Case Law Details
Guruji Mercantile Pvt. Limited Vs ITO (ITAT Kolkata)
Introduction: The case of Guruji Mercantile Pvt. Limited Vs ITO brought forward by ITAT Kolkata revolved around the controversy over an addition made on an interest receipt. The contention arose when the Commissioner of Income Tax (Appeals) confirmed the addition of Rs.5,64,863/- in the total income of the assessee, Guruji Mercantile Pvt. Limited. The case throws light on the jurisdictional boundaries of tax assessment authorities in India.
Analysis: The dispute originated when the CPC made an addition of Rs.5,64,863/-, an interest receipt from M/s. Mohan Impressions Pvt. Limited. The reason cited was the non-deduction of TDS by the payer of the interest. The assessee refuted the addition, highlighting that the interest was already included in their “income from other sources” and TDS was indeed deducted.
The CIT(Appeals), rather than addressing the central issue of the inclusion of the interest income in the “income from other sources”, introduced the concept of income from ‘Winnings from Lottery’ or ‘Crossword Puzzles’. They insisted on taxing such winnings at a flat 30% rate, following section 115BB, which deviated from the core dispute of the appeal.
The ITAT held that this new issue brought up by the CIT(Appeals) was out of jurisdiction, as the primary dispute revolved around the addition of Rs.5,64,863/- in the total income. The ITAT pointed out the absence of a notice for enhancement from the CIT (Appeals) and concluded that the case should have been selected for scrutiny assessment for these new issues to be considered.
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