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Income Tax - Case Laws
Showing 81 to 100 of 192 Records
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2005 (2) TMI 446 - ITAT BOMBAY-I
Business Income ... ... ... ... ..... While computing taxable income, the assessee estimated the cost of construction of 24 flats and claimed the same as deduction. The assessing authority disallowed the claim but the CIT(A) held that the construction and sale of flats were subject to the liability attached to it in the form of construction of other sets of flats and shopping complex, and the income of the assessee could be rightly worked out only if the expenditures towards construction of those flats and shopping complex also were taken into consideration. The above position of the CIT(A) was confirmed by the Tribunal in the said order holding that the liability was real and had to be deducted in computing the taxable income of the assessee. 21. In the facts and the circumstances of the case, we direct the assessing authority to allow the amount of Rs. 1,08,16,500 as deduction in computing the taxable income of the assessee-company. 22. In result, this appeal filed by the assessee is allowed. Order accordingly.
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2005 (2) TMI 445 - ITAT BOMBAY-I
Maintainability ... ... ... ... ..... isfied and the conditions were fulfilled. So according to us, at that stage, it was catastrophic to withdraw the exemption already granted under s. 10(15)(iv)(f). Due to the withdrawal of the exemption the impugned order under s. 195(2). now under dispute was passed directing to deduct withholding tax at the rate of 20 per cent. To arrive at a logical conclusion first we hold that, considering the totality of the facts, circumstances, conditions of the scheme, evidences of utility of the funds and the legal matrix of the case the withdrawal of exemption was unwarranted. Consequent thereupon we also hold that the appellant-company was not liable to deduct withholding tax at the rate of 20 per cent in respect of the interest payment of US 105,902 to M/s Deutsche Bank-AG. With the result, we hereby quash the order passed under s. 195(2) of the IT Act as well as reverse the findings of learned CIT(A). We order accordingly. 23. In the result, the appeal of the assessee is allowed.
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2005 (2) TMI 444 - ITAT BOMBAY-I
Additional Ground ... ... ... ... ..... y, the impugned block assessment is liable to be set aside. 68. In the facts and circumstances, the impugned block assessment order is set aside on the following short grounds (i) The search has not brought out any evidence and material to hold that the deductions claimed by the assessee-firm under ss. 80HHC and 80-IA were false. (ii) The deductions allowed under ss. 80HHC and 80-IA have been withdrawn by the assessing authority on the basis of materials already disclosed to the Department in the course of regular assessments. 69. As the block assessment order is set aside on the grounds stated above, we do not find it necessary to consider the other grounds, both of law and of facts, raised by the assessee-firm. 70. As the impugned assessment is held as bad in law and set aside, the grounds raised by the Revenue in its appeal become infructuous. 71. In the result, the appeal filed by the assessee is allowed and the appeal filed by the Revenue is dismissed. Order accordingly.
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2005 (2) TMI 443 - ITAT BOMBAY-G
Interest On Borrowed Capital ... ... ... ... ..... ide para 13 hereinabove, we delete the addition of Rs. 66,220 sustained by the CIT(A) for the asst. yr. 1991-92 as well and allow the grounds of the assessee on this issue. 28. The next grievance of the assessee in this appeal is that the CIT(A) erred in sustaining disallowance of interest amount of Rs. 5,640 on account of alleged cash balance held by the assessee. Facts and circumstances leading to the disallowance in question are similar to those considered by us while considering corresponding disallowance made by the AO and sustained by the CIT(A) for the asst. yr. 1989-90. Hence, following our decision for that year vide para 5 hereinabove, we delete the addition of Rs. 66,220 sustained by the CIT(A) for the asst. yr. 1991-92 as well and allow the grounds of the assessee on this issue. 29. In the result, appeal of the assessee for the asst. yr. 1991-92 is allowed. 30. To sum up, both the appeals of the assessee are allowed and the only appeal of the Revenue is dismissed.
