Income Tax Officer-(Exeption), Lucknow V. M/s Grameen Development Services, Lucknow

ITA 623/LKW/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0875 (ITAT-LUCKNOW)
• Duration Of Justice: 2 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 27-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APPLICATION OF INCOME AT RS
• Keywords: Charitable institution; Benefit of exemption
• Section: 12A; 12

Judgement Text

I.T.A. NO.623/LKW/2016 ASSESSMENT YEAR:2013-14 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI A. D. JAIN, VICE PRESIDENT AND SHRI T. S. KAPOOR, ACCOUNTANT MEMBER ITA NO.623/LKW/2016 ASSESSMENT YEAR:2013-14 INCOME TAX OFFICER (EXEMPTIONS) LUCKNOW. VS. M/S GRAMEEN DEVELOPMENT SERVICES, B-1/84, SECTOR-B, ALIGANJ, LUCKNOW. PAN:AAATG 2067 M (APPELLANT) (RESPONDENT) O R D E R PER T. S. KAPOOR, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LEARNED CIT(A)-4, LUCKNOW DATED 04/08/2018 PERTAINING TO AS SESSMENT YEAR 2013- 2014. 2. THE FACTS OF THE CASE, IN BRIEF, ARE THAT THE AS SESSEE IS REGISTERED WITH REGISTRAR OF SOCIETIES, U.P. AND RENDERS RURAL DEVE LOPMENT SERVICES FOR POVERTY ALLEVIATION THROUGH ECONOMIC EMPOWERMENT PR OGRAMMES. DONORS TO THE SOCIETY ARE REPUTED NAMES LIKE JAMSETJI TATA TRUST, UNICEF, ITC LTD., ICCO NETHERLAND ETC. THE ASSESSEE FILED RETURN OF INCOME ON 28/09/2013. THE ASSESSEE HAS SHOWN GROSS INCOME OF RS.2,01,70,6 63/- AND APPLICATION OF INCOME AT RS.2,01,70,663/- AND CLAIMED ITS INCOM E AS EXEMPT U/S APPELLANT BY SHRI C. K. SINGH, D.R. RESPONDENT BY SHRI SANDEEP SINGH, C. A. DATE OF HEARING 14/11/2018 DATE OF PRONOUNCEMENT 16 / 11 /201 8 I.T.A. NO.623/LKW/2016 ASSESSMENT YEAR:2013-14 2 11(1)(A) OF THE ACT. DURING THE YEAR THE SALARY TO SHRI S.K. DWIVEDI (SECRETARY), SHRI AMITABH MISHRA(TREASURER) AND SHR I PROBIR BOSE (MEMBER) WAS INCREASED AS COMPARED TO LAST YEAR I.E. RS. 4.8 7 LAC TO RS. 5.64LAC, RS. 4.26LAC TO RS. 4.95LAC AND RS. 1.43 LAC TO RS. 1.65 LAC RESPECTIVELY WERE PAID. THE ASSESSING OFFICER HELD THAT THE SALARY PAID TO THESE EMPLOYEES WAS EXCESSIVE AND RS.20,000/-, RS.20,000/- AND RS.10,00 0/- WERE DISALLOWED OUT OF SALARY PAID TO THREE PERSONS U/S 13 OF THE ACT. TOTAL DISALLOWANCE WORKED OUT TO RS.50,000/-. 2.1 SALARY OF MS PADMJA NAIR (MEMBER) AND SHRI J. L DWIVEDI (MEMBER) AMOUNTING TO RS.78,652/- AND RS.17,500/- WAS DISALL OWED AS THEY WERE PART TIME EMPLOYEES OF THE ASSESSEE. THE TOTAL DISALLOWA NCE WORKED OUT TO BE RS.96,152/- U/S 13 OF THE ACT. 2.2 THE ASSESSING OFFICER FURTHER DISALLOWED THE CL AIM OF APPLICATION OF INCOME/DEDUCTION OF EXPENSES TO TUNE OF RS.62,40,01 2/- PAID TO OTHER PARTNER NGO'S WHO ARE REGISTERED U/S 12A OF THE ACT AND FURTHER ADDITION OF RS.6,17,903/- WAS MADE ON ACCOUNT OF INTEREST INCOM E NOT SHOWN BY THE ASSESSEE. THE ASSESSING OFFICER NOTED THAT ASSESSE E HAS VIOLATED THE PROVISIONS OF SECTION 13 OF THE ACT SO THE BENEFIT OF EXEMPTION U/S 11 AND 12 OF THE ACT WAS DENIED. 2.3 BEING AGGRIEVED WITH THE ACTION OF ASSESSING OF FICER THE ASSESSEE WENT IN APPEAL BEFORE LEARNED CIT(A) WHO HAS ALLOWE D RELIEF TO THE ASSESSEE. NOW AGGRIEVED WITH THE ACTION OF LEARNED CIT(A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 3. BEFORE US LEARNED D. R. SUPPORTED THE ASSESSMENT ORDER WHEREAS LEARNED COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDE R OF LEARNED CIT(A). I.T.A. NO.623/LKW/2016 ASSESSMENT YEAR:2013-14 3 4. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE T HROUGH THE MATERIAL PLACED ON RECORD. VIDE GROUND NO. 1 & 2 THE REVENU E IS AGGRIEVED WITH THE ACTION OF LEARNED CIT(A) BY WHICH HE HAS DELETED TH E ADDITION OF RS.50,000/- AND RS.96,152/- MADE BY THE ASSESSING OFFICER U/S 1 3(1)(C)(II) AND 13(2)(C) AND 13(3) ON ACCOUNT OF EXCESSIVE SALARY PAID TO RE GULAR/PART TIME EMPLOYEES. WE FIND THAT LEARNED CIT(A) HAS DELETED BOTH THE ADDITIONS MADE BY THE ASSESSING OFFICER BY HOLDING AS UNDER: 5.1 THE AO HAS HELD THAT SALARY PAID TO SHRI S.K. DWIVEDI (SECRETARY), SHRI AMITABH MISHRA(TREASURER) AND SHR I PROBIR BOSE (MEMBER) IS EXCESSIVE AND DISALLOWED RS. 20,000/-, RS. 20,000/- AND RS. 10,000/- OUT OF THEIR SALARIES U/S 13 OF TH E ACT. TOTAL DISALLOWANCE MADE WAS RS. 50,000/-. THE AO WAS PROV IDED WITH DETAILED JOB DESCRIPTIONS OF THESE THREE PERSONS AL ONG WITH OTHER DETAILS VIDE SUBMISSION DATED 18.11.2015 ALONGWITH DETAILS OF REMUNERATION PAID TO THEM IN LAST 10 YEARS. SIMILARLY THE AO HELD THAT MS PADMJA NAIR (MEMBER) AND SHR J.L DWIVDEI (MEMBER) ARE PART TIME EMPLOYEES AND NOT FU LL TIME EMPLOYEES. THEREFORE, THEIR SALARIES OF RS. 78,652/ - AND RS.17,500/- WAS DISALLOWED U/S 13 OF THE ACT. TOTAL DISALLOWANCE MADE WAS RS. 96,152/-. 