MINERAL ORIENTAL LTD,KOLKATA vs. DCIT, CIR-5(1), KOLKATA, KOLKATA

ITA No.686 /Kol/2016 Mineral Oriental Ltd A.Y.2011-12 IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH ‘C’, KOLKATA (Before Shri N.V.Vasudevan, J.M. &Dr.A.L.Saini, A.M.)

ITA No. 686/Kol/2016 : Asstt. Year : 2011-12

Mineral Oriental Limited Vs D.C. of Income Tax, Circle 5(1) 2nd Floor Birla Building, 9/1 R N P 7 Chowringhee Square, Kol- Mukherjee Road, Kolkata- 69 700001

PAN:AABCM7490C (APPELLANT) (RESPONDENT)

Appellant by: Shri K.M.Roy, FCA Respondent by:ShriA.K. Panda, Addl. CIT

Date of Hearing : 22.09.2016 Date of Pronouncement :- 19/10/2016

ORDER Per Dr. A.L.Saini, A.M.:

The captioned appeal filed by the Assessee pertaining to assessment year 2011-12, is directed against the order passed by the Ld. Commissioner of Income- Tax (A) -2, Kolkata,in appeal No.757/CIT(A)-2/Cir-5/14-15 dated 23/12/2015, which in turn arises out of an order passed by the Assessing Officer under section 143(3) of the Income Tax Act, 1961 (in short, ‘the Act’), dated 14.11.2013.

ITA No.686 /Kol/2016 Mineral Oriental Ltd A.Y.2011-12 34,37,304/-. The assessee`s case was selected for scrutiny U/s 143(3) of the Act and the Assessing officer had completed the assessment U/s 143(3) by making following additions: (a) In 26AS details, a payment of Rs.27,840/- has been found to be credited to the assessee company on which Rs.2,784/- has been deducted as tax. The assessee company explained that the amount has been paid by AVVNL as interest on deposits with electricity department. The deposit with electricity department pertains to the land and building, which has been transferred to M/s Nanak Marbles Pvt ltd, but the name of the consumer was not changed. The AO observed that the payment has been received by the assessee company but failed to prove the same, hence interest is treated as income in the hand of the assessee company and added to the total income of the assessee. (b)In the 26AS details, a payment of Rs. 4,57,769/- has been found to be credited to the assessee company on which Rs. 45,777/- has been deducted as Tax, but the assessee company has accounted for Rs. 1,99,705/- in its books as income with the claim of full TDS. The assessee explained that the interest received from M/s. Goldoleen Marbles & Granites was calculated for wrong period in the preceding year for which rectification has been made in the current F.Y. The assessee has credited net interest in its books and claimed that the balance of Rs. 2,58,064/- has already been taxed in its hands. The explanation offered by the assessee company is not found to be satisfactory regarding the balance interest not credited in the Profit & Loss Account. As such, the balance of interest income amounting to Rs. 2,58,064/- is treated as undisclosed income in the hand of the assessee and added to the total income.

ITA No.686 /Kol/2016 Mineral Oriental Ltd A.Y.2011-12 (c)In the 26AS details, a payment of Rs. 8,889/- has been found to be credited to the assessee company on which Rs. 889/- has been deducted as Tax, but the same amount has not been accounted in the books of the assessee company towards income. The assessee company accepted that the interest received from Assistant Engineer, Kherwara has not been credited in the books as the interest was not actually received by the assessee but the same was adjusted from a liability of the assessee. As per Mercantile system of accounting, the interest income is taxable in the hands of the assessee and hence treated as income and added to the total income of the assessee.

“2. Ground No. 1 of the appeal relates to addition of Rs.27,840/- due to TDS mismatch. The AO found from 26AS statement that the assessee company had received interest of Rs.27,840/- from AVVNL for which tax of Rs.2,784/- was deducted at source, but said amount was not included.in the total income. Ld. AR in his written submission has stated as follows: "An amount of Rs. 27,840/- is reflecting in 26AS as interest received from Ajmer VidyutVirtan Nigam Ltd. The deposit pertains to the land and building which has been transferred by the appellant to Nanak Marbles Pvt. Ltd. But the consumer's name was not rectified in the records of the electricity Department and TDS was deducted with the PAN of the assessee, hence the interest shall not be treated as income in the hand of appellant. The land and building has been transferred as on 13.08~2010 and the date of credit of interest as per 26AS was·01.09.2010 which was after the date of transfer and accordingly the interest income belongs ofNanak Marbles Pvt. Ltd. i.e. the buyer. The copy of sale deed has been enclosed herewith for the transfer of Land and building to Nanak Marbles Pvt. Ltd." . 2.1. The reason given by Ld. AR for non inclusion of interest income is not convincing. Had the interest received from' AVVNL belonged to Nanak. Marbles Pvt. Ltd. with the transfer of building, the assessee should not have claimed credit of TDS made on such interest. Since the assessee claimed

ITA No.686 /Kol/2016 Mineral Oriental Ltd A.Y.2011-12 credit of TDS ofRs.2,784/-, corresponding income ought to have been included in its income. The addition of Rs.27,840/- is therefore, sustained.