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2005 (2) TMI 442 - ITAT BOMBAY-F
Income From Other Sources - interest income earned during the pre-operative period - deductible u/s 57(iii) - HELD THAT:- Since consolidated details of expenses have been maintained, apportionment has been done by the assessee on pro-rata basis. It is seen that the assessee-company has also taken into account the various administrative expenses. On estimate basis, the assessee-company has apportioned these administrative expenses as pertaining to earning of interest income. In our view, all administrative expenses have been primarily incurred for the purpose of the assessee's business and the assessee-company is not required to incur such administrative expenses for earning interest income, which flows from the term deposits made with the banks. Therefore, in our view, the administrative expenses or part thereof cannot be allowed u/s 57(iii).
Only interest expenditure is required to be apportioned to the investment which are yielding interest income to the assessee. The Assessing Officer is, therefore, directed to work out the quantum of interest expenditure, which is allowable u/s 57(iii) on pro-rata basis as per the details already made available by the assessee and reproduced by the ld. CIT(A) in his order, in respect of all the three assessment years. Opportunity shall be allowed to the assessee.
In the result, while the appeals are allowed.
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2005 (2) TMI 441 - ITAT BOMBAY-E
... ... ... ... ..... sessee are not applicable because either they pertain to assessment year prior to 1993-94, insertion of section 64(1A) of the Act or regarding allowance of deduction which are to be allowed for computing the income under a particular head of income for example the decision of Karnataka High Court in the case of S.K. Nuyak the issue was regarding allowance of standard deduction for the purpose of including income from salary of spouses in the hands of husband (assessee). 19. For the aforesaid reasons, we hold that prima facie adjustment for both assessment under appeal was correctly made by the Assessing Officer and Learned CIT(A) clearly erred in deleting the same on the ground that issue regarding allowance of addition under section 80L of income of minor child clubbed under section 64(1A) is of debatable nature. We, therefore reverse the order of the CIT(A) and prima facie adjustment made by the Assessing Officer are restored. 20. In the result both the appeals are allowed.
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2005 (2) TMI 440 - ITAT BANGALORE-A
... ... ... ... ..... g different provisions of the IT Act, 1961. In the present case, the assessee has furnished the details regarding her business, investments in such businesses, sources of income, etc. Through her letter dt. 15th May, 1995, in compliance of the notice issued by the ADI, Madurai, under s. 131 of the IT Act. Disclosing certain details and particulars in compliance of a requisition made by an appropriate authority under s. 131 of the IT Act amounts to disclosure of such particulars and details for the purposes of the IT Act, 1961. In view of our finding above and relying on the decision of Hon ble Supreme Court in the Tarsem Kumar case and decision of Tribunal, Chennai, addition of Rs. 50 lacs is required to be deleted. 7. The grounds relating to validity of notice, charging of interest under s. 158BFA(1) and initiating proceedings under s. 158BFA(2) were not pressed before us. The same are therefore dismissed for want of prosecution. In the result, the appeal is partly allowed.
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2005 (2) TMI 439 - ITAT BANGALORE-A
Rectification of mistakes ... ... ... ... ..... e case of Volkart Brothers and Ors., an order cannot be rectified under s. 154 when two views are possible on the subject-matter. Hon ble Karnataka High Court in God Granites case held that prima facie adjustment is not permissible in an intimation under s. 143(1)(a) where two plausible views are existing. In the present case, it is seen that rectification under s. 154 was effected to an intimation under s. 143(1)(a). What cannot be made by way of prima facie adjustment in s. 143(1)(a) cannot be done indirectly by resorting to s. 154. We accordingly set aside the order passed under s. 154. 5.1 Learned Departmental Representative relied on the Hon ble Karnataka High Court in the case of Nicco Corporation Ltd. From the facts it is not clear whether the said company was distributing dividend or not. In absence of the said fact which is very relevant for the issue on hand, we are unable to apply the said decision to hold against the assessee. In the result, the appeal is allowed.
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2005 (2) TMI 438 - ITAT BANGALORE-A
Double Taxation Relief - purchase of software - payment made to the foreign companies - Whether, the payment is royalty or not - HELD THAT:- According to the ITO (TDS), the payment made by the assessee-company to the foreign companies for purchase of software is to be treated as royalty u/s 9(1)(vi) of the IT Act read with section DTAA of relevant countries.
