2017 (12) TMI 1164 - AT - Income Tax

Tribunal Upholds Income Tax Appeal Decision, Emphasizes Correct Application of Law

The Tribunal upheld the Commissioner of Income-Tax (Appeals) decision, emphasizing that the Assessing Officer correctly followed the Commissioner of ... Revision u/s 263 - Held that:- As per the provisions of IT Act, the CIT(A) is not vested with the powers to adjudicate the orders of the CIT. Since it is specific remand to the AO, the AO is bound to follow the direction and the Ld.CIT (A) cannot adjudicate the merits of the directions of the CIT. Since the AO has given effect to the order of the CIT u/s 263 correctly by making addition which was confirmed by the Ld.CIT(A), we do not find any reason to interfere with the order of the Ld.CIT(A), hence, we uphold the order of the Ld.CIT(A) and dismiss the appeal of the assessee on this issue. Addition interest received on which the income is estimated - Held that:- In this case, the AO has not made out a case for making the addition of interest as income from other sources separably. As per the judicial precedents, once the income is estimated no income required to be brought to tax separately. During the appeal hearing, the Ld.AR did not make out case that the impugned interest is business receipt and the Ld.DR also failed to produce any other evidence to establish that there is a case for making the addition of interest income separately. Therefore, we are of the considered opinion the issue needs further verification to hold whether the interest is a separate source of receipt other than from the source of business or not. Therefore we set aside the order of the CIT(A) and remit the matter back to the file of the AO to examine the correctness of assessee’s claim that the interest forms part of business income or not and decide the issue afresh on merits. Assessee’s appeal on this ground is allowed for statistical purposes. Issues involved:- Jurisdiction of CIT(A) on order passed u/s 143(3) r.w.s. 263- Correct application of law in allowing depreciation from estimated income- Adjudication of interest received on contract worksAnalysis:1. Jurisdiction of CIT(A) on order passed u/s 143(3) r.w.s. 263:- The appeal was against the order of the Commissioner of Income-Tax (Appeals) for the assessment year 2010-11.- The CIT passed an order u/s 263 directing the AO to add depreciation of a specific amount to the total income.- The CIT(A) declined to interfere with the order of the CIT, stating that the jurisdiction of the CIT(A) on such orders is limited to ensuring correct implementation.- The Tribunal upheld the decision, emphasizing that the AO correctly followed the CIT's direction, making the grounds related to the merits of the revision order irrelevant to the appeal.2. Correct application of law in allowing depreciation from estimated income:- The CIT's order directed the AO to add depreciation from the estimated income, which the assessee contested.- The assessee argued that the CIT's order was not in accordance with the law laid down by the jurisdictional High Court.- The Tribunal noted that the assessee did not appeal the CIT's order u/s 263, making it final and binding.- The Tribunal upheld the CIT(A)'s decision, stating that the AO correctly implemented the CIT's order, and dismissed the appeal on this issue.3. Adjudication of interest received on contract works:- The CIT directed the AO to decide the issue of interest received on contract works in accordance with the law.- The AO made a separate addition for interest received, which the CIT(A) upheld.- The Tribunal observed that once income is estimated, there is no need for a separate addition for interest unless it qualifies as income from other sources.- The Tribunal remitted the matter back to the AO for further examination to determine if the interest forms part of business income, allowing the appeal on this ground for statistical purposes.This detailed analysis covers the issues of jurisdiction of CIT(A), correct application of law regarding depreciation from estimated income, and the adjudication of interest received on contract works as addressed in the legal judgment by the Appellate Tribunal ITAT Visakhapatnam.