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2012 (2) TMI 70 - AT - Income TaxTaxability of interest received on FDR accrual basis vs receipt basis - FDR conveyed in the name of the assessee through Will executed on 19.07.03 - Will probate on 21.3.2007 FDR matured on 20.04.07 agricultural income treated as income from other sources by Revenue A.Y. 08-09 - Held that -Probate was issued in the A.Y.2007-08 then total interest should have been assessed in the A.Y.2007-08, which the assessee has failed to do. Since only interest of Rs.1,13,306/- has been offered for taxation for A.Y.2007-08, therefore, to this extent no addition should have been made. Accordingly, addition of Rs.1,13,306/- is reduced out of total addition of Rs.3,19,588/-. The remaining amount out of total interest is sustained in the year under consideration. In respect of agricultural income, assessee did not file any evidence in respect of agricultural land holding. Thus, it cannot be said that the same is out of agricultural income. Order of CIT(A) is confirmed Decided partly in favor of assessee.
Issues:
1. Disallowance of interest on FDR 2. Treatment of agricultural income as income from other sources Analysis: Issue 1: Disallowance of interest on FDR The appeal was against the disallowance of Rs.3,19,558/- on account of interest on FDR for the assessment year 2008-09. The Assessing Officer (AO) found a discrepancy in the interest amount declared by the assessee and assessed the entire interest of Rs.3,19,588/- for the year under consideration. The appellant argued that the interest was related to previous years and only a portion should be assessed for the current year. The Commissioner of Income Tax (Appeals) upheld the AO's decision. However, the Tribunal found that a part of the interest had already been offered for taxation in the assessment year 2007-08. Therefore, to avoid double taxation, the Tribunal reduced the addition by Rs.1,13,306/-, confirming the remaining amount as assessable for the current year. Issue 2: Treatment of agricultural income as income from other sources The second issue pertained to the addition of Rs.45,600/- treating agricultural income as income from other sources. The AO made this addition as the assessee failed to provide evidence of owning agricultural land. The CIT(A) upheld this decision. The Tribunal, after reviewing the case, found no evidence presented regarding the ownership of agricultural land. Without such evidence, the income could not be categorized as agricultural income. Therefore, the Tribunal confirmed the CIT(A)'s order on this issue. In conclusion, the appeal of the assessee was partly allowed, with the Tribunal reducing the disallowance of interest on FDR and confirming the treatment of agricultural income as income from other sources. The order was pronounced on 03.01.2012 by the Tribunal.
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