New Vision IT System P.Ltd, New Delhi V. ITO, Ward-18(2), New Delhi

ITA 6073/DEL/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2867 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 27-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D S RAWAT

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI SMC - A BENCH, NEW DELHI BEFORE SHRI N.K. BILLAIYA , ACCOUNTANT MEMBER, AND SHRI KULDIP SINGH , JUDICIAL MEMBER ITA NO. 6 0 7 3 /DEL/201 7 [ASSESSMENT YEAR: 20 1 3 - 1 4 ] NEW VISION IT SYSTEM PVT LTD VS. THE I.T. O C 185/2, LGF, NARAINA INDUSTRIAL AREA WARD - 18 ( 2 ) PHASE 1, NEW DELHI NEW DELHI PAN : AAACU 6737 B [APPELLANT] [RESPONDENT] DATE OF HEARING : 27 . 0 8 .201 8 DATE OF PRONOUNCEMENT : 2 9 .0 8 .2018 ASSESSEE BY : SHRI P.C. YADAV, ADV . REVENUE BY : S HRI D.S. RAWAT , SR. DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX [APPEALS] - 6 , NEW DELHI DATED 1 4 .0 8 .201 8 PERTA INING TO ASSESSMENT YEAR 201 3 - 1 4 . 2. THE SUM AND SUBSTAN CE OF THE GR IEVANCE OF THE ASSESSEE IS THAT THE CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 22,40,424/ - DISALLOWING SET OFF OF INTEREST INCOME. 2 3. BRIEFLY STATED, TH E FACTS OF THE CASE ARE THAT DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS , THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS SET OFF ITS INTEREST INCOME OF RS. 22,40,424/ - EARNED FROM FIXED DEPOSITS WI TH THE INTER E ST EXPENDITURE PAID TO THE BANK ON MO NIES BORROWED FOR PURCHASE OF MACHINERY. THE ASSESSEE WAS ASKED TO JUSTIFY ITS CLAIM OF SET OFF. REPLY FILED BY THE ASSESSEE DID NOT FIND FAVOUR WITH THE ASSESSING OFFICER WHO DISALLOWED THE CLAIM OF SET OFF. THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A) , BUT WITHOUT ANY SUCCESS. 4 . BEFORE US, THE LD. AR STRONGLY SUBMITTED THAT THE ASSESSING OFFICER HIMSELF HAS ACCEPTED THAT THE ASSESSEE HAD EARNED INTEREST ON FIXED DEPOSITS WHICH WERE MADE FROM SUR PLUS FUNDS OF BANK LOANS TAKEN FROM THE SAME BANK ON WHICH THE ASSESSEE HAD PAID INTEREST OF RS. 27,59,040/ - . IT IS THE SAY OF THE LD. AR THAT SINCE EARNING OF INTEREST AND PAYMENT OF INTEREST IS ON THE SAME ACCOUNT, THEREFORE, THERE IS NO REASON WHY THE INTEREST SHOULD NOT BE ALLOWED TO BE SET OFF AGAINST INTEREST PAYMENT. 3 5. PER CONTRA, THE LD. DR STRONGLY SUPPORTED THE FINDINGS OF THE AO. 6. WE HAVE GIVEN THOUGHTFUL CONSIDERATION TO THE ORDERS OF THE AUTHORITIES BELOW. THERE IS NO DISPUTE THAT THE ASSESSING OFFICER HAS HIMSELF ACCEPTED THAT THE FIXED DEPOSITS MADE IN ING VYSYA BANK WERE OUT OF THE SURPLUS FUNDS OF BANK LOANS. 7. THE HON'BLE SUPREME COURT IN THE CASE OF ACG ASSOCIATED CAPSULES [P] LTD 343 ITR 89 M HAS CATEGORI CALLY HELD THAT NETTING OFF OF INTEREST IS PERMISSIBLE. INTEREST EARNED FROM THE BANK AND INTEREST PAID TO THE BANK HAS TO BE NETTED OFF AND ONLY SURPLUS INTEREST BECOMES INCOME OF THE ASSESSEE. 8. ASSUMING, YET NOT ACCEPTING THAT INTEREST EARNED BY THE ASSESSEE HAS TO BE TAXED UNDER THE HEAD INCOME FROM OTHER SOURCES, THEN ALSO THE ASSESSEE IS ENTITLED FOR DEDUCTION FOR THE PAYMENT OF INTEREST U/S 57 OF THE INCOME TAX ACT, 1961. 4 9. CONSIDERING THE FACTS OF THE CASE FROM ALL POSSIBLE ANGLES, WE FIND FORC E IN THE CLAIM OF THE ASSESSEE. INTEREST INCOME HAS TO BE NETTED OFF AND WE DIRECT THE ASSESSING OFFICER TO ALLOW NETTING OFF OF INTEREST EARNED FROM INTEREST PAID. 1 0 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED . THE ORDER IS PRON OUNCED IN THE OPEN COURT ON 2 9 . 0 8 .2018. S D / - S D / - [ KULDIP SINGH ] [N.K. BILLAIYA] J UDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 9 T H AUGUST , 2018 VL/ COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI 5 DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER