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Income Tax Appellate Tribunal, “B” BENCH, KOLKATA
Before: SHRI SANJAY GARG, HON’BLE & SHRI RAJESH KUMAR, HON’BLE
PER SANJAY GARG, JUDICIAL MEMBER:
The present appeal is directed at the instance of the assessee against the order of the Learned Commissioner of Income Tax (Appeals) - 8, Kolkata, (hereinafter the “ld. CIT(A)”) dt. 21/09/2020, passed u/s 250 of the Income Tax Act, 1961 (“the Act’), for Assessment Year 2012-13. 2. The assessee has taken the following grounds of appeal:- “1.) (a) That on the facts and in the circumstances of the case, Ld. CIT(A) is erred in confirming the addition of AO who treated interest income of Rs. 92,28,545/- which never accrued to the appellant. (b) That on the facts and in the circumstances of the case, the order of Ld. CIT(A) is erroneous as because he ignored the facts that for the recovery of principal loan legal suit is pending in court and applying the theory of real income, no income ever accrued to the appellant. 2.) That on the facts and in the circumstances of the case, Ld. CIT(A) is erred in confirming the addition of interest income of Rs. 5,74,118/- without considering the merit of the income. 3.) That the appellant craves leave to add, alter, adduce or amend any ground or grounds on or before the date of hearing of the appeal.” Assessment Year: 2012-13 Sri Shubh Gautam 2
The brief facts of the case are that the assessee had given loans amounting to Rs.2,50,00,000/- on 24/02/2010 and Rs.2,00,00,000/- on 31/03/2010 respectively, to M/s. Anjani Technoplast Ltd.. Towards repayment of the aforesaid loans, M/s. Anjani Technoplast Ltd., had given two cheques i.e., dt. 24/04/2010 for Rs.2,50,00,000/- & dt. 14/04/2010 for Rs.2,00,00,000/-. The said cheques were presented by the assessee for encashment but the same got dishonored for want of insufficient funds. Thereafter, the assessee filed a complaint dt. 18/12/2010 u/s 138 of the Negotiable Instruments Act, 1881, against M/s. Anjani Technoplast Ltd. and its directors (copy of the complaint is placed at page no. 30 of the paper book). Since the assessee did not receive either any principal amount or any interest income from M/s. Anjani Technoplast Ltd., therefore, the assessee did not book any interest income on the said loan amount. However, during the assessment year under consideration M/s. Anjani Technoplast Ltd. deposited TDS amount of Rs.9,22,855/- on the interest amount of Rs.92,28,545/- relating to the aforesaid loan amount aggregating to Rs.4,50,00,000/- on 31/03/2012. However, the assessee by that date had already filed its return of income i.e., on 29/09/2019 and by that time, there was no trace of TDS of the aforesaid amount. Therefore, the assessee did not book this TDS amount in his return of income.
Now, the case of the Assessing Officer is that as per Form 26AS, M/s. Anjani Technoplast Ltd., has deducted TDS amounting to Rs.9,22,855/- on the interest income of Rs.92,28,545/- which the assessee has not shown in his return of income. The Assessing Officer, therefore, made the addition of Rs.92,28,545/- into the income of the assessee being interest income on the aforesaid loan aggregating to Rs.4,50,00,000/-.
Whereas the case of the assessee is that M/s. Anjani Technoplast Ltd. has failed to repay even the principal amount and litigation is pending and there was no likelihood of receiving any payment of principal or interest amount from M/s. Anjani Technoplast Ltd., therefore, there was no question of booking of interest income of Rs.92,28,545/-. That, merely because M/s. Anjani Technoplast Ltd., Assessment Year: 2012-13 Sri Shubh Gautam 3 deposited TDS amounting to Rs.9,22,855/-, does not mean that the interest income of Rs.92,28,545/- has accrued to the assessee. It has been pleaded that in view of the aforesaid facts, only the real income of the assessee can be taxed and since the litigation is going on with M/s. Anjani Technoplast Ltd., therefore, the addition of Rs.92,28,545/- into the income of the assessee on accrual basis is not justified. It has been further pleaded that the company M/s. Sriram Compounds Pvt. Ltd., in which the assessee is a Director was having some credit balance of M/s. Anjani Technoplast Ltd., in respect of purchases made, in its books of accounts. It was mutually agreed that the assessee’s credits for M/s. Anjani Technoplast Ltd. will be adjusted against the credit balances of M/s. Anjani Technoplast Ltd. in the books of M/s. Sriram Compounds Pvt. Ltd. The assessee in this respect has placed on record the following chart:-
Amount (in Rs.) Sl. No. Date of Particulars Amount (in Rs.) events 1 24-02-2010 Loan given by the appellant to 2,50,00,000 Anjani Technoplast 2 31-03-2010 Loan given by the appellant to 2,00,00,000 4,50,00,000 Anjani Technoplast 3 29-04-2010 Less: receipt of the loan money (60,257) from Anjani Technoplast vide cheques no 819834 4 29-04-2010 Less: receipt of the loan money (4,63,716) from Anjani Technoplast vide cheques no 819833 5 30-04-2010 Less: receipt of loan money (3,00,000) (8,23793) from Anjani Technoplast vide cheques no 819838 6 31-03-2011 Credit balance of Anjani 1,19,67,870 Technoplast transferred to the appellant by Sriram Compounds 7 31-03-2012 Credit balance of Anjani 3,22,08,157 4,41,76,027 Technoplast transferred to the appellant by Sriram Compounds 8 20-11-2010 Adjustment of Purchase of raw (3,45,27,547) To materials from Anjani 31-03-2012 Technoplast by Sriram Compounds Pvt. Ltd. 9 Balance amount due from 96,48,480 Anjani Technoplast by the appellant Assessment Year: 2012-13 Sri Shubh Gautam 4
Placing reliance on the aforesaid chart, it has been pleaded that even otherwise, only the amount which was outstanding against M/s. Anjani Technoplast Ltd., was Rs.96,48,480/-. In a nutshell, the pleading of the assessee is that only amount which the assessee has received on account of interest from M/s. Anjani Technoplast Ltd. during the assessment year under consideration is the amount deposited as TDS of Rs.9,22,855/-. That, neither any other amount has been received by the assessee nor any other income has accrued for which any addition could have been made by the Assessing Officer.