5.2 DURING COURSE OF APPELLATE PROCEEDINGS, DETAILE D JOB DESCRIPTIONS OF SHR S.K. DWIVEDI, SHRI AMITABH MISH RA AND SHRI PROBIR BOSE WAS PROVIDED. SHRI PROBIR BOSE IS PROGRAM DIRECTOR FOR MIGRATION PROJECTS SUPPORTED BY JAMSHETJI TATA TRUST BEING IMPLEMENTED AT KHALILABAD AND LUCKNOW. HE IS WORKING WITH APPELLAN T SINCE JULY 2001 AND WAS COOPTED AS MEMBER ON 28.01.2004. SHRI AMITABH MISHRA IS PROGRAM DIRECTOR FOR GOAT BA SED LIVELIHOOD PROJECT IN BUNDELKHAND, NRM PROJECT IN L ALITPUR, CBDRR PROJECT IN EASTERN UP AND AGRICULTURAL PROJEC T IN HARDOI. HE IS WORKING WITH APPELLANT SINCE JULY 1996 AND IS MEMBER OF BOARD SINCE 26.02.2007. I.T.A. NO.623/LKW/2016 ASSESSMENT YEAR:2013-14 4 SHRI S.K. DWIVEDI IS EXECUTIVE DIRECTOR AND OVERSEE S THE PROJECTS FOR REVIVAL OF AGRICULTURAL BASED LIVELIHOODS IN EA STERN U.P. AND NORTH BIHAR, IRRAS PROJECT AND JAWAJA PROJECT. HE I S RESPONSIBLE FOR STRATEGIC PLANNING, IMPLEMENTATION OF PROJECTS AND MONITORING THEIR OUTCOMES. HE ALSO COORDINATES THE FINANCE AND ACCOUNTS FUNCTIONS. SALARIES ARE FIXED AS PER TERMS AND CONDITIONS OF S ERVICE UNDER SPECIFIC SCALE (CATEGORY E-I) CONSISTING OF BASIC S ALARY, DA (50% OF BASIC), HRA, TRANSPORT ALLOWANCE WHICH IS REVISE D FROM TIME TO TIME AFTER PERFORMANCE APPRAISAL. EITHER SIDE M AY TERMINATE THE SALARY AGREEMENT BY GIVING ONE MONTH NOTICE OR PAY IN LIEU OF NOTICE. PARTICULARS OF SALARY PAID TO THESE THREE PERSONS O VER LAST 10 YEARS WAS FILED I.E. 2003-04 TO 2012-13. THE AVERAG E INCREASE IN SALARY IN 2012-13 AS COMPARED TO 2011-12 IS 15% APP ROXIMATELY IN ALL THE THREE CASES. AFTER LOOKING AT THEIR JOB DESCRIPTION, THEIR PROFESSIONAL PROFILE, THEIR WORK EXPERIENCE AND THE INFLATIONARY PRESSURES THE INCREASE IN ANNUAL SALARY BY 15% IN T HE THREE KEY MEMBERS OF APPELLATE SOCIETY CANNOT BE HELD AS EXCE SSIVE OR UNREASONABLE. THE AO HAS NOT OUTLINED ANY BASIS ON WHICH HE HAS COME TO A FINDING THAT THIS SALARY IS EXCESSIVE . EITHER THE SERVICES RENDERED ARE NOT COMMENSURATE WITH THE SAL ARY OR THE SALARY GIVEN IS IN EXCESS OF SERVICES RENDERED. NO SUCH FINDING HAS BEEN GIVEN BY THE AO. TO FIND OUT WHETHER THE PAYMENT OF SALARY IS EXCESS IVE THEN SAME HAS TO BE EXAMINED ON COMMERCIAL CONSIDERATION S I.E. IN COMPARISON TO MARKET VALUE OF SERVICES RENDERED. TH E AO HAS NOT BROUGHT ANYTHING ON RECORD TO SHOW THAT SALARY PAID TO THESE THREE PERSONS WAS EXCESSIVE IN COMPARISON TO THE MA RKET VALUE OF SERVICES RENDERED. MERELY BECAUSE THERE IS INCRE ASE IN SALARY BY 15% COMPARED TO EARLIER YEAR WILL NOT LEAD TO CO NCLUSION THAT