In view of the provisions of section 90(2) of the Act, we have to give preference to the definition as provided in the treaties. Apart from the provisions of the treaties, we have to consider the licence agreement entered into by the assessee with foreign companies which has been quoted at page 17 of the paper book filed by the revenue. It has been submitted by the revenue that under such an agreement, the developer of the software licences its intellectual property in the software in favour of the licensee. As a result of such agreement, the licensor of the software retains ownership over the copyright in the software and protects such copyright in the licence
On perusal of the agreement between the parties, we are of the view that in the present case also what the assessee had acquired is only a copy of the copyrighted articles i.e., software, whereas the copyright remains with the owner, i.e., foreign parties.
We find that the incorporeal right to software i.e., copyright remained with the owner and the same was not transferred to the assessee. We have also noticed the definition of 'royalty' in the DTAA, which has been quoted above. The primary condition for bringing within the definition of 'royalty' in DTAA is that the payments of any kind received as consideration for the use of or right to use any copyright of a literary, artistic or scientific work etc., Right to use of a copyright is totally different from right to use the programme embedded in a cassette or CD or it may be a software.
In this case, the assessee had acquired a ready made off the shelf computer programme for being used in its business. No right was granted to the assessee to utilize the copyright of the computer programme. The assessee had merely purchased a copy of the copyrighted article, namely, a computer programme which is called 'software'. Looking to the circumstances of the case and considering the fact that the definition of 'royalty' as provided in the treaties does not apply to the facts of the case. We are of the view that the finding recorded by the authorities below cannot be sustained. Accordingly, we hold that the remittance made by the appellant for purchase of software is not an income in India, hence, no tax is to be deducted in India under section 195 of the Income-tax Act, 1961. Since we have decided the issue on merit, therefore, we are not going into the technical objections raised on behalf of the assessee.
In the result, the appeals are allowed.
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2005 (2) TMI 437 - ITAT AMRITSAR
Jurisdiction ... ... ... ... ..... d to be let out. Considering the above discussion and the case law referred to above, we set aside the orders of the authorities below. The addition is uncalled for in the matter. The same is accordingly deleted. As a result, the appeal of the assessee is partly allowed. 24. ITA No. 386/Asr/2002-(Assessee s appeal-Asst. yr. 1999-2000) This appeal is filed by the assessee on merits. There is no challenge to the jurisdiction of the AO. In this case, the AO estimated the ALV at Rs. 81,451 and the CIT(A) allowed the appeal of the assessee partly restricting the AL V of the property at Rs. 54,000. The facts and the circumstances are identical as are decided in ITA No. 491/Asr/2001. By following our earlier order, we set aside the orders of the authorities below, delete addition and allow the appeal of the assessee. 25. Considering the facts of the case, parties shall bear their own costs. 26. As a result, ITA No. 491/Asr/2001 is partly allowed and ITA No. 386/ Asr/2002 is allowed.
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2005 (2) TMI 436 - ITAT AMRITSAR
Reason To Believe ... ... ... ... ..... e submitted that the assessee got the benefit of TDS certificate in the asst. yr. 2000-01 as the whole amount of interest of Rs 8,54,764 was shown in the asst. yr. 2000-01. The contention of the learned Departmental Representative regarding filing of the revised return is liable to be rejected because of the finding given above. 14. Considering the above discussion and the case law referred to above, we set aside the orders of the authorities below and hold that the interest income did not accrue in favour of the assessee on the debit balance of M/s Arihant Cotsyn Ltd. for the assessment year under appeal, i.e., 1999-2000. The addition of Rs. 8,54,764 is, therefore, unwarranted. We delete the same. The appeal of the assessee is accordingly allowed on this issue. 15. The learned counsel for the assessee submitted that other grounds are consequential in nature and as such call for no interference. 16. As a result, the appeal of the assessee is allowed partly as indicated above.
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2005 (2) TMI 435 - ITAT AMRITSAR
Condonation Of Delay ... ... ... ... ..... and for promoting the cause of justice, I am of the view that the CIT(A) ought to have condoned. the delay in filing the appeal I, therefore, set aside the order of CIT(A) and direct him to treat the appeal on time. This ground of appeal is allowed. 6. The next ground relates to sustaining the penalty imposed by the AO under s. 271(1)(c) of the IT Act. The learned CIT(A) has dismissed the appeal in summary manner without dealing with submissions of the assessee probably the reason that delay in filing the appeal was not condoned. Since the delay in filing the appeal is now condoned, I set aside the order of the CIT(A) and restore the matter on his file for deciding the same de novo after allowing proper opportunity to both the parties. Needless to say that CIT(A) shall pass a speaking and reasoned order while re-deciding the matter. This ground of appeal is treated as allowed for statistical purpose. 7. In the result, the appeal is treated as allowed for statistical purposes.
