TMI Blog2010 (3) TMI 1192X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee is a Company. For the assessment year under appeal, it filed the return of income on 30.10.2002 declaring business loss of ₹ 3,12,145/- and income from capital gains at ₹ 32,80,672/-, against which capital loss of assessment year 1995- 96 was set off. The Assessing Officer framed the assessment under section 143(3) determining income from house property at ₹ 1,56,187/- and other sources at ₹ 83,46,209/- aggregating to ₹ 85,02,396/-. In the assessment order, the A.O. also initiated the penalty proceedings under section 271(1)(c). Subsequently, the A.O. vide order dated 28.03.2007 levied the penalty under section 271(1)(c) in respect of taxation of income from other sources of ₹ 60,98,209 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nses capitalized cannot be allowed under section 36(1)(iii). However, it is seen that in the profit and loss account filed alongwith the return, it was mentioned by the assessee that the interest from fixed deposits of ₹ 47,51,448/- and interest from fixed deposit kept as margin money of ₹ 1,54,891/- and interest amount of ₹ 13,46,761/- receivable from Shalimar Wire Industries Ltd. has been reduced from the pre-operative expenses relating to copper project. The appellant has also relied upon the decision in the case of CIT vs.- Bokaro Steel Lt. 236 ITR 315 (SC) and also the guidelines issued by the Institute of Chartered Accountant of India in regard to its treatment of netting off of the interest income against pre-ope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s there was a clear lapse on the part of the assessee and Learned Commissioner of Income Tax(Appeals) ought to have considered the ratio of the Hon'ble Supreme Court in the case of T. Ashok Pai vs.- CIT [292 ITR 11 (SC)] and confirmed the penalty levied by the A.O. because the explanation of the assessee is not bonafide. The ld. D.R. concluded that the assessee has concealed the particulars of income, therefore, the penalty of ₹ 21,77,060/- levied by the A.O. under section 271(1)(c) be restored. 5. On the other hand, Shri Tushar Himani, ld. counsel of the assessee filed the decision dated 13.11.2009 of ITAT, A Bench in assessee s own case. He submitted that in this order, in the immediately preceding assessment year, i.e. 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest paid thereon were expended for the purpose of earning of interest income of ₹ 1,08,40,072/- during the year under consideration and, therefore. the same to be deducted for computing the income assessable under the head from other sources . In the light of this order of a co-ordinate bench, which is binding on us, we have to hold in the present case that the interest paid by the assessee to earn the interest income of ₹ 93,47,688/- should be allowed as deduction. It is not in dispute that the deposits made by the assessee on which interest was earned were made out of borrowed monies. The interest paid in respect of the borrowed monies, to the extent it is attributable to the earning of the interest income of ₹ 93,47 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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