Tribunal corrects misinterpretation, remands case for fresh adjudication. Interest under section 234B to be levied.

The Tribunal found that the CIT (A) and AO misinterpreted the earlier Bench's directions. The matter was remanded to the AO for fresh adjudication on all issues raised by the assessee, including the commencement of business. The AO was instructed to levy interest under section 234B until the date of the original assessment on 31.3.1995. The appeal was partially allowed for statistical purposes.

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Issues Involved:
1. Failure of CIT (A) to appreciate Tribunal's direction for fresh adjudication.
2. Direction to capitalize pre-commencement business expenditure.
3. Levy of interest under section 234B of the Income Tax Act.

Detailed Analysis:

1. Tribunal's Direction for Fresh Adjudication:
The assessee contended that the CIT (A) failed to appreciate that the Tribunal had set-aside the original assessment order for fresh adjudication. The Tribunal had directed the AO to reconsider the issues afresh, including the commencement of business. The CIT (A) erroneously concluded that only the issue of charging interest under section 234B survived for adjudication. The Tribunal clarified that both parties had agreed to set aside the entire matter for fresh adjudication, not just the issue of interest under section 234B. The CIT (A) was not justified in limiting the scope of the Tribunal's remand.

2. Capitalization of Pre-commencement Business Expenditure:
The assessee argued that the CIT (A) should have directed the AO to capitalize the pre-commencement business expenditure and apply the provisions of sections 35AB and 35D of the Act. However, no specific arguments were put forth by the assessee's representative during the hearing before the Tribunal. Therefore, this ground was not adjudicated by the Tribunal in the current proceedings.

3. Levy of Interest under Section 234B:
The assessee contended that the CIT (A) erred in upholding the levy of interest under section 234B until the date of the present assessment, arguing that it should be pegged to the date of the first regular assessment on 31.3.1995 or, alternatively, up to 25.3.1999. The AO had calculated interest up to 25.3.1999 but charged interest up to 19.7.2007 in the computation, which was deemed arbitrary and incorrect. The Tribunal analyzed the provisions of section 234B and concluded that the interest should be charged up to 25.3.1999, as initially determined. The AO was directed to correct the interest calculation accordingly.

Conclusion:
The Tribunal found that the CIT (A) and AO had not properly understood the directions of the earlier Bench. The matter was restored to the AO for fresh adjudication on all issues raised by the assessee, including the additional ground of commencement of business. The AO was directed to charge interest under section 234B up to the date of the original assessment on 31.3.1995. The appeal was partly allowed for statistical purposes.

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