TMI Blog2018 (7) TMI 947X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessment year 1985-86 would not help this issue. In our opinion, it is appropriate to remit this issue to the file of the Assessing Officer to allow that expenditure supported by vouchers and bills for incurring of that expenditure. Addition as interest accrued - Held that:- Admittedly, this issue was considered by the High Court of Kerala in assessee’s own case [2017 (12) TMI 1364 - KERALA HIGH COURT] as held the interest income on Bank deposits is hypothetical income and that the assessee is entitled to get the interest excluded from assessment. The question raised is thus answered in favour of the Revenue and against the assessee. - ITA No. 550/Coch/2015 - - - Dated:- 11-7-2018 - SHRI CHANDRA POOJARI, AM AND GEORGE GEORGE K., JM For The Assessee : Shri Iype John, CA For The Revenue : Shri A. Dhanaraj Sr. DR ORDER Per CHANDRA POOJARI, AM: This appeal filed by the assessee is directed against the order of the CIT(A), Kottayam dated 20/01/2016 and pertains to the assessment year 2009-10. 2. The first ground is with regard to disallowance of claim of expenses of ₹ 26,01,772/- in respect of income from interest. 3. The facts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s own case for the assessment year 1984-85 vide order dated 24/12/1992 in ITA No. 1069(Coch)/1987. Accordingly, we hold that the assessee would be entitled to deduction of 10% of the interest receipts. 6. The Ld. DR submitted that the assessee has not substantiated the incurring of expenditure for the purpose of earning the interest income. Being so, it is to be disallowed. 7. We have heard the rival submissions and perused the record. Admittedly, in the earlier order for the assessment year 1985-86 in ITA No.1156/Coch/1987, the Tribunal vide order dated 12th January, 1993 observed that 10% of total receipts is to be considered as deduction towards incurring of expenditure for earning such interest income. The contention of the Ld. AR raised during the hearing was that in the absence of any change in the circumstances, the Revenue should have felt bound by the previous decisions and no attempt should have been made to reopen the question. He relied upon some authorities in support of this stand. The Full Bench of the Madras High Court in the case of T.M.M, Sankaralinga Nadar Bros. vs. CIT (1929) 4 ITC 226 expressed the following opinion : The principle to be dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year. 7.2 The Ld. DR submitted that the facts of this case being very special, nothing should be said in a manner which would have general application. We are inclined to accept this submission and would like to state in clear terms that the decision is confined to the facts of the case and may not be treated as an authority on aspects which have been decided for general application. 7.3. We have carefully gone through the order of the Tribunal for the assessment year 1985-86 in ITA No.1156/Coch/1987 dated 12th January, 1993 in assessee s own case as discussed in para 5 of this order. In that year, the expenditure was allowed deduction at 10% of total receipts which was based on the earlier order of the Tribunal for the assessment year 1984-85. There was no discussion in the order regarding the reason for adoption of 10% of total r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ach case. It is not borne out from the order of the Tribunal that the question cropped up for adjudication in that case was adjudicated by the Tribunal. 7.6 In our opinion the assessee is a limited company which is required to maintain books of accounts and required to be audited both under the Company Act as well as under section 44AB of the Income Tax Act. It is primary duty of the assessee to place necessary evidence to claim expenditure which was incurred wholly and exclusively for the purpose of earning such interest income. Further, in the present case, the assessee has not led any evidence regarding expenditure incurred to earn such interest income. The assessee has only relied on the order of the Tribunal (supra) and claimed 10% of the total interest income to be allowed as expenditure incurred towards earning of such interest income. But there is no basis for such estimation. The assessment in this year was made u/s. 143(3) of the Act by calling for details like books of accounts etc. and it was not best judgment assessment. Then, it is the duty of the assessee to produce necessary evidence in support of the claim of the assessee. It is the primary duty of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal against the order of the Tribunal in ITA No. 56/Coch/2016 dated 13/05/2016. The High Court decided the issue against the assessee and in favour of the Department by observing as under: 6. In the instant case, the assessee, in the books of accounts showed the interest income of ₹ 4,84,25,103/- as accrued, but returned only ₹ 1,60,33,548. The computation in the return excluded ₹ 3,23,91,555/- on the ground that the same was not received. The depositor is entitled to get interest as and when it becomes due, which may be monthly, quarterly, half yearly, yearly or at the end of the term of deposit, which is at the option of the depositor. It is also trite that on the option being exercised, to so deffer the receipt, the Bank pays cumulative interest. The assessee, as is seen from the assessment order; produced no evidence to substantiate the claim that the interest was not payable in the assessment year, but merely asserted that the interest accrued was not entirely received. If at all the maturity period or the expiry date did not fall in the relevant assessment year, it cannot be said that the interest was not due. The interest that accrued in the relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Government and the Board of Directors of the Plantation. Corporation took a decision to convert the loan into equity shares. The situation in this case is not similar. The deposits in Bank for definite periods at definite interest rates generate interest at the agreed rates. In fact, income tax was also paid on the interest income, which was received subsequently, but not during the subject assessment year, when it accrued. Hence, we do not agree with the findings of the Income Tax Appellate Tribunal that the interest income on Bank deposits is hypothetical income and that the assessee is entitled to get the interest excluded from assessment. The question raised is thus answered in favour of the Revenue and against the assessee. The appeal is therefore, allowed and the order of the Income Tax Appellate Tribunal is set aside and the assessment is restored. Parties left to suffer their costs. 11. In view of the above judgment of the High Court, wherein the issue was decided against the assessee and in favour of the Department, we are inclined to dismiss this ground of appeal of the assessee. 12. In the result, the appeal filed by the assessees is partly allowed for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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