TMI Blog2009 (12) TMI 703X X X X Extracts X X X X X X X X Extracts X X X X ..... cts of the case are that in the present case, return of income was filed by the assessee on October 30, 2001 declaring an income of Rs.36,63,640. The assessment under section 143(3) of the Income-tax Act, 1961 was completed on February 25, 2003 at the returned income. It is noted by the Assessing Officer in the assessment order that thereafter, on perusal of the assessment record, there were some deficiencies such as for calculation of deduction under section 80HHC of the Act because foreign exchange at Rs. 8 lakhs which was not received in India within the time allowed was not reduced from the export turnover and 90 per cent. of the interest income of Rs. 16,00,611 was not reduced from the business income. Notice under section 148 of the Act was issued on March 31, 2008 and served upon the assessee by registered post. The assessee raised objection against the initiation of proceedings under section 148 which were disposed of by the Assessing Officer vide an order in writing on August 28, 2008. Such objections were rejected. Thereafter, the Assessing Officer completed the assessment proceedings under section 143(3)/148 of the Income-tax Act, 1961 as per the order dated October 10, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held by the Tribunal that the assessee is eligible for netting of interest income against interest payment. Regarding validity of reopening, it was submitted by him that in the present case, the proviso to section 147 is applicable and in the course of original assessment proceedings, the Assessing Officer has made enquiry about the nature of interest received. It was submitted that a questionnaire was issued by the Assessing Officer in the course of original assessment proceedings along with notice under section 142(1) dated January 8, 2003. He submitted a copy thereof. It is pointed out that as per this questionnaire, the Assessing Officer has asked the assessee to furnish the details of interest received and the Assessing Officer has also asked the assessee to explain as to how this interest income is assessable as business income. It is also submitted that the reply given by the assessee to the Assessing Officer is available on pages 9 to 16 of the paper book and on this issue, the reply is available on pages 12 and 13 of the paper book in which it was submitted by the assessee that the fixed deposit was kept towards margin money for bank guarantee facility provided by the bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t exclusion from business profit is to be of gross interest income or net interest income, if any. Now, we examine the various Tribunal decisions in the assessee's own case. In the assessment year 1996-97 in I. T. A. No. 2054/Del/2000 dated August 4, 2003, the Tribunal has decided this issue in favour of the assessee and it was held that since the interest paid was much more than the interest received, there was no question of excluding any component of interest received from business profit. In the assessment years 1995-96 and 1997-98, the matter was restored back by the Tribunal to the file of the Assessing Officer for finding out the nexus between interest received and interest payment as per the decision of the Special Bench of the Tribunal rendered in the case of Lalsons Enterprises v. Deputy CIT as reported in [2004] 89 ITD 25 (Delhi) [SB]. Similarly, in the assessment year 1996-97 in I. T. A. No. 154/Del/2002 dated May 13, 2004, the Tribunal has restored back this issue to the file of the Assessing Officer for examining the nexus between interest received and interest payment as per the judgment of the Special Bench of the Tribunal rendered in the case of Lalsons Enterprises ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osit with bank kept as margin money. But neither the Assessing Officer has made any enquiry about the nexus of interest received and interest payment and nor is there any reply on this aspect. In the profit and loss account of the assessee as available on page 2 of the paper book, the assessee has reduced the amount of interest received from interest payment and only net interest payment was debited to the profit and loss account. Under these facts, we are not in agreement with the learned authorised representative for the assessee that all material facts were disclosed by the assessee fully and truly which were necessary for the assessment because the assessee has not furnished any detail about the nexus of interest received and interest payment and in the absence of that, it cannot be said that all material facts were disclosed fully and truly before the Assessing Officer. Now, we examine the judgment of the hon'ble Delhi High Court rendered in the case of CIT v. Indian Sugar and Gen. Ind. Ex. [2008] 303 ITR 155 (Delhi). In this case, it was held by the hon'ble Delhi High Court that there was nothing on record to suggest that there was no application of mind which would entitle t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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