Philip Anil Cherian, Pathanamthitta V. ACIT, Thiruvalla

ITA 77/COCH/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3939 (ITAT-COCHIN)
• Duration Of Justice: 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 04-02-2019
• Assessment Year: 2008-2009
• Appeal Filed On: 12-03-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A S BINDHU
• Keywords: Unexplained cash credit; Proportionate interest; Corroborative evidences; Agreed addition; Commercial expediency
• Section: 68

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFOR E S/ SHRI CHANDRA POOJARI , AM & GEORGE GEORGE K., J M I .T . A. NO . 77 / COCH/ 201 8 ASSESSMENT YEAR : 2 0 08 - 09 SHRI PHILIP ANIL CHERIAN, M/S. BIGFIELD DRUG LINKS, PATHANAMTHITTA . [AABPC 1071D] VS. THE ASSISTANT COMMISSIONER OF INCOME - TAX, CIRCLE - 1, THIRUVALLA. (ASSESSEE - APPELLANT) (REVENUE - RESPONDENT) I .T.A. NO. 412/COCH/2018 ASSESSMENT YEAR : 2011 - 12 SHRI PHILIP ANIL CHERIAN, M/S. BIGFIELD DRUG LINKS, PATHANAMTHITTA, [AABPC 1071D] VS. THE DEPUTY COMMISSIONER OF INCOME - TAX, CIRCLE - 1, THIRUVALLA. (ASSESSEE - APPELLANT) (REVENUE - RESPONDENT) A SSESSEE BY SHRI R. SREENIVASAN, CA REVENUE BY SMT. A.S. BINDHU, SR. DR D ATE OF HEARING 04 / 0 2/ 201 9 DATE OF PRONOUNCEMENT 05 / 0 2 /201 9 I.T.A. NO S . 77 & 412 /COCH/ 201 8 2 O R D E R P ER CHANDRA POOJARI, AM: TH ESE TWO APPE AL S FILED BY THE ASSESSEE ARE DIRECTED AGAINST DIFFERENT ORDER S OF THE CIT (A), KOTTAYAM AND PERTAIN TO THE A SSESSMENT YEAR S 2008 - 09 AND 2011 - 12. 2 . FIRST WE SHALL TAKE UP THE APPEAL IN ITA NO.77/COCH/2018 WHEREIN THE A SSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1) THE OFFICERS BELOW WERE NOT JUSTIFIED IN THE DISALLOWANCE OF PROPORTIONATE INTEREST RELYING ON THE KERALA HIGH CO URT DECISION. 2) THE OFFICERS DID NOT APPRECIATE THE FACT THAT SUFFICIENT NON INTEREST BEARING FUNDS WERE AVAILABLE FOR MAKING THE ADVANCES TO ONE LESLIE DANIEL. 3) THE OFFICERS BELOW WERE NOT JUSTIFIED IN DISALLOWING AND CONFIRMING SALES INCENTI VES EXPENSES PAID TO VARIOUS INSTITUTIONS IN ORDER TO BOOST UP SALES FOR NON PRODUCTION OF FULL VOUCHERS. 3. REGARDING GROUND NOS. 1 & 2, THE FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER DISALLOWED THE PROPORTIONATE INTEREST EXPENDITURE BY RELYI NG ON THE DECISION OF HIGH COURT OF KERALA IN THE CASE OF V.I. BABY & CO. (254 ITR 248) . THE ASSESSING OFFICER REJECTED THE CLAIM OF THE ASSESSEE THAT SUFFICIENT INTEREST FUNDS WERE AVAILABLE AND THEREFORE, DISALLOWANCE CANNOT BE MADE. ACCORDING7 TO THE ASSESSING OFFICER EVEN IF CASH BALANCES WERE AVAILABLE WITH THE PROPRIETOR, I.T.A. NO S . 77 & 412 /COCH/ 201 8 3 SINCE HE AVAILED INTEREST BEARING LOANS AND AT THE SAME TIME GAVE INTEREST FREE ADVANCES, AN INFERENCE CAN BE DRAWN THAT IT WAS THE LOAN FUNDS THAT WERE SO ADVANCED. 