TaxTMI 
TaxTMI 
2018 (5) TMI 123
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....sment. 3. The brief facts of the issue are that the assessee company filed e-return for assessment year 2009-10 on 27.09.2009 admitting total income of Rs. 29,44,58,482/- and the assessment u/s.143(3) of the Act was completed on 29.11.2011 determining income Rs. 29,58,43,681/- Later it laws noticed by the AO that the assessee deducted a sum of Rs. 1,35,99,036/- being loss on sale of shares from the total income. It was also noticed by the AO that while calculating the eligible deduction u/s.36(i)(viii) of the Act, the assessee had not deducted the income from other sources of Rs. 3,17,60,073/- being interest on deposits. As such, notice u/s.148 of the Act dated 09.01.2014 was issued to re-open the assessment. In response, the assessee vide its letter dated 03.02.2014 stated that the return filed originally filed may be treated as one in response to notice u/s.148 of the Act. While framing the assessment, the AO made addition by disallowing the loss on sale of shares at Rs. 1,35,99,036/- and disallowance of interest u/s.36(i)(vii) of the Act at Rs. 63,52,015/-. Aggrieved by the order of ld. Assessing Officer, the assessee carried the appeal before the Ld.CIT(A). On appeal, the CI....
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.... can be formed. The word 'reason' in the phrase 'reason to believe' would mean cause or justification. In case the Assessing Officer has a cause or justification to know or suppose that income has escaped assessment, action u/s 148 can be taken. But obviously, there should be relevant material on which a reasonable man could have formed a requisite belief. Whether this material(s) would conclusively prove the escapement of income is not the concern at that particular stage. So what is required is the subjective satisfaction of the Assessing Officer based on objective material evidence. The reason was recorded as discussed above. The argument of the ld.AR is that where there was no fresh tangible material to reopen the assessment u/s 147, no action could be taken after the expiry of four years from the end of the relevant assessment year unless the assessee has disclosed fully and truly all material facts necessary for the assessment for that assessment year, inter alia. 6.2 As seen from the assessment order, it gives a clear picture that the Assessing Officer has got material evidence to form his opinion for taking recourse to section 147 r.w.s 148 of the Act. There cannot be tw....
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....e could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso". It is possible that with due diligence of the Assessing Officer would have ascertained this fact at the time of assessment, if any also, but in view of the explanation (1) it does not mean that there was no default on the part of the assessee. Hence, we hold that the entire reassessment proceeding in this case is valid and therefore, the action of the Assessing Officer is upheld. As such in this case, the issue taken up by the AO in reopening of assessment viz. to consider loss on sale of shares and also deduction u/s.36(1)(iii) of the I.T Act, which was not at all considered in the course of original assessment, though it was completed u/s.143(3) of the Act and mere production of records by the assessee before the AO at the time of original assessment itself cannot be led to the conclusion that the AO had applied his mind wherein it requires due diligence and application of mind from the end of the AO. 6.4 The ld.A.R relying on the judgement of Supreme Court in the case of CIT Vs. Kelvinator of India Ltd., in (2010) ....
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....ntion in the nature of trade. As seen from the facts of the case, the assessee was engaged in the housing financing activity and not at all engaged in trading in shares. The buying of the shares was only the intention of holding it as an investment. The assessee has no intention to trade in shares. Hence, it cannot be business assets in the hands of assessee rather than it was treated as investment. 9.1 The investments in shares are classified as long term investment or current investments and long term investments are valued on historical cost method. On the other hand, current investments are valued at cost or market value whichever is lower. In other words, investments in shares were not at all considered as stock in trade as the assessee was not dealing in shares. Once the shares are treated as investments, loss arising out of purchase and sale of shares is only a capital loss and it is not a business loss. In other words, assessee having carried on no business activity and treated the shares as investments from year to year, income or loss arising out of sale of such shares is to be considered as capital gain or capital loss. The share being a capital asset cannot acquire d....
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....e purpose of advancing home loan to make deposit and to earn interest thereon. In our opinion, the interest income earned on deposit of surplus money would be assessable as income from other sources. If the interest income is from a fund, which has been kept as deposit from surplus capital, it would be assessable as income from other sources only. Hence, in our opinion, if the surplus funds are invested instead of keeping them idle, the income by way of interest should be treated as income from other sources. In the present case, in our opinion, since there is no evidence to show that the borrowed fund was used for making fixed deposit, it is to be considered as assessee has deposited its surplus fund as fixed deposit instead of keeping them idle, the income by way of interest should be treated as income from other sources. More, so the assessee before the AO accepted this disallowance and at this stage, the assessee cannot have any grievance. Hence, this ground of appeal of assessee stands rejected. 13. In the result, the appeal of assessee in ITA No.2732/Mds./2016 stands dismissed. 14. Next we take ITA No.2733/Mds./16 (A.Y2009-10) The sole grievance of the assessee in th....
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.... assessee were sought to be disallowed invoking the provisions of s.14A on the premise that the same related to borrowings that had been invested and would yield exempt returns. The assessee contested the disallowance u/s 14A on multiple grounds. It was contended that there were sufficient reserves and surpluses available for the purpose of investments, and borrowed funds, for which the payment of interest had been incurred, had not been invested. The assessee sought to draw a nexus between the borrowed funds and the interest payments, highlighting the position that the quantum of available free funds was far in excess of the investments made. The Bench, in the light of the above submissions, remanded the issue to the file of the assessing officer to be considered de novo and after conducting a proper enquiry. Inter alia a direction was issued to the assessee to tender a proper explanation for the interest payments. The open remand was made in the facts and circumstances of that case and no conclusion was drawn by the Bench on the position of law involved. In fact, the substantial question of law raised in that case for the consideration of the Court was couched in general terms as....