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Facts
The assessee, engaged in real estate, declared income for AY 2018-19. During assessment, the AO noted an interest income of Rs.1.01 Crore from Tarla Shah, not offered in the return. The assessee explained this income was offered in AY 2019-20.
Held
The Tribunal held that since the interest income was offered and accepted in the subsequent assessment year (AY 2019-20) by the AO/CPC, making a similar addition in the current year (AY 2018-19) would amount to double taxation and is not justified.
Key Issues
Whether addition of interest income in AY 2018-19 is justified when the same income was offered and accepted in AY 2019-20, leading to potential double taxation.
Sections Cited
143(1), 254(1)
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PER PAWAN SINGH, JUDICIAL MEMBER;
This appeal by assessee is directed against the order of ld. CIT(A) / NFAC
dated 13.04.2025 for A.Y. 2018-19. The assessee has raised following grounds of appeal:
“1) On the facts and in the circumstances of the case and in law the learned Commissioner of Income Tax (Appeals) erred in confirming and retaining the addition of interest amounting to Rs.1,01,12,235/- from Tarla R. Shah in the total income merely on the basis of entry shown in 26AS that too belatedly on 15th June, 2019 which became known to your appellant only on 14th February, 2020.
2) On the facts and in the circumstances of the case and in law the learned Commissioner of Income Tax (Appeals) erred in confirming addition of interest income of Rs.1,01,12,235/- from Tarla Shah by ignoring that the said interest is offered for tax and included in total income for the A.Y. 2019-20 by your appellant.
3) On the facts and in the circumstances of the case and in law the learned Commissioner of Income Tax (Appeals) had also ignored the fact submitted by the appellant that inclusion of the interest in the income from Tarla R Shah again in the Total Income of the year under consideration i.e. A.Y. 2018-19 amounting to Rs.1,01,12,235/- would tantamount to double taxation and proceeded by confirming the said addition without giving specific directions to the learned A.O. to exclude the said income from assessment of Income for A.Y. 2019-20 though the same was submitted without prejudice and as an alternate argument.
4) On the facts and in the circumstances of the case and in law the learned Commissioner of Income Tax (Appeals) erred in confirming addition of interest income of Rs.1,01,12,235/- in A.Y. 2018-19 by ignoring our submission that the return for the A.Y. 2019-20 has also been processed as per intimation u/s 143(1) dated 16.06.2020 and accepted the said income in the A.Y. 2019-20 which included the said amount of Rs. 1,01,12,235/-.
Alternatively without prejudice it is prayed that justice be given by issuing appropriate directions to include the said amount in one year.
5) Your appellant craves leave to add to amend, modify and alter any of the grounds as may be advised.”
Rival submissions of the parties have been heard and record perused. The learned authorised representative (Ld.AR) of the assessee submits that assessee is engaged in the business of real estate, filed its return of income for A.Y. 2018-19 on 13/10/2018 declaring total income of Rs.2.89 crores. The case was selected for scrutiny. During assessment, the AO, on the basis of TDS details in Form 26AS noted that as per TDS details, there was interest income of Rs. 1.01 Crore, has not been shown in the return of income. Before AO, the assessee explained that such income has already been offered in the return of income for A.Y. 2019-20. The assessee further explained that they were discussing the commercial understanding with Tarla Shah for revenue sharing. However, such negotiation could not be worked out. Therefore, Tarla Shah credited interest to the account of assessee.
Since negotiation could not be materialised till finalisation of accounts for current assessment year; however, the assessee offered the said income in subsequent assessment year. The Ld.AR carried us through the details of interest income shown in Form 26AS of current assessment year, which is shown as page No.171 of paper book. The copy of ‘Notes’ forming part of financial statement of A.Y. 2019-20 showing the interest income of Rs.2.53 crores at page 214 of PB and computation of total income at page 190 of PB. The Ld. AR of assessee by showing all such documentary evidence about offering the interest income in subsequent year would submit that once the same income had been offered and accepted in subsequent assessment year, the addition in the assessment year under consideration is not justified which is otherwise double addition of the same income. The Ld.AR for the assessee prayed for deleting the entire addition.
On the other hand, the learned Senior Departmental representative (Ld. Sr DR) for the revenue supported the order of AO / CIT(A). The Ld.CIT-DR submits that interest income shown in the form 26AS for A.Y. 2018-19 should have been offered in the same assessment year.
In the short rejoinder submission, the Ld.AR of the assessee submits that all such facts were brought to the notice of the AO and that the return of income for subsequent assessment year by including same income was filed before completion of assessment for A.Y. 2018-19.
We have considered the rival submissions of both the parties and have gone through the orders of lower authorities. We find that the AO made addition of Rs.1.01 crores on account of addition of interest income on the basis of details in Form 26AS. We find that in response to show cause notice dated 13/04/2021, assessee filed its reply on 16/04/2021. In the reply, the assessee has taken similar stand as explained before us. The assessee also explained that similar income has been offered in subsequent assessment year. Assessment order of current assessment year was passed on 16/04/2021. On perusal of financial statement of A.Y. 2019-20, we find that assessee has offered such interest income in subsequent assessment year which had not accepted in the intimation dated 16/06/2022. We find that impugned amount of interest which has been offered in subsequent assessment year, was accepted by AO / CPC in its order dated 16/06/2020, i.e. much prior to passing the assessment order of current assessment year. Intimation/ order of CPC under section 143(1) for A.Y. 2019-20 is placed at pages 223 to 224 of paper book. Considering the peculiar facts that assessee has offered impugned interest income e in subsequent assessment year, which had been accepted by AO/CPC, therefore, we do not find any justification in making similar addition in the year under consideration. In the result, the grounds appeal raised by the assessee are allowed.
In the result, appeal of the assessee is allowed. 7. Order was pronounced in the open Court on 29/09/2025. Sd/- Sd/-
SMT. RENU JAUHRI PAWAN SINGH ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, Dated: 29/09/2025 Pavanan