4. ON A PPEAL, THE CIT(A) CONFIRMED THE DISALLOWANCE OF PROPORTIONATE INTEREST RELATING TO INTEREST FREE LOANS TO LESLIE DANIEL BY RELYING ON THE JUDGMENT OF THE KERALA HIGH COURT IN THE CASE OF ACCELERATED FREEZE DRYING CO. LTD. (324 ITR 316) WHEREIN IT WAS HELD AS UNDER: '3. THE ASSESSEE IS A LIMITED COMPANY ENGAGED IN EXPORT OF MARINE PRODUCTS. ON VERIFYING THE ACCOUNTS, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAD ADVANCED AN INTEREST FREE LOAN OF RS. 4,03,75,000 TO ANOTHER LIMITED COMPANY BY NAME M/S. AMA LGAM INVESTMENTS P. LTD. WHICH IS STYLED AS A SISTER CONCERN OF THE ASSESSEE. THE ASSESSING OFFICER FOUND THAT ADVANCES WERE MADE OUT OF BORROWED FUNDS ON WHICH THE ASSESSEE HAD PAID AN INTEREST OF RS. 64,72,004. IT WAS FOUND THAT THE TERM LOAN OUTSTANDING IN THE END OF THE PREVIOUS YEARS WAS RS. 17.74 LAKHS. UND E R SECTION 36(1)(I II ) OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE INCOME TAX ACT'), THE ASSESSEE IS ENTITLED TO DEDUCTION OF INTEREST PAID ON BORROWED FUNDS IF SUCH FUNDS WERE BORROWED FOR BUSINESS PURPOSES. IF THE ASSESSEE IS ABLE TO DIVERT BORROWED FUNDS TO OTHER COMPANIES, WHETHER IT BE SISTER CONCERNS OR NOT, OBVIOUSLY, THE PURPOSE OF BORROWAL WAS NOT FOR ITS OWN BUSINESS PURPOSES, BUT FOR HELPING ANOTHER COMPANY FOR THAT COMPANY S BUSINESS PURPO SES. THE ASSESSING OFFICER, BY FOLLOWING THE JUDGMENT OF THE VARIOUS HIGH COURTS IN C I T V. H. R. SUGAR FACTORY P. LTD. (1991) 187 I TR 363 (A LL.) HELD THAT DIVERSION OF BORROWED FUND ON WHICH INTEREST IS PAID BY THE ASSESSEE TO SISTER CONCERN WITHOUT COLLE CTING INTEREST CALLS FOR PROPORTIONATE DISALLOWANCE. HE HAD WORKED OUT THE INTEREST ATTRIBUTABLE TO FUNDS DIVERTED TO ANOTHER COMPANY WITHOUT COLLECTION OF INTEREST AT RS. 14,76,510 AND DISALLOWED THE SAME. 4. WHEN THE ASSESSEE CHALLENGED THE SAME BEFORE THE COMMISSIONER (APPEALS), HE, 1N PRINCIPLE, COMPLETELY AGREED WITH THE FINDINGS OF THE ASSESSING OFFICER AND FOLLOWING THE DECISION OF THIS COURT IN C I T V. V. I . BABY AND CO. (2002) 254 ITR 248, REWORKED THE INTEREST TO BE DISALLOWED ON PROPORTIONATE BAS IS AFTER NOTICE TO THE ASSESSEE AND ENHANCED THE DISALLOWANCE. IT IS PERTINENT TO NOTE FROM THE ORDER OF THE COMMISSIONER I.T.A. NO S . 77 & 412 /COCH/ 201 8 4 (APPEALS) THAT THE ASSESSEE DID NOT HAVE ANY CASE THAT ADVANCING OF INTEREST FREE LOAN TO ANOTHER COMPANY WHICH IS A SISTER CONCERN IS IN THE INTEREST OF COMMERCIAL EXPEDIENCY. ON THE OTHER HAND, THE ASSESSEE S CASE WAS THAT IT HAD AVAILABLE FUNDS LIKE, SURPLUS FOR GIVING INTEREST FREE LOANS TO ANOTHER COMPANY. HOWEVER, WHEN THE MATTER WENT TO THE TRIBUNAL IN SECOND APPEAL, THE ASSESSEE CHANGED THE STAND OF AVAILABILITY OF SURPLUS FUNDS FOR GIVING INTEREST FREE ADVANCES, BUT TOOK A STAND THAT ON AN EARLIER OCCASION, THE TRIBUNAL ALLOWED THE ASSESSEE S CASE ON THE SAME ISSUE RELYING