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TMI Blog2015 (7) TMI 115X X X X Extracts X X X X X X X X Extracts X X X X ..... s of development of infrastructure projects in textile sector. The assessee electronically filed return of its income for the relevant assessment 2009-10 declaring income at Rupees NIL. Subsequently, the case was selected for scrutiny and Authorised Representative of the company attended on various dates. However, the AO assessed the total income of the assessee at Rs. 55,19,856/- after making various additions and completed the assessment u/s. 143(3) of the I.T. Act, 1961 vide order dated 29.12.2011. 4. Aggrieved with the aforesaid assessment order dated 29.12.2011, assessee appealed before the Ld. CIT(A), who vide impugned order dated 12.8.2013 has confirmed the additions made by the AO by partly allowing the appeal of the assessee vide his order dated 12.8.2013. 5. Against the order of the Ld. CIT(A) dated 12.8.2013 assessee now appealed before the Tribunal. 6. Ld. Counsel of the assessee submitted that AO while completing the assessment treated Rs. 5,91,850/- as 'income from other sources' which was earned an interest income from fixed deposits, without appreciating that the interest was in the nature of capital receipt. In this regard, assessee's counsel submitted that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditor, assessment was shown as completed on 29.12.2011 being antedated which is evident from the fact that the AO has written a line in the assessment order that till the time of conclusion of the instant proceeding no confirmation was filed. Therefore, he submitted that the purchases are duly substantiated, as all the payments have been made to the creditor through the account payee cheques within this year. Finally, he pleaded that there is no justification for treating the cash sales of Rs. 49,28,006/- as unexplained income u/s 68 which may be deleted. 7. On the contrary, Ld. DR relied upon the orders of the authorities below. 8. We have heard both the parties and perused the records especially the orders of the revenue authorities and submissions of both the parties. With regard to ground no. 1 relating to confirmation of addition of Rs. 5,91,850/- on account of interest income which was treated as capital receipt by the assessee. As per the P&L A/c, the assessee had earned interest income of Rs. 5,91,850/- on FDR with banks, though simultaneously, the assessee had debited the P&L A/c with a sum of Rs. 47,21,002/- and after setting off such expenditure against interest income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Tuticorin Alkali Chemical & Fertilizers Ltd. Vs. CIT (1997) 227 ITR 172 (SC), it was, however, held by the apex court that the computation if income under each of the five heads of income will have to be made independently and separately. There are specific rules of deduction and allowance under each head. No deduction or adjustment on account of any expenditure can be made except as provided by the Act. It was further held in this case that interest income is always of a revenue nature, unless it is received by way of damages or compensation. If a person borrows money for business purposes but utilises that money to earn interest, howsoever, temporarily, the interest so generated will be his income. Merely because it was utilized to repay the interest on loan taken by the assessee, it did not cease to be his income when the question is whether a receipt of money is taxable or not or whether certain deductions from that receipt are permissible in law or not, the question has to be decided according to the principles of law and not in accordance with accountancy practice. Accounting practice cannot override Section 56 or any other provision of the Income Tax Act. Similar views ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest earned on grant so released to it for any purpose. The interest earned shall be indicated in the UC which can either be adjusted in next release or to be refunded to Govt. Of India after in aid sanctioned is utilized." And in view of this clause the Central Govt. released a grant of Rs. 12,91,45,365/- only as against Rs. 14.36 crores which was eligible as the 2nd installment. The assessee also in the balance sheet for FY 2011-12 has reflected the interest earned on grant as capital reserves. Thus, he pleaded that the interest earned on FD made with banks out of Central Government as not the income of the assessee and rather it was to be refunded to the Central Govt. or to be adjusted against the future grant. Ld. Counsel of the assessee further submitted that it is of capital nature. He further submitted that the AO while passing the assessment order of the AY 2011-012 and the 2012-13 has also not treated the interest earned on FD as income of the assessee. 8.2 We also find that Ld. Counsel has relied upon the decision of the Hon'ble Delhi High Court in the case of Indian Oil Panipat Power Consortium Ltd. vs. ITO 315 ITR 255, Delhi High Court wherein it was held that "the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rse of assessment proceedings, it was found by him that assessee had shown sales and purchases of an equivalent amount i.e. Rs. 49,28,006/- though the assessee claimed to be in the business of setting up infrastructure projects, as a part of Central Government Scheme, on PPP Basis. Therefore, the AO was of the view that though the purchases were stated to have been effected from one party i.e. M/s Shyam Lal Goyal Textiles (Pvt.) Ltd, over the period May-July, of F.Y. 2008-09, but the same was sold through 33 different invoices in cash for an amount exactly totaling at Rs. 49,28,006/-. Initially before the A0, it was submitted by the AR on behalf of the assessee that the cash sales bills are not available but subsequently he produced 33 invoices/sales bills. Moreover none of the sales bills contain any details e.g. name and address of the parties to whom the goods were sold in cash There was even no details' regarding measurement of cloth sold either in terms of No of bales or in terms of length Moreover. There was no description of the quality or the make of the fabric, on the face of the bills. Even there were no details of cartage or transportation of consignment. We further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held to unproved, as detailed in the assessment order under reference. Moreover, while the purchases have been stated to be effected from 21.05.2008 to 08.08.2008 amounting in all to Rs. 49,28,006/- by way of transactions on different dates, the payment to the said Shyam Lal Textiles (P) Ltd has been made, subsequently after approx seven months on 21.03.2009 and afterwards upto 26.03.2009 i.e. at the fag end of the financial year, where even the appellant is stated to have sold its entire stock by August 2008 and also closed its cloth business in August 2008, itself. The cash book of the appellant company, reflects cash transfers to Pandhurna in MP of Rs. 37,50,100/- on 21.07.2008, followed by another cash transfer on 02.09.2008 of Rs. 11,78,070/- amounting in all to Rs. 49,78,170/- for the purpose of purchase of land at Pandhurna Industrial Cluster, Chhindwara, M.P. for the purpose of undertaking the said Industrial Infrastructure Upgradation Scheme (IIUS), a Govt Of India initiation on S.P.V./P.P.P basis. Therefore, as per the Ld. CIT(A) it is the immediate requirement of cash that had made the assessee to bring in picture the entire paper transaction of sale and purchase of clot ..... X X X X Extracts X X X X X X X X Extracts X X X X
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