TMI Blog2007 (1) TMI 209X X X X Extracts X X X X X X X X Extracts X X X X ..... iation of proceedings under s. 147 and subsequently issued notice under s. 148 of the IT Act on the following grounds: 4. Firstly, the reassessment proceedings initiated on the basis of audit objection were invalid. In support of this contention, he relied upon the following case law: 1. Indian Eastern Newspaper Society vs. CIT (1979) 12 CTR (SC) 190 : (1979) 119 ITR 996 (SC); 2. Brig. B. Lall vs. WTO (1980) 15 CTR (Raj) 180 : (1981) 127 ITR 308 (Raj); 3. Anil Starch Products Ltd. vs. ITO (1982) 134 ITR 355 (Guj); 5. Secondly, he contended that in this case, the original return was filed on 31st Dec., 1999 and the same was processed on 30th Nov., 2000 under s. 80-IA of the IT Act. Notice under s. 143(2) could have been served as a period of twelve months from the end of the month in which the return was furnished had not expired. Therefore, the AO had no power to issue notice under s. 148 and the notice issued under s. 148 of the IT Act was not valid. In support of his contention, he relied upon the case of Vipin Khanna vs. CIT Ors. (2002) 175 CTR (P H) 335 : (2002) 255 ITR 229 (P H). 6. Thirdly, he submitted that there was change of opinion on the part of the AO an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case on the basis of factual error pointed out by the internal audit party is permissible under law. In the case before us, we find that the AO had reopened the assessment on the basis of factual information given by the audit party. This view has also been upheld by the jurisdictional High Court in the case of New Light Trading Co. vs. CIT. 12. As regards the issue of notice under s. 148, without issuing notice under s. 143(2) when the stipulated time for issue of notice had not expired, we find that this issue was decided by the Tribunal, Hyderabad Bench, in the case of N. Sandeep Reddy wherein in para 28 of the order, it was held that it is well-settled that non-issue of notice within a stipulated time under s. 143(2) was not a bar on the AO for reopening the case under s. 148. Similar was the decision in the case of Vipin Khanna vs. CIT wherein it was held that the AO can exercise his power under s. 147 of the Act. 13. As regards the contention of the learned Authorised Representative that there was change of opinion, in this connection, it is relevant to refer to the case of CIT vs. Kelvinator of India Ltd. (2002) 174 CTR (Del)(FB) 617 : (2002) 256 ITR 1 (Del)(FB), wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nk guarantee as per rules and regulations of the bank. A copy of bank certificate dt.8th Oct., 2003has already been filed." 18. The AO held that interest on deposits with bank for opening letter of credit and other formalities was income from other sources and was not eligible for benefit under s. 80HHC and assessed the interest earned from Vikas cash certificates as income from other sources. After taking into consideration the contentions of the appellant, the learned CIT(A) held as under: "4.1 I have considered the facts of the case and submission of the appellant and the case law relied upon. The appellant has admitted that in order to avail bank facility like opening of LCs the assessee firm was required to deposit margin money with banks and Vikas cash certificate deposits were taken as margin money. As mentioned above, the AO has relied on the decision in the case of K. Ravindernathan Nair vs. Dy. CIT (2003) 181 CTR (Ker) 310 : (2003) 262 ITR 669 (Ker) to conclude that interest income on fixed deposit would be assessed as income from other sources. In this context it would be relevant to refer to the observations of the Hon'ble Supreme Court in the case of Raja Bahadur K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the assessee on the FDRs was income and could be reduced only if there was a provision in law permitting such diminution. Therefore, considering the facts and circumstances of the case, the submission of the appellant in respect of netting of interest is rejected." 19. Learned Authorised Representative relied upon the case of CIT vs. Nagpur Engineering Co. Ltd. (2000) 245 ITR 806 (Bom) (Nagpur Bench). He submitted that the interest. income is eligible profits of the business while computing the deduction under ss. 80HHC and 80-I of the IT Act. 20. Learned Departmental Representative relied upon the case of National Thermal Power Corpn. Ltd. vs. Addl. CIT (2004) 91 TTJ (Del) 75 : (2004) 91 ITD 101 (Del) and contended that in view of this order of the Tribunal, deduction under ss. 80-I and 80-IA was not eligible on miscellaneous receipts like interest from banks on deposits, etc. In this case, the interest income was earned on Vikas cash certificate kept with bank and margin money. It is to be seen whether the interest income earned by the appellant on Vikas cash certificate was business income derived from the industrial undertaking or it was an income from other sources. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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