The Plantation Corporation of Kerala Ltd, Kottayam V. The DCIT, Kottayam

ITA 56/COCH/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8650 (ITAT-COCHIN)
• Duration Of Justice: 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2016
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 11-05-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 03-02-2016
• Court: TRIBUNAL
• Department Lawyers: K P GOPAKUMAR
• Assessee Lawyers: K I JOHN

Judgement Text

ITA NO.56/COCH/2016 1 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI B P JAIN, AM & GEORGE GEORGE.K, JM ITA NO.56/COCH/2016 (ASST YEAR :2009-10 ) THE PLANTATION CORPORATION OF KERALA LTD., MUTTAMBALAM P.O., KOTTAYAM. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-1, KOTTAYAM. ( ASSESSEE APPELLANT) VS (REVENUE -RESPONDENT) PAN NO. AAACT 7596H] ASSESSEE BY SHRI K.I. JOHN, CA REVENUE BY SHRI K P GOPAKUMAR, SR DR DATE OF HEARING 11/05/2016 DATE OF PRONOUNCEMENT 13/05/2016 ORDER PER B.P. JAIN, AM: THIS APPEAL OF THE ASSESSEE ARISES FROM THE OR DER OF THE LD. CIT(A), KOTTAYAM DATED 07-01-2014 FOR THE ASSESSMENT YEAR 2009-10. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX(APP EALS) IS OPPOSED TO LAW, FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE COMMISSIONER OF INCOME TAX(APPEALS) HAS ERR ED IN DISPOSING OF THE APPEAL WITHOUT DEALING WITH THE BASIC GROUND ON THE QUESTION OF REOPENING WHICH GOES TO THE VERY ROOT OF THE MATTER, THE CONT ENTIONS ON WHICH HAS BEEN RAISED PARAS 1 O 4 OF THE STATEMENT OF FACTS AS PER GROUND NO. B OF THE GROUNDS OF APPEAL. ITA NO.56/COCH/2016 2 3. THE COMMISSIONER OF INCOME TAX(APPEALS) OUGHT T O HAVE FOUND THAT IN VIEW OF THE SUBMISSION IN THE STATEMENT OF FACTS AS PER PARA 4 AND THE ORDER OF THIS HONBLE TRIBUNAL RELIED ON WHICH IS DIRECTLY ON THI S ISSUE AND ALSO BASED ON THE JUDGMENTS RELIED ON ESPECIALLY 233 ITR 228 IN SUB-P ARA (III) THE CIT(APPEALS) WAS BOUND TO FOLLOW THE ORDER OF THIS HONBLE TRIBUNAL BY WAY OF JUDICIAL DISCIPLINE. 4. THE COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRE D IN HOLDING THAT THE INTEREST WHICH HAS NEITHER ACCRUED NOR DUE IN THE S UM OF RS.3,23,91,555/- IS LIABLE FOR ASSESSMENT WITHOUT CONSIDERING THE SUBMI SSIONS AS PER THE STATEMENT OF FACTS AND JUDGMENTS RELIED ON AND WITHOUT DEALIN G WITH GROUND NOS. D TO J OF THE GROUNDS OF APPEAL. 5. THE COMMISSIONER OF INCOME TAX(APPEALS) HAS WR ONGLY ASSUMED IN PARA 8 OF THE ORDER THAT THIS HONBLE TRIBUNAL HAS NOT GON E INTO THE MERITS OF THE CASE FOR ASSESSMENT YEARS 1999-2000 TO 2001-02 WITHOUT C ONSIDERING THE SPECIFIC FINDING IN PARA 5 OF THE TRIBUNAL ORDER BASED ON TH E ORDER IN THE CASE OF HINDUSTAN NEWSPRINT LTD. AND ALSO WITHOUT CONSIDERI NG THE SPECIFIC FINDINGS IN PARA 7 AND THE JUDGMENTS RELIED ON BY HOLDING THAT WHAT CAN THE ASSESSEE IS ONLY A REAL INCOME AND NOT HYPOTHETICAL INCOME. 6. THE COMMISSIONER OF INCOME TAX(APPEALS) OUGHT T O HAVE FOUND THAT BY VIRTUE OF SECTION 194A OF THE ACT THE PERSON RESPON SIBLE FOR PAYING ANY INCOME BY WAY OF INTEREST SHALL AT THE TIME OF CREDIT OF S UCH INCOME TO THE ACCOUNT OF THE PAYEE OR AT THE TIME OF PAYMENT THEREOF WHICHEV ER IS EARLIER IS TO DEDUCT TAX AND THAT THE BANK HAS NEITHER CREDITED THE INTE REST NOR PAID THE INTEREST AND ACCORDINGLY, NO TAX WAS DEDUCTED AND THE QUESTI ON OF ACCRUAL DOES NOT ARISE. 7. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ER RED IN NOT PASSING A SPEAKING ORDER INSPITE OF THE SPECIFIC GROUNDS RAIS ED IN GROUND NO. H TO FOLLOW THE APEX COURT JUDGMENT AS REPORTED IN (2010) 9 SCC 496. 8. FOR THE ABOVE AND OTHER GROUNDS THAT MAY BE A DVANCED AT THE TIME OF HEARING IT IS PRAYED THAT THE ORDER OF THE COMMISSI ONER OF INCOME TAX(APPEALS) BE SET ASIDE. 