SALARY PAID IS EXCESSIVE OR IT IS PERSONAL BENEFIT AS ENVISAGED IN SECTION 13(1) OF THE ACT EXCESSIVE SALARY HAS TO BE SHOWN NOT WITH REFERENCE TO INCREASE IN SALARY OVER EARLIER Y EAR BUT WITH REFERENCE TO EXCESSIVENESS IN COMPARISON TO MARKET VALUE OF THE SERVICES THAT IS WITH REFERENCE TO COMMERCIAL CONSI DERATIONS. SUCH A FINDING IS CLEARLY MISSING IN THE ASSESSMENT ORDER. I.T.A. NO.623/LKW/2016 ASSESSMENT YEAR:2013-14 5 THE AO HAS JUST MADE A GENERAL COMMENT THAT SALARY GIVEN IS EXCESSIVE AND DISALLOWED RS. 50,000/- OUT OF SALARY GIVEN. NO FINDING HAS BEEN GIVEN AS TO WHY IT IS EXCESSIVE OR WHAT IS THE BASIS OF MAKING THE DISALLOWANCE. NO COMPARATIVE CA SE HAS BEEN GIVEN TO JUSTIFY THE DISALLOWANCE. A DISALLOWANCE B ASED ON A GENERAL COMMENT IS NOT CALLED FOR. THE ACTION OF TH E AO DEFIES THE LOGIC. IN VIEW OF THESE FACTS THE DISALLOWANCE OF RS. 50,000/- U/S 13 MADE BY THE AO IS HEREBY DELETED. RELIEF OF RS. 50,000/- IS ALLOWED TO THE APPLICANT. 5.3 SIMILARLY, THE AO HAS DISALLOWED RS. 96,152/- O N THE BASIS OF A GENERAL COMMENT THAT THIS PAYMENT IS NOT ALLOW ABLE U/S 13 OF THE ACT FOR THE SOLE BASIS THAT MS. PADMJA NAIR AND SHRI J.L DWIVEDI ARE PART TIME EMPLOYEES AND NOT FULL TIME E MPLOYEES. THE AO HAS FURTHER NOTED THAT THE 'ASSESSEE COULD N OT EXPLAIN THEIR JOB AND DUTIES RENDERED TO THE ASSESSEE. THE DETAILED TERMS AND CONDITIONS OF MRS. PADMJA NAIR AND MR. J. L. DWIVEDI WERE MADE AVAILABLE TO THE AO VIDE WRITTEN SUBMISSI ONS DATED 18.11.2015. MRS. PADMJA NAIR WAS PAID FOR A SPECIFIC TASK I.E. CRITICAL APPRAISAL OF 'COMMUNITY LED TOTAL SANITATION' PROCE SS CARRIED OUT UNDER THE PROJECT FACILITATING COMMUNITY LED WASH A ND LIVELIHOOD INTERVENTIONS IN FLOOD PLAINS OF EASTERN UP IN 20 VILLAGES OF RAPTI BASIN SPREAD OVER DISTRICT OF SID DARTHA MAGAR, SANT KABIR NAGAR, MAHARAJ GANJ AND GORAKHPUR, THE I MPORTANT COMPONENT WAS TO PROMOTE SANITATION IN THESE VILLAG ES. TOTAL FEES PAID WAS RS. 70,000/- SUBJECT TO TDS AND EXCLU SIVE OF SERVICE TAX AFTER SUBMISSION OF FINAL REPORT. TOTAL PAYMENT MADE WAS RS. 78,652/- INCLUSIVE OF SERVICE TAX (12%) AND EDUCATION CESS (3%). DR. J.L DWIVEDI WAS PAID FOR SPECIFIC TASK FOR 'DES IGNING AND IMPLEMENTATION OF AGRICULTURE BASED LIVELIHOOD STRE NGTHENING PROGRAMME WITHIN THE PROJECT IN APPELLANT SOCIETY A S WELL AS PARTNERS LOCATION IN EASTERN UP AND NORTHERN KHAR'. TOTAL PAYMENT MADE WAS RS. 17,500/-. IT