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2005 (2) TMI 434 - ITAT AMRITSAR
Reassessment ... ... ... ... ..... d ab initio. Before parting with this issue, it must be mentioned that even though the assessment year involved was 1988-89 and amended provisions came into being only w.e.f. 1st April, 1989, i.e., asst. yr. 1989-90, the law applicable would be one, as it existed on the date of issue of notice. Reliance in this regard is placed on the judgment of Hon ble Jharkhand High Court in the case of Navketan Enterprises vs. CIT (2001) 169 CTR (Jharkhand) 562 (2001) 250 ITR 508 (Jharkhand). In the light of these facts and circumstances of the case and legal position discussed above, I quash the assessment order as bad in law and resultant order of the CIT(A) is also quashed. Accordingly, all the grounds of appeal are allowed. 9. As regards the merits of the case, it is mentioned that since the assessment order has been quashed, I do not consider it necessary to discuss the merits of the case. Therefore, this ground is disposed of in these terms. 10. In the result, the appeal is allowed.
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2005 (2) TMI 433 - ITAT AMRITSAR
... ... ... ... ..... 978) 111 ITR 248 (P and H), the Hon ble Punjab and Haryana High Court has held that doctrine of mens rea has no application to the taxing statutes. Where the assessee had failed to furnish a return of income without a reasonable cause, this was sufficient for the imposition of penalty under s. 271(1)(a) of the IT Act. In the present case, the assessee has failed to do so. Therefore, it is clear that the assessee has no explanation to offer for such inordinate delay. Accordingly, the submission of the assessee that the penalty has been imposed without allowing an opportunity is without any merit. This ground of appeal is also rejected. 10. In the light of these facts and circumstances of the case and the above legal position, I am of the considered opinion that the learned CIT(A) has rightly sustained the impugned penalty. The order of the CIT(A) is upheld and the grounds of appeal of the assessee are rejected. 11. In the result, the appeal filed by the assessee is dismissed.
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2005 (2) TMI 432 - ITAT AMRITSAR
... ... ... ... ..... ce-server before ordering service by affixture. He is only required to satisfy himself that the service through normal means was not possible. This could be done on the written report of the notice-server. The fact recorded by the AO in the penalty order that the learned counsel was contacted for finding out the address of the assessee has not been controverted by the assessee. Under these circumstances, the plea of the assessee that the order for imposing penalty has been passed without allowing proper opportunity has no merit. 9.2 In the light of these facts and circumstances of the case, I am of the considered opinion that the learned CIT(A) was not justified in sustaining the impugned penalty. Accordingly, I quash the order for imposing penalty without jurisdiction and resultant order of CIT(A) and cancel the impugned penalty. Accordingly, additional grounds of appeal in regard to ITA No. 139/Asr/2002 are allowed. 10. In the result, the appeal of the assessee is allowed.
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2005 (2) TMI 431 - ITAT AMRITSAR
Capital Or Revenue Expenditure ... ... ... ... ..... e learned counsel for the assessee i.e., four judgments of Hon ble Kerala High Court in the cases of (i) CIT vs. Co-operative Sugar Ltd., (ii) CIT vs. Co-operative Sugar Ltd., (iii) Co-operative Sugar Ltd. vs. CIT, and (iv) CIT vs. Madras Spinners Ltd., where the expenditure incurred on replacement of the worn out machinery was held to be revenue expenditure, irrespective of the fact that the expenditure so incurred was for the better conduct and improvement of the existing business. The other judgments of the Hon ble Supreme Court in the cases of Alembic Chemicals Works Co. Ltd. and Empire Jute Co. vs. CIT (1980) 17 CTR (SC) 113 (1980) 124 ITR 1 (SC), also support this view. Thus, the decision of the learned CIT(A) is in conformity with the ratio of the aforesaid judgments. Respectfully following the above judgments, the order of the learned CIT(A) is upheld and the grounds of appeal of the Revenue are rejected. 7. In the result, the appeal filed by the Revenue is dismissed.
