TaxTMI 
TaxTMI 
2018 (3) TMI 1572
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....its of the case. 2. On the facts and circumstances of the case and in law ld CIT(A) has erred in deleting the addition of Rs. 12356771/- and Rs. 11299879/- being the amount of interest not offered to tax by assessee holding the order as null and void merely on technical grounds while ignoring the merit of the case. 3. On the facts and circumstances of the case and in law ld CIT(A) has erred in quashing the assessment order by holding it as null and void merely on technical ground of a minor inadvertent mistake by AO while ignoring the facts of such mistake having been committed by the assessee twice while filing its objections for reopening of assessments. 4. On the facts and circumstances of the case and in law ld CIT(A) has erred in quashing the assessment order by holding it as null and void merely on technical grounds even though he himself has agreed that reopening is not on account of change of opinion as alleged by the assessee." 4. Brief facts shows that assessee is a company engaged in the business of providing finance for Rural Electrification. It filed its return of income on 31.10.2005 declaring income of Rs. 6548889120/- and the assessment was made u/s 143(3....
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....th confirmed before us that issue is identical in the present appeal before us. The ld CIT(A) also has followed that order of the ld Hon'ble High Court while quashing the reassessment proceedings for this year. In view of these facts we do not find any infirmity in the order of the ld CIT(A) in quashing reassessment proceedings for AY 2005-06. In view of this the appeal filed by the revenue does not survive hence, dismissed. 8. In the result ITA No. 3009/Del/2014 filed by the revenue for AY 2005- 06 is dismissed. 9. Now we come to the appeal of the parties for AY 2006-07. 10. The revenue has filed appeal against the order of the ld CIT(A)-LTU, New Delhi in ITA No. 3010/Del/2014 raising the following grounds of appeal:- "1. On the facts and circumstances of the case and in law Ld. CIT(A) has erred in deleting the addition of Rs. 93,73,987/- out of total addition of Rs. 1,25,74,387/- made by AO on account of interest accrued to various cooperative societies but taxable in the hands of the assessee i.e. M/s REC Ltd. 2 On the facts and circumstances of the case and in law Ld.CIT(A) has erred in deleting the addition of Rs. 93,73,987/- out of total addition of Rs. 1,25,74,38....
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....n 07.12.2011. Assessee aggrieved with the order of the ld AO preferred appeal before the ld CIT(A). The ld CIT(A) confirmed the reopening holding that there was no sufficient disclosure in the notes to the accounts for the AO to unable him to hold that the interest accrued thereon was not an income of the appellant. It was further held that new information was received in the form of the order of the coordinate bench. On the merits of the case, the ld CIT(A) though held that interest on special fund could not taxed in the hands of the appellant company but because of the decision of the coordinate bench and respectfully following the decision of the coordinate bench he held that interest is chargeable to tax in the hands of the appellant company. 13. The ld AR contesting on the ground of reopening submitted that the reopening has been made on the basis of information received from another person without independent application of mind by the ld AO to the information and forming an opinion. He submitted that the reopening has been made merely on the basis information received from Addl CIT, Karim Nagar regarding the decision of the ITAT, Hyderabad without independently applied his ....
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.... The appellant provides finance to various societies who are engaged in the business of power. The appellant has a policy whereby the interest of five years is forgone by the appellant subject to certain terms and conditions laid down by the appellant. Such terms and conditions are tabulated in specific reserve funds rules. According to one of such rules that the interest on such funds is required to be kept in fixed deposits as a special fund. The refund is lying with the societies and therefore, the claim of the assessee is that interest on such funds is required to be taxed in the hands of the societies. The claim of the societies is that it is not their income but it is the income of the appellant. Once such dispute reached Hyderabad Bench of the Tribunal wherein, it has been held that such income is chargeable to tax in the hands of the appellant. Therefore, the information was given by the Addl. CIT, Karim Nagar to the Assessing Officer stating that such interest on fixed deposit receipts of Special Reserve Fund is held by the coordinate bench as taxable not in the hands of the societies but in the hands of the appellant. The decision of the coordinate bench is in ITA No. 111....
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.... assessee. 19. On the issue of change of opinion it is apparent that Assessing Officer iin original assessment proceedings has not applied his mind to the taxability of interest on fixed deposits with the societies. Even otherwise it is a judicial decision which has been rendered by ITAT Hyderabad Bench based on which the reopening is initiated. Any judicial decision by the courts and tribunal if it is rendered subsequent to the passing of the Assessment order and if reopening is initiated of the concluded assessment, according to us, same cannot be called as change of opinion. In view of above facts we do not find any infirmity in the order of the ld CIT(A) in upholding the reopening of the assessment. In the result ground No. 1 of the appeal is dismissed. 20. Ground No. 2 of the appeal is with respect to upholding the addition of Rs. 9070673/- by the ld CIT(A) on account of the interest income earned by the cooperative society Sirecila, Hyderabad on special reserve fund created and maintained by the society which has been forgone by the assessee as the income of the appellant. The above addition has been confirmed by the ld CIT(A) holding that decision of the coordinate bench b....
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....sentative supported the order of the ld AO and the ld AR supported the order of the ld CIT(A). 25. We have carefully considered the rival contentions and also perused the orders of the lower authorities. In the present case the ld CIT(A) has deleted the addition with respect to those societies whose confirmation of offering the interest income in the hands of those societies was finished by those societies. In absence of those certificates the additions were confirmed. The ld Departmental Representative could not point out any infirmity in the order of ld CIT(A). We are also of the considered view when the income has been offered by those societies in their own hand it cannot be taxed in the hands of the assessee. In the result we do not find any merit in the appeal of the revenue hence, we dismiss all the three grounds of appeal. 26. In the result we dismiss the appeal of the revenue. 27. Now we come to the appeal of the assessee for the AY 2009-10 in ITA No. 3079/Del/2014. 28. The assessee has raised the following grounds of appeal in ITA No. 3079/Del/2014 for the Assessment Year 2009-10:- "1. On the facts and in the circumstances of the case and in law, the ld CIT(A) has e....
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.... contentions. Admittedly, the assessee has availability of fund of Rs. 2128 crores which does not carry any interest. The amount of investment made by the assessee is only Rs. 462 crores. Therefore, apparently assessee has more interest free funds then the amount of investment. The ld CIT(A) though has considered the above issue however, has state that assessee was permitted to investment in mutual funds out of this interest free funds. However, he confirmed the addition on interest merely for the reason that assessee could have invested borrowed funds. In view of these facts relying on the decision of the Hon'ble Bombay High Court in HDFC Bank Ltd Vs. DCIT 383 ITR 529 and Hon'ble Gujarat High Court in case of Pr. Cit Vs. Sintex Industries Ltd 248 Taxmann 449, the amount of interest disallowance made by the ld Assessing Officer of Rs. 21815273/- deserves to be deleted. With respect to 0.5% of average value of investment the ld AR did not submit any explanation. Therefore, the AO is directed to restrict the disallowance u/s 14A to the extent of 0.5% of the average value of the investment as provided under Rule 8D. Accordingly, ground No. 1 of the appeal is partly allowed. 3....