TaxTMI 
TaxTMI 
2023 (3) TMI 155
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....ssed by CIT (appeal) for both the assessment years were sustained. 2. In Tax Appeal No. 21 of 2019, the respondent which is a Jharkhand State Government undertaking incorporated with the object to promote tourism in the State with PAN No. AABCJ4014D, filed its return of income for the A.Y. 2014-15 on 28.11.2014 declaring total income of Rs. 1,45,47,290/-; whereas, in Tax Appeal No. 22 of 2019, the respondent had filed the return of income for the A.Y. 2012-13 on 29.09.2013 declaring total income of Rs.1,02,48,950/-. In Tax Appeal No. 21 of 2019 the return was processed u/s 143(1) of the Income Tax Act, 1961 and selected for scrutiny through CASS. Subsequently notice u/s 143(2) was issued to the respondent corporation on 23.09.2015 and the assessment proceedings were undertaken; whereas in Tax Appeal No. 22 of 2019, notice u/s 143(2) was issued to the respondent corporation on 07.08.2013 and the assessment proceedings were undertaken. 3. In T.A. No. 21 of 2019, the final assessment order was passed on 13.12.2016 by the Deputy Commissioner of Income Tax Circle -1, Ranchi whereby the interest amount earned on the fixed deposits by the Respondent Assesse amounting to Rs.4,63,76,660/....
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.... that the learned ITAT was not justified in holding that the interest income earned on the fixed deposit is not the amount of Assesse in spite of the fact that the said interest income is covered under the "Income from other sources" as defined under the Income Tax Act. The learned ITAT should have appreciated that an executive guideline of the Ministry of Tourism cannot override a statutory provision of the Act. As a matter of fact, the learned ITAT as well as CIT (Appeals) should have appreciated that the Assesse holds the fixed deposit account in its own name and the TDS was deducted by the Bank on the interest income earned in such account which has also been shown and claimed by Assesse. He lastly submits that the orders passed by the CIT (Appeals) for both the assessment years as well as the respective impugned orders passed by the learned ITAT is incorrect and not sustainable in the eye of law, as such the impugned orders for respective assessment years be quashed and set aside. 6. Mr. Sumeet Gadodia assisted by Ms. Aakansha Mittal, learned counsel for the respondent submits that the Assesse is a government undertaking working under the instruction of the Government. Even t....
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....ng title. The law is well settled by a long catena of cases to the effect that in event of there being a diversion of income by overriding title, question of income being assessed in the hands of Assesse does not and cannot arise. Reference in this regard may be made to the case of Commissioner of Income Tax, Bombay City II, Bombay vs. Shri Sitaldas Tirathdas, Bombay, reported in AIR 1961 SC 728 wherein at para 16 it has been held as under: "16. These are the cases which have considered the problem from various angles. Some of them appear to have applied the principle correctly and some, not. But we do not propose to examine the correctness of the decisions in the light of the facts in them. In our opinion, the true test is whether the amount sought to be deducted, in truth, never reached the assessee as his income. Obligations, no doubt, there are in every case, but it is the nature of the obligation which is the decisive fact. There is a difference between an amount which a person is obliged to apply out of his income and an amount which by the nature of the obligation cannot be said to be a part of the income of the assessee. Where by the obligation income is diverted before i....
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....as taken place and the supplemental agreement dated 2-11-1962 makes the situation clear and categorical. The parties agreed the relevant date to be 30-9-1962 and not the completion of sale. Clause 3 of the agreement to which the High Court made a special reference and interpreted that by reason of the contingent event which would be subsequent to the accrual of profits, the profit cannot but be treated to be in the hands of the assessee does not withstand the test of correctness. The High Court has not laid any importance to the event which stands completed by reason of the sale agreement. There is no question of enabling the assessee to retain the profit in its own hand after the "sale agreement". The event as noticed above, has taken place and by reason of the event and in terms of the provisions of the agreement question of tracing the profit in the hands of the assessee does not and cannot arise. In any event profits of a business do not accrue from day to day but at the end of the accounting year. Profits were ascertained on 30-9-1964 when the property was transferred as such for the year 1965-66 as noted above, so question of profit accruing to the assessee does not arise. As....
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....anzie Tea Assn. [(1989) 179 ITR 295 (Cal)] also seems to be apposite. S.C. Sen, J. (as his Lordship then was) in the last-noted decision observed: "It is true that the income tax liability cannot be assigned by any agreement. The Revenue is entitled to proceed against the person who earned the income but where the income has been diverted by an overriding title even before accrual, then the Income Tax Officer cannot proceed to assess the income thus diverted as the income of the transferor. In this case, not only had the tea estates been transferred but the income accruing therefrom had also been transferred to the purchaser with effect from January 1, 1969. All its manufacturing activities as from that date were on behalf of the purchaser. The income attributable to the manufacturing activity accrued to the purchaser. I fail to see how the income realised from sale of such tea can be assessed as the income of the vendor. In this connection, reference may be made to the observations made by G.K. Mitter, J. in the case of CIT v. Tea Producing Co. of India Ltd. [(1963) 48 ITR 200 (Cal)] where it was stated that before a person could be assessed under Section 10, it must be shown ....