"In the assessment year 2010-11 the M/s. Goldoleen Marbles and Granite has credited a sum of Rs. 5,86,506/- in our account and TDS ofRs. 58,651/- was deducted which was duly recognised by the assessee in that year. M/s. Goldoleen Marbles and Granite had rectified the above interest credited in out account by a sum of Rs. 2,58,064/- by debiting the assessee's account for erroneous calculation of interest which was rectified by the assessee in theassessment year 2011-12 due to late information by the M/s. Goldoleen Marbles and Granite. It is to be noted that the above error in recognizing the income the income in the assessment year have no tax effect and the income which was offer for tax in the assessment year 2010-2011 cannot be tax twice. In support of the above facts ledger confirmation of party and interest income party wise as recognised by the assessee in the assessment year 2010-2011 and 2011-2012 along with copy of Form No. 26AS is enclosed here with for your kind perusal and you are earnestly requested to consider the undisputed facts. 3.1. I have duly considered the submission of the AR but not inclined to accept his version. He has precisely stated that since M/s. Goldoleen Marbles and Granite adjusted the excess interest of Rs.2,58,064/- paid in the last year with the interest payable for the current year, the assessee company accounted for less interest in the current year to that extent. The argument put forward by Ld. AR has no legal sanctity as the income of a particular year is to be assessed in that year itself. For the reduction of interest payments by M/s. Goldoleen Marbles and Granite for the previous assessment year, the remedial action lied in A.Y. 2010-11. For this year, the assessee received interest income of Rs.4,57,769/- against TDS of Rs.45, 777/- and same should have been accounted for. In view of such, addition ofRs.2,58,064/- is confirmed.

ITA No.686 /Kol/2016 Mineral Oriental Ltd A.Y.2011-12 produce any evidence in this regard. The addition of Rs.8,889/- is therefore, confirmed.” 4. Not being satisfied with the order of the ld. CIT(A), the assessee is in further appeal before us and has taken the following grounds :-

“i) That the CIT (A)-2 erred in law as well as on the facts in sustaining the addition of Rs.27,840/- without appreciating the fact that there was no accrual of Income. ii) That the CIT (A)- 2 was not justified in upholding the addition of Rs.2.58,064/- as concealed income when it was clearly explained that such interest was already taxed in the earlier year. iii) That the addition of Rs 8889/- is not tenable because such income has been already accounted by way of deduction of Electricity expenditure. iv) That appellant reserves the right to add to the above grounds of appeal and/or to amend, delete any of them on or before the date of hearing of appeal.”

Ground No.1 – Additon of Rs.27,840/-

ITA No.686 /Kol/2016 Mineral Oriental Ltd A.Y.2011-12 book for interest. However since the TDS has been claimed in the return for Rs.2,784/, only the same may be taxed u/s 199 for sake of natural justice. 6. On the other hand, the ld. DR for the revenue has primarily reiterated the stand taken by the ld. AO and the ld. CIT(A), which we havealready noted in our earlier para, and is not being repeated for the sake of brevity.

Next ground relates to the addition of Rs.2,58,064/- 9. The ld. AR for the assessee has submitted that the difference in income of Rs.2,58,064/- was already offered for taxation in earlier year. The same income cannot be taxed twice. The AO has simply brushed aside the explanations without any cogent reason. Just because TDS was made in single year does not imply that entire income become taxable in assessment year 2011-12. There cannot be any double taxation of same income because such interest was already booked in A.Y 2010-11.

ITA No.686 /Kol/2016 Mineral Oriental Ltd A.Y.2011-12 10. On the other hand, the ld. DR for the revenue has primarily reiterated the stand taken by the ld. AO and the ld. CIT(A), which we havealready noted in our earlier para, and is not being repeated for the sake of brevity.

The next ground relates to the addition of Rs.8,889/- on account of difference in interest : 13. The ld. AR for the assessee has submitted that the difference in interest of Rs.8,889/- has already been accounted by way of adjustment in corresponding expense payable to same person. Hence, even by the wildest stretch of imagination such income cannot again be brought under the purview of tax because such income has already been accounted for by way of set off from expenditure. Such adjustment has been made suo motto by the service provider in the bill and the amount as per bill was paid after deduction of net amount of Rs.8000/-Accordingly a sum of Rs.889/- may be taxed & credit of TDS may also be allowed.

ITA No.686 /Kol/2016 Mineral Oriental Ltd A.Y.2011-12 15. Having heard the rival submissions, perused the materials available on record, we are of the view that there is merit in the submissions of the ld. AR for the assessee, as the propositions canvassed by the ld. AR for the assessee are supported by the facts cited above. As he has explained that the said income cannot again be brought under the purview of the tax because such income has already been accounted for by way of set off from expenditure. Such adjustment has been made suo motto by the service provider in the bill and the amount as per the bill was paid after deduction of the net amount of Rs.8000/-. However a sum of Rs.889/- may be taxed and credit of TDS may also be allowed. Therefore, we direct the AO to examine the assessee’s claim afresh after verifying the relevant documents and allow him necessary relief.

Order Pronounced in the Open Court on 19.10.2016

Sd/- Sd/- (N.V.Vasudevan) (Dr. A.L.Saini) JudicialMember Accountant Member Dated: 19.102016

Copy of the order forwarded to:

ITA No.686 /Kol/2016 Mineral Oriental Ltd A.Y.2011-12 True Copy, By order,

Asst. Registrar, ITAT, Kolkata Benches