TMI Blog2018 (3) TMI 1572X X X X Extracts X X X X X X X X Extracts X X X X ..... on has been confirmed by the ld CIT(A) holding that decision of the coordinate bench binds him. Similar is the situation with us. If the assessee is agreed with the order of the ITAT Hyderabad Bench decision which has rendered certain findings, the assessee should have challenged the same before Hon'ble High Court. Apparently, it was not done. We have no authority to say anything on the correctness of that decision, it binds us judicially. Further, when on examination of the rules and the all other criteria related to the creation of special reserve fund and its control the coordinate bench has held that interest has accrued in the hands of the appellant. Before us except reiterating the same facts the ld AR has not produced any other evidence or any evidence of decision of the higher forum where the order of the coordinate bench is challenged by the assessee. In this circumstances we also respectfully following the decision of the coordinate bench based on which reopening has been initiated, we also confirm the addition Addition with respect to those societies whose confirmation of offering the interest income in the hands of those societies was finished by those societies - He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee involving common grounds for different years, therefore, these are heard and disposed off together by the common order. 2. First we take up ITA No. 3009/Del/2014 for AY 2005-06 preferred the DCIT, LTU Delhi against the order of the ld CIT(A)-LTU, New Delhi dated 26.02.2014 wherein reopening of the assessment was quashed. 3. The revenue has raised the following grounds of appeal in ITA No. 3009/Del/2014 for the Assessment Year 2005-06:- 1 On the facts and circumstances of the case and in law ld CIT(A) has erred in quashing the assessment order by holding it as null and void, merely on technical grounds while ignoring the merits of the case. 2. On the facts and circumstances of the case and in law ld CIT(A) has erred in deleting the addition of ₹ 12356771/- and ₹ 11299879/- being the amount of interest not offered to tax by assessee holding the order as null and void merely on technical grounds while ignoring the merit of the case. 3. On the facts and circumstances of the case and in law ld CIT(A) has erred in quashing the assessment order by holding it as null and void merely on technical ground of a minor inadvertent mistake by AO whil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the notes on accounts and showed that significant accounting policy has disclosed this issue in its completeness. 7. We have carefully considered the rival contentions and perused the orders of the lower authorities. On identical issue the reopening was made by the ld Assessing Officer from AY 1999-2000 to 2004-05. The reopening was challenged before the Hon'ble Delhi High Court by filing a writ petition for AY 2004-05 which was disposed off by the Hon'ble High Court in WPC No. 7943/2011 vide order dated 24.03.2013 quashing reassessment proceedings holding that initiation of the reopening of the assessment for AY 2004-05 did not have the backing of the law. The ld AR and DR both confirmed before us that issue is identical in the present appeal before us. The ld CIT(A) also has followed that order of the ld Hon'ble High Court while quashing the reassessment proceedings for this year. In view of these facts we do not find any infirmity in the order of the ld CIT(A) in quashing reassessment proceedings for AY 2005-06. In view of this the appeal filed by the revenue does not survive hence, dismissed. 8. In the result ITA No. 3009/Del/2014 filed by the revenue for AY 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest forgone by the appellant company, as the income of the appellant company. 12. The brief facts of the case as stated earlier that assessee is a company providing finance for rural electrification. For the impugned year the assessment u/s 143(3) was completed on 19.12.2008 at total income of ₹ 5245534725/-. Subsequently, as the facts stated in appeal for AY 2005-06 of the revenue the assessment was reopened. Thereafter, interest on the amount of advances given by the assessee to various societies, who maintained a special reserve fund was considered to be taxable in the hands of the assessee and addition of ₹ 21645060/- was made in the hands of the assessee. Consequently, order u/s 143(3) of the Act read with section 147 was passed on 07.12.2011. Assessee aggrieved with the order of the ld AO preferred appeal before the ld CIT(A). The ld CIT(A) confirmed the reopening holding that there was no sufficient disclosure in the notes to the accounts for the AO to unable him to hold that the interest accrued thereon was not an income of the appellant. It was further held that new information was received in the form of the order of the coordinate bench. On the mer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e due to non production of account. The appellant has produced the detail supporting though on sample basis. It was further stated that in subsequent years the appellant was able to produce documents from societies and in that year same has been accepted by the tax department that interest income of the fund has offered to tax by said society in its hands. He therefore, submitted that CIT(A) should have deleted the addition. 17. The ld Departmental Representative on the appeal of the assessee relied on the order of the lower authorities. 