2015 (2) TMI 1255 - AT - Income Tax

Addition on account of interest on post dated cheque (PDC) paid out of books of account - Held that - The PDCs have been encashed within a period of six months as is apparent from page 11 of assessment order where A.O. has noted the date of sale of properties and date of encashment of cheques. Therefore, we find that the facts in the present case are similar in one of the Sister concern i.e. case of M/s IAG Promoters and Development Pvt. Ltd 2015 (2) TMI 12 - ITAT DELHI therefore, following the Tribunal order in the case of group company, we dismiss this appeal of Revenue.

Summary

Issues:
Deletion of addition of interest on post-dated cheques paid out of books of account.

Analysis:
The appeal pertains to the deletion of an addition of interest on post-dated cheques (PDC) paid outside the books of account. The assessee company, part of the BPTP Group, was found to have paid interest in cash to vendors on PDCs @1.25% per month, leading to an unaccounted interest amount. The AO made an addition to the total income of the assessee based on this calculation. The CIT(A) directed a recalculation of interest on PDCs, emphasizing that interest was paid only during the extension period of PDCs. The CIT(A) concluded that interest on PDCs for the extension period should be confirmed. The order highlighted a trend of interest payment on PDC extensions, especially within companies under the management of the BPTP Group. The CIT(A) also directed the AO to recomputed interest on PDCs after six months from the date of issue if the extension period could not be determined in each case.

In a related case involving a sister concern, the Tribunal upheld the CIT(A)'s decision to recalculate interest on PDCs during the extension period. The Tribunal emphasized that the CIT(A) did not delete the addition but directed a recalculation based on seized documents. The Tribunal rejected the Revenue's appeal, noting the sound logic behind the CIT(A)'s direction and the absence of grounds to interfere with the order.

Based on the above precedents and the absence of distinguishing factors, the Tribunal confirmed the impugned order, dismissing the Revenue's appeal. The decision was made on 27.02.2015, upholding the direction to recalculate interest on PDCs during the extension period and rejecting the Revenue's grounds for appeal.