Both the lower authorities did not agree with the aforesaid contention of the assessee and held that since M/s. Anjani Technoplast Ltd., has deducted TDS on the interest income of Rs.92,28,545/-, therefore, the amount of interest income has accrued to the assessee and, therefore, the assessee is liable to pay income tax on the same.
We have heard rival contentions and gone through the record. The first and foremost fact to be noted in this case is that there is no finding that any amount in cash or cheques on account of interest from M/s. Anjani Technoplast Ltd., has been received by the assessee except the amount of Rs.9,22,855/- deposited as TDS by M/s. Anjani Technoplast Ltd.. Even the said TDS was not traceable as on the date of filing of the return of income by the assessee on 29/02/2012. Now, the question arises whether because of the deposit of the aforesaid amount of Rs.9,22,855/- as TDS by M/s. Anjani Technoplast Ltd., can the assessee be taxed on the interest income of Rs.92,28,545/- when the case of the assessee is that it has not received any amount during the year under consideration either on account of principal or on account of interest income from M/s. Anjani Technoplast Ltd. and even the litigation for the recovery of loan was also going on during the year.
In our view, it will not be justified in this case to charge income tax from the assessee on the interest income of Rs.92,28,545/- when neither such amount has been paid by M/s. Anjani Technoplast Ltd. to the assessee nor there is any Assessment Year: 2012-13 Sri Shubh Gautam 5 likelihood of the payment of the same to the assessee and even the litigation is going on between the parties. Merely because, M/s. Anjani Technoplast Ltd. has deposited TDS amount of Rs.9,22,855/-, that itself will not fasten liability on the assessee to pay tax on the total interest income of Rs.92,28,545/-, especially under the circumstances, when the other party has failed to repay the loan amount and interest thereupon and the litigation was going on. It has been held by the Higher Courts that only the real income should be taxed and not the hypothetical income as that will place the assessee in a disadvantageous position as on the one hand, the assessee is struggling to recover its principal amount without any hope of receiving interest income thereupon and then to fasten liability on the assessee on accrual basis of the interest income for which there did not seem any probability of recovery of the same. Under these circumstances, in our view, the addition made by the lower authorities in this case of the amount of Rs.92,28,545/- is not justified. The only addition which can be made by the lower authorities is of the actual income received by the assessee by way of TDS in his account of Rs.9,22,855/-. The Assessing Officer is directed to deduct admissible tax upon the aforesaid income of Rs.9,22,855/- and refund the remaining amount out of the said amount of Rs.9,22,855/- to the assessee as per the provisions of the I.T. Act. With the above observations, the appeal of the assessee is treated as partly allowed.
In the result, appeal of the assessee is partly allowed. Order pronounced in the Court on 1st September, 2022 at Kolkata. (RAJESH KUMAR) JUDICIAL MEMBER Kolkata, Dated 01/09/2022 *SC SrPs Assessment Year: 2012-13 Sri Shubh Gautam 6
आदेश क" "ितिलिप अ"ेिषत/Copy of the Order forwarded to : 1. अपीलाथ" / The Appellant
""यथ" / The Respondent 3. संबंिधत आयकर आयु" / Concerned Pr. CIT 4. आयकर आयु" अपील / The CIT(A)- ( ) 5. िवभागीय "ितिनिध अिधकरण अपीलीय आयकर कोलकाता/DR,ITAT, Kolkata, , , 6. गाड" फाईल /Guard file.
आदेशानुसार/ BY ORDER,