18. We have carefully considered the rival contentions and also perused the orders of the lower authorities. The appellant is a public sector enterprise engaged in the business of providing finance for promoting rural electrification. The appellant provides finance to various societies who are engaged in the business of power. The appellant has a policy whereby the interest of five years is forgone by the appellant subject to certain terms and conditions laid down by the appellant. Such terms and conditions are tabulated in specific reserve funds rules. According to one of such rules that the interest on such funds is required to be kept in f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also supplied that interest income is ₹ 49 lacs on account of interest on REC Bonds and ₹ 4170673/- being interest on commercial bank funds. In view of this it is apparent that information was specific and naturally not offered by the assessee in its return of income. Therefore, according to us no fault can be found in the reopening initiated by the ld Assessing Officer. The several decisions relied upon by the assessee are relating to information received from the Investigation Wing or from outside agencies. However, in the present case the information is in the form of a judicial order which even otherwise binds the Assessing Officer. In view of these facts all the decisions with respect to the reopening relied upon by the assessee does not come to the rescue of the assessee. 19. On the issue of change of opinion it is apparent that Assessing Officer iin original assessment proceedings has not applied his mind to the taxability of interest on fixed deposits with the societies. Even otherwise it is a judicial decision which has been rendered by ITAT Hyderabad Bench based on which the reopening is initiated. Any judicial decision by the courts and tribunal if it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich has challenged the order of the ld CIT(A), wherein the addition of ₹ 12574387/- made by the ld Assessing Officer has been deleted to the extent of ₹ 9373987/- holding that as these societies have already offered the interest income in their hands. The ld Assessing Officer made the addition with respect to the 8 societies amounting to ₹ 12574387/- on the identical facts. However, the ld CIT(A) after considering the fact that interest income except in case of Cheepurupaale, Ankapalle and Nowgong all other societies have duly accounted for the said interest income and confirmation certificate from those parties for treatment of interest income and copy of the FDR certificates were produced. Therefore, the ld CIT(A) has deleted the addition with respect to the societies. 24. The ld Departmental Representative supported the order of the ld AO and the ld AR supported the order of the ld CIT(A). 25. We have carefully considered the rival contentions and also perused the orders of the lower authorities. In the present case the ld CIT(A) has deleted the addition with respect to those societies whose confirmation of offering the interest income in the hands of tho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Assessing Officer considered the explanation of the assessee and recorded his satisfaction and after that he applied the provisions of rule 8D of the Income Tax Rules and computed the disallowance of ₹ 22499273/-. On appeal before the ld CIT(A) the addition was confirmed subject to certain correction as per application u/s 154 dated 30.10.2012 filed before the ld Assessing Officer. Therefore, the assessee is in appeal before us. 30. The ld AR submitted that the assessee has share application and free reserve as on 31.03.2009 on ₹ 1781 crores and therefore, the investment made by it in earning exempt income are much less then the above sum. He therefore, submitted that no disallowance on account of interest shall be made. 31. The ld Departmental Representative relied upon the order of the lower authorities. 32. We have carefully considered the rival contentions. Admittedly, the assessee has availability of fund of ₹ 2128 crores which does not carry any interest. The amount of investment made by the assessee is only ₹ 462 crores. Therefore, apparently assessee has more interest free funds then the amount of investment. The ld CIT(A) though has consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating that notwithstanding offering of such income by various societies in their hands, the same is legally taxable in the hands of the assessee i.e. M/s REC Ltd only. 4. On the facts and circumstances of the case and in law Ld. CIT(A) has erred in deleting the addition of ₹ 1,32,76,964/- out of total addition of ₹ 1,33,26,617/- ignoring his own findings in the same appellate order, holding income of the same nature as taxable in the hands of the assessee i.e. M/s REC Ltd. 37. The first ground of appeal is with respect to disallowance for provision of post retirement, medical expenses of the staff of ₹ 40933800/- holding that the liability of the assessee is contingent in nature. On appeal before the ld CIT(A) the addition was deleted holding that the claim for provision for post retirement medical benefit is an ascertain liability. 38. The ld DR relied on the order of the ld AO, whereas the ld AR relied on the order of the ld CIT(A). 39. We have carefully considered the rival contentions. The post retirement medical benefit provision has been created by the assessee in accordance with accounting standard 15 relating to employees benefit. The abo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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