×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
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These two appeals by Revenue are directed against the orders of CIT(A)-5, Bangalore for Assessment Years 2007-08 and 2011-12, both dated 29.03.2016. Since common issues are involved, these appeals were heard together and are being disposed off by way of this consolidated order.
2. Briefly stated, the facts relevant for disposal of this appeal are as under:
Assessment Year 2007-08
2.1 The assessee company, engaged in the business of working as a Nodal Agency to implement the schemes of the government to construct houses, filed its return of income for Assessment Year 2007-08 on 31.10.2007 declaring NIL income and claiming brought forward loss of Rs.11,71,77,914/-. The assessee subsequently filed a revised return on 19.09.2009 declaring NIL income and claiming carry forward loss of Rs.27,13,25,625/-. Assessment proceedings under section 147 of the Income Tax Act, 1961 (in short ‘the Act’) were initiated and notice under section 148 of the Act was issued to the assessee. The assessment was concluded under section 143(3) r.w.s. 147 of the Act vide order dated 31.12.2014, wherein the assessee’s income was determined at Rs.6,71,46,517/-; in view of the following additions / disallowances: -
(i) Guarantee Commission - Rs.5,99,72,854/-
(ii) Interest income - Rs.12,43,51,577/-
2.2 For Assessment Year 2011-12, the assess filed its return of income on 30.09.2011 declaring NIL income and claimed carry forward of loss of Rs.2,89,84,324/-. The case was taken up for scrutiny for this Assessment year and the assessment was concluded under section 143(3) of the Act vide order dated 21.03.2014 wherein the assessee’s income was determined at Rs.22,21,66,127/- in view of the following additions / disallowances: -
(1) Interest Income - Rs.25,05,49,350/-
(2) Prior Period expenditure - Rs. 5,92,189/-
(3) Loss on sale of asset - Rs. 8,912/-
3. Aggrieved by the orders of assessment dated 31.12.2014 for Assessment Year 2007-08 and dated 21.03.2014 for Assessment Year 2011-12, the assessee preferred appeals before CIT(A)-5, Bangalore. The CIT(A)-5, Bangalore, vide assessment order dated 29.03.2016, disposed off the same, allowing the assessee’s appeal for Assessment Year 2007-08 and allowing the assessee partial relief in its appeal for Assessment Year 2011-12.
4. Revenue, being aggrieved by the orders of CIT(A)-5, Bangalore, for Assessment Years 2008-09 and 2011-12, both dated 29.03.2016, has filed these appeals before the Tribunal wherein it has raised the following grounds:
4.1 Assessment Year 2007-08
1. The order of the Commissioner of Income Tax(Appeals) - 5, Bangalore, is opposed to the law and not on the facts and circumstances of the case.
2. Whether on the facts and in the circumstances of the case, the CIT(A) was justified in deleting the addition made by the AO without appreciating that the assessee had debited Guarantee Commission to P & L account as provisional in nature which is not allowable and as the assessee follows mercantile system of accounting, only payments made during the financial year is eligible for deduction.
3. Whether on the facts and in the circumstances of the case, the CIT(A) was justified in deleting the addition made by the AO without' appreciating that the work of the assessee related to the construction of houses to the economically weaker section and so the interest earned on the deposits made with banks has to be treated as income from other sources. Section 56 of the IT Act,1961 mandates taxation of interest from bank deposits and the section does not take into cognizance the purpose for which the interest it put to use.
4. For these and other grounds that may be urged upon, the order of the CIT(A) may be reversed and that assessment order be restored.