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Income Tax Appellate Tribunal, ‘A’ BENCH: CHENNAI
Before: SHRI V. DURGA RAO & SHRI G. MANJUNATHA
PER V. DURGA RAO, JUDICIAL MEMBER:
This appeal filed by the Assessee is against the order of the learned Commissioner of Income Tax (Appeals)-15, Chennai in dated 28.12.2018, relevant to the Assessment Year 2012 – 2013.
The grounds of appeal raised by the Assessee are as follows: 1) The order of the Commissioner of Income Tax (Appeals) 15, Chennai dated 29.12.2018 in I.T.A. No.131/2015-16/CIT(A)-15
2 -: for the above mentioned Assessment Year is contract to law, facts and in the circumstances of the case. 2) The CIT(Appeals) erred in sustaining the addition of Rs.1,62,043/- under the head “income from other sources” based on the findings in the assessment order in para IV(a) of the assessment order in the computation of taxable total income without assigning proper reasons and justification.
3) The CIT(Appeals) erred in sustaining the addition of Rs.4,58,400/- representing the interest received in view of the court litigation pertaining to the property under head “income from other sources” without assigning proper reasons and justification.
4) The CIT(Appeals) failed to appreciate that the additional sum received by the Appellant under the compromise wrongly treated as interest income would partake the character of sale consideration and ought to have been considered under the head “capital gains” instead of “income from other sources” while vitiating the cryptic findings in para 5.3.2 of the impugned order.
5) The CIT(Appeals) failed to appreciate that in the absence of a relationship of lender-borrower /creditor-debtor the question of interest would not arise on the consideration of the judicial trend pointed out in relation thereto.
6) The CIT(Appeals) failed to appreciate that there was no proper opportunity given before passing the impugned order and ought to have appreciated that any order passed in violation of the principles of natural justice should be reckoned as nullity in law.
7) The Appellant craves leave to file additional grounds / arguments at the time of hearing.
Ground No.1 is general in nature, thereby adjudication is not required, and the same is dismissed.
3 -: 4. Ground No.2 raised by the Assessee relates to Rs.1,62,043/-. In the Assessment Order, the Assessing Officer had noted that the total amount of interest received from Standard Chartered Bank in Account No.42810402528 for the period from 01.04.2011 to 31.03.2012 is Rs.8,48,073/-. An amount of Rs.3,00,000/- was admitted in the return of income filed by Smt. Dipti Sharma, wife of the Assessee, Shri Samir Kumar Sharma as the account is in joint names. The Assessee admitted only Rs.3,86,030/- as interest income in his return of income under the head „income from other sources‟ instead of Rs.5,48,073/- (i.e.Rs.8,48,073/- less Rs.3,00,000/-). Hence, the difference of Rs.1,62,043/- (i.e. Rs.5,48,073/- less Rs.3,86,030/-) is added to the income of the Assessee by treating it as income from other sources. The same is confirmed by the learned Commissioner of Income Tax (Appeals).
We have heard both the parties, perused the materials available on record and gone through the orders of authorities below. We find that the total interest income that was received by the Assessee in a joint Bank Account No.42810402528 was Rs.8,48,073/. His wife had admitted an amount of Rs.3,00,000/-. Therefore, the Assessing Officer had treated the remaining balance, i.e. Rs.1,62,043/- as interest income of the Assessee and the same is treated as income from other sources. We
4 -: find no reason to interfere with the order of the learned Commissioner of Income Tax (Appeals) and thus the ground of appeal raised by the Assessee is dismissed.
6. As far as Ground Nos.3 to 7 are concerned, the issue relates to treatment of interest amounting to Rs.4,58,400/- received by the Assessee as income from other sources or it relates to the sale consideration? In the Assessment Order, the Assessing Officer has noted as under:
b) “It is also seen from the Bank Account that an amount of Rs.1,52,200/- Rs.1,54,000/- and Rs.1,52,200/- totaling to Rs.4,58,400/- has been received from 29.06.2011 vide cheque nos.278447, 278448 and 278445 along with the compromise amount of Rs.2.5 crores. The amount received of Rs.4,58,400/- is the interest amount received on 2.5 crores as per the Hon‟ble High Court judgement as per:- “Additional Joint Memo of compromise entered into between the plaintiffs and 3rd defendant:
1. 1. The parties viz. The plaintiffs and the 3rd Defendant, jointly agrees that the time for making payment mentioned in the Memorandum of Compromise dated 24.02.2011 which expires on 27th April, 2011 may be extended further up to 30th June, 2011.
2. The 3rd Defendant agrees to pay interest on 2,50,00,000/- (Rupees Two Crores and Fifty Lakhs only) at the rate of 11% per annum from 27th April 2011 till date of payment”. The payment of Rs.2.5 crores as per Memo of compromise was made on 29.06.2011 only. Hence, it is evidenced that the amount received of Rs.4,58,400/- is the interest for the amount of Rs.2.5 crores at the rate of 11% per annum for the period of two months from 27.04.2011 to 29.06.2011. The same is added as income from other sources.”
On appeal, the learned Commissioner of Income Tax (Appeals) confirmed the order of the Assessing Officer by observing that the 5 -: interest received is part and parcel of the compensation and hence should be assessed under the head „income from other sources‟.
On appeal before us, the learned Counsel for the Assessee had submitted that the interest amount received by the Assessee is a part and parcel of the sale consideration and hence it cannot be treated as an income from other sources.
On the other hand, the learned Departmental Representative had submitted that the interest income is to be treated as income from other sources and not as a part and parcel of the sale consideration.
We have heard both the sides, perused the materials available on record and gone through the orders of the authorities below.
The issue involved in this appeal relates to the interest income received by the Assessee amounting to Rs.4,58,400/-. According to the Assessing Officer, the interest received by the Assessee is income from other sources and accordingly he added the same to the total income of the Assessee. On appeal, the learned Commissioner of Income Tax (Appeals) confirmed the order of the Assessing Officer.
We find that the Assessee has received a payment of Rs.2.5 crores as per the „Memo of Compromise‟ dated 29th June, 2011. Further, the 6 -: Assessee has received an amount of Rs.4,58,400/- as interest for the amount of Rs.2.5 crores at the rate of 11% per annum for the period of two months, i.e. from 27.04.2011 to 29.06.2011. Therefore, the interest amount received by the Assessee cannot be treated as apparent sale consideration. In view of the above, we find no infirmity in the order passed by the learned Commissioner of Income Tax (Appeals). Thus, these grounds of appeal raised by the Assessee are dismissed.
In the result, the appeal filed by the Assessee in is dismissed. Order pronounced on 8th October, 2021 in Chennai.