Appeal Details
Counselvise Citation
[2016] 131 COUNSELVISE.COM (IT) 8812 (ITAT-CHENNAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
4 month(s) 27 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
10-08-2016
Appeal Filed By
Assessee
Bench Allotted
C
Next Hearing Date
01-08-2016
Assessment Year
2010-2011
Appeal Filed On
14-03-2016
Judgement Text
, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI . . . , ! . '#'$ , % !& ' [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ] ./ I.T.A.NO.596/MDS/2016 / ASSESSMENT YEAR : 2010-11 SHRI AKSHAY KUMAR J MEHTA NO.196, GOVINDAPPA NAICKEN STREET, CHENNAI 600 001 VS. THE INCOME TAX OFFI CER WARD VIII(1) CHENNAI [PAN AAIPM 4085 D] ( () / APPELLANT) ( *+() /RESPONDENT) / APPELLANT BY : SHRI D. ANAND, ADVOCATE /RESPONDENT BY : SHRI A.V. SREEKANTH, JCIT / DATE OF HEARING : 01 - 0 8 - 2016 ! / DATE OF PRONOUNCEMENT : 10 - 0 8 - 2016 / O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-13, CHENN AI, DATED 28.1.2016 FOR ASSESSMENT YEAR 2010-11. 2. IN THIS APPEAL, THE ASSESSEE HAS ALTOGETHER RAISED FIVE GROUNDS. THE ISSUE THAT ARISES FOR CONSIDERATION I N THESE GROUNDS ARE ADDITION TOWARDS INTEREST MADE IN THE HANDS OF THE ASSESSEE. ITA NO.596/16 :- 2 -: 3. FACTS APROPOS ARE THAT THE ASSESSEE, ENGAGED IN THE BUSINESS OF MONEY LENDING, FILED HIS RETURN DECLARI NG INCOME OF RS.6,83,640/-. DURING THE COURSE OF ASSESSMENT PRO CEEDINGS, IT WAS NOTED BY THE ASSESSING OFFICER THAT THE ASSESSEE H AD RECEIVED INTEREST OF RS.13,38,099/- FROM THE BANK DEPOSITS AND INTERE ST OF RS.1,39,000/- FROM ONE SHRI JITENDAR KUMAR. THE ASSESSEE HAD AD MITTED INTEREST OF RS.6,69,258/- ONLY. INTEREST TO THE EXTENT NOT OFF ERED FOR ASSESSMENT OF RS. 8,07,841/- WAS ADDED BACK BY THE ASSESSING O FFICER. 4. AGGRIEVED, THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). ARGUMENT OF THE ASSESSEE BEFORE THE CIT(A) WAS TH AT HE HAD SOLD SHARES OF A COMPANY CALLED M/S TRISHYIRAYA RECYCLIN G INDIA PVT. LTD. AS PER THE ASSESSEE, THE SHARES IN THE SAID COMPAN Y WAS HELD BY HIM ALONGWITH HIS FAMILY MEMBERS. THE ASSESSEE POINTE D OUT THAT PART OF THE CONSIDERATION WAS KEPT BY THE BUYER OF THE SHAR ES IN ESCROW ACCOUNT. THE AMOUNT IN THE ESCROW ACCOUNT WAS PAYA BLE TO EACH OF THE PERSONS MENTIONED IN THE AGREEMENT WITH M/S SI MS GROUP MAURITIUS LTD. (SIMS) WHICH ACQUIRED THE SHARES. CONTENTION OF THE ASSESSEE BEFORE THE CIT(A) WAS THAT THE AMOUNT IN E SCROW ACCOUNT REPRESENTS BALANCE OF THE VARIOUS SHAREHOLDERS AND NOT THAT OF HIS ALONE. AS PER THE ASSESSEE, SUCH SHARE OF INTERES T WAS TRANSFERRED BY HIM TO THE FAMILY MEMBERS THROUGH BANKING CHANNELS. ASSESSEE ITA NO.596/16 :- 3 -: POINTED OUT THAT CONFIRMATION FROM THE FAMILY MEMBE RS WERE FILED IN THIS REGARD. THE CIT(A) WAS NOT SATISFIED WITH THI S CONTENTION OF THE ASSESSEE. ACCORDING TO HIM, TDS WAS DEDUCTED AGAINS T THE NAME OF THE ASSESSEE FOR THE INTEREST IN THE ESCROW ACCOUN T. FURTHER, AS PER THE CIT(A), ASSESSEE COULD NOT PROVIDE PERCENTAGE OF SHARES OF THE FAMILY MEMBERS IN THE INTEREST RECEIPT. TAKING THI S VIEW, HE CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 5. NOW BEFORE US, THE LD. AR PLACING RELIANCE ON THE A