TMI Blog2013 (10) TMI 1127X X X X Extracts X X X X X X X X Extracts X X X X ..... capital reserves amount totaling to Rs.9,23,16,891/- - Settlement agreement between assessee and the bank does not specify the principal amount and the interest and other charges. However, the AO has given a very categorical finding by bifurcating the principal amount and the interest amount - CIT(A) has very correctly excluded the principal amount from the clutches of the provisions of section 41(1) of the Act and restricted rightly the interest part to be taxed u/s 41(1) of the Act – Decided against the Assessee. Depreciation on BSE card – Held that:- Claim of depreciation on BSE Card is disallowed as there is no business activity. Disallowance of expenditure as there is no business activity – Held that:- Reliance has been placed u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, therefore, there is no occasion to supply reasons for reopening the assessment. 3. We have considered the rival submissions. We find force in the submission of the ld DR. As no previous assessment was framed nor any return of income was filed by the assessee, the AO has issued notice u/s 148 only asking the assessee to file its return of income, therefore, we do not find any reason why the AO should have given any reason for reopening the assessment. The additional ground is accordingly dismissed. 4. On merits with ground no. 1, the assessee has challenged the addition of Rs.2,49,26,390/- being amount credited to capital reserve on account of waiver of principal amount of loan allowed by Centurian Bank. 5. During the course of scru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es not clearly specify whether the write-off amount includes a Bank Guarantee, principal or interest amount. According to the AO, the liability written off at Rs.9,23,16,981/- includes principal amount of Rs.6,73,90,591/- and interest and other charges are at Rs.2,49,26,390/-. The AO was of the firm belief that the assessee has already debited interest and other charges to its profit and loss account in the relevant assessment proceedings and now the assessee has been benefited by way of written-off of interest and other charges by the order of the DRT. Provisions of section 41(1) of the Act squarely apply on these facts. The AO further observed that the entire liability written off of Rs.9,23,16,981/- also includes principal amount of Rs.6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cify the principal amount and the interest and other charges. However, the AO has given a very categorical finding by bifurcating the principal amount and the interest amount. In our considered view, the CIT(A) has very correctly excluded the principal amount from the clutches of the provisions of section 41(1) of the Act and restricted rightly the interest part to be taxed u/s 41(1) of the Act. We therefore do not find any reason to interfere with the findings of the CIT(A). Ground no. 1 is accordingly dismissed. 8. Ground no. 2 is not pressed and is accordingly dismissed. 9. Ground no. 3 relates to the enhancement of the income by Rs.7,61,354/. The CIT(A) invoking powers of enhancement during the course of appellate proceedings, obser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BSE card is straightway disallowed for the reason mentioned hereinabove. So far as the other business activity is concerned, we find force in the contention of the ld. Counsel for the assessee that the Tribunal in a group concern namely Classic Shares Stock Broking Pvt. Ltd. at para 3 of its order has held as under:- "As regards ground No.2, it is observed that the issue involved therein relating to the head of income under which interest and miscellaneous income is assessable to tax in the hands of the assessee, is also covered by the decision of the Tribunal rendered in the cases of various sister concerns of the assessee company belonging to the same group. In one of such decision rendered in the case of M/s Classic Shares Stock Br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Madras in the case of CIT Vs Vellore Electrical Corporation Ltd. (243 ITR 529) held that the business had not closed and the claim of expenditure had to be allowed. Respectfully following the said decision of the tribunal we hold that the business of the assessee had not been closed in the relevant year and therefore FDRs had to be treated as pledged in connection with the business which was in existence and therefore the interest income had to be treated as incidental business income. We accordingly set aside the order of CIT(A) and allowed the claim of the assessee." 12. Facts and circumstances being identical, respectfully following the decision of the Coordinate Bench, we do not agree with the findings of the CIT(A) that the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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