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TMI Blog2014 (12) TMI 796X X X X Extracts X X X X X X X X Extracts X X X X ..... eld – Decided against revenue. Deletion of addition on interest of HDFC bonds – Held that:- CIT(A) while granting relief to the assessee has noted that assessee had offered for taxation interest on HDFC bonds on the basis of calculation of simple interest at 8% amounting to ₹ 10,40,000/- whereas as per terms and conditions of the bonds, the interest was on cumulative basis - CIT(A) has further given a finding that as against the interest of ₹ 12,81,981/- worked out by the AO, assessee had offered for taxation interest on HDFC bonds of ₹ 10,40,000/- and therefore addition of only differential amount of ₹ 1,78,981/- was upheld - revenue has not placed any material on record to controvert the findings of CIT(A) – thus, the order of the CIT(A) is upheld – Decided against revenue. Deletion of addition accrued interest u/s. 64(2) – Held that:- CIT(A) while deleting the addition rightly noted that provision of section 64 were not applicable - no material has been placed on record by the Revenue to controvert the findings of CIT(A) and there is no reason to interfere with the order of CIT(A) – Decided against revenue. Deletion of addition of ₹ 19,22, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 10,40,000/- out of addition of ₹ 12,18,981/- made by the AO on account of interest of HDFC bonds. 4 The Ld CIT(A) has erred in law and on facts in deleting addition of ₹ 4,84,434/-on account of accrued interest income u/s 64(ii) of the IT Act. 5. The Ld. CIT(A) has erred in law and on facts in deleting addition of ₹ 19,22,500/- pm account of interest received from family members. On the other hand, grounds raised by the assessee in CO read as under: 1. On the facts and in the circumstances of the case, Ld. CIT(A) has erred in upholding of ₹ 54,072/- being interest component of NSC. He ought to have deleted such addition made by the AO. 2. On the facts and in the circumstances of the case, the CIT(A) has erred in not accepting the assessee s plea that it was not at all a fit case for levy of interest u/s. 234B of the I.T. Act. We first take up Revenue s appeal in ITA No. 2466/Ahd/2010 4. 1st ground is with respect to deduction of addition of ₹ 60,000/- on account of NSC maturity. 5. During the course of assessment proceedings and on verification of the statement of account of Assessee with Federal Bank, AO noticed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l on record. We find that Ld. CIT(A) while granting partial relief to the assessee has given a finding that the amount was invested by cheque from the bank account maintained with Federal Bank and thus the source of investment has been established. With respect to taxing of interest of 54,072/- he has noted that such interest was not reflected in assessee s return of income of earlier years. He therefore considered the interest to have been rightly taxed. Before us, Revenue has not brought any material to controvert the finding of Ld. CIT(A). We therefore find no reason to interfere with order of Ld. CIT(A) and thus this ground of Revenue is dismissed. 9. Ground No. 2 is with respect to deletion of interest income from various saving bank accounts. 10. During the course of assessment proceedings, AO noticed that Assessee had declared interest income of ₹ 2,46,263/-. On the basis of the details submitted by the assessee, AO noticed that the interest income from various saving bank accounts including interests on fixed deposits receipts work to the extent of ₹ 6,03,501/-, the details of which are listed at page 5 of the order. He therefore considered the difference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.3 I have gone through the facts of the case, assessment order and submission made by the appellant. It is noticed that the appellant had given specific explanation that he held RBI bonds on which interest was offered for tax at ₹ 10,40, 000/-. It is further noticed that as explained by the assesses the Government of India authorized HDFC to issue bonds and accordingly the assessee had made investment in Government bonds with HDFC as above. It is noticed that the assessee has offered for tax only simple interest at 8% which works out to ₹ 10,40,000/-. However, as per the bond issued, it was cumulative bond and, therefore, interest accrued on such bonds was worked out by the A.O. at ₹ 12,80,981/-. Thus it is not correct to say that such interest was not at all shown by the appellant. The interest on accrual basis and bond being cumulative bond, was correctly worked out at ₹ 12,80,981/- which figure is not disputed by the appellant. As against it, the interest offered for tax was at ₹ 10,40,000/-being simple interest. As the interest of ₹ 10,40,000/- is already included in the retuned Income, the A.O. was not justified in making the addition fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the submission made by the appellant. On consideration of the facts of the case and provisions of section 64 along with explanation 3 thereto, I am of the opinion that the addition made by the A.O. was not within the purview of section 64(ii) which has been invoked by the A.O. Even section 64(iv) also is not applicable on plain reading of the provisions of the said section read with Explanation 3 thereto. The investment in bond is not envisaged as per explanation 3 for the purpose of clubbing section. Accordingly the addition made by the A.O. is deleted. 21. Aggrieved by the order of Ld. CIT(A), Revenue is now appeal before us. 22. Before us ld. DR supported the order of AO. On the other hand, Ld. AR reiterated the submissions made before Ld. CIT(A) and supported his order. 23. We have heard the rival submissions and perused the material available on record. We find that Ld. CIT(A) while deleting the addition has noted that provision of section 64 were not applicable in the present case. Before us, no material has been placed on record by the Revenue to controvert the findings of Ld. CIT(A) and we therefore find no reason to interfere with the order of Ld. CIT(A) and thu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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