ON THE DECISION OF THE SUPREME COURT IN S. A. BUILDERS LT D. V. C I T (APPEALS) (2007) 288 ITR 1. IN SIMILAR CASE, WE HAVE FOUND THAT THE DECISION OF THE SUPREME COURT COULD BE APPLIED ONLY IF COMMERCIAL EXPEDIENCY IS ESTABLISHED WITH FACTS. UNLESS THE INTEREST FREE LOAN GOES TO ADVANCE BUSINESS INTEREST OF THE ASS ESSEE, THERE CANNOT BE ANY COMMERCIAL EXPEDIENCY. FOR E.G., IF A COMPANY OR A FIRM SUPPLYING RAW MATERIAL FO R MANUFACTURE OF PRODUCTS OF THE ASSESSEE GOES INTO FINANCIAL CRISIS AND IF ASSISTANCE, RENDERED BY THE ASSESSEE, WOULD RETAIN THEIR BUSINESS WHICH IN TURN HELPS THE ASSESSEE TO CARRY ON BUSINESS MORE SUCCESSFULLY, CERTAINLY COMMERCIAL EXPEDIENCY CAN BE CANVASSED. HOWEVER, PRIMA FADE IN THIS CASE, FROM THE NAME OF THE COMPANY TO WHICH ASSESSEE ADVANCED INTEREST FREE LOANS, IT APPEARS TO BE AN INVEST MENT COMPANY PROBABLY ENGAGED IN FINANCE AND WE DO NOT KNOW WHAT IS THE COMMERCIAL EXPEDIENCY THAT THE PETITIONER CAN CANVASS FOR ADVANCING INTEREST FREE LOANS TO THAT CONCERN. AS ALREADY STATED, THE ASSESSEE HAS SHIFTED THE STAND CANVASSED BEFORE THE FIRS T APPELLATE AUTHORITY IN SECOND APPEAL BEFORE THE TRIBUNAL, AND THE TRIBUNAL, WITHOUT CONSIDERING THE FACTS BY RELYING ON THEIR EARLIER ORDER, ALLOWED THE CLAIM. THE DEPARTMENT HAS STATED THAT THE OTHER YEAR S CASE RELIED ON BY THE TRIBUNAL PERTAINS TO LO ANS ADVANCED TO OTHER COMPANIES AND NOT TO THE INVESTMENT .COMPANY AND THE FACTS ARE DIFFERENT. WE DO NOT THINK , THE DEPARTME NT IS BARRED FROM FILING APPEAL AGAINST ONE YEAR S ASSESSMENT MERELY BECAUSE FOR ANOTHER YEAR, THEY HAVE NOT CONTESTED THE MATTER. THE TRIBUNAL S ORDER IS NOT A PRECEDENT TO BE FOLLOWED BY THE DEPARTMENT IN EVERY YEAR S ASSESSMENT. SI NCE THE DEPARTMENT HAS FILED APPEAL IN THIS CASE, IT WAS THE DUTY OF THE TRIBUNAL TO DECIDE THE CASE WITH REFERENCE TO THE FACTS AND NOT BY JUST FOLLOWIN G THE EARLIER YEAR S ORDER. STRANGELY, THE TRIBUNAL HAS NOT BOTHERED TO CONSIDER THE VARIOUS H IGH C OURT JUDGMENTS PARTICULARLY THAT OF THIS COURT, BASED ON WHICH THE COMMISSIONER (APPEALS.) DECIDED THE MATTER, AS ALREADY FOUND BY US, THE DECISION OF THE SU PREME COURT IN S. A. BULLDER S CASE (2007) 288 ITR 1 (SC) COULD BE APPLIED ONLY IF, ON FACTS, THE ASSESSEE ESTABLISHES COMMERCIAL EXPEDIENCY IN ADVANCING INTEREST FREE LOANS WHICH THE ASSESSEE HA S NOT VENTURED TO RAISE OR PROVE BEFORE THE TWO LOWER AUTHORI TIES. WE THEREFORE HOLD THAT THE I.T.A. NO S . 77 & 412 /COCH/ 201 8 5 TRIBUNAL S ORDER IS UNSUSTAINABLE AND WE THEREFORE SET ASIDE THE ORDER AND REMAND THE CASE BACK TO THEM TO DECIDE THE CASE ON THE MERITS.' 4.1 IN VIEW OF THE ABOVE JUDGMENT OF THE KERALA HIGH COURT, THE CIT(A) OBSERVED TH AT AVAILABILITY OF INTEREST FREE FUNDS CANNOT BE TAKEN AS GROUND AGAINST DISALLOWANCE OF INTEREST FOR ADVANCING INTEREST FREE LOANS. HENCE, THE CIT(A) CONFIRMED THE DISALLOWANCE OF PROPORTIONATE INTEREST MADE BY THE ASSESSING OFFICER. 