TaxTMI 
TaxTMI 
2025 (11) TMI 90
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....ncome : * Bank has created lien on the interest income accrued to Escrow Account. * Notice of cancellation was given and therefore, the agreement was cancelled from my end. * Confirmation letter was given by bank that income was credited to my A/c due to technical glitches. 3. The order passed by the AO is without jurisdiction and be declared null and void. 4. The appellant craves its right to add to or alter the NIL Grounds of Appeal at any time before or during the course of hearing of the case." 3. Brief facts of the case are that the assessee is an individual and income of Rs. 5,67,960/- declared in the return of income for A.Y. 2017-18 on 05.08.2017. Case selected for Limited Scrutiny through CASS for the reason of "Deduction against income from other sources' followed by validly serving statutory notices u/s. 143(2) and 142(1) of the Act. During the course of assessment proceedings, ld. Assessing Officer (AO) noticed that the assessee has received interest on Fixed Deposit Receipts at Rs. 48,08,119/- but has also claimed similar deduction u/s. 57(iii) of the Act at Rs. 48,08,119/- and also the assessee has not claimed the tax de....
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....aid portion of Rs. 48,08,119/- was also not been claimed by me as the said interest income also does not belong to me. Thus, income declared and offered to tax under this head was Rs. 5,84,948/-. However, claiming deduction u/s 57 was mainly for the reason that only real income be taxed and appropriate disclosure be given in ITR In regard to the fact that the income does not belong to me, I submit as under: 1. I along with my family members have entered into three different development agreements with M/s Dhardhar Developer Pvt. Ltd. (now known as M/s Sangamcity Township Pvt. Ltd.) in respect of various lands situated at Sangamwadi, Pune vide agreements dated 24/04/2007 2. The essence of the agreement was as under. * The owners (I and other family members) were paid first tranch at the time of execution of the agreements * Second tranch was payable after 11 months from the date of execution of the agreements. * In addition to the above said payments, we were also to receive certain constructed units. * As per the agreements, the second and third installments of sale considerations were to be deposited into an Escrow Acc....
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....t income was credited to my A/c due to technical glitches The bank credited the same on my account and also duły deducted TDS on technical ground citing their inability to close Escrow Account for the want of signature of the developer. Copy of the letter of bank submitted during the course of assessment is attached as Annexure 11. Thus, I pray your honor to consider the above and delete the addition made. I pray your honor to consider the real income theory and delete the addition On without prejudice basis, I also state that bank has created lien (the same can be verified from the letter attached as Annexure 3) on the interest income accrued to Escrow Account which means I cannot even withdraw the money lying in the account. Therefore, the receipt which is uncertain cannot be taxed in the hands of assessee. Therefore, the addition may please be deleted. The revenue recognition is governed by Accounting Standard 9- Revenue Recognition issued by ICAI. The relevant portion is reproduced below for easy reference: 13. Revenue arising from the use by others of enterprise resources yielding interest, royalties and dividends should only be recognized when ....
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....laced the following submissions : "May it Please the Hon'ble Tribunal, 02. The appellant before the Hon'ble ITAT, SMC Bench Pune sought information regarding the status of the assessment/appeals in the case of 16 people who received interest. In this regard the AO submitted reply dated 07/04/2025. The AO submitted that in the list provided above letter only the name of the persons have been mentioned PAN of none of the person have been mentioned After thorough search of physical record, the case records of Shri Shankar B. Nikam has been case found. The AO further submitted regarding the AY 2016-17 the income was assessed of Rs. 45,33,262/- on account of interest income received from Union Bank of India. The CIT(Appeal) dismissed the assessee's appeal and the Hon'ble ITAT Pune vide appellate order 293/PUN/2024 dated 10/05/2024 allowed the assessee's appeal for the reason that the assessee had deceased before the date of issue of notice u/s 148 of the Act with remark "All other pleadings on merits stand rendered academic With regard the assessment year 2017-18 an amount of Rs. 44,21,7048/- is disallowed under section 57 of the Act. The case is pe....
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.... technical glitches. We further observe that ld.CIT(A) has dealt with the issue of deduction u/s. 57 of the Act and along with direction to ld. Jurisdictional Assessing Officer to give credit of TDS as per Form No.26AS after necessary verification has observed as follows : "4. DECISION 4.0 The Ground No. 1 is with regard to the disallowance of deduction claimed under sec. 57 of the IT Act. 4.1 As per the assessment order, the assessee has received interest on FD kept with bank amounting to Rs. 48,08,119/-, The bank has deducted TDS on the aforesaid amount and deposited in the name of the assessee. While filing the return of income, the assessee has shown interest income of Rs. 48,08,119/- and claimed deduction of similar amount as deduction u/s. 57 of the IT Act. It is held by the AO that the interest of Rs. 48,08,119/- belong to assessee as bank account and FD is in the name of the assessee, Further, the bank has deducted TDS and deposited in the name of the assessee. As per the provisions of sec. 57, the expenditure incurred for earning income is allowed as deduction. In view of the discussion, a sum of Rs. 48,08,119/- was disallowed and added to the to....
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...., in view of provisions of section 57 of the Income Tax Act, 1961 and the facts of the case, the deduction u/s 57 of Income Tax Act, 1961 may not be allowed if deemed fit as the deduction can only be claimed for the expenditure occurred to earn the income, whereas, there is no any expenditure claimed by the assessee to earn the interest income received from the escrow account for which the deduction is claimed u/s 57 of the Act, therefore, the case may be decided on the merit. The remand report in this case is submitted for your kind perusal and information." 4.3.1 A notice u/s. 250 was issued to the assessee requesting to file a rejoinder to the remand report forwarded by the AO. In response, the assessee made submission. The relevant part of the submission is produced as following: "1) The requisition of a remand report called by your honor does not seem to be necessary as rightly pointed out by the Ld. AO in his report that there is no fresh evidence filed by us. 2) We have prayed before your honor to consider the evidence already filed by us and review the conclusions made by the Ld. AO including interpretations and effect of evidence before the AO wh....
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..... 2. No notice u/s 127/129 was served on me, therefore the order passed by AO please be declared as null and void 3. On without prejudice basis, if the Addition of Interest Income is upheld, then TDS credit be allowed even though not claimed by me while filing the ITR. 4. On without prejudice basis, if at all the addition of Interest Income is confirmed, then AO be directed to recover the tax from Escrow Account only. 5. On without prejudice basis, if at all the addition of Interest Income is confirmed, and in future, due to court order, it is concluded that that the interest income did not belong to me, appropriate direction be given to AO to refund back the taxes levied on me today on such interest Income......" 4.4 I have gone through the grounds of appeal, statement of facts, assessment order and the submissions of the appellant. Remand report submitted by the AO has also been perused. During the year under consideration, the appellant has received an interest of Rs. 48,08,119/- on the FD kept with bank on which TDS has also been deducted by the Bank and credited to the government account under the PAN of the appellant. Under the cir....
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....the record. Appellant is directed to file all the required documents before the JAO after receipt of this order. Appellant gets relief. Ground No. 4 of appeal is treated as allowed. 7. Lastly, vide ground No. 5 the appellant craves to leave, adduce additional grounds. Since no such option has been exercised by the appellant during appeal proceedings, the same is dismissed as infractuous. 8. In the result, the appeal is partly allowed." 9. Now on going through the above finding of ld.CIT(A) as well as details filed in the paper book, we observe that the assessee along with other family members entered into three different Development Agreements with M/s. Dhardhar Developer Pvt. Ltd. (now known as M/s. Sangamcity Township Pvt. Ltd.) in respect of various lands situated at Sangamwadi, Pune vide agreements dated 24.04.2007. The lands for which Development Agreement was entered were Agricultural lands and as per the Agreement amount deposited into Escrow Account were payable to the assessee and other co-owners after conversion of the land from Agricultural zone into Residential zone. The possession of the land was also with the owners. However, since the land was no....