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TMI Blog2024 (11) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... 14 271(1)(c) 4 ITA-1734/Chny/2024 ITBA/NFAC/S/250/2024-25/1064071232 (1) dt. 12.04.2024 2014-15 271(1)(c) 2.0 In the above appeals delay of 3 days each in ITA Nos. 1717, 1733 & 1734 and of 6 days in ITA No.1730 have been noted. The revenue has filed a request for condonation of delay. It is the case of the revenue that the delay was purely unintentional and caused on account of pre-occupation with time barring work as well as some unforeseen technical glitches in the electronic platforms. The Ld. AR did not oppose the condonation of delay. We are satisfied with the justification given by the revenue and condoning the delay we proceed for adjudication of the appeals. 3.0 The only issue raised by the Revenue vide appeals bearing ITA-1717/Chny/2024 for AY 2013-14 & ITA-1730/Chny/2024 for AY 2014-15 are regarding the deletion of Interest income of Rs. 2,46,16,767/- and Rs. 2,50,55,139/- respectively by the Ld. CIT(A). The impugned addition was made by the Ld. AO vide his orders u/s 147 r.w.s 144 of the Act 13/3/2022 for both the years. Since both the years are having common issues the two appeals are adjudicated together. For the purpose of this adjudication AY 2013-14 is taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le promoters, the new shareholders had transferred a sum of Rs. 78.45 Crores out of the said amount to the account of CHPL bearing Account No. 1103945 with the ABN Amro Bank, Haddows Road, Chennai on 19 August 2004. Thereafter, CHPL had transferred a sum of Rs. 35,30,46,483 out of the said amount to the account of the assessee bearing Account No. 922322 with the same ABN Amro Bank, Haddows Road, Chennai and further some amounts were transferred by CHPL to the account of KCPAHL and Sporting Pastime India Limited ('SPIL'). Further, out of the sum received by the assessee amounting to Rs. 35,30,46,482 from CHPL, a sum of Rs. 25 Crores was deposited by the appellant assessee in a Fixed Deposit with the State Bank of India, Erode Branch in its name. 7.0 The Ld. Counsel submitted that Pacific Convergence Corporation Limited ('PCCL') is a company incorporated under the laws of the Cayman Islands which had granted loans to DAIL. Upon failure to repay such loans, PCCL filed a winding up petition against DAIL in the Hon'ble Delhi High Court. The Hon'ble Delhi High Court vide its order dated 17 December 2004 passed an order attaching the moneys lying in the accounts of the assessee, and its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court of Delhi vide its order dated 21 January 2011 wherein it was held in Paragraph 36 as follows: - "Keeping in view the aforesaid facts, the following directions are issued: - 1. All bank accounts and deposits of CEPL, CHPL. SPIL and KCPAHPL are hereby attached. No payments will be made from the said bank accounts except with the permission of the Company Court. The aforesaid companies are also restrained from selling, disposing of, or creating third party interest in respect of the movable and immovable assets. 2. Managing Director/Principal Officer of CEPL, CHPL, SPIL and KCPAHPL will file affidavits in the Court within fifteen days furnishing the following details: a) Account Numbers and details of the banks including details of fixed deposits and other deposits. b) Details of movable and immovable assets including shares. c) Names and addresses of the Directors." 9.0 The Ld. Counsel submitted that the said disputed amount of Rs. 25 Crores deposited by it with the State bank of India, Erode Branch was attached by the Hon'ble High Court of Delhi on 18 November 2005 and it continued to remain in interest bearing Fixed Deposit. However, the ownership of the said mon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any corresponding tax liability also. In support of its contentions the assessee reiterated its reliance on the following judicial precedents and ratios prescribed therein, which were also placed before the Ld CIT(A) : 8.1 That the Hon'ble Delhi High Court in the case of PCIT v. Rajdarbar Heritage Venture Ltd. [2022] 145 taxmann.com 438 has held that where fixed deposits were made in name of assessee in pursuance of an arbitration proceedings, till final award was passed by Tribunal determining ownership of such fixed deposits and interest, it could not be said that interest income had crystallized in assessee's hands and same could not be held to be income of assessee under section 5(1). The relevant extract of the ruling was extracted as under : "9. Consequently, this Court in agreement with the finding of the two Appellate Authorities below that till the final award was passed by the Arbitral Tribunal determining the ownership of the fixed deposits and interest, it could not be said that the interest income had crystallized in the respondent's hands and the same cannot be held to be income of the respondent-assessee under section 5(1) of the Income-tax Act, 1961 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d v. CIT [1953] 23 ITR 230 (SC); * Ashokbhai Chimanbhai v. CIT [1965] 56 ITR 42 (SC); * DSL Enterprises (P.) Ltd. V. Mrs. N.C. Chandratre, ITO [2013] 35 taxmann.com 477 (Bombay High Court); * Sushil Thomas Abrahum v. CIT [2018] 93 taxmann.com 64 (Kerala High Court); * T.V. Patel (P.) Ltd. V. DCIT [2023] 157 taxmann.com 108 (Bombay High Court); * Govind Prasad Prabhu Nath v. CIT [1987] 35 TAXMAN 513 (Allahabad High Court); * Vijay Sales v. DCIT [2014] 52 taxmann.com 310 (Mumbai Tribunal). 12.0 Placing reliance on the above stated judicial precedents the Ld counsel argued that, the the interest income shall be taxable in its hands only when it acquires a right to receive such interest income, or the interest income has actually come in its control. It was urged that in the instant case, the said interest accrued on the fixed deposit held with SBI cannot be said to be "received" by it since such interest never crystallized in its hands. The Ld. Counsel would like to also make us believe that as the said interest income is subject matter of the dispute which is still pending before the Delhi High Court it has no right to receive such interest income. Therefore the same sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fect that in the event of ownership of the said FD vested back to him, it shall be liable for payment of due taxes on the interest income for the relevant period. Accordingly, we set aside the order of the Lower Authorities and direct the assessing officer to consider and re adjudicate afresh, the issue of taxation of interest income over the impugned FD, only once the Hon'ble High Court decides upon its ownership. Accordingly, the grounds of appeal raised by the revenue in ITA-1717/Chny/2024 for AY 2013-14 are allowed for statistical purposes only. 15.0 ITA-1730/Chny/2024 for AY 2014-15 As discussed herein above, the facts of the case for this appeal are also identical to those in ITA-1717/Chny/2024 for AY 2013-14 supra therefore the decision taken therein would apply mutatis mutandis. Accordingly, the grounds of appeal raised by the revenue in ITA-1730/Chny/2024 for AY 2014-15 are also allowed for statistical purposes only. ITA-1733/Chny/2024 for AY 2013-14 & ITA-1734/Chny/2024 for AY 2014-15 The above appeals vide ITA numbers 1733 & 1734 made by the Revnue are regarding action of the Ld AO in imposing penalty u/s 271(1) (c) for AY's 2013-14 & 2014-15 respectively and the dec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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