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2005 (2) TMI 430 - ITAT AMRITSAR
Appealable Orders ... ... ... ... ..... se are different from that considered in the case of Shadi Ram and Sons and the ratio laid down therein cannot be applied here. 10. The last contention of the ld. AR was that the interest, if any, should have been charged after the date of determination of income under section 143(1) only. From a plain reading of the section, as underlined above, it can be clearly seen that the Legislature has provided that where a regular assessment is made, then the interest is to be charged for a period from 1st day of April next following such financial year to the date of such regular assessment. In view of this clear prescription of the section, I am not inclined to accept this submission raised on behalf of the assessee. I, therefore, hold that the ld CIT(A) was justified in upholding the charging of interest under section 234B on the income determined on the regular-assessment under section 143(3) up to the date of such regular assessment. 11. In the result, the appeal is not allowed.
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2005 (2) TMI 429 - ITAT AMRITSAR
Exemption in respect of interest on FDRs in NRE account u/s 10(4) - challenged the Order passed u/s 154 - fresh evidence in the form of bank certificate - Whether there is a mistake in the intimation or deemed intimation is to be seen in the light of powers conferred u/s 143(1) - HELD THAT:- The certificate of the Bank, which indicated that money kept in the NRE account was as per guidelines of Reserve Bank of India, went to the very root of the issue. The CIT(A) has inherent powers to admit such evidence under Sub Rule 4 of Rule 46A of the Income-tax Rules. This would have helped the cause for justice. He should have appreciated that orders were passed u/s 154 and not u/s 143(3). Therefore, in my view, CIT(A) was not justified in declining to admit such evidence.
It is no doubt true that powers have been conferred on the Assessing Officer to rectify intimation or deemed intimation u/s 143(1). But such power has to be seen in the light of powers conferred u/s 143(1). The returns were processed u/s 143(1) on 28-3-2000. Provisions of section 143 have been drastically amended by the Finance Act, 1999 w.e.f. 1-6-1999. Highlights of these amendments are that powers of the Assessing Officer to make adjustments u/s 143(1)(a) and consequent levy of additional tax u/s 143(1A) have been taken away.
Since the action of the Assessing Officer for withdrawing exemption of interest u/s 10(4) of the Act falls outside the scope of powers conferred u/s 143(1), the Assessing Officer had no jurisdiction to pass orders u/s 154(1)(b). Even if the assessee had agreed before the Assessing Officer due to wrong appreciation of law, such agreement would have not made the illegal orders as legal because the Assessing Officer had no authority or jurisdiction to do so. Therefore, such orders are bad in law and void ab intio and deserve to be quashed on this ground itself.
In the present case, returns were filed on 31-12-1998 and 15-12-2000. Therefore, the time limit for issue of notices u/s 143(2) expired before 31-12-2001. The present orders u/s 154 have been passed on 14-2-2002 i.e., after the expiry of time limit of issue of notices u/s 143(2). In any case, section 154 cannot be substituted for issue of notices u/s 143(2).
Thus, I am of the considered opinion that CIT(A) was not justified in sustaining the orders of Assessing Officer passed u/s 154. Accordingly, I quash the orders of Assessing Officer passed u/s 154 and resultant orders of CIT(A) and allow the grounds of appeals of the assessee for all the assessment years.
In the result, all the appeals filed by the assessee for the assessment years from 1997-98 to 2000-01 are allowed.
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2005 (2) TMI 428 - ITAT AHMEDABAD-C
Deduction u/s 80HHC - Profits Of The Business - excise duty refund from profit of business - liability to pay excise duty - Exclusion of sale of scrap, sundry balance written back and octroi refund - industrial undertaking - interest income earned on temporary investment of share application money
HELD THAT:- If the assessee was having bounded warehouse facility, these payments and refunds of excise duty would not have taken place. As and when such excise duty was paid by the assessee as a temporary measure, the amount was debited and similarly, on refund of such excise duty, the same was credited to the books of account. Thus, we found that alleged amount of excise duty either paid or refunded did not affect the business profits of the assessee at all and, therefore, there is no reason for excluding 90 per cent of the excise duty refund from the profits of the business of assessee as per the Expln. (baa) to s. 80HHC. The findings recorded by the CIT(A) to the effect that payment of excise duty has not reduced the business profit of the assessee, therefore, refund of excise duty paid should not be excluded from the business profit, had not been controverted by the Department. We are, therefore, inclined to agree with the learned Authorised Representative, that there is no infirmity in the order of the CIT(A) in directing the AO not to exclude 90 percent of such excise duty refund in terms of Expln. (baa), from the profit of business for computing deduction u/s 80HHC.
