE HAS COME UP IN APPEAL. 3. WE HAVE HEARD RIVAL SUBMISSIONS. BOTH PARTIES HA VE REITERATED THEIR EARLIER STAND. APART FROM THE ABOVE LD. A.R. HAS PLACED RELIANCE ON THE DECISION OF THE HONBLE HIGH COURT OF PATNA RENDERED IN THE CASE OF SHYAM BIHARI VS CIT & ANOTHERS REPORTED IN (2012) 345 ITR 283 (PAT). THE LD. D.R. HAS RELIED ON THE DECISION OF S PECIAL BENCH, DELHI IN THE CASE OF DCIT VS ALLIED CONSTRUCTION (2007) 106 TTJ (DEL (SB) 595 DATED 30/11/2006. HE HAS TRIED TO DISTINGUISH THE F ACTS OF THE JAIPUR BENCH A DECISION IN THE CASE OF M/S. S.P. EQUIPME NT AND SECURITIES VS ACIT IN ITA NO. 464/JP/2007 ON WHICH DECISION LD. C IT(A) HAS RELIED. AFTER CONSIDERING RIVAL SUBMISSIONS WE HAVE FOUND T HAT THE HONBLE HIGH COURT OF PATNA IN THE ABOVE NOTED CASE HAS CLE ARLY HELD THAT IN THE CASE OF A CIVIL CONTRACTOR WHO DERIVED HIS INCO ME FROM CONTRACT WORK OBTAINED FROM THE GOVERNMENT DEPARTMENTS AND F OR OBTAINING WHICH DEPOSIT OF MONEY IN FDRS AND NSCS WAS A PRE R EQUISITE CONDITION, IT HAS BEEN HELD THAT INTEREST EARNED BY THE ASSESSEE ON THE 3 INVESTMENT OF AMOUNT IN FIXED DEPOSITS WHICH WAS ON LY TO PROVIDE A BANK GUARANTEE TO THE CONTRACTEE IN ORDER TO ACQUIR E THE CONTRACT WORK, COULD NOT BE TREATED AS INCOME FROM OTHER SOU RCES AND HAS TO BE TREATED S BUSINESS INCOME ONLY. THE HONBLE HIGH CO URT HAS RELIED ON THE DECISION OF KARNATAKA HIGH COURT IN THE CASE OF CIT VS CHINNA NACHIMUTHU CONSTRUCTION 297 ITR 70 (KAR). ACCORDING LY, BY RESPECTFULLY FOLLOWING THE ABOVE JUDGMENTS WE CANNOT ALLOW THIS APPEAL OF THE REVENUE. WE ALSO DRAW SUPPORT FOR THE JUDGMENT OF T HE HONBLE APEX COURT IN THE CASE OF CIT VS. GOVINDA CHOUDHARY & SO NS (1993) 203 ITR 881 (SC). 4. THEREFORE, WE DISMISS THE APPEAL OF THE REVENUE. 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE COURT ON 12 TH SEPTEMBER, 2013. SD/- SD/- (N.K.SAINI) [HARI OM MARATH A] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 12 TH SEPTEMBER, 2013. VL/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 4 3. THE CIT BY ORDER 4. THE CIT(A) 5. THE DR ASSISTANT REGISTRAR ITAT, JODHPUR