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2019 (4) TMI 271 - AT - Income TaxRevision u/s 263 by CIT(IT) - different interpretation of a decision of court relating to assessee - directing the AO to assessee the FD interest, which is in the name of Ferani Hotels Pvt. Ltd. as income and holding the assessment as erroneous and prejudicial to the interest of the Revenue - HELD THAT:- AO had conducted enquiry before completion of assessment. The AO had issued notices u/s 133(6) of the Act to Ferani as well as Indian Bank and obtained required information. The AO had also examined the judgment of Hon’ble Bombay High Court NUSLI NEVILLE WADIA AND OTHERS AND VICE-VERSA. [2012 (7) TMI 1088 - BOMBAY HIGH COURT] and interpreted in her own way the directions. By interpreting the directions in her own way the AO had come to conclusion that the amounts collected by Ferani from Flat purchasers constituted assessee's income liable to be taxed in A.Y. 2013-14. Without going to the merits or demerits of the AO's interpretation of the High Court judgment, we are of the considered opinion that the evidence on record shows that the AO had applied her mind to the contents of Hon’ble Bombay High Court judgment. Wherever the AO found that inference was required to be drawn against the assessee, such inference was drawn. The same judgment had directed Ferani to maintain account in respect of sums collected from Flat purchasers and further directed Ferani to invest the amounts collected in Fixed Deposits which would be governed by the final order of the Trial Court. If interpreting the said directions of the Court to mean that the deposits were made by Ferani and in that view, the AO did not include the interest in the assessed total income then it would only mean that the AO had followed one of the legal course permissible in law. Since in AO's opinion interest on FD was not assessable as assessee's income, the AO also did not allow the credit for taxes paid by way of TDS from interest on FD which by CIT's own admission was reported by the Bank in Statement-26AS. According to us, in such circumstances it was not a case where there was any failure on the part of the AO to conduct proper enquiries and gather relevant information. The AO had in fact gathered relevant material and information from Ferani & Indian Bank. CIT sought to interpret the directions of Hon’ble Bombay High court in a manner different from the AO and has directed the AO to assess even the interest on FD as assessee's income. We also noted that the CIT has not brought on record any cogent & conclusive material which would prove or show that the course followed by the AO was unsustainable in law. When the AO after conducting the enquiries, which the circumstances demanded, had followed one of the course permissible in law, then it was not open for the CIT to treat the assessment order erroneous within the meaning of Sec. 263. See Malabar Industrial Company Vs CIT [2000 (2) TMI 10 - SUPREME COURT]. Hence, we quash the revision order and allow the appeal of assessee.
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