Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2017 (7) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (7) TMI 1302 - AT - Income TaxDisallowance of interest in respect of security deposit - HELD THAT:- A decided in assessee's own case [2016 (9) TMI 1336 - ITAT DELHI] we do not agree with the finding of the CIT(A) to the extent of confirmation of the addition partly merely because reconciliation in these accounts with respect to the live connections are pending. The observation of the CIT(A) is also not correct that assessee submitted that this amount is under reconciliation and to that extent such credits are not fully explained. Before him assessee submitted that it is under reconciliation. Further when the character of deposit is determined, looking to the nature of operation geographically as well as large subscriber’s base, it is not correct to hold that pending reconciliation the deposit become income of the assessee. In view of this we set aside this issue back to the file of the Assessing Officer to give proper opportunity to the assessee to provide reconciliation of the same and then if the amounts are not at all identifiable with respect to the customers then to that extent addition may be restricted. - Decided in favour of assessee for statistical purposes. Disallowance u/s 14A - HELD THAT:- The factual finding of the ld. CIT(A) that the assessee has not borrowed any loans and therefore no interest has been paid on account of such borrowings could be controverted by the ld. DR. We find the interest expenditure incurred by the assessee company is on account of interest paid on security deposits received from the customers, interest on GPF and interest paid to the Municipal Authorities, Mumbai. We further find from the various details furnished by the assessee in the paper book that sufficient funds are available with the assessee which are much more than the investments made during the year. Therefore in view of the decision of Hon’ble Mumbai High Court in the case of CIT vs. HDFC Bank Ltd. [2014 (8) TMI 119 - BOMBAY HIGH COURT] order of Ld. CIT(A) in our opinion is fully justified. Since the Ld. CIT(A) has given justifiable reasons as to why provisions of Rule 8D and 14A are not applicable to the facts of the present case, and since the Ld.DR could not point out any infirmity in the order of the Ld. CIT(A), therefore, we do not find any infirmity in the order of the same. Disallowance of interest on customers deposit accounts - HELD THAT:- We find identical issue had come up before the Tribunal in assessee’s own case in A.Y. 2006-07 and the ground raised by the revenue was dismissed by The Tribunal as held subscriber’s deposit held to be payable by the assessee to the subscriber on termination of services to the extent of reconciled amount and therefore, it cannot be added to the income of the assessee specially in view of the assessee furnishing substantial details and reconciliation of the amount outstanding. Further the amount of interest related to that deposit is also deleted by the ld CIT(A) as the interest was payable with respect to subscriber deposit which is completely reconciled. Understatement of income due to changes in the accounting policy - CIT-A deleted the addition - HELD THAT:- We find the assessee company during the year under consideration has changed its accounting policy for valuation of inventory of stores and spare parts and has adopted a new policy for valuation of intangibles. With regard to valuation of inventory of stores and spares, we find the assessee has changed its accounting policy to value the inventory at cost or net realisable value, whichever is lower. With regard to valuation of intangibles, we find the assessee has introduced new accounting policy whereby it has been specified that the intangible assets will be capitalised when they are ready to use. The changes in accounting policy adopted by the assessee in our opinion are in line with the AS notified by ICAI, and this fact has also not been controverted by the A.O. It is an accepted fact that revenue cannot pick and choose and make additions or disallowances in part. In detailed reasoning given by the CIT(A) on this issue, we do not find any infirmity in his order on this issue. - Revenue appeal dismissed.
|