2008 (1) TMI 587

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....urn of income on November 29, 1995, declaring nil income for the assessment year 1995-96. The return was processed under section 143(1)(a) of the Income-tax Act, 1961, and an addition of Rs. 11,07,36,000 was made under the head "Income from other sources". The case was selected for scrutiny. During the course of scrutiny, the Assessing Officer noticed that the assessee proposed to start steel plant in Karnataka and production was not commenced so far. It had earned income of Rs. 11.07 crores by way of interest from deposits. The assessee claimed the same as income from the business and also claimed expenditure incurred by it at the central treasury office at Mumbai, registered office at Bangalore and also expenditure incurred at project off....

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....ess has to be treated as business income and further held that the assessee is entitled to claim interest earned and dividend received has to be treated as income from the business relying upon the provisions of section 2(13) of the Income-tax Act and further held that the expenditure incurred by the central treasury office, Mumbai, has to be treated as revenue expenditure. Accordingly, the appeal was allowed in part and the Tribunal has directed the Assessing Officer to pass orders accordingly. 3. The legality and correctness of this order is called in question by the Revenue in this appeal raising the following two substantial questions of law : "(i) Whether, on the facts and in the circumstances of the case the interest earned by t....

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....ould not have reversed the concurrent findings of the Assessing Officer and that of the Commissioner of Income-tax (Appeals). He further contends that the assessee did not produce any additional documents either before the Commissioner of Income-tax (Appeals) or before the Tribunal. In spite of it, the Tribunal has erroneously allowed the appeal of the assessee without examining the balance-sheet and documents. Therefore, he requests the court to allow the appeal and reverse the finding of the Tribunal. 5. On the contrary, Sri Ashok Kulkarni contends that the Tribunal had all the material before it and has scrutinised carefully by looking into the paper books filed by the parties. Therefore, he contends that no error has been committed b....