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TMI Blog2024 (11) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... t does not has any conclusive ownership. The fact of the matter however remains that the issue of final ownership is yet to be decided by the court. The assessee therefore cannot say that it is permanently excluded for taxation qua interest earned from the said FD. To allay the apprehension of revenue, the assessee has filed during present proceedings an affidavit, principally to the effect that in the event of ownership of the said FD vested back to him, it shall be liable for payment of due taxes on the interest income for the relevant period. Accordingly, we set aside the order of the Lower Authorities and direct the assessing officer to consider and re adjudicate afresh, the issue of taxation of interest income over the impugned FD, only once the Hon ble High Court decides upon its ownership. Accordingly, the grounds of appeal raised by the revenue are allowed for statistical purposes only. Penalty u/s 271(1)(c) - Where the quantum additions stand set aside there wouldn t be any tax on concealed income for levy of penalty. Therefore in the light of above directions to the Ld AO we also set aside the orders of lower authorities. The Ld AO may decide the issue of imposition of pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee was in receipt of interest income of Rs. 2,46,16,767/- from the State Bank of India Erode on which TDS of Rs. 24,61,681/- was deducted. As the assessee had not filed any Return of Income (ROI) for AY under consideration, the Ld. AO proceeded to issue notice under section 148 r.w.s 147 of the Act requiring filing of income tax return. No ROI was filed. There was no response to repeated notices under section 142(1) 144 to file reasons for non-disclosure of interest income. The Ld. AO therefore proceeded to pass ex parte assessment order dated 13/3/22 supra by making addition of impugned interest income of Rs. 2,46,16,767/- as income from other sources. 5.0 The Ld. Counsel informed that aggrieved by the order, the assessee preferred an appeal before the Ld. CIT(A) and made detailed submissions qua peculiar facts of the case relying upon a catena of judicial pronouncements to allude that it is not liable for payment of any tax on interest income as it has not received any . The Ld. First Appellate Authority deleted the addition made by the AO. Aggrieved by the same the Revenue has filed this appeal challenging the order of Ld CIT(A). 6.0 The Ld. Counsel for assessee brought to our ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that the assessee,and its group companies CHPL, SPIL and KCPAHL etc had also staked their respective claims over the said sum which was lying in their respective accounts, the Hon ble High Court of Delhi vide its order dated 18 November 2005 (page 26 to 58 of paper book filed during present proceedings) had confirmed the interim order of attachment of the moneys made on 17 December 2004 and had further directed all the parties to remit the moneys received by them to the account of DAIL with ABN Amro Bank, Haddows Road, Chennai and the same was to be remitted to the account of Canara Bank. In support of its contentions the Ld counsel invited reference to Paragraph 72 of the said order dated 18 November 2005 which read as follows: - Interim order dated 17th December 2004 is accordingly confirmed. Consequence would be that the amount which has been transferred from ABN AMRO Account No. 1014374 of the company to CHPL and other companies shall be remitted back by those parties to the account of the company maintained with ABN AMRO Bank. Needful in this respect shall be done within two weeks. After receiving this amount, the ABN AMRO Bank shall remit this amount to Canara Bank. It is b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rected the State Bank of India, Erode Branch to transmit the entire amount of Rs. 25 Crores lying in the Fixed Deposit together with the accrued interest thereon to Canara Bank, Green Park Branch. The operative portion of the said order read as under: - In view of the consents given by Mr. K.C. Palanisamy, Mr. Chandran Ratnaswamy and Mr. Ramasamy Athappan, the Managing Director and nominee Directors, respectively, of Cheran Enterprises Pvt. Ltd., (CEPL), it is considered just necessary and proper to direct the State Bank of India, Erode Branch, Tamil Nadu, to transmit the entire money lying with the said State Bank of India branch to the credit of CEPL along with the interest, that may have accrued thereon till date, to the Canara Bank, Green Park Branch, New Delhi, under intimation to the latter, forthwith. The Canara Bank upon receipt of the said money from the State Bank of India, Erode Branch shall deposit the same in an interest-bearing fixed deposit initially for a period of one year. It is, however, made clear that the entitlement of the said amount shall be subject to further orders/directions that may be passed in the company petition with regard to its disbursement. (Emph ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he interest income can be recognized only when there is no uncertainty and significant scope to receive the same. Further the same shall be subject to tax in the year in which it is actually received by the assessee or the right to receive is accrued to the assessee. The relevant extract of the ruling was extracted as under : 12. From the above, it is apparent that the interest income of the assessee can be recognized only when there is no uncertainty and a significant scope to receive the same. Therefore, in the case of the assessee the accrued interest on the bank deposit frozen by the DVAC, wing of the Govt. of Tamil Nadu cannot be treated as interest income of the assessee during the relevant assessment year. Hence, we hereby direct the Learned Assessing Officer to delete the interest income of INR 36,10,000 /- while computing the total taxable income of the assessee. 8.3 That the Hon ble Bangalore Tribunal in the case of Bellary Iron-Ores Pvt. Ltd. v. ITO [2023] 156 taxmann.com 392 has held that interest accrued on bank deposits subject to CBI s prohibitory order cannot be treated as income until the assessee actually receives it from bank, even though it was subject to deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh proceeding u/s 147 r.w.s 148. The Ld. DR would like to make us to believe that the issue about the confirmed ownership of FD under consideration is still subjudice. The Ld. DR has raised an apprehension, that with the present order of Ld. CIT(A) deleting the addition, in coming future, in case the Hon ble Courts decide that the said FD belongs to the assessee, then at that stage the revenue would not have any mechanism left with it to tax the same. 14.0 We have heard rival submissions in the light of material available on records. It is an undisputed fact of the case that the assessee was exercising a legal ownership over the impugned FD of Rs. 25 Crs maintained with Erode Branch of State Bank of India. It is also an undisputed fact that the assessee has and is contesting the decision of Hon ble Delhi High Court directing its remission to Canara Bank, Delhi. It is also an undisputed fact that Hon ble Delhi High Court has directed that the ownership over the said FD is to be kept in open till a final decision qua its ownership is taken by the Hon ble Court. Thus, in a situation where the ownership per se of the FD is in question, the decision of the Ld. First Appellate Authority ..... X X X X Extracts X X X X X X X X Extracts X X X X
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