5. AGAINST THIS , THE ASSESSEE IS IN APPEAL BEFORE US. THE LD. AR SUBMITTED THAT AS FAR AS THE INTEREST FREE ADVANCES OF RS.2,13,350/ - TO LESLIE DANIEL WAS CONCERNED, HE WAS A CLOSE FRIEND OF THE ASSESSEE AND ADVANCE HAD BEEN GIVEN AS A LOAN OUT OF CAPITAL FUNDS AVAILABL E WITH HIM AND NO BORROWED FUNDS CAN BE ATTRIBUTED TO THIS. FURTHER, ACCORDING TO THE ASSESSEE, A SUIT HAS BEEN FILED AGAINST LESLIE DANIEL FOR RECOVERY OF THIS AMOUNT. THE ASSESSEE SUBMITTED THAT THE JUDGMENT OF THE KERALA HIGH COURT IN THE CASE OF CIT V S. V.I. BABY & CO. CITED SUPRA HAS NO APPLICATION TO THE FACTS OF THE PRESENT CASE. THEREFORE, IT WAS SUBMITTED THAT DISALLOWANCE OF 12% INTEREST ON BOTH THE AMOUNTS WAS NOT IN ORDER. 6. THE LD. DR RELIED ON THE ORDER OF THE LOWER AUTHORITIES. I.T.A. NO S . 77 & 412 /COCH/ 201 8 6 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. THE MAIN CONTENTION OF THE LD. AR IS THAT THE ASSESSEE IS HAVING SUFFICIENT NON INTEREST BEARING FUNDS TO ADVANCE THE SAME TO LESLIE DANIEL AND OTHER SISTER CONCERN. HOWEVER, THE ASSESSEE HAS N OT DEMONSTRATED THE EXACT AVAILABILITY OF SUCH FUNDS AT THE TIME OF ADVANCING TO OTHER PARTIES WITHOUT INTEREST. HENCE, IN THE INTEREST OF JUSTICE, WE REMIT THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR FRESH CONSIDERATION WITH A DIRECTION TO THE AS SESSEE TO PLACE FUND/CASH FLOW STATEMENT BEFORE THE ASSESSING OFFICER FOR HIS CONSIDERATION AND DECIDE THE ISSUE THEREUPON. HENCE, THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 8. THE NEXT GROUND, GROUND NO. 3 IS WITH REGA RD TO DISALLOWANCE OF SALES INCENTIVES EXPENSES PAID TO VARIOUS INSTITUTIONS IN ORDER TO BOOST UP SALES FOR NON PRODUCTION OF FULL VOUCHERS. 8.1 THE FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER NOTICED THAT THE EXPENSES WERE INCURRED IN CASH AND TH E ASSESSEE HAD NOT MAINTAINED PARTICULARS OF THE PAYEES. ACCORDING TO THE ASSESSING OFFICER, THE ASSESSEE WAS NOT ABLE TO PRODUCE VOUCHERS IN SUPPORT OF THESE EXPENSES ALTHOUGH THESE WERE SPECIFICALLY CALLED FOR VIDE ORDER SHEET ENTRY DATED 19/10/2011. T HE ASSESSING OFFICER FOUND THAT THE INCENTIVES PAID TO DOCTORS, INSTITUTIONS, STAFF OF VARIOUS RETAIL STORES ETC. TO BOOST SALES WERE HIGH WHEN COMPARED TO OTHERS IN THE SAME LINE OF BUSINESS. I.T.A. NO S . 77 & 412 /COCH/ 201 8 7 HENCE, THE ASSESSING OFFICER DISALLOWED RS.4,52,114/ - OUT OF EX PENDITURE CLAIMED ON ACCOUNT OF INCENTIVES. 8.2 . ON APPEAL, THE CIT(A) OBSERVED THAT IN THE ABSENCE OF SUPPORTING VOUCHERS FOR THE EXPENDITURE INCURRED, THE ADDITION OF RS.4,52,114/ - MADE BY THE ASSESSING OFFICER WAS CORRECT AND UPHELD THE SAME. 8 .3 AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. THE LD. AR SUBMITTED THAT INCENTIVES WERE PAID TO DOCTORS, INSTITUTIONS, STAFF OF VARIOUS RETAIL STORES IN ORDER TO BOOST UP THE SALES WHICH IS A NORMAL PRACTICE IN SIMILAR LINE OF BUSINESS. 