GREEMENT DATED 3.12.2007 WITH M/S SIMS, M/S TRISHYIRAYA AND SHAREHOLDERS OF M/S TRISHYIRAYA, SUBMITTED THAT ASSESSEE HAD HELD ONLY 63271 SHARES OUT OF TOTAL 2,50,000 SHARES IN TRISHYIRAYA. AS PE R THE LD. AR, THE EQUITY SHARES HELD BY THE ASSESSEE AND HIS FAMILY MEMBERS WERE TRANSFERRED TO M/S SIMS BY VIRTUE OF THE ABOVE AGRE EMENT. OUT OF THE TOTAL CONSIDERATION, RS. 1,60,00,000/- WAS KEPT IN THE ESCROW ACCOUNT WHICH WAS TO BE RELEASED TO THE SELLER ONLY ON SATI SFACTION OF THE CONDITIONS STIPULATED IN CLAUSE (4) OF THE SAID AGR EEMENT. AS PER THE LD. AR, INTEREST ACCRUED IN THE ESCROW ACCOUNT OF T HE ASSESSEE WAS ONLY TO THE EXTENT OF ASSESSEES SHARE IN THE MON EY HELD IN THE ESCROW ACCOUNT. JUST BECAUSE THE BANKERS CREDITED T HE INTEREST TO THE ASSESSEE AND MADE TAX DEDUCTION AT SOURCE ON THE GR OSS AMOUNT WOULD NOT MEAN THAT SUCH INTEREST IN THE ESCROW ACC OUNT BELONGED TO ITA NO.596/16 :- 4 -: THE ASSESSEE. AS PER THE LD. AR, THE CIT(A) ERRED IN COMPUTING THE INTEREST ON THE WHOLE OF THE AMOUNT IN THE ESCROW A CCOUNT AND ADDING THAT TO THE INCOME OF THE ASSESSEE. 6. PER CONTRA, THE LD. DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSE D THE ORDERS OF THE LOWER AUTHORITIES. WE FIND THAT BY V IRTUE OF THE AGREEMENT DATED 3.12.2007 ENTERED INTO BETWEEN M/S SIMS, M/S TRISHYIRAYA AND SHAREHOLDERS OF M/S TRISHYIRAYA, SI MS GROUP ACQUIRED 250,00,000 SHARES HELD BY VARIOUS SHAREHOLDERS WITH M/S TRISHYIRAYA. THE ASSESSEE IS ONE AMONG THE SHAREHOLDERS. THE F IRST INSTALLMENT OF THE CONSIDERATION OF RS.640,00,000/- WAS PAID THEN AND THERE AND BALANCE OF RS.160,00,000/- WAS HELD IN ESCROW ACCOU NT WITH ABN AMRO BANK, NUNGAMBAKKAM BRANCH, CHENNAI. THE ESCROW AGR EEMENT BETWEEN THE PARTIES CLEARLY MENTIONS THE SHARES OF EACH OF THE SHAREHOLDER IN THE AMOUNT IN THE ESCROW ACCOUNT. T HEREFORE, THE INTEREST ACCRUING ON THE BALANCES IN THE SAID ESCRO W ACCOUNT BELONG TO EACH OF THE PERSONS AND NOT TO THE ASSESSEE ALONE. ASSESSEE WOULD BE LIABLE ONLY FOR THE INTEREST IN SO FAR AS IT REL ATES TO HIS SHARE ON ` 160,00,000/-. AS PER THE ASSESSEE, INTEREST WHICH WAS DUE TO HIM ON THE ESCROW ACCOUNT WAS DULY ACCOUNTED FOR AND SHOWN IN HIS RETURN OF ITA NO.596/16 :- 5 -: INCOME. WE ARE OF THE OPINION THAT ASSESSEE WAS LIABLE FOR RETURNING ONLY THE AMOUNT WHAT WAS DUE TO HIM BASED ON THE ES CROW AGREEMENT. HOWEVER, WHETHER THE ASSESSEE HAD RETU RNED THE CORRECT AMOUNT PROPORTIONATE TO HIS HOLDING IN THE ESCROW A CCOUNT HAS NOT BEEN VERIFIED BY THE AUTHORITIES BELOW. WE, THEREF ORE, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND REMIT THE ISSUE REGARDING INTEREST ACCRUING TO THE ASSESSEE ON THE ESCROW ACCOUNT BAL ACES, BACK TO THE FILE OF THE ASSESSING OFFICER FOR CONSIDERATION AFR ESH IN ACCORDANCE WITH LAW. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH AUGUST, 2016, AT CHENNAI. SD/- SD/- ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER ( ! . '#'$ ) (ABRAHAM P. GEORGE) % / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED: 10 TH AUGUST, 2016 RD &' ()*) / COPY TO: 1 . / APPELLANT 4. + / CIT 2. / RESPONDENT 5. ),- . / DR 3. +/' / CIT(A) 6. -01 / GF
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