TaxTMI 
TaxTMI 
2017 (4) TMI 661
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.... of the Commissioner of Income Tax (Appeals) [in short, CIT(A)], whereby, penalty imposed by the Deputy Commissioner of Income Tax, vide order dated 27.09.2002, in the sum of Rs. 3,66,57,057/- was deleted. 3.1. A perusal of the penalty order dated 27.09.2002 would show that penalty was imposed on the Assessee, upon alleged failure to furnish true particulars in the return, filed under Section 139 of the Act. 4. The record shows that the Assessee had filed the return for assessment year (in short, AY) 1998-99, on 27.11.1998, whereat, it had declared loss of Rs. 10,12,37,470/-. This return was processed under Section 143(1) of the Act, on 27.09.1999. 4.1. Since, the Assessee's case was taken up for scrutiny, an assessment order under Section 143(3) of the Act was passed on 14.03.2001. 4.2. Via, the said assessment order, the loss returned by the Assessee in the sum of Rs. 10,12,37,470/- was disallowed and interest received in the sum of Rs. 34,96,979/- from short term deposits made over to financial institutions, was added to its total income, albeit, under the head "Income from other sources". 4.3. To be noted, the record also shows that the Assessee had raised mo....
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....fore, relying upon the judgment of the Supreme Court in Tuticorin Alkalies, Chemicals and Fertilizers Limited, 227 ITR 172, added the aforementioned interest income to the total income of the Assessee under Section 56 of the Act. 8. To be noted, the Assessee, both before the Assessing Officer and the CIT(A) had cited the judgments of the Supreme Court in CIT Vs. Bokara Steel Limited, 236 ITR 315 and Godhra Electricity Co. Vs. CIT, 225 ITR 746, to contend to the contrary, albeit, unsuccessfully. 9. The Deputy Commissioner of Income Tax, though, while passing the penalty order, in a sense re-examined the very same defence offered by the Assessee, during assessment proceeding and came to the conclusion that there was both concealment of particulars of income and inaccurate particulars of income had been furnished. 9.1. It was, specifically, concluded by the Deputy Commissioner of Income Tax, that the judgement of the Supreme Court in CIT Vs. Bokara Steel Limited, 236 ITR 315, was not applicable and therefore, qua interest received on the short term deposits, the Assessee had concealed and/or furnished inaccurate particulars of income. 9.2. Based on the aforesaid reas....
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....ce was issued and during the course of scrutiny. As regards interest income, it was submitted that, since, it had no connection with business activity, it could have only been treated as income from other sources and not capitalised, as was sought to be done by the Assessee. 15. Therefore, Mr.Narayanasamy said that there was both concealment of material particulars of income, as also an attempt on the part of the Assessee to furnish inaccurate particulars of income. 16. Mr.Vijaya Raghavan, on the other hand, submitted that while the Assessee had set up its business in the relevant previous year, it had not commenced commercial production. The learned counsel submitted that the date of setting up the business and commercial production were two different dates and, therefore, during this period, certain expenses were incurred, as also, income had been earned by the Assessee. 16.1. The learned counsel further submitted that the details of income earned and expenses incurred, were provided to the Assessing Officer, which formed part of the balance sheet, prepared as on 31.03.1998. 17. To be noted, while the learned counsel conceded that a profit and loss account had not bee....
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....the Assessee had already set up its business, and therefore, incurred not only expenses, but also earned income. 24. The learned counsel submits that it is well settled that expenses incurred after the business is set up, can be claimed as revenue expenditure. 24. 1.For this purpose, the learned counsel relied upon the judgement of the Delhi High Court in Commissioner of Income Tax Vs. Samsung India Electronics Limited, (2013) 356 ITR 0354 (Delhi) and another judgement of the Delhi High Court in Commissioner of Income Tax Vs. ESPN Software India Private Limited, (2008) 301 ITR 368 (Delhi). 24.2. Therefore, it was submitted that this was a debatable issue, which, the Tribunal ought to have examined. 25. In so far as the treatment of interest income by the Revenue as income from other sources was concerned, it was clearly the stand of the Assessee that it was a debatable issue. 25.1. This aspect, as a matter of fact was accepted both, by the CIT(A) as well as by the Tribunal. 25.2. For the sake of convenience, the relevant paragraph from the impugned judgment is extracted herein below: "4.In regard to the interest income we have noted that the assessee had ....