IS PERTINENT TO POINT OUT THAT MRS. PADMJA NAIR AND MR. J.L. DWIVEDI ARE ACCLAIMED INDEPENDENT PROFESSIONALS IN THE DEVELOPMENT SECTOR SPECIALIZING IN RURAL DEVELOPMEN T. THE AO IGNORED THE ENTIRE ABOVE STATED GAMUT OF FACTS BEFO RE HIM AND I.T.A. NO.623/LKW/2016 ASSESSMENT YEAR:2013-14 6 DISALLOWED PAYMENT OF RS. 96,152/-TO THESE TWO INDE PENDENT PROFESSIONALS BASED ON A GENERAL COMMENT THAT THEY ARE ONLY PART TIME EMPLOYEES AND NOT FULL TIME EMPLOYEES. TH E AO IGNORED THE THAT THESE TWO PERSONS ARE CONSULTANTS FOR SPECIFIC PROJECTS AND NOT EVEN T TIME EMPLOYEES. ANY DISALLOWANCE BASED ON A GENERAL COMMENT BY THE AO IS UNCALLED FOR. IN VIEW OF THE ABOVE MENTIONED FACTS THE DISALLOWANCE OF RS. 96,152/- IS HEREBY DELETED. GRO UNDS OF APPEAL NO. 1 AND 2 ARE ALLOWED. 4.1 WE FIND THAT LEARNED CIT(A) HAS DEALT WITH THE ISSUES EXHAUSTIVELY AND FINDING NO INFIRMITY IN THE FINDINGS OF LEARNED CIT(A), GROUND NO. 1 & 2 OF THE REVENUES APPEAL ARE DISMISSED. 5. VIDE GROUND NO. 3 THE REVENUE IS AGGRIEVED WITH THE ACTION OF LEARNED CIT(A) BY WHICH HE HAS DELETED THE ADDITION OF RS.6 2,40,012/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF AMOUNTS PAID TO OTH ER PARTNER NFOS. WE FIND THAT LEARNED CIT(A) HAS DELETED THE ADDITION M ADE BY THE ASSESSING OFFICER BY HOLDING AS UNDER: APPELLANT CLAIMED RS.2,01,70,662/- AS APPLICATION OF INCOME FOR CHARITABLE PURPOSES. THIS UTILIZATION IN CLUDES DONATIONS GIVEN OUT OF CURRENT YEARS RECEIPTS OF RS .62,40,012/- BEING EXPENSES INCURRED BY PARTNER NGO'S OUT OF GRA NTS BY THE APPELLANT. THE AO DISALLOWED THIS CLAIM OF RS. 62,4 0,012/- FOR REASON THAT NGO'S ARE REGISTERED U/S 12A OF THE ACT AND ARE ELIGIBLE TO CLAIM EXEMPTION, THEREFORE, THESE AMOUN TS ARE NOT ALLOWABLE IN HANDS OF THE APPELLANT. ON THIS ISSUE THE LAW STANDS WELL SETTLED THAT WHEN A SUM HAS BEEN DISBURSED TO ANOTHER ENTITY CARRYING OUT S IMILAR OBJECT AND REGISTERED U/S 12A OF THE ACT THEN IT IS APPLIC ATION OF INCOME FOR PURPOSE OF SECTION 11 AND 12 OF THE ACT. THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE O F J.K CHARITABLE TRUST (1992) 196 ITR 31(ALL) HELD THAT ' DONATION TO ANOTHER CHARITABLE TRUST OUT OF CONTRIBUTIONS RECEI VED BY ASSESSEE TRUST IS APPLICATION OF INCOME FOR CHARITA BLE PURPOSE I.T.A. NO.623/LKW/2016 ASSESSMENT YEAR:2013-14 7 AND SUCH DONATION CANNOT BE TREATED AS INCOME OF AS SESSEE TRUST IN YEAR OF CONTRIBUTION