In the result, appeal of the Revenue is dismissed.
Exclusion of sale of scrap, sundry balance written back and octroi refund - We find that the issue is squarely covered by the decision of the jurisdictional High Court in the case of Harjivandas Juthabhai, in favour of the assessee, wherein it was held that the scrap generated during the course of manufacturing was eligible for deduction u/s 80-I [1999 (12) TMI 5 - GUJARAT HIGH COURT]. It was categorically observed by the High Court that it requires to be noted that if the assessee was not engaged in the industrial activity there was no question of generating any scrap and if the assessee was doing trading activity, obviously this section will not apply. In view of the above, we uphold the action of the CIT(A) regarding the inclusion of income of sale of scrap amounting to Rs. 3,02,336, eligible for deduction u/s 80-I, whereas we reverse the action of the CIT(A) with regard to other income of sundry debtors written back and octroi refund, included for computation of deduction u/s 80-I. We direct accordingly.
In the result this ground of Revenue's appeal is allowed in part.
Interest income earned on temporary investment of share application money - In the instant case, there is no dispute to the fact that such deposit was made in a bank as a statutory requirement for keeping such share application money in separate bank account in a scheduled bank until permission for listing of share on stock exchange is granted. Decision for putting the deposit in bank was not taken as a prudent business decision to earn interest income thereon.
Thus, income earned on such deposits was incidental to the public issue which in turn was for expansion of the assessee's project. In view of the peculiar facts and circumstances of the case, the ratio laid down by the Supreme Court in the case of Tuticorin Alkalies & Fertilisers Ltd.[1997 (7) TMI 4 - SUPREME COURT] will not be attracted, wherein surplus money available with the assessee was parked in the bank for earning interest income thereon.
More appropriate decision for application in the factual situation of the present case are Bokaro Steels Ltd.[1998 (12) TMI 4 - SUPREME COURT] and Karnal Co-operative Sugar Mills Ltd. [1999 (4) TMI 7 - SC ORDER]. The decision of Tribunal, Jodhpur and Mumbai Benches, cited by the learned AR and discussed hereinabove are directly in favour of the assessee on the very same issue in which interest received on deposit of share application money, which was statutorily required to be deposited in the bank and the interest income earned thereon, Was held to be liable to be set off against the expenses on public issue/expansion project. No contrary decision to this effect was brought to our notice by the learned DR.
Respectfully following these decisions of co-ordinate Bench, we are persuaded to agree with the contention of the learned AR that the interest income is to be set off against the cost of public issue and cost of capital assets, and. not to be treated as income from other sources.
Thus, respectfully following the decisions of the Tribunal, Jodhpur and Mumbai Benches, we are inclined to reverse the findings of the lower authorities and allow this ground in favour of the assessee.
In the result, Revenue's appeal for the AY 1992-93 is dismissed, whereas the cross-appeals of the assessee and the Revenue for the AY 1993-94 are allowed in part, as indicated above.
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2005 (2) TMI 427 - ITAT AGRA
... ... ... ... ..... te of commission at 0.4 per cent may be applied. 42. On merits, the learned Departmental Representative has supported the order of the CIT(A). 43. After careful consideration of the rival submissions, facts and circumstances for the case, we, in the interest of substantial justice, are of the opinion that it will be in the interest of justice if the assessment is set aside and the AO is directed to make de novo assessment. Consequently we set aside the order of the CIT(A) as well as the assessment order and direct the AO to make de novo assessment in accordance with law after allowing the assessee an opportunity of being heard. The assessee will extend her full co-operation and will produce the books of account and file details required by the AO. In case the assessee fails to co-operate or to produce the books of account, the AO will be free to make a proper assessment as the circumstances may require. 44. In the result, assessee s appeal is allowed for statistical purposes.
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