8.4 THE LD. DR RELIED ON THE ORDER OF THE LOWER AUTHORITIES. 8.5 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. BEFORE US, THE ASSESSEE HAS NOT PLACED ANY VOUCHERS IN SUPPORT OF THE ABOVE SALES INCENTIVE EXPENDITURE INCURRED BY THE ASSESSEE. IN THE ABSENCE OF SUPPORTING EVIDENCE TO SUBSTANTIATE THE PAYMENT OF INCENTIVES, WE ARE NOT IN A POSITION TO HOLD WHETHER IT WAS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. HENCE, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AND CONFIRM ED BY THE CIT(A) ON THIS ISSUE IS JUSTIFIED. THUS, THIS GROUND OF APPEAL OF THE ASSESSEE IS REJECTED. I.T.A. NO S . 77 & 412 /COCH/ 201 8 8 9 . AT THE TIME OF HEARING, GROUND NOS. 4 & 5 WERE NOT PRESSED WHICH READ AS FOLLOWS: 4) THE OFFICERS BELOW WERE NOT JUSTIFIED IN INVOKING S. 40A(I A) ON THE INTEREST FOR THE REASON THAT THIS IS AN AGREED ADDITION. 5) THE ASSESSEE CLAIMED THAT HE HAS NOT AGREED FOR ANY ADDITION IN THIS REGARD. 9.1 ACCORDINGLY, THE ABOVE GROUNDS ARE DISMISSED AS NOT PRESSED. THUS, THE APPEAL OF THE ASSESSEE I N ITA NO. 77/COCH/2018 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 1 0 . REGARDING THE APPEAL IN ITA NO. 412/COCH/2018, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: I) THE OFFICERS BELOW WERE NOT JUSTIFIED IN TAXING VARIOUS CREDIT IN CAPITAL ACCOUNT U /S. 68 OF THE ACT. II) SHOULD HAVE TAKEN AVAILABLE AGRICULTURAL INCOME AS SOURCE FOR VARIOUS CREDITS. 1 1 . THE FACTS OF THE CASE ARE THAT THE DURING THE RELEVANT PREVIOUS YEAR ADDITIONAL CAPITAL TO THE TUNE OF RS.7,23,457/ - WAS INTRODUCED INTO PROPRIE TORS CAPITAL ACCOUNT. THE ASSESSING OFFICER CALLED FOR DETAILS IN THIS REGARD BUT THE ASSESSEE WAS NOT ABLE TO SUBSTANTIATE THE GENUINENESS OF THE CREDITS WITH SUPPORTING DOCUMENTS. FOR EXAMPLE, RS.40,000/ - RECEIVED FROM SHRI SUNIL KUZHIYIL WAS STATED T O BE A LOAN ADVANCED TWO YEARS AGO AND RETURNED DURING I.T.A. NO S . 77 & 412 /COCH/ 201 8 9 RELEVANT PREVIOUS YEAR. SIMILAR WAS THE CASE WITH RS.8,600/ - FROM SHRI GOPAKUMAR, RS.5,000/ - FROM SHRI LEJU AND RS.3,687 FROM SHRI SHIVA KUMAR. ACCORDING TO THE ASSESSING OFFICER, NO DOCUMENTARY PROOF COULD BE SUBMITTED SO AS TO PROVE THE GENUINENESS OF THESE TRANSACTIONS AND THE ADVANCES WERE NOT REFLECTED IN THE BOOKS FOR THE PERIOD THEY WERE CLAIMED TO BE ADVANCED. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE COULD NOT PRODUCE ANY DOCUMENTS SO A S TO PROVE THE GENUINENESS OF CREDITS IN THE CAPITAL ACCOUNT FROM GLENMARK RS.8,000/ - , MARTHOMA SCHOOL RS.15,000/ - WHICH WERE CREDIT ED ON 15/12/2010 , RS.1,25,000/ - CREDIT ED ON 18/02/2011 , RS.53,362/ - CREDITED ON 15/03/2011 AND RS.60,112/ - . THUS, OUT OF TH E TOTAL CREDITS IN THE CAPITAL ACCOUNT, THE ASSESSEE COULD OFFER NO SATISFACTORY EXPLANATION ABOUT THE NATURE AND SOURCE OF CREDITS TO THE TUNE OF RS.3,31,761/ - . THEREFOREW, THE ASSESSING OFFICER MADE AN ADDITION OF RS.3,31,761/ - ON ACCOUNT OF UNEXPLAINED CREDITS OUT OF THE CAPITAL INTRODUCED DURING THE PREVIOUS YEAR U/S. 68 OF THE ACT. 1 2 . ON APPEAL, THE CIT(A) OBSERVED THAT ASSESSEE HAD NOT PROVED THE SOURCE OF THESE CREDITS BY PRODUCING NECESSARY EVIDENCE. IN THE ABSENCE OF SUCH EVIDENCE, THE CI T(A) CONFIRMED THE ADDITION OF R.3,31,761/ - MADE BY THE ASSESSING OFFICER. 18. AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. THE LD. AR SUBMITTED THAT IN SO FAR AS ADDITION U/S. 68 WAS CONCERNED, FOR EACH OF THE CREDIT, EXPLANATION I.T.A. NO S . 77 & 412 /COCH/ 201 8 10 WAS GIVEN DURIN G ASSESSMENT STAGE AND ALL THESE AMOUNTS WERE OUT OF DRAWINGS IN THE EARLIER YEARS. IT WAS ALSO SUBMITTED THAT THE ASSESSEE HAD SUFFICIENT AGRICULTURAL INCOME FOR EXPLANATION OF THESE CREDITS. IT WAS SUBMITTED THAT HAVING REGARD TO THE HUGE AGRICULTURAL I NCOME OF ABOUT RS.24,69,442/ - , THE ADDITION OF RS.3,312,761/ - U/S. 68 WAS NOT WARRANTED. 1 3 . THE LD. DR RELIED ON THE ORDER OF THE LOWER AUTHORITIES. 14 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. THE MAIN CONTENTION OF THE ASSESS EE IS THAT THE ASSESSEE HAD DECLARED AGRICULTURAL INCOME OF RS. 24,69,442/ - . HOWEVER, NO TELESCOPING BENEFIT HAS BEEN GIVEN TOWARDS THIS EXEMPT ED INCOME. ACCORDING TO HIM, IF THIS EXEMPT ED INCOME IS CONSIDERED AS SOURCE FOR INTRODUCTION OF CAPITAL, THER E COULD NOT BE ANY ADDITION U/S. 68 OF THE ACT. WE FIND MERIT IN THE PLEA OF THE ASSESSEE. BEING SO, IF THE ASSESSEE HAS NOT ALREADY ADDED ANY AMOUNT OUT OF RS. 2 4 ,69,442/ - TO THE CAPITAL ACCOUNT , TELESCOPING BENEFIT IS TO BE GIVEN TOWARDS EX EMPT ED INCOM E OF THE ASSESSEE. ACCORDINGLY, FOR THE PURPOSE OF CONSIDERING TELESCOPING BENEFIT, WE REMIT THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR FRESH CONSIDERATION AND DECIDE THE ISSUE THEREUPON. HENCE, THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED F OR STATISTICAL PURPOSES. I.T.A. NO S . 77 & 412 /COCH/ 201 8 11 21. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 5 TH FEBRUARY, 2019 SD/ - SD/ - (GEORGE GEORGE K.) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 5 TH FEBRUARY, 2019 GJ COPY TO: 1 . SHRI PHILIP ANIL CHERIAN, M/S. BIGFIELD DRUG LINKS, PATHANAMTHITTA, 2. THE ASSISTANT COMMISSIONER OF INCOME - TAX, CIRCLE - 1, THIRUVALLA. 3. THE DEPUTY COMMISSIONER OF INCOME - TAX, CIRCLE - 1, THIRUVALLA. 4 . T HE COMMISSIONER OF INCOME - TAX (AP P EALS) , KOTTAYAM . 5 . THE PR. COMMISSIONER OF INCOME - TAX, KOTTAYAM. 6. D. R., I.T.A.T., COCHIN BENCH, COCHIN. 7. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T., COCHIN I.T.A. NO S . 77 & 412 /COCH/ 201 8 12