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Facts
The Revenue appealed against the Ld. CIT(A)'s order deleting the addition of interest income on Fixed Deposit Receipts (FDRs). The assessee, a West Bengal government undertaking, argued that the interest was either reduced from the work-in-progress or already offered to tax, making the addition a case of double taxation. This was the second round of litigation on this issue.
Held
The Tribunal upheld the Ld. CIT(A)'s order, dismissing the Revenue's appeals. It found that the assessee's system of accounting involved reducing interest on FDRs from 'work-in-progress', and this income was not shown on the revenue side of the Profit and Loss account, or had already been offered to tax. Therefore, the addition by the AO would lead to double taxation, and the CIT(A)'s decision was reasoned and correct.
Key Issues
Whether interest income on Fixed Deposit Receipts (FDRs), which has been either reduced from 'work-in-progress' or already offered to tax in the computation of income, can be subjected to an addition by the Assessing Officer, leading to double taxation.
Sections Cited
143, 254, 263
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Income Tax Appellate Tribunal, “C” BENCH, KOLKATA
Before: SHRI RAJESH KUMAR, AM & SHRI PRADIP KUMAR CHOUBEY, JM
These are appeals preferred by the Revenue against the orders of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] even dated 16.04.2024, for the AYs 2011-12 to 2014-15
At the outset, we note that there is a delay of 48 days in filing these appeals before ITAT, for which the Revenue has filed condonation petitions.
After perusing the condonation petition and hearing the rival parties, we find that the delay is for genuine, bonafide and reasonable cause
The common issue in both the appeals by the Revenue is against the deletion of addition made by the ld. CIT (A) as made by the ld. AO in respect of interest on FDR in the order passed u/s 143/254/143(3) of the Income-tax Act, 1961 (the Act)by the ld. Assessing Officer. As the facts are similar in all the appeals, we take for A.Y. 2011-12 as the lead case and adjudicate the same.
The facts in brief are that the respondent assessee is a government of West Bengal undertaking, fully owned by the State Government and is engaged in development of land and infrastructure and housing projects. The ld. AO in the assessment proceedings brough to tax the interest income on FDR during the year on the ground that the same has not been offered to tax. We note that this is second round of litigation before us. In the first round the tribunal vide dated 20.09.2019 restored the issue of interest on fixed deposits to the file of the ld. AO. The ld. AO made the addition again in the assessment framed u/s 143/254/143(3) dated 27.09.2021.
In the appellate proceedings, the ld. CIT (A) allowed the appeal of the assessee by observing and holding as under: -
“DECISION Grounds 1 to 3 are general in nature. Grounds 4 to 7 relate to Interest earned on Fixed Deposits to the extent of Rs.68,52,58,292. WBHIDCO had received deposits from prospective purchasers of developed land or flats while the work of construction was in progress. In the assessment order under consideration, the AO was of the opinion that this Interest quantum had not passed through the P and L account, and was hence liable to be brought to tax. Before me, the appellant has referred to the order of the jurisdictional ITAT in its own case for the AY 2017-18. It submits as: to 1619/KOL/2024 for A.Y. 2012-13 to 2014-15, is similar to one as decided by us in A.Y. 2011-12. Accordingly, our decision would, mutatis mutandis, apply to these appeals of assessee in to 1619/KOL/2024. Hence, the appeals of Revenue in to 1619/KOL/2024 are also dismissed.
In the result, the all the appeals of the Revenue are dismissed.
Order pronounced in the open court on 30.07.2025.