What did the Tribunal hold?

The Tribunal noted that a co-ordinate bench had previously upheld the CIT(Appeals)'s order on the same issue for a prior assessment year. Therefore, the Tribunal found no reason to interfere with the current order.

The Revenue appealed against the deletion of an addition of accrued interest on zero coupon bonds by the CIT(Appeals). The assessee had cross-objected supporting the CIT(Appeals)'s order. This issue was identical to a previous assessment year.

What were the issues?

Whether accrued interest on zero coupon bonds is taxable income or a capital receipt. The taxability of accrued interest on NABARD bonds was the central point.

DCIT vs The Tirupur Co-Op Urban Bank… | ITAT Chennai 2015

Income Tax Appellate Tribunal, “A” BENCH, CHENNAI

Before: SHRI B.R. BASKARAN & SHRI VIKAS AWASTHY

For Respondent: Shri P.N. Rajan, Advocate

Hearing: 05.02.2015Pronounced: 05.02.2015

Heard together (2 matters)

ITA No. 1538/Mds/2014

C.O. No. 83/Mds/2014

Read from the judgment's own cause title. This page is filed under one of them.

आदेश /O R D E R

PER B.R. BASKARAN, ACCOUNTANT MEMBER:

The appeal filed by the Revenue and the cross- objection filed by the assessee are directed against the order dated 03-03-2014 passed by Ld CIT(Appeals)-1, Coimbatore and they the decision of Ld CIT(Appeals) in deleting the addition of accrued interest of `13,80,000/- on zero coupon bonds. The assessee has filed the cross-objection supporting the order of the Ld. CIT(Appeals).

We heard the parties and perused the record. We notice that the Ld CIT(Appeals) has followed his own decision rendered in the assessee’s own case in AY 2009-10. We further notice that the revenue has challenged the order passed by Ld CIT(Appeals) in AY 2009-10 by filing appeal before the Tribunal and the Tribunal has confirmed the order of Ld CIT(Appeals). The parties placed before us the copy of order dated 25-07-2014 passed by the Co-ordinate bench in the assessee’s own case in relating to the assessment year 2009-10. For the sake of convenience, we furnish below the operative portion of the order of theTribunal:-

“6. We have heard both parties and gone through the case file. The Revenue’s sole argument is that once the assessee has itself recognized in its books a sum of `13,80,000/- as accrued interest from NABARD bonds, the same could not have been reduced from its profits. Replying this, the assessee relies on its cross objections to submit that the CIT(A) has rightly held that NABARD bonds give rise to only capital and not revenue receipts. We find from the booklet of NABARD bonds Scheme that these Bhavishya Nirman Bonds do not carry any interest. A perusal of clause 9 at page 35 of the paper book makes it apparent that these bonds give rise to gains on maturity which are to be treated as long term capital gains only. The sole issue before us is about the alleed accrual of interest on the said bonds. It is apparent that once there is no question of accrual of any interest on NABARD bonds, the assessee appears to have wrongly charged the impugned amount of `13,80,000/- in its books. It is not the Revenue’s case that the bonds scheme placed on record does not cover facts of this case. We are of the view that no interest on NABARD bonds in question has accrued to the assessee liable to be recognized as income. Thus, we uphold the CIT(A)’s order and reject the Revenue’s grounds.”

Since the Ld CIT(Appeals) has rendered the decision in accordance with the view taken by the Tribunal on identical issue, we do not find any reason to interfere with his order on this issue.

In the result, the appeal filed by the revenue is dismissed and the cross objection filed by the assessee is dismissed as infructuous.

DCIT, TIRUPPUR vs. THE TIRUPUR CO-OP URBAN BANK LTD., TIRUPPUR

What did the Tribunal hold?

What were the facts?

What were the issues?

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