M/s Visakhapatnam Urban Development Authority, Visakhapatnam v. The ACIT, Circle-2(1),, Visakhapatnam

ITA 389/VIZ/2006 | 2003-2004
Pronouncement Date: 29-04-2010 | Result: Partly Allowed

Appeal Details

RSA Number 38925314 RSA 2006
Assessee PAN AAALV0082F
Bench Visakhapatnam
Appeal Number ITA 389/VIZ/2006
Duration Of Justice 3 year(s) 7 month(s) 22 day(s)
Appellant M/s Visakhapatnam Urban Development Authority, Visakhapatnam
Respondent The ACIT, Circle-2(1),, Visakhapatnam
Appeal Type Income Tax Appeal
Pronouncement Date 29-04-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 29-04-2010
Assessment Year 2003-2004
Appeal Filed On 07-09-2006
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH: VISAKHAPATNAM BEFORE: SRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SRI B.R. BASKARAN ACCOUNTANT MEMBER I.T.A. NO 389/VIZAG/2006 ASSESSMENT YEAR : 2003-04 VISAKHA PATNAM URBAN DEVELOPMENT AUTHORITY VISAKHAPATNAM VS. ACIT CIRCLE-2(1) VISAKHAPATNAM (APPELLANT) (RESPONDENT) PAN NO.AAALV 0082 F APPELLANT BY : SHRI A.V. RAGHURAM ADVOCATE RESPONDENT BY : SHRI SUBRATA SARKAR CIT( DR) O R D E R PER B.R. BASKARAN ACCOUNTANT MEMBER : THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 23-06-2006 PASSED BY LD CIT (A)-II VISAKHAPATNAM AND IT RELAT ES TO THE ASSESSMENT YEAR 2003-04. 2. THE GROUNDS RAISED BY THE ASSESSEE GIVE RISE TO THE FOLLOWING TWO ISSUES: A) WHETHER THE ASSESSEE IS ENTITLED TO EXEMPTION U/S 1 0(20) OF THE ACT. B) WHETHER THE ADDITION OF INTEREST INCOME OF RS.53.09 LAKHS IS RIGHT IN LAW. 3. THE FACTS OF THE CASE ARE STATED IN BRIEF. THE ASSESSEE HEREIN IS A STATUTORY BODY UP UNDER THE ANDHRA PRADESH URBAN AR EAS (DEVELOPMENT) ACT 1975. THE SPECIFIC PURPOSE FOR SETTING UP THE VUDA IS TO PROMOTE AND DEVELOP THE AREAS LAND IN AND AROUND VISAKHAPATNAM. THE AM ENITIES EXTENDED BY VUDA INCLUDES LAYING OF ROADS DEVELOPMENT OF FACILITIE S LIKE WATER SUPPLY SITE 2 DEVELOPMENT SEWAGE PUBLIC WORKS TOURIST PLACES OPEN PLACES PARKS AND PLAY GROUNDS ETC. THE ACT ENVISAGES THE GROWTH AND DEVEL OPMENT OF THE CITY AND ITS SURROUNDING AREAS IN AN ORGANIZED WAY IN ALL ASPECT S AND RESPECTS. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE FIRST TIME FOR T HE ASSESSMENT YEAR 2003-04 ADMITTING A LOSS OF RS.2 00 64 640/- WHICH WAS LATE R REVISED TO A LOSS OF RS.4 02 64 003/-. UPTO THE ASSESSMENT YEAR 2002-03 THE INCOME OF AN AUTHORITY CONSTITUTED FOR THE PURPOSE OF PLANNING DEVELOPMEN T OR IMPROVEMENT OF CITIES TOWNS AND VILLAGES WAS EXEMPT U/S 10(20A) OF THE AC T. HENCE THE ASSESSEE DID NOT FILE THE RETURN OF INCOME UPTO THE YEAR 2002-03 . BEFORE THE AO THE ASSESSEE FILED A LETTER IN MARCH 2006 CLAIMING THAT ITS ACT IVITIES ARE IDENTICAL WITH THE ACTIVITIES CARRIED OUT BY THE MUNICIPAL CORPORATION S AND HENCE ITS INCOME IS EXEMPT U/S 10(20) OF THE ACT. HOWEVER THE AO DID NOT DISCUSS ANYTHING IN HIS ORDER ON THIS ISSUE. IN THE RETURN OF INCOME THE A SSESSEE CLAIMED THAT IT IS FOLLOWING CASH SYSTEM OF ACCOUNTING. THE ASSESSEE DECLARED INTEREST RECEIPTS TO THE TUNE OF RS.1.07 CRORES. HOWEVER AS PER THE TDS CERTIFICATE FILED BY THE ASSESSEE THE INTEREST INCOME WORKED OUT TO RS.1.61 CRORES. THUS THERE WAS A DIFFERENCE OF RS.53 69 005/- IN THE INTEREST INCOME BETWEEN THE AMOUNT SHOWN BY THE ASSESSEE AND THE TDS CERTIFICATES. THE AO FE LT THAT THE ASSESSEE SHOULD HAVE OFFERED THE INTEREST AS PER THE TDS CERTIFICAT E AS THE AO FELT THAT THE INTEREST AMOUNT SHOWN IN THE TDS CERTIFICATE IS THE AMOUNT RECEIVED BY THE ASSESSEE. ACCORDINGLY THE AO ASSESSED THE DIFFERENC E INTEREST OF RS.53 69 005/-. 