COST ENGINEERING INDIA PVT. LTD., NEW DELHI V. ITO, WARD- 6(3), NEW DELHI

ITA 5855/DEL/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2948 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 13-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3); 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : SMC : NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 5855/DEL/2017 ASSESSMENT YEAR : 2013-14 M/S COST ENGINEERING INDIA PVT. LTD., 511/2/1, RAJOKARI, NEW DELHI 110 008 (PAN: AAACC9801E) VS. ITO, WARD 6(3), NEW DELHI ( APPELLANT ) ( RESPONDENT ) ASSESSEE B Y : SHRI SALIL KAPOOR, ADV . DEPARTMENT BY : SHRI VK JIWANI, SR. DR ORDER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER PASSED BY THE CIT(A)-2, NEW DELHI ON 31.3.2017 IN RE LATION TO THE ASSESSMENT YEAR 2013-14 AND RAISED THE FOLLOWING GROU NDS:- 1. THAT THE ADDITION OF RS. 4,46,017/- ON ACCOUNT OF ALLEGED INTEREST INCOME HAS BEEN WRONGLY MADE BY THE A O AND WRONGLY UPHELD BY CIT(A). 2. THAT THE INCOME PERTAINING TO THE YEAR UNDER APPEAL HAS ALREADY BEEN OFFERED TO TAX IN AY 2014-15 I.E. WHEN M/S TATA CAPITAL FINANCIAL SERVICES LIMITED CREDITED T HE INTEREST AMOUNT FOR AY 2014-15. 2 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE CIT(A) HAS FILED TO APPRECIATE THAT NO INTEREST CREDIT WAS REFLECTED IN FORM 26AS FOR THE RELEVANT ASSESSMENT YEA R. 4. THAT THE EVIDENCE FILED AND MATERIALS AVAILABLE O N RECORD HAVE NOT BEEN PROPERLY CONSTRUED AND JUDICIOUSLY INTERPRETED, HENCE THE ADDITION MADE IS UNCALLED FO R. 5. THAT THE OBSERVATION AND THE ADDITIONS MADE ARE UNJUST, ILLEGAL, ARBITRARY, BAD IN LAW, HIGHLY EXCESSI VE AND BASED ON SURMISE CONJECTURE. 6. THAT INTEREST U/S 234B, 234C AND 234D OF THE INCOM E TAX ACT, 1961 HAS BEEN WRONGLY AND ILLEGALLY CHARGED AN D HAS BEEN WRONGLY WORKED OUT. 7. THAT THE APPLICANT CRAVES LEAVE TO ADD, AMEND, AL TER AND /OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL AT O R BEFORE THE TIME OF HEARING. 2. THE FACTS IN BRIEF ARE THAT ASSESSEE COMPANY FILE D ITS RETURN FOR AY 2013-14 ON 27.09.2013 DECLARING INCOME AT RS. NI L. THE CASE OF THE ASSESSEE WAS PROCESSED U/S 143(1) OF THE INCOME TAX ACT, 1961 AND WAS TAKEN UP FOR SCRUTINY. NOTICE U/S 143(2) OF THE I.T. ACT DATED 03.09.2014 AND SUBSEQUENTLY NOTICE U/S 142(1) OF THE I.T. ACT ALONG WITH QUESTIONNAIRE WERE ISSUED AND SERVED UPON THE AS SESSEE. DURING THE YEAR UNDER CONSIDERATION, ASSESSEE COMPANY WAS ENG AGED IN THE BUSINESS OF PROVIDING ENGINEERING SERVICES TO COMPANIES INTO VARIOUS SECTORS AND CONSULTANCY SERVICES FOR COST AND TECHNIC AL AUDIT FOR AN OPERATING PROCESS PLANT, COST REDUCTION AND OPTIMIZATI ON OF 3 MANUFACTURING, PROCESSING, PROCESSING AND MAINTENANCE COST. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ON PERUSAL OF D ETAILS FILED BY THE ASSESSEE COMPANY, AO OBSERVED THAT THE ASSESSEE COMPANY HAS MADE INVESTMENT IN FIXED DEPOSIT OF RS.1,13,30,806/ - AS ON 3103 2012 WITH M/S TATA CAPITAL LIMITED. THE INVESTMENT I N FIXED DEPOSIT AMOUNTING TO RS 1,11,50446/- WAS MADE ON 20.10.2011 . THE AMOUNT WAS DEPOSITED TOWARDS SECURITY DEPOSIT WITH CONDITION FOR TAKING LOAN TO PURCHASE OF PROPERTY AT UDYOG VIHAR, GURGAON. THE AS SESSEE COMPANY HAD ALSO RECEIVED A SUM OF RS.2,00,400/- AS INTEREST ON SUCH FIXED DEPOSIT AS ON 31.03.2012 RELEVANT TO PREVI OUS ASST. YEAR 2012-13. HOWEVER NO ACCRUED INTEREST OR INTEREST RECEIVED WAS OFFERED FOR TAXATION BY THE ASSESSEE COMPANY FOR THE Y EAR. IN REPLY