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Income Tax Appellate Tribunal, MUMBAI BENCH “B” MUMBAI
Before: SHRI OM PRAKASH KANT & MS. KAVITHA RAJAGOPAL
This appeal by the assessee is directed against order dated 13.01.2023 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2010-11, raising following grounds of appeal:
Ground No. I
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The Income Tax Officer Ward 7(1)(1), Mumbai (‘the A.O.) erred in making an addition of Rs.84,00,000/- on account of accrued interest on debentures.
2. He failed to appreciate and ought to have held that : a. Investment in 2% debentures of Rs.42,00,00,000/- was made during the FY 2003-04 and since then no interest was ever received. b. Such interest was waived on request of the Debenture issuing company to safeguard the principal amount sicne issuing company was incurring heavy loss and was not in a position to pay the interest. c. As prudent accounting, income should be accrued only when there is certainly that income is going to be realized in near future. d. Since interest was waived, no income was accrued in the books. This stand was also accepted by auditors of the appellant. 3. The appellant therefore prays that addition on account of accrued interest on debenture be deleted. Ground No. II 1. On the facts and circumstances of the case and in law, AO erred in computing the interest leviable on the appellant under section 234B. 2. At the outset, the Ld. Counsel of the assessee submitted that appeal against the assessment order dated 26.03.2013 passed u/s 143(3) of the Income-tax Act, 1961 (in short ‘the Act’) has already been adjudicated by the Ld. First Appellate Authority on 17.03.2016 and therefore, this appeal decided by the Ld. CIT(A) against the same order of the assessment is infructuous and needs to be dismissed.
We have heard rival submission of the parties on the issue-in- dispute and perused the relevant material on record. From the title of the impugned order of Ld CIT(A), it is clear that the appeal is P a g e | 3 Neon Solutions Pvt. Ltd. 26.03.2013. The relevant title of impugned order is reproduced as under:
“Instituted on 30/04/2013 from the order of ITO, Mumbai dated 26.03.2013 Appeal No. CIT(A), Mumbai – 13/10183/2013-14 (Manual Appeal Register Number : 176/2015-16) Status/Deductor Category Company Residential Status Resident Nature of Business Advertisement Agencies Section under which the order 143(3) appealed against was passed Date of order under which the order 26.03.2013 appealed against was passed Income/Loss Assessed (in Rs.) 0 Tax/Penalty/Fine/Interest 3487930 Demanded (in Rs.) Present for the appellant Not applicable Present for the Department Not applicable 4. Before us, the Ld. Counsel of the assessee has filed a copy of another order of the Ld. First Appellate Authority dated 17.03.2016 and on perusal of the title of the said order, it is evident that said appeal has also been decided against order u/s 143(3) of the Act dated 26.03.2013. The relevant title is reproduced as under:
Appeal No. CIT(A)-13/ITO-7(2)(4)/176/2015-16 1. Name & Address of the appellant M/s Neon Solutions Private Limited Kalpataru Square, 4th floor KondiVitha Road, J.B. Nagar Andheri (East), Mumbai-400059.
Date of Institution of appeal 30-04-2013 3. Name and designation of the Shri Sudhakar V. Malusare officer who passed the order Income Tax Officer 7(1)(1), Mumbai 4. Date of order against which the 26.03.2013 appeal was instituted 5. State of the appellant Company 6. PAN of the appellant AABCN5925B 7. Assessment year 2010-11 8. Section under which order Section 143(3) of the I.T. Act, 1961
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Date(s) of hearing 16.03.2016 10. Present for the Department None 11. Present for the appellant Shri H.G. Buch, CA 12. Date of appellate order 17-03-2016 5. On perusal and comparison of the title of the two appellate orders, it is evident that the appeal of the assessee against the order u/s 143(3) dated 26.03.2013 has already been adjudicated by the Ld. CIT(A) on 17/03/2016. This fact of appeal already decided has been noted by the ld CIT(A) in impugned order as under :
“II. FACTS OF THE CASE On 13.01.2023 the case was posted for hearing. The taxpayer replied that'....... WIlhrespect to notice ITBA/NFAC/F/APL 1/2022-23/1048485192(1) issued u/s 250 dated 05.01.2023 for the AY 2010-11, we have to inform that order against the said appeal for AY2010-11 has already been passed by the honourable CIT Appeal - 13, Mumbai on dated17.03.2016 and the appeal has been allowed in the matter. There is no other appeal pending for AY 2010-11. Copy of the order passed by CIT Appeal-13 is enclosed herewith. Please write to us if any other information is required on the matter.' The issue before us is an addition of Rs. 84,00,000 on account of accrued interest on debentures. The assessee made an investment in 2% debentures of 42 crores during FY2003-04 and every year interest accrues. In the CIT(A) order enclosed by the taxpayer the reason cited by the CIT(A) and the Tribunal is that the company which had issued these debentures namely M/s. Marketing and Brand Solutions (India) Pt Ltd was not doing well, it had stopped making any payments by way of interest to the appellant from the previous year relevant to AY 2007-08. Due to the fact that there was significant chance of non-recovery of this amount the appellant had not returned this interest income on an accrual basis from AY 2007-08. For the AY 2010-11 the assessee was before this office on the same issue and it was informed through a reply
P a g e | 5 Neon Solutions Pvt. Ltd. 13.01.2023 that the appeal was already decided by theCIT(A)-13, Mumbai. Accordingly the facts of the present appeal filed before this office were verified and the details are as given below: 1. Date of order appealed against: 26.03.2013 2. Date of initiation of appeal: 30.04.2013 3. Appeal Number: CIT (A), Mumbai-13/10183/2013-14 The facts are identical to the appeal already decided for the AY 2010-11. The AR pointed out that the addition made in AY 2007-08 and 2009-10 have been deleted by the Honble Mumbai Tribunal. As far as AY 2008-09 is concerned the departmental appeal is pending before the Honble Tribunal. Following the decision for the AYs 2007-08 and 2009-10 the CIT(A)-13, Mumbai held that "As the principles laid down in recognizing the income equally applied to the facts of the assessee's present case, we are of the view that the authorities below are not justified in bringing the impugned notional interest to tax. Accordingly, we delete the impugned additions. Thus, ground no. 1 is allowed." It is pointed out that this AY is a different AY and whether the same set of facts is applicable to this year for deleting the addition of 84 Lakhs in the earlier years has not been verified. This may be pointed at the time of hearing before the hon ITAT. III. The other ground on charging of interest u/s 234B being consequential in nature depends on the main issue decided. IV. In the result, the appeal is dismissed.” 5.1 We find that the Ld. CIT(A) himself recorded the fact that appeal of the assessee for the current assessment year was adjudicated by the Ld. CIT(A) and despite he has adjudicated again and dismissed the appeal of the assessee. The order of the Ld.
P a g e | 6 Neon Solutions Pvt. Ltd. CIT(A) is without application of mind and beyond his jurisdiction. In the circumstances, this appellate order is held to be infructuous and accordingly, we dismiss the same.
In the result, the appeal of the assessee is allowed at above terms.