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TAXAP/1146/2008 6/ 6 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX
APPEAL No. 1146 of 2008
=====================================================
THE
COMMISSIONER OF INCOME TAX-II - Appellant(s)
Versus
METROCHEM
CAPITAL TRUST LIMITED - Opponent(s)
=====================================================
Appearance
:
MRS MAUNA M BHATT for
Appellant(s) : 1, MR MANISH R BHATT for Appellant(s) :
1,
None for Opponent(s) :
1,
=====================================================
CORAM
:
HONOURABLE
MR.JUSTICE D.A.MEHTA
and
HON'BLE
SMT. JUSTICE ABHILASHA KUMARI
Date
: 11/11/2008
ORAL
ORDER
(Per
: HONOURABLE MR.JUSTICE D.A.MEHTA)
The
appellant-Revenue has proposed the following two questions:
[A]
Whether the Appellate Tribunal is right in law and on facts in
confirming the order passed by the CIT(A) in deleting the addition
made u/s.68 for cash credit of Rs.9,75,639/- shown as advance lease
rent received?
[B]
Whether the Appellate Tribunal is right in law and on facts in
confirming the order passed by the CIT(A) in respect of deletion of
the interest pertaining to of M/s.Ankush Finstock Pvt. Ltd.,
M/s.Montari Industries Ltd. and M/s.Jauss Polymers Ltd.?
Heard
learned counsel for the appellant. She has reiterated the
contentions raised by Revenue before the Tribunal.
In
relation to proposed question No.1, the Assessing Officer treated a
sum of Rs.9,75,639/- as cash credit taxable under Section 68 of the
Income Tax Act, 1961 ( the Act ). The assessee carried the
matter in appeal before Commissioner (Appeals) who worked out the
so-called discrepancy by considering the following details in
tabular form:
Asst.
Year
Lease
rent as per the agreement
Lease
rent adopted by the appellant company in the statement of total
income
Lease
income assessed by the A.O.
1995-96
336427
336427
336427
1996-97
4037124
4037124
5012763
1997-98
4037124
4037124
5012763
1998-99
3700697
3700697
3700697
Total
12111372
14062650
Thereafter,
Commissioner (Appeals) recorded the following findings which have
been reproduced by the Tribunal in Paragraph No.6 of the impugned
order:
8.
I have considered the rival submissions. Considering the fact that
the terms of the lease agreement have not been disputed by the
Assessing Officer inasmuch as the monthly lease rent of
Rs.3,36,427/- and a total lease rent to be paid over the period of
A.Y. 95-96 to 98-99 of Rs.1,21,11,372/- have been accepted and duly
brought to tax in the respective assessment years and also
considering the fact that there is no finding on the record that the
lease agreement between the appellant company and M/s.Poggen AMP
Nagarsheth Powertronics Ltd. lasted only for 5 months, the Assessing
Officer’s decision cannot be upheld. The Assessing Officer is,
therefore, directed to delete the addition of Rs.9,75,639/- on the
ground of unexplained credit appearing in the books of the accounts
of the appellant firm.
The
Tribunal has confirmed this order by holding that the figure given
by the lessee to the Assessing Officer was relatable to rent for two
months for the period commencing from 1.4.1996 to 31.5.1996
considering that the monthly lease rental was Rs.3,36,427/-. The
Tribunal has thus confirmed the order made by Commissioner
(Appeals).
It
is apparent that the findings recorded concurrently, both by
Commissioner (Appeals) and the Tribunal, are based on facts and
evidence on record. In absence of any legal infirmity on this count,
no question of law, much less a substantial question of law, can be
said to arise in relation to this issue.
In
so far as the second question is concerned, the Assessing Officer
brought to tax, the accrued interest in respect of three parties,
namely M/s.Ankush Finstock Pvt. Ltd., M/s.Montari Industries Ltd.
and M/s.Jauss Polymers Ltd. The assessee succeeded before the
Commissioner (Appeals). In the appellate order, Commissioner
(Appeals) recorded as under, as reproduced by the Tribunal in
Paragraph No.9 of its impugned order.
3. I
have considered the rival submissions and perused the copies of
various correspondence, legal action and the guidelines to
Non-banking Financial Companies on prudential norms for Income
Recognition, Accounting standards, Asset Classification,
provisioning for bad and doubtful debts, Capital adequacy and
Concentration of credit/ investments issued by Reserve Bank of
India. Considering the totality of facts and the norms prescribed by
the Reserve Bank of India in my opinion the interest in case of
M/s.Ankush Finstock Pvt. Ltd., M/s.Montari Industries Ltd. and
M/s.Jauss Polymers Ltd. should be taxed on cash accounting basis.
The
Tribunal has confirmed this finding.
Once
again, it is apparent that the findings recorded concurrently both
by Commissioner (Appeals) and the Tribunal are based on facts and
evidence on record. Once it has been found by both the authorities
that the debts qua the three parties had turned bad and as per norms
prescribed by Reserve Bank of India, interest receivable from the
three parties was taxable on the basis of cash method of accounting,
no question of law, much less a substantial question of law, can be
said to arise out of the impugned order of Tribunal on this issue.
In
the result, the appeal is dismissed.
(D.A.Mehta,
J.)
(Smt.Abhilasha
Kumari, J.)
(sunil)
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