TO THE SPECIFIC QUERY RAISED BY THE AO, IT WAS SUBMITTED THAT NO INTEREST ON FIXED DEPOSIT WITH M/S TATA CAPITAL LIMITED DURING THE YEAR AND IN SUPPORT OF THE SAME ASSESSEE COMPANY HAD FILED THE C OPY OF FORM 26AS FOR ASST. YEAR 2013-14 AND ASST. YEAR 2014-15. ON PERUSAL OF FORM 26AS FOR ASST. YEAR 2014-15 REVEALS THAT THE ASSES SEE COMPANY HAD RECEIVED INTEREST TWICE AMOUNTING TO RS.4,46,017 .84. SINCE THE ASSESSEE COMPANY IS FOLLOWING MERCANTILE SYSTEM OF A CCOUNTING, HENCE THE INTEREST ACCRUED FOR THE PRESENT ASSESSMENT YEAR SHOULD BE OFFERED FOR TAXATION FOR THE CURRENT FINANCIAL IRRESPECTIVE OF T HE FACT THAT THE SAME HAS BEEN RECEIVED IN NEXT FINANCIAL YEAR. IN VI EW OF ABOVE, AO HELD THAT THE INTEREST INCOME ACCRUED ON FIXED DEPOSI T WITH M/S TATA CAPITAL LIMITED AMOUNTING TO RS.4,46,018/- IS TAXABL E IN THE HANDS OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION AND WAS A DDED TO THE INCOME OF THE ASSESSEE COMPANY BY ASSESSING THE IN COME OF THE 4 ASSESSEE AT RS. 4,46,020/- VIDE ORDER DATED 143(3) O F THE I.T. ACT, 1961 ON 19.2.2016. 3. AGGRIEVED WITH THE AFORESAID ASSESSMENT ORDER DATED 19.2.2016, ASSESSEE APPEALED BEFORE THE LD. CIT(A) WHO VIDE HI S IMPUGNED ORDER DATED 31.3.2017 HAS AFFIRMED THE ACTION OF THE AO AN D DISMISSED THE APPEAL OF THE ASSESSEE. 4. AT THE TIME OF HEARING, LD. COUNSEL OF THE ASSE SSEE STATED THAT INCOME PERTAINING TO THE YEAR UNDER CONSIDERATION HAS A LREADY BEEN OFFERED TO TAX IN AY 2014-15 I.E. WHEN M/S TATA CAPI TAL FINANCIAL SERVICES LIMITED CREDITED THE INTEREST AMOUNT FOR AY 20 14-15. IT WAS FURTHER STATED THAT LD. CIT(A) HAS FAILED TO APPRECIATE THAT NO INTEREST CREDIT WAS REFLECTED IN FORM 26AS FOR THE RELEVANT AS SESSMENT YEAR AND THE EVIDENCE FILED AND MATERIALS AVAILABLE ON RECORD HAVE NOT BEEN PROPERLY CONSTRUED AND JUDICIOUSLY INTERPRETED, H ENCE, THE ADDITION IN DISPUTE IS UNCALLED FOR AND NEEDS TO BE DELETED. 6. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND STATED THAT THE SAME MAY BE AF FIRMED. 7. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS . I FIND THAT THE ASSESSEE COMPANY HAD GIVEN SECURITY DEPOSIT OF R S. 1,11,50,446/- TO TATA CAPITAL FINANCIAL SERVICES LIMITED AND NO IN TEREST CREDIT WAS REFLECTED IN FORM 26AS OF M/S COST ENGINEERING INDIA PRI VATE LIMITED FOR AY 2013-14. I FURTHER NOTE THAT INTEREST OF RS. 4,4 6,018/- WAS INCLUDED IN TAXABLE INCOME OF AY 2014-15 AND THE SA ME WAS CREDITED IN AY 2014-15 WHICH WAS REFLECTED IN FORM 26AS IN TH E SAME YEAR (PAPER BOOK PAGE NO. 48). I FURTHER NOTE THAT THERE WAS NO CREDIT OF 5 INTEREST AND EVENTUALLY NO DEDUCTION OF TAX BY TATA CAPITAL FINANCIAL SERVICES LIMITED IN A.V 2013-14, WHICH CLEARLY SHOWS T HAT INTEREST WAS NOT EARNED IN A.Y 2013-14 AND THEREFORE NOT ACCRUED IN THE YEAR UNDER CONSIDERATION. I FURTHER FIND THAT IN THIS CASE INTERES T OF RS. 4,46,018/- HAS ALREADY BEEN TAXED IN AY 2014-15. HENCE THE SAME CANNOT BE SUBJECTED TO TAXED AGAIN IN AY 2013-14, IN VIEW OF SETTLED LAW. 8. IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS, I AM OF THE CONSIDERED OPINION THAT THE ADDITION MADE AND CONFI RMED BY THE LD.CIT(A) IS NOT SUSTAINABLE IN THE EYES OF LAW, HE NCE, I DELETE THE SAME AND ACCORDINGLY ALLOW THE APPEAL OF THE ASSESSE E. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. THE ORDER PRONOUNCED ON 12-03-2018. SD/- [ H.S. SIDHU ] JUDICIAL MEMBER DATED:- 12-03-2018 SRBHATNAGAR COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.