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2018 (3) TMI 1339 - AT - Income TaxAddition of income account of interest on income tax refund - Additions on account of interest no more payable on commencing capital - cessation of liability - reversal of interest on the direction of C&AG - Held that:- there is no denying the fact that whenever the department charged these interest u/s 234A, 234B, 234C and 234D, same were getting reflected in the P&L A/c of the assessee but being added back in the computation of income. Thus the assessee never claimed the deduction of the same under the Income Tax Act. Since the amount received back was the amount paid by the assessee and deduction of which was never been claimed in the Income Tax Act by the assessee in the previous years the same cannot be considered as income in the current year. - AO and CIT(A) have fell into error while making this addition. This amount is refund of the interest paid by the assessee to the department and hence cannot be considered as income and accordingly AO is directed to delete the same. Cessation of liability - reversal of interest on the direction of C&AG - Held that:- the amount of ₹ 106.18 crore has been taxed twice i.e. in Assessment year under consideration 2010-11 and assessment year 2011-12. We are of the view that this is not permissible. An income cannot be taxed twice that too on substantive basis. The AO being an adjudicating officer has a duty to assess correct income. In these circumstances we have two options, either to confirm the addition in this year and direct the AO to delete the addition in the subsequent A.Y. 2011-12. However, considering the fact that the reversal of interest has happened consequent to the C&AG observation on 7th October, 2010 which falls in the F.Y. 2010-11 i.e. A.Y. 2011-12, we are of the view that this amount should not be taxed in this assessment year and be included in the income of the assessment year 2011-12. Accordingly, we direct the AO to delete the addition in this assessment year i.e. A.Y. 2010-11. - Decided in favor of assessee.
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