TaxTMI 
TaxTMI 
2015 (4) TMI 761
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....ls are identical in nature, they were heard together and are being disposed of by this common order for the sake of convenience. 2. The grounds urged by the assessee for assessment years 2004-05, 2005-06 and 2006-07 give rise to following two issues:- (a) Validity of reopening of assessment under Section 147of the Income-tax Act, 1961. (b) Correctness of assessing the interest income under the head "income from other sources" instead of assessing the same as business income. 3. For assessment year 2009-10, following issues are urged:- (a) Correctness of assessing the interest income under the head "income from other sources" instead of assessing the same as business income. (b) Disallowance made under Section 14A of the In....
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....mpleted under Section 143(3) of the Act, on 23.10.2006, accepting the interest income as business receipts of the assessee. The returns of income filed for AY 2005-06 and 2006-07 were accepted u/s 143(1) of the Act. 6. The assessing officer took up the return filed for AY 2009-10 for scrutiny. At that point of time, the Assessing Officer re-opened the assessments of AY 2004-05 to 2006-07 by issuing notices under Section 148 of the Act. He submitted that, in all these four years, the Assessing Officer did not accept the interest receipts as forming part of business income. Accordingly the AO assessed the same as income of the assessee under the head "Income from other sources". The Ld A.R submitted that the assessee was having huge brough....
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.... reopening of assessment for these two years is also bad in law. 9. On merits, he submitted that the assessee has all along been showing the interest income as its business income and the Assessing Officer has decided to assess the same as income from other sources, only on the reasoning that the assessee has surrendered its NBFC certificate. The ld A.R submitted that the NBFC certificate enables the assessee to collect the deposits from public and hence the cancellation of the certificate will not change the character of interest income. Accordingly, he submitted that the Assessing Officer was not justified in changing the head of interest income. 10. On the contrary, the Ld D.R submitted that the assessee has received interest incom....
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....ady noticed that the Assessing Officer has re-opened the assessment only for the reason that the NBFC certificate has been cancelled by the RBI. For the sake of convenience, we extract below the reasons recorded for re-opening of assessment in AY 2004-05:- "The assessee company is in the business of "purchase and sale of shares - as stock in trade". Perusal of record shows that the assessee company did not accept any deposit from public and neither it was a NBFC. Apart from the stock-in-trade of share it also held shares as investment separately. In the computation of income, dividend income earned was held by the assessee as exempt u/s 10(33) of the Income-tax Act, 1961. Excluding the dividend income, the assessee companyhad computed....
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....essee was holding NBFC certificate. Hence, the reason of the Assessing Officer for reopening of the assessment, in our view, fails in these two years. Accordingly, we are of the view that the re-opening of assessment of AY 2004-05 and 2005-06 are bad in law. The re-opening of assessment of AY 2004-05 is also liable to be cancelled in view of the first proviso to sec. 147 of the Act, since the assessment has been reopened after the expiry of four years from the end of the assessment year after completion of assessment u/s 143(3) of the Act. There is no allegation on the assessee that there was failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. Accordingly, we set aside the order of Ld....
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....carrying on NBFC business. Hence, in our view, there is no justification for the assessee to claim the interest income as its "business income". As submitted by Ld D.R, the assessee has set off brought forward loss against the interest income, by offering the interest income as its business income. If the interest income is assessed under the head income from other sources, then the assessee would not be entitled to set off the brought forward business loss against the income declared under the head Income from other sources. In that case, the total income of the assessee would go up by the amount so set off. Hence, in our view, there was reason with the AO to believe about escapement of income in AY 2006-07. Accordingly we uphold the re-op....