TaxTMI 
TaxTMI 
TaxTMI 
2014 (5) TMI 356
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....issioner (Appeals) erred in confirming the reopening proceedings based on the change of opinion. 4. The learned Commissioner (Appeals) erred in confirming the reopening of the assessment by issue of notice dated 22 February 2008 under section 148 of the Act after expiry of four years from the end of the relevant assessment year. No escapement of income 5. The learned Commissioner (Appeals) erred in confirming that there was escapement of income. 6. The learned Commissioner (Appeals) ought to have appreciated that even after taxing interest income of Rs.11 ,77,49,053 under normal provisions of the Act, the Assessing Officer assessed the appellant under the provisions of section 115JB of the Act as per returned income. Therefore, the appellant submits that there was no escapement of income. 7.The learned Commissioner (Appeals) erred in holding that had the interest income of Rs.ll,77,49,053 offered by the appellant in the return, the difference between assessed tax and tax payable under section 115JB would have been less and consequently lesser amount of tax credit would have been available to the appellant for adjustment against the tax liability of subsequent years. The learne....
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....the AO that along with the refund the said amount of interest u/s 244A was paid to the asessee, therefore, there is no questin of failure on the part of the assessee to disclose fully and truly the facts necessary for assessment of the said income. Further since the appeal in respect of A.Y. 1994-95 was pending before this Tribunal and the issue of refund had not attend the finality, therefore, the assessee did not offer the said amount of interest received u/s 244A to tax. 2.2 On the other hand, the Ld. DR has submitted that the assessee has not disclosed this fact of receipt of interest of Rs. 11,77,49,053/- u/s 244A in the year under consideration and, therefore, the benefit of proviso to section 147 is not available to the assessee. He has relied upon the orders of authorities below. 2.3 We have considered the rival submissions as well as relevant material on reocrd. There is no dispute that the assessee received a sum of Rs. 11,77,49,053/- towards interest u/s 244A of the Income Tax Act along with the refund pertaining to A.Y. 1994-95. In the return of income the assessee has neither offered this amount to tax nor disclosed this fact of receipt of the interest and the reason....
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....ast on the assessee to disclose all facts relevant to the assessment. Therefore, we are of the considered view that the benefit of the proviso to section 147 is not available to the assessee in this case. Accordingly we do not find any error or illegality in the orders of authorities below qua this issue of validity of reopening of assessment. 3. Ground no. 8 is regarding assessment of the interest received u/s 244A of Rs. 11,77,49,053/- in the year under consideration. 3.1 We have heard the Ld. AR as well as Ld. DR and considered the relevant material on record. The AO has assessed the said amount by adding to the total income of the assessee while framing reassessment under consideration. The assessee contended that the amount of interest has not been finalised and, therefore, is not assessable in this year. The Ld. AR of the assessee has pointed out that the AO has already given effect to the orders of Tribunal and has determined the interest u/s 244A at Rs. 8,01,46,478/- only. At the outset we note that this issue of taxability of the interest received u/s 244A of income tax has been considered and decided by the special bench of this Tribunal in the case of Avada Trading Co.....
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.... to receive the interest in respect of such refund calculated in the manner provided in clauses (a) and (b) of such provisions. Therefore, the moment the refund is granted, as enforceable debt is created in favour of assessee in respect of interest due on such refund. Consequently, income can be said to accrue on the date of refund itself. Therefore, when such interest is actually granted along with the refund then, in our opinion, the requirement of sections 4 and 5 of the Act are fully satisfied and the same can be taxed in the year of receipt. 3.2 Thus the issue of taxability of interest received u/s 244A in the year of receipt is covered against the assessee and, therefore, we do not find any merit in the assessee's claim. 3.3 As regards adjustment in terms of the Tribunal order for the A.Y. 1994-95 the AO has already given effect to the said order and, therefore, no grievance is left in this respect. 4. Ground no. 9 is regarding netting of interest received u/s 244A by the amount of interest paid by the assessee. 4.1 We have heard the Ld. AR as well as Ld. DR and considered the relevant material on record. The assessee has claimed that the payment of interest in the year u....
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....oan by Rs. 27,034/-. The assessee's case was that he should be taxed only on the difference of Rs. 27,034/- under the residuary head whereas the case of the revenue was that the entire interest received should be brought to tax without reducing the same by the interest paid. It was noticed by the Supreme Court that the learned counsel appearing for the assessee before the Tribunal had made it clear that the assessee's case did not rest upon the provisions of section 57(iii) of the Act, which provided for a deduction of the interest paid by the assessee for earning the interest income. In other words, it was not the contention of the assessee that he was paying interest to the bank to facilitate the earning of interest from the bank. This aspect of the matter was noticed by the Supreme Court at page 450 of the report. Thereafter the Supreme Court noticed that the argument before them on behalf of the assessee was that the real income of the assessee was only Rs. 27,034/-. This argument was rejected by the Supreme Court in the following words: - "It was not disputed, as it could not be, that if the assessee had taken a loan from another bank and paid interest thereon his rea....