4. IN THE APPEAL FILED BY THE ASSESSEE THE LD CIT ( A) DID NOT ACCEPT THE CLAIM OF EXEMPTION U/S 10(20) OF THE ACT IN THE ABSENCE O F ANY DETAILS FORTHCOMING FROM THE ASSESSEE. WITH REGARD TO THE ADDITION OF I NTEREST INCOME THE LD CIT (A) UPHELD THE ORDER OF THE AO. HENCE THE ASSESSEE IS I N APPEAL BEFORE US. 5. WE HAVE HEARD THE PARTIES AND CAREFULLY PERUSED THE RECORD. WE SHALL TAKE UP THE ISSUE RELATING TO THE ASSESSMENT OF INT EREST INCOME FIRST. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE ASSESSEE I S FOLLOWING CASH SYSTEM OF ACCOUNTING. ACCORDINGLY THE ASSESSEE WOULD BE OFFER ING ONLY SUCH INTEREST WHICH 3 HAS ACTUALLY BEEN RECEIVED BY IT. IT IS A WELL KNOW N FACT THAT THE BANKS AND OTHER FINANCIAL INSTITUTIONS ARE FOLLOWING MERCANTILE SYS TEM OF ACCOUNTING. HENCE THE BANKS AND OTHER FINANCIAL INSTITUTIONS ARE REQUIRED TO ACCOUNT FOR THE INTEREST EXPENDITURE THAT HAS ACCRUED UP TO THE END OF THE Y EAR. THEY WILL DEDUCT TAX AT SOURCE ON THE AMOUNT SO ACCOUNTED BY IT. IN VIEW OF THE DIFFERENCE BETWEEN THE SYSTEM OF ACCOUNTING FOLLOWING BY THE ASSESSEE AND THE BANKS THERE BOUND TO BE A DIFFERENCE BETWEEN THE AMOUNT OFFERED BY THE ASSE SSEE AND THE AMOUNT SHOWN IN THE TDS CERTIFICATES. IN SUCH A CASE IN OUR OP INION THE ASSESSEE IS DUTY BOUND TO RECONCILE SUCH DIFFERENCE AND OFFER NECESS ARY EXPLANATIONS TO THE AO. AS OBSERVED BY THE LD CIT (A) THE ASSESSEE HAS NOT FURNISHED THE BREAK UP DETAILS OF INTEREST ALONG WITH THE RECONCILIATION S TATEMENT BEFORE THE TAX AUTHORITIES. IN THAT CASE IT WOULD BE DIFFICULT FO R ANYBODY TO EXPRESS AN OPINION. THE LD COUNSEL APPEARING ON BEHALF OF THE ASSESSEE PLACED RELIANCE ON THE DECISION OF HYDERABAD BENCH OF ITAT PASSED IN THE C ASE OF SHRI DEEP CHAND IN ITA NO.400/HYD/06 WITH REGARD TO THE LEGAL PROPOSIT ION. HOWEVER THERE APPEARS TO BE NO DIFFERENCE OF OPINION BETWEEN THE ASSESSEE AND THE TAX AUTHORITIES WITH REGARD TO THE LEGAL PROPOSITION. WHAT IS REQUIRED I S ONLY A RECONCILIATION STATEMENT RECONCILING THE DIFFERENCE BETWEEN THE AMOUNT DISCL OSED BY THE ASSESSEE AND THE AMOUNTS SHOWN IN THE TDS CERTIFICATE. HENCE IN THE INTEREST OF NATURAL JUSTICE WE SET ASIDE THIS ISSUE TO THE FILE OF THE AO WITH A D IRECTION TO THE AO TO CONSIDER THE ISSUE AFRESH AFTER GIVING THE NECESSARY OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE ALSO DIRECT THE ASSESSEE TO COOPERATE WITH THE AO BY FILING THE RECONCILIATION STATEMENT AND OTHER DETAILS THAT MAY BE CALLED FOR BY THE AO. 6. THE NEXT ISSUE RELATES TO THE CLAIM FOR EXEMPTIO N U/S 10(20) OF THE ACT. THE CLAIM OF THE ASSESSEE IS THAT ITS ACTIVITIES AN D OBJECTS ARE AKIN TO THE ACTIVITIES CARRIED ON BY THE MUNICIPAL CORPORATIONS WHICH ARE ELIGIBLE FOR EXEMPTION U/S 10(20) OF THE ACT. AS PER THE EXPLAN ATION TO SEC.10(20) OF THE ACT A MUNICIPALITY AS REFERRED TO CLAUSE (E) OF AR TICLE 243P OF THE CONSTITUTION IS TREATED AS A LOCAL AUTHORITY FOR THE PURPOSE OF 10( 20) OF THE ACT. AS OBSERVED BY THE LD CIT (A) THE ASSESSEE HAS NOT PRODUCED ANY MA TERIAL TO SHOW THAT THE 4 ASSESSEE WOULD FALL UNDER CLAUSE (E) OF ARTICLE 243 P OF THE CONSTITUTION. HENCE WE ARE UNABLE TO EXPRESS ANY OPINION ON THIS ISSUE. ACCORDINGLY THE SAID GROUND OF THE ASSESSEE IS DISMISSED. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS TREA TED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED ACCORDINGLY ON 29 TH APRIL 2010. SD/- SD/- (SUNIL KUMAR YADAV) (B.R. BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM DATE : 29-4-2010. A COPY OF THIS ORDER IS FORWARDED TO : 01 VISAKHAPATNAM URBAN DEVELOPMENT AUTHORITY SIRIP URAM VISAKHAPATNAM 02 THE ACIT CIRCLE-2(1) VISAKHAPATNAM 03 THE CIT (A)-II VISAKHAPATNAM 04 THE CIT VISAKHAPATNAM 05 THE DR ITAT VISAKHAPATNAM 06 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY ITAT VISAKHAPATNAM BENCH