EITHER UNDER UNAMENDE D AS AMENDED SECTION 12 OF THE ACT. CBDT INSTRUCTION NO. 1132 DATED 05.01.1978 STATED T HAT 'THE PAYMENT OF SUM BY ONE CHARITABLE TRUST TO ANOT HER FOR UTILIZATION BY DONEE TRUST TOWARDS ITS CHARITABLE O BJECTS IS PROPER APPLICATION OF INCOME FOR CHARITABLE PURPOSE IN HAN DS OF DONOR TRUST AND DONOR TRUST WILL NOT LOOSE EXEMPTION U/S 11 OF THE ACT OF THE DONATIONS DURING THE YEAR OF RECEIPT ITSELF. THE DECISION OF HON'BLE GUJRAT HIGH COURT IN CASE O F NIRMALA BAKU BHAI FOUNDATION (1997) 226 ITR 394 (GU J.) TOO IS IN FAVOUR OF THE APPELLANT ON THIS ISSUE ITSELF. THE RECENT DECISIONS IN CASE OF DELHI STATE AIDS CO NTROL VS. ITO IN ITAT NO. 2906/DEL/2010 AND IN CASE OF RA M ASHRAM TRUST, NASHIK VS. DEPTT OF INCOME TAX IN ITA NO. 97 5/PN/2012 ARE ALSO IN THE FAVOUR OF APPELLANT ON THIS ISSUE I TSELF. IN VIEW OF THE ABOVE FACTS AND JUDGMENTS OUTLINED A BOVE THE DISALLOWANCE OF RS. 62,40,6127- MADE BY THE AO IS HEREBY DELETED. THE GROUNDS OF APPEAL NO. 4 IS ALLOWED. 5.1 WE FIND THAT LEARNED CIT(A) WHILE DECIDING THE ABOVE GROUND HAS CONSIDERED VARIOUS JUDICIAL PRONOUNCEMENTS AND HAS EXHAUSTIVELY DEALT WITH THE ISSUE WHICH NEEDS NO INTERFERENCE FROM OUR SIDE . KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE CASE, WE CONFIRM THE VIEW OF LEARNED CIT(A) AND DISMISS THE GROUND NO. 3 TAKEN BY THE REVENUE. 6. VIDE GROUND NO. 4 OF THE APPEAL, THE REVENUE IS AGGRIEVED WITH THE ACTION OF LEARNED CIT(A) BY WHICH HE HAS DELETED TH E ADDITION OF RS.6,17,903/- MADE BY THE ASSESSING OFFICER ON ACCO UNT OF DIFFERENCE OF INTEREST ON FDRS AND SAVING BANK ACCOUNT. THE ASSE SSEE HAS SHOWN TOTAL INTEREST INCOME AT RS.13,48,281/- AS AGAINST INTERE ST OF RS.19,66,184/- AS PER CERTIFICATE ISSUED BY THE BANK. WE FIND THAT L EARNED CIT(A) HAS DELETED THE ADDITIONS MADE BY THE ASSESSING OFFICER BY HOLD ING AS UNDER: I.T.A. NO.623/LKW/2016 ASSESSMENT YEAR:2013-14 8 THE ASSESSING OFFICER MADE ADDITION ON ACCRUAL OF INTEREST ON FDR ETC. TO THE EXTENT OF RS.6,17,903/-. THE APPEL LANT IS FOLLOWING THE CASH SYSTEM OF ACCOUNTING AND HAS SHO WN INTEREST INCOME FROM FDR AND SAVING BANK ACCOUNT AT RS.13,48 ,281/- IN THE RECEIPT AND PAYMENT ACCOUNT. THE ASSESSING OFF ICER HAS TAKEN TOTAL INTEREST ON FDR AS PER CERTIFICATE ISSU ED BY BANK WHICH INCLUDES ACCRUAL OF INTEREST AND INTEREST ON SAVINGS BANK ACCOUNT TO TUNE OF RS.19,66,184/-. ON EXAMINATION OF RETURN OF