Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (6) TMI 411 - AT - Income TaxIssues Involved: 1. Examination of taxability of accrued interest income. 2. Validity of the order passed u/s 263 of the Income-tax Act, 1961. Summary: 1. Examination of Taxability of Accrued Interest Income: The Ld. Pr.CIT observed that the Assessing Officer (AO) erred in not examining the taxability of accrued interest income of Rs. 2.79 crores being investment income of the assessee before allowing its application in the accounts. The Ld. Pr.CIT noted that the SGF remained unutilized, and the investment income should have been routed through the profit and loss account. The failure of the AO to examine this aspect rendered the assessment erroneous and prejudicial to the interest of the revenue within the meaning of Section 263 of the Act. 2. Validity of the Order Passed u/s 263 of the Income-tax Act, 1961: The assessee contended that the issue of taxability of contribution and income thereon was already examined by the AO during the proceedings u/s 143(3) of the Act. The AO had considered the detailed submissions and explanations provided by the assessee, including the SEBI circular and the provisions of Section 10(23EE) of the Act, which exempt the specified income of the Core Settlement Guarantee Fund (SGF). The assessee argued that the interest income on contributions made to the Core SGF belongs to the SGF and not to the assessee, and hence, is not liable for tax in the hands of the assessee. The Tribunal observed that the AO had scrutinized the issue of contributions to the Core SGF and the related interest income during the assessment proceedings. The income accrued to the SGF was exempt u/s 10(23EE) of the Act in the hands of the Indian Clearing Corporation Limited (ICCL), and the assessee had no right over this income. The Tribunal noted that the Ld. Pr.CIT did not demonstrate how the income earned by ICCL was chargeable to tax in the hands of the assessee. The Tribunal concluded that the assessment order was not prejudicial to the interest of the revenue as the income was exempt in the hands of ICCL, and the contribution made by the assessee was allowable as an expense. The Tribunal held that both conditions for invoking revision proceedings u/s 263'erroneous and prejudicial to the interest of the revenue'were not satisfied. Therefore, the order passed u/s 263 was set aside, and the appeal filed by the assessee was allowed. Conclusion: The appeal filed by the assessee was allowed, and the order passed u/s 263 was set aside as the conditions of being erroneous and prejudicial to the interest of the revenue were not met. The interest income on contributions to the Core SGF was exempt in the hands of ICCL, and the contribution made by the assessee was allowable as an expense.
|