3. THE BRIEF FACTS TAKEN IN THE GROUNDS OF THE A SSESSEE ARE THAT THE ASSESSEE HAD CLAIMED DIFFERENCE OF INTEREST OF RS.3,23,91,55 5/- DISCLOSED IN THE BALANCE SHEET AS INTEREST RECEIVABLE ON FIXED DEPOSITS. IT WAS CLAIMED THAT IT WAS ONLY A HYPOTHETICAL INCOME AND THERE WAS NO RIGHT TO RECEI VE. THE ASSESSING OFFICER ITA NO.56/COCH/2016 3 DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE AND ACCORDINGLY, TREATED THE SAID AMOUNT OF RS.3,23,91,555/- AS INTEREST INCOME AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 4. THE CIT(A) CONFIRMED THE ACTION OF THE ASSESS ING OFFICER. 5. THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON T HE SUBMISSIONS MADE BEFORE THE LD. CIT(A). THE LD. DR ON THE OTHER HAND RELI ED UPON THE ORDERS OF BOTH THE AUTHORITIES BELOW. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED THE FACTS OF THE CASE. ON PERUSAL OF THE RECORDS, WE FIND THAT THE MAJOR ISSU E RAISED IN THIS CASE IS ADDITION OF INTEREST INCOME AMOUNTING TO RS. 3,23,91,555/- W HICH WAS NOT OFFERED TO TAX. THE ASSESSEE IS FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING IS NOT IN DISPUTE. IT WAS ARGUED THAT U/S. 194A OF THE ACT, A PERSON RESP ONSIBLE FOR PAYING ANY INCOME BY WAY OF INTEREST SHALL AT THE TIME OF CRED IT OF SUCH INCOME TO THE ACCOUNT OF THE PAYEE OR AT THE TIME OF PAYMENT THER EOF WHICHEVER IS EARLIER HAS TO DEDUCT INCOME THEREON. SINCE THE BANK HAS NEITH ER CREDITED THE INTEREST NOR PAID THE INTEREST, NO TAX AT SOURCE WAS DEDUCTED IN RESPECT OF THE ENTRY PASSED BY THE ASSESSEE IN THE BALANCE SHEET AS INTEREST AC CRUED BUT NOT DUE. THERE IS NO CHANGE IN THE METHOD OF ACCOUNTING WHICH IS MERC ANTILE SYSTEM OF ACCOUNTING AS IS EVIDENT FROM THE AUDIT REPORT IN F ORM 3CA AND 3CD. THE ITA NO.56/COCH/2016 4 ASSESSEE IN FACT DOES NOT HAVE ANY RIGHT TO RECEIVE SUCH HYPOTHETICAL INCOME WHICH HAS BEEN SHOWN AS INTEREST ACCRUED BUT NOT DU E. AS A MATTER OF FACT, THE LIABILITY BECOMES DUE ONLY WHEN IT IS ACCOMPANIED B Y THE CORRESPONDING LIABILITY OF THE OTHER PARTY TO PAY THE AMOUNT AND THEREFORE, IN VIEW OF OUR FINDINGS HEREINABOVE, AND FACTS OF THE PRESENT CASE, INTERES T WHICH HAS BEEN SHOWN AS INTEREST ACCRUED BUT NOT DUE, BEING HYPOTHETICAL IN COME, CANNOT BE MADE A SUBJECT OF LEVY OF TAX. IT IS SETTLED ISSUE THAT I NCOME ACCRUES ONLY WHEN THE RIGHT TO RECEIVE IS ACQUIRED AND THE RIGHT CAN BE SAID T O HAVE BEEN ACQUIRED WHEN AN ENFORCEABLE DEBT IS CREATED IN FAVOUR OF THE ASS ESSEE. THEREFORE, THE INCOME WHICH HAS NOT BEEN RECEIVED AND NOT ACKNOWLEDGED OR WHICH HAS NOT BEEN ACKNOWLEDGED AS PAYABLE TO THE ASSESSEE, CANNOT BE TAXED. IN THE CIRCUMSTANCES AND FACTS OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN TAXING THE I NCOME OF RS.3,23,91,555/-. ACCORDINGLY, THE ORDER OF THE LD. CIT(A) IS REVERSE D AND ALL THE GROUNDS OF THE ASSESSEE ARE ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 -05-2016. SD/- SD/- (GEORGE GEORGE K.) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE : COCHIN DATED: 13TH MAY, 2016 GJ COPY TO: 1. THE PLANTATION CORPORATION OF KERALA LTD., MUTT AMBALAM P.O., KOTTAYAM. ITA NO.56/COCH/2016 5 2. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-1 , KOTTAYAM. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS), KOTTAYA M. 4. THE COMMISSIONER OF INCOME-TAX, KOTTAYAM. 5. THE DR/ITAT, COCHIN BENCH. 6. GUARD FILE. BY ORDER ASSISTANT REGISTRAR ITAT, COCHIN ITA NO.56/COCH/2016 6 1.DATE OF DICTATION : 13/05/2016 2.DATE ON WHICH THE TYPED DRAFT IS PLACED 13/05/2016 BEFORE THE DICTATING MEMBER OTHER MEMBER: 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR . PS/PS:13/05/2016 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER : 13/05/2016 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. PS/PS : 13/05/2016 6. DATE ON WHICH THE FILE GOES TO BENCH CLERK: 13/0 5/2016 7. DATE ON WHICH THE FILE GOES TO HEAD CLERK: 8. DATE ON WHICH THE FILE GOES TO ASSISTANT REGISTR AR 9. DATE OF DISPATCH OF THE ORDER: