2011 (7) TMI 66 - DELHI HIGH COURT

Reassessment - Interest income on FDR - Income from other sources - It was only during the proceeding of AY 2001-2002, that the AO noticed that the interest income of Rs.93,81,222/- has escaped assessment and he also noticed that on the same facts, the interest income for the AY 2001-2002 was charged to tax as Income from Other Sources - It is noted that the impugned assessment is in response to notice under Section 148 of the Act and the Act does not specifically provide that the assessment made under Section 147 of the Act will be after issue of the notice under Section 143(2) of the Act - assessee was contesting rejection of bid in the High Court, the amount was kept deposited in the shape of FDs only to earn interest till such time the issues with MPSEB and investing company were resolved. The interest earned on these investments cannot be related to setting up of business - Held that: interest earned by the assessee on FDs is assessable as income from other sources and any set off of the same cannot be given to the assessee as pre-operative expenses - Decided in favour of the revenue