INCOME FOR F.Y. 2010-11 AND F.Y. 2011-12 IT IS CLEAR THAT RETURN HAS BEEN FILED ON BASIS OF CASH SYSTEM OF ACCOUNTING AND SAME HAS BEEN ACCEPTE D. AFFIDAVIT WAS FILED BY THE SECRETARY OF THE APPELLA NT SOCIETY THAT APPELLANT FOLLOWS CASH SYSTEM OF ACCOUNTING. THE AP PELLANT CONTENDED THAT INTEREST ACCRUED OF RS.6,17,903/- IS INCLUDED IN INTEREST SHOWN OF RS. 7,37,740/- IN THE INCOME OF T HE APPELLANT FOR F.Y. 2013-14 AND HAS BEEN OFFERED FOR TAX IN A. Y. 2014-15. IT WAS STATED THAT TAXATION OF RS. 6,17,903/- IN TH E YEAR UNDER CONSIDERATION WILL TANTAMOUNT TO TAXING THE SAME IN COME TWICE. IN VIEW OF THE ABOVE FACTS IT IS CLEAR THAT THE APP ELLANT IS FOLLOWING CASH SYSTEM OF ACCOUNTING. THE INTEREST A CTUALLY RECEIVED DURING THE YEAR IS SHOWN UNDER THE INTERES T INCOME. THE ACCRUED INTEREST INCOME IS SHOWN IN THE YEAR OF ACTUAL RECEIPT. THIS DISPUTED AMOUNT OF INTEREST I.E. RS. 6,17,903/- HAS BEEN OFFERED FOR TAXATION BY THE APPELLANT IN F.Y. 2013-14 RELEVANT TO A.Y. 2014-15 I.E. THE YEAR OF RECEIPT O F THIS INTEREST. IF THE SAME SUM IS ADDED DURING THE YEAR UNDER CONS IDERATION I.E. A.Y. 2013-14 ON ACCRUAL BASIS THEN IT WILL RES ULT IN DOUBLE TAXATION OF THE SAME INTEREST INCOME. IN VIEW OF TH ESE FACTS, THE ADDITION OF RS. 6,17,903/- MADE BY THE AO IS HEREBY DELETED. GROUND OF APPEAL NO. 5 IS ALLOWED. 6.1 IN VIEW OF THE ABOVE FACTS IT IS CLEAR THAT THE ASSESSEE IS FOLLOWING CASH SYSTEM OF ACCOUNTING. THE INTEREST ACTUALLY RE CEIVED DURING THE YEAR IS SHOWN UNDER THE INTEREST INCOME. THE ACCRUED INTERE ST INCOME IS SHOWN IN THE YEAR OF ACTUAL RECEIPT. THIS DISPUTED AMOUNT OF INTEREST I.E. RS.6,17,903/- HAS BEEN OFFERED FOR TAXATION BY THE ASSESSEE IN F.Y. 2013-14 RELEVANT TO A.Y. 2014-15 I.E. THE YEAR OF RECEIPT O F THIS INTEREST. IF THE SAME I.T.A. NO.623/LKW/2016 ASSESSMENT YEAR:2013-14 9 SUM IS ADDED DURING THE YEAR UNDER CONSIDERATION I. E. A.Y. 2013-14 ON ACCRUAL BASIS THEN IT WILL RESULT IN DOUBLE TAXATIO N OF THE SAME INTEREST INCOME WHICH IS NOT PERMISSIBLE UNDER THE LAW. IN V IEW OF THESE FACTS, WE DO NOT FIND ANY INFIRMITY IN THE FINDINGS OF LEARNED C IT(A). ACCORDINGLY, GROUND NO. 4 OF THE REVENUE IS ALSO DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 16/11/2018) SD/. SD/. ( A. D. JAIN ) ( T. S. KAPOOR ) VICE PRESIDENT ACCOUNTANT MEMBER DATED:16/11/2018 *SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSISTANT REGISTRAR