TMI Blog2010 (1) TMI 876X X X X Extracts X X X X X X X X Extracts X X X X ..... 29-1-2010 - J. Sudhakar Reddy, V. Durga Rao, JJ. I.P. Rathi for the Appellant Ajaykumar Srivastava for the Respondent ORDER V. Durga Rao: 1. These appeals filed by the assessee are directed against the order of the CIT(Appeals)-XVII, Mumbai, dated 26-3-2009. As common points are involved, all these appeals were heard together and disposed of by this consolidated order. 2. ITA No.3880(Mum)2009 (Assessment year 1999-2000): The assessee has raised as many as nine grounds of appeal. Ground No.9 is general in nature and does not require adjudication. At the time of hearing, learned counsel for assessee did not press ground Nos.1 and 2 relating to reopening of assessment u/s 147 of the Income-tax Act, 1961 [hereinafter referred to as "the Act"]. 2(i) Ground No.4 is with regard to the finding of the AO that the entire amount received on transfer of DEPB was in the nature of profits on transfer of DEPB and stood covered within the meaning of section 28(iiid) was also not pressed. Hence, ground Nos.1, 2 and 4 are dismissed as not pressed. 2(ii) The assessee has raised ground Nos.3, 5, 6 and 7 as under: "3. On the facts and circumstances of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he afore mentioned case. Needless to say the assessee will be given reasonable opportunity of being heard by the AO in the fresh proceedings. 2(iv) Ground No.8 relates to interest charged u/s 234B of the IT Act. Learned counsel for assessee submitted that the AO may be directed to follow the CBDT Circular No.2 of 2006 dated 17-1-2006. Learned Departmental Representative fairly conceded that he has no objection to follow the CBDT circular. We, therefore, direct the AO to consider ground No.8 in the light of CBDT circular in accordance with law after giving opportunity to assessee. 2(v) In the result, the appeal is treated as partly allowed for statistical purposes. 3. ITA 3882(Mum/2009 (AY: 2000-01): The assessee has raised as many as seven grounds of appeal. Ground No.7 is general in nature and does not require adjudication. 3(i) At the time of hearing, learned counsel for assessee did not press ground Nos.1, 2, 4. Hence, the same are dismissed as not pressed. 3(ii) Ground No.3, 5 and 6 are identical to ground Nos.3, 5 and 7 raised in ITA 3880/Mum/2009. For the reasons given by us in paragraph 2(iii), we set aside the order of the CIT(Appeals) on this issue and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in law as it was done after four years from the end of the relevant assessment year. The assessee had declared all the facts before the AO. The assessment was completed u/s 143(3) of the Act on 27-2-2004. Learned counsel for assessee strongly relied on the decision of the jurisdictional High Court in the case of Sesa Goa Pvt. Ltd. vs. JCIT (2007)(294 ITR 101). In addition, the learned counsel for assessee also relied on the following decisions: 1) IPCA Laboratories Ltd. vs. DCIT (251 ITR 416) 2) Parikh Petrol Chemicals Agencies P. Ltd. vs. ACIT (266 ITR 196) 3) Caprihans India Ltd. vs. DCIT (266 ITR 566) 4) Hindustan Lever Ltd. vs. ACIT (268 ITR 339) 5) Desai Brothers Ltd. vs. DCIT D(272 ITR 335) 6) MRPL vs. ACIT (282 ITR 516) 7) Devidayal Rolling Mills vs. ACIT (285 ITR 514) 8) Cartini India vs. ACIT (291 ITR 355) 4 (iv) On the other hand, learned Departmental Representative supported the orders of the authorities below and submitted that the AO had reason to believe that there is escapement of income and the assessment was reopened as per the amended provisions of law. As per the change in law, it is the duty of the AO to reopen the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und No.6 relates to treatment of interest income as income from other sources. The AO treated interest income earned on bank FDs as income from other sources. On appeal, the CIT(Appeals) upheld the order of the AO. Being aggrieved, assessee is in appeal before this Tribunal. We have heard rival submissions and perused material on record. It is not clear from the orders of the authorities below the nature of bank deposits kept by the assessee. It is very much necessary to find out the nature of bank deposits to decide the issue involved in this appeal. Therefore, we remit the issue back to the file of the AO to decide the nature of bank deposits. If the bank deposits were kept for the purpose of business, the AO is directed to allow netting of interest in accordance with decision of the Special Bench of the Tribunal in the case of Lalsons Enterprises vs. DCIT (89 ITR 25). If the AO comes to the conclusion that bank deposits were not kept for the purpose of business, he is directed to disallow the claim by following the decision of the Special Bench of the Tribunal in the case of M/s Topman Exports (ITA No.5769/Mum/2006) and M/s.Kalpataru Colours and Chemicals (ITA 5651/Mum/2006). It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were not kept for the purpose of business, he is directed to disallow the claim by following the decision of the Special Bench of the Tribunal in the case of M/s Topman Exports (ITA No.5769/Mum/2006) and M/s.Kalpataru Colours and Chemicals (ITA 5651/Mum/2006). It is ordered accordingly. 9(iv) Ground No.6 is inter-connected with ground No.5 wherein it is contended that even if interest income is being treated as income from other sources, payment of interest should be allowed to be adjusted as admissible expenses u/s.57(iii) of the Act. Ground No.7 is inter-connected with ground No.6 wherein is contended that if interest income is treated as income from other sources, 10% of the income may be allowed as indirect cost for earning such interest. Ground Nos.6 and 7 are dismissed in view of direction given to the AO with regard to ground No.6. If the AO comes to conclusion that the interest income from FDRs is income from other sources, the alternative ground raised by the assessee may be considered as per law after giving reasonable opportunity to the assessee. 10. In the result, the appeal is partly allowed. Order pronounced in open court on 29.01.2010. - - TaxTMI - TMI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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