TMI Blog2018 (4) TMI 1591X X X X Extracts X X X X X X X X Extracts X X X X ..... se, it will be in the interest of equity and justice to restore the issue in question to the file of the AO to decide it afresh taking into consideration the additional evidence (supra) and decide the issue by providing adequate opportunity of being heard to the assessee. Ground of the assessee is allowed for Statistical purposes. - ITA No. 696/JP/2014 And 702/JP/2016 - - - Dated:- 4-4-2018 - Shri Vijay Pal Rao, JM Shri Bhagchand, AM, JJ. ORDER Bhagchand, AM Both these appeals have been filed by the assessee against separate orders of the ld. CIT(A)-2, Jaipur dated 10-09-2014 and 04-04-2016 for the Assessment Years 2010-11 and 2011-12 respectively. 2.1 At the outset of the hearing, the Bench observed that the appeal for the Assessment Year 2011-12 is filed by the assessee is late by 22 days for which the assessee filed the application dated 08-07-2016 for condonation of delay with following prayers. As assessment order u/s 143(3) for the A.Y. 2011-12 was passed vide order dated 17-02-2014. The first appeal was preferred on 18-03-2014 before the ld. CIT(A)-2, Jaipur. Appeal against the order u/s 143(3) was partially dismissed by ld. CIT(A)-2, Jaipur vide o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onfirming the action of the AO in restricting the deduction u/s 10AA to ₹ 1,00,64,922/- as against ₹ 1,06,11,921/- claimed by assessee. 5. Under the facts and circumstances of the case, the ld. CIT(A) has erred in confirming the addition of ₹ 23,017/-on account of disallowance u/s 43B of the I.T. Act, 1961. ITA No. 702/JP/2016- A.Y.2011-12 1. In the facts and circumstances of the case and in law the ld. CIT(A) has erred in confirming the action of the AO in treating the interest on FDR of ₹ 3,32,342/- as Income from other sources and thereby restricting the deduction u/s 10AA of I.T. Act, 1961 amounting to ₹ 4,43,59,235/- as against claimed deduction of ₹ 4,46,88,897/-. The action of ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted deleting the said addition of ₹ 3,32,342/- allowing deduction u/s 10AA at ₹ 4,46,88,897/- as claimed by the assessee company. 4.1 Apropos Ground No. 1 and 2 of the assessee for the Assessment Year 2010-11, the facts as emerges from the order of the ld. CIT(A) are as under:- 2.4.1 I have examined the facts of the case, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the assessee itself (Shree Barkha Synthetics Ltd. [2006] 155 Taxman 289 (Raj). In this case, the appellant has discharged his onus with respect to the identity of the share applicants who have given share application money to the applicant through banking channel. To this extent, the appellant has discharged his onus. Thereafter the onus has shifted to Revenue which has in this case shown that the share applicants do not conduct any business activity and have no source of income except commission received from providing accommodation entries. In this case, the directors of the share applicant companies have stated that they are engaged in the business of providing accommodation entries by accepting cash from the desirous persons, depositing it in the bank accounts of the directors and employees and thereafter giving cheques for share application money in lieu of commission. The Revenue has therefore, established that the investment for the share application money has come from the assessee itself. Merely proving the identity of the share applicants who have given money thorough banking channels will not suffice in such a situation. The assessee has not been able to furnish any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter cheques are issued in the names of the companies which are controller by Shri Satya Narain Gadiya as such these companies are indulged in providing accommodation entries to the needy persons. The submissions filed by the assessee has stated nothing about the source of deposit in the individual accounts which is the basis of the funds transferred to the assessee company s account as share application money. As such I am convinced that the assessee company has received share application money of ₹ 15,00,000/- as mentioned above which is nothing but the accommodation entry obtained through the aforementioned so called persons. In view of the above discussion and clenching evidence available on record in respect of all the accommodation entries a sum of ₹ 15,00,000/- is added as unexplained cash credits within the meaning of section 68 of the I.T. Act, 1961. 9. Commission on accommodation entries: In the statements recorded Shri Satya Narain Gadiya has admitted that the accommodation entries were provided on commission basis and he was charging commission @ 1.5% of the entry provide. As such the assessee has paid commission @ 1.5% of the share application as such &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has held that the interest income earned on deposits is to be taxable as income form other sources u/s 56 of the Act. Similar view has also been expressed in other decisions particularly Apex Court s decision in the case of Tuticorin Alkalies and Fertilizers and also in CIT vs Auto Kast Ltd 248 ITR 110 (SC), CIT vs V. Goppinathan, Consolidated Fibres vs CIT and K Ravindranatham v/s DCIT (Asstt.) 262 ITR 669. All the above judicial pronouncement support the view that the interest income is income from other sources. This issue was also raised during the scrutiny assessment proceedings for A.Y. 2009-10 wherein the AO has held that interest on FDRs is income from other sources. This issue was also raised during the scrutiny assessment proceeding for A.Y. 2009-10 wherein the AO has held that interest on FDRs is income from other sources. In view of the above facts as well as the past history of the case of the assessee and he is not eligible for claiming exemption u/s 10AA on this component of the income as shown in the profit and loss account. 3.2 The appellant has claimed that the interest income has been derived from the export business of the SEZ. 3.3 In view of the vari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,429/- by disallowing exemption u/s 10AA of the Act on account of interest on FDR by observing as under:- 4.2 The nature of the income as well as assessee's contention have been considered and before taking final view, I would like to place reliance on the judicial pronouncements on the issue under consideration. The Hon'ble Delhi High Court in the case of CIT vs Sree Ram Honda Power Equipment 289 ITR 475 (Delhi) has held that the interest income earned on deposits is to be taxable as income from other sources u/s 56 of the Act. Similar view has also been expressed in other decisions particularly Apex Court s decision in the case of Tuticorin Alkalies and Fertilizers and also in CIT vs Auto Kast Ltd 248 ITR 110 (SC), CIT vs V. Goppinathan, Consolidated Fibres vs CIT and K Ravindranatham v/s DCIT (Asstt.) 262 ITR 669. All the above judicial pronouncement support the view that the interest income is income from other sources. This issue was also raised during the scrutiny assessment proceedings for A.Y. 2009-10 wherein the AO has held that interest on FDRs is income from other sources. This issue was also raised during the scrutiny assessment proceeding for A.Y. 2009-10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AA was not allowed on this amount. The issue is covered in the previous year by the order of my predecessor dated 10-09-2014 wherein it has been held as follows:- In view of the various judicial pronouncements, it is held that interest on bank FDRs is income from other sources and this interest income has not been derived from export. Therefore, it cannot be included in the Profit gain derived from export . In view of the above, the action of the Assessing Officer in reducing the FDR interest from Profit Gains from business and profession and including it under the head income from other sources is confirmed. No exemption u/s 10AA can be claimed on this interest income. In view of the above, this ground of the assessee is dismissed. 8.2 We have heard the rival contentions and perused the materials available on record. It is pertinent to mention that the similar issue for the Assessment Year 2010-11 has been restored to the file of the AO for afresh adjudication. Since the facts and circumstances of the issue in question are same, therefore, the decision taken in the Assessment Year 2010-11 shall apply mutatis mutandis in the appeal of the assessee for the Assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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