2011 (6) TMI 728 - AT - Income Tax

Summary

Issues involved: Appeal against order of ld. CIT (Appeals) for assessment year 2008-09 regarding addition made on account of 'Suspense Individual and Society' and interest income.

Addition on account of 'Suspense Individual and Society': The assessee, a Co-operative Society, had an amount of Rs. 1,31,00,880 in the account of 'Suspense Individual and Society'. The assessing officer added this amount to the income of the assessee, which was challenged before the ld. CIT (Appeals). The assessee explained that the amount was deposited by individuals and societies to open new accounts, pending completion of formalities. The ld. CIT (Appeals) found that the amount belonged to the depositors and could not be treated as income of the assessee. The Tribunal upheld this decision, stating that unless the amount became income of the assessee, no addition could be made. The appeal by the Revenue was dismissed.

Addition on account of Interest income: An interest of Rs. 4,58,530 was calculated on the above amount and added to the income of the assessee. The ld. CIT (Appeals) deleted this addition as well, stating that since the funds were available to the assessee for free and were advanced for generating proceeds, notional interest did not apply. The Tribunal agreed with this reasoning and dismissed the Revenue's appeal, finding no fault in the ld. CIT (Appeals) decision.