EXOTICA EXPORTS (I) LTD, MUMBAI v. ITO 8(1)(3), MUMBAI

ITA 4824/MUM/2010 | 2002-2003
Pronouncement Date: 29-07-2011 | Result: Dismissed

Appeal Details

RSA Number 482419914 RSA 2010
Assessee PAN AAACE0904C
Bench Mumbai
Appeal Number ITA 4824/MUM/2010
Duration Of Justice 1 year(s) 1 month(s) 19 day(s)
Appellant EXOTICA EXPORTS (I) LTD, MUMBAI
Respondent ITO 8(1)(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 29-07-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted F
Tribunal Order Date 29-07-2011
Assessment Year 2002-2003
Appeal Filed On 10-06-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH FMUMBAI BEFORE SHRI T.R. SOOD (AM) AND SMT. ASHA VIJAYARAGHAVAN (JM) ITA NO. 4824/MUM/2010 ASSESSMENT YEAR 2002-03 M/S. EXOTICA EXPORTS (INDIA)LTD. C-190 SANJAY BUILDING NO. 5 MITTAL INDUSTRIAL ESTATE M.V. ROAD ANDHERI (E) MUMBAI-400 059 PAN-AAACE 0904C VS. THE ITO-8(1)(3) AAYAKAR BHAVAN MUMBAI-400 020 (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI BIKASH KUMAR BOGI RESPONDENT BY: SHRI SANJEEV JAIN DATE OF HEARING :26.7.2011 DATE OF PRONOUNCEMENT: 29 TH JULY 2011 O R D E R PER ASHA VIJAYARAGHAVAN (JM) THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER DATED 3.5.2010 PASSED BY THE LD. CIT(A)-16 FO R THE ASSESSMENT YEAR 2002-03. 2. THE ONLY GROUND RAISED BY THE ASSESSEE READS FOL LOWS: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN CONFIRMING THE ORDER OF THE AO THAT INTEREST OF RS. 8 30 550/- ACCRUED DURING THE RELEVANT YEAR ON LOAN GIVEN TO KND ENGG. & TECHNOLOGIES OF RS. 35 LACS AN D NOT GRANTING RELIEF AS CLAIMED BY THE APPELLANT. ITA NO. 4824/M/10 2 3. THE LD. CIT(A) HELD THAT THIS ISSUE HAS BEEN DEC IDED BY THE TRIBUNAL IN ASSESSEES OWN CASE VIDE ORDER NO. 321 0/M/2006 DT. 30.7.2009 FOR A.Y. 2003-04 IN WHICH IT HAS BEEN HEL D AS FOLLOWS: THE LEGAL POSITION WHICH CLEARLY EMANATES FROM THE RESUME OF THE JUDICIAL PRONOUNCEMENTS DISCUSSED ABOVE IS T HAT WHEN THE RIGHT TO RECEIVE A PARTICULAR INCOME VESTED IN THE ASSESSEE IS WAIVED BY HIM AS A RESULT OF REVISED AGREEMENT OR U NDERSTANDING ENTERED INTO IN THE RELEVANT YEAR THE INCOME SO WA IVED COULD NOT BE SAID TO BE ACCRUED TO THE ASSESSEE IN THAT YEAR AND ACCORDINGLY THE SAME COULD NOT BE ASSESSED TO TAX IN HIS HANDS IN THAT YEAR. IF THE FACTS INVOLVED IN THE PRESENT CASE ARE CONSIDERED IN THE LIGHT OF THE LEGAL POSITION EMANA TING FROM THE VARIOUS JUDICIAL PRONOUNCEMENTS ON THE POINT WE FI ND THAT THERE WAS NOTHING BROUGHT ON RECORD TO SHOW THAT INTEREST INCOME RECEIVABLE BY THE ASSESSEE ON THE LOAN GIVEN TO KND ENGINEERING & TECHNOLOGY LTD. FOR THE YEAR UNDER CONSIDERATION WAS WAIVED BY IT AND THAT THERE WAS ANY AGREEMENT OR ARRANGEME NT BETWEEN THE ASSESSEE AND THE SAID PARTY TO THAT EFFECT. ON THE OTHER HAND EFFORTS WERE BEING MADE BY THE ASSESSEE COMPA NY TO RECOVER THE LOAN AS WELL AS INTEREST THEREON FROM K ND ENGINEERING & TECHNOLOGY LTD. BY FILING A SUIT. AS NOTED BY TH E LD. CIT(A) THE SAID LOAN WAS GIVEN AGAINST MORTGAGE OF PROPERTY AN D EVEN A DECREE WAS OBTAINED BY THE ASSESSEE IMMEDIATELY AFT ER THE END OF THE YEAR UNDER CONSIDERATION TO ENABLE IT TO DIS POSE OFF THE PROPERTY AND RECOVER THE DUES FROM THE KND ENGINEER ING & TECHNOLOGY LTD. NO DOUBT THERE WERE CERTAIN DIFFI CULTIES IN THE EXECUTION OF THE SAID DECREE AS SOUGHT TO BE POINTE D OUT BY THE LEARNED COUNSEL FOR THE ASSESSEE. THE FACT HOWEVER REMAINS THAT THERE WAS A POSSIBILITY OF RECOVERY OF LOAN GIVEN T O KND ENGINEERING & TECHNOLOGY LTD. ALONG WITH INTEREST A ND IT WAS NOT A CASE THAT SUCH RECOVERY WAS IMPOSSIBLE OR HIGHLY IMPROBABLE SO AS TO SAY THAT INTEREST INCOME HAD NOT ACCRUED T O THE ASSESSEE EVEN GOING BY THE REAL INCOME THEORY. AS SUCH CON SIDERING ALL THE FACTS OF THE CASE AND THE RELEVANT LEGAL POSITION D ISCUSSED ABOVE WE ARE OF THE VIEW THAT INCOME ON ACCOUNT OF INTERE ST ON LOAN GIVEN BY THE ASSESSEE COMPANY TO KND ENGINEERING & TECHNOLOGY LTD. HAD ACCRUED DURING THE YEAR UNDER C ONSIDERATION AND SINCE IT WAS FOLLOWING MERCANTILE SYSTEM OF ACC OUNTING THE SAME WAS CHARGEABLE TO TAX IN ITS HANDS. IN THAT VI EW OF THE MATTER WE UPHOLD THE IMPUGNED ORDER OF THE LD. CIT (A) CONFIRMING THE ADDITION MADE BY THE A.O. ON ACCOUNT OF INTERES T INCOME AND DISMISS THIS APPEAL FILED BY THE ASSESSEE. ITA NO. 4824/M/10 3 4. RESPECTFULLY FOLLOWING THE ABOVE WE CONFIRM THE ORDER OF THE LD. CIT(A) AND DISMISS THE APPEAL. 5. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON THIS 29 TH DAY OF JULY 2011 SD/- SD/- (T.R. SOOD) ( ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED 29 TH JULY 2011 RJ COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR F BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR I.T.A.T MUMBAI ITA NO. 4824/M/10 4 DATE INITIALS 1. DRAFT DICTATED ON: 26.7.2011 SR. PS/PS 2. DRAFT PLACED BEFORE AUTHOR: 26.07.2011 SR. PS/PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER: JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER: JM/AM 5. APPROVED DRAFT COMES TO THE SR. PS/PS: SR. PS/PS 6. ORDER PRONOUNCED ON: SR. PS/PS 7. FILE SENT TO THE BENCH CLERK: 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK: SR. PS/PS 9. DATE ON WHICH FILE GOES TO AR 10. DATE OF DISPATCH OF ORDER: