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TMI Blog2003 (3) TMI 292X X X X Extracts X X X X X X X X Extracts X X X X ..... under appeal is the first year of assessee-company and that only construction of factory was under process during this year. He has contended that the assessment was completed under s. 143(3) on 30th Nov., 1998. He has contended that the learned CIT issued show cause notice under s. 263 on 4th May, 2000, wherein the learned CIT raised the two points as under: (i) interest earned on FDRs (which were deposited as margin money), amounting to Rs. 9,31, 572, (ii) share capital and share application money aggregating to Rs. 9,42,89,000. He has contended that during the assessment proceedings the assessee furnished more than 500 pages including pp. 21 to 72, being the bank statement of assessee-company to show that all payments of share capital received by assessee were through account payee cheque. He has contended that the assessee furnished the list of shareholders as placed on pp. 73 to 113 with their names alongwith full address and distinctive numbers of the shares. He has contended that the assessee also furnished confirmations from majority of the shareholders and share applicants, as placed on pp. 114 to 273 paper book. He has contended that the confirmations from sharehol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quasi-judicial authority and learned CIT(A) cannot substitute his own opinion. He has cited Malabar Industrial Co. Ltd. vs. CIT (2000) 159 CTR (SC) 1 : (2000) 243 ITR 83 (SC) contending that an order may be prejudicial to the interest of Revenue but if it is not an erroneous order, proceedings under s. 263 are not attracted: He has also cited in the case of CIT vs. Gabriel India Ltd. (1993) 114 CTR (Bom) 81 : (1993) 203 ITR 108 (Bom) contending that it has been held therein that CIT cannot direct AO to make roving and fishing inquiries. 5. The learned authorised representative of assessee has contended that an assessment order passed by AO as per s. 143(3) after going through the material on record including the evidence furnished by assessee together with such further evidence as the AO required the assessee to produce on specific points, as also other relevant material gathered by AO, and after considering the explanation of assessee, cannot be termed as erroneous. In this regard he has relied on CIT vs. Girdharilal (2002) 176 CTR (Raj) 92. He has contended that in the instant case also the. assessment order has been passed by AO after going through the evidence produced by as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Anima Investment Ltd. (2000) 68 TTJ (Del)(TM) 1 8A. The learned authorised representative of assessee-petitioner has also contented that the AO s order was in the light of law prevailing at the time of passing the subjected assessment. He has contended that at that time two judgments were available which are as under: (i) National Thermal Power Corpn. Ltd. vs. Union of India Ors. (1991) 96 CTR (Del) 140 : (1991) 192 ITR 187 (Del) (ii) (1993) 113 CTR (Del)(FB) 472 : (1994) 205 ITR 98 (Del)(FB) He has contended that in the light of the above two judgments the AO has not committed any error. He has cited CIT vs. G.M. Mittal Stainless Steel (P) Ltd. (2003) 179 CTR (SC) 553 and contended that if AO's assessment is in accordance with judgments of some High Court then it cannot be treated to be erroneous even though that High Court judgment might be reversed by Supreme Court. He has contended that here rather the judgment of Hon'ble Delhi High Court in (1991) 192 ITR 187 (Del) stands confirmed by the Hon'ble Supreme Court in (2000) 164 CTR (SC) 287 : (2001) 251 ITR 263 (SC). He has contended that there has been complete application of mind by AO on the issues involved in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itations relied upon by the learned CIT are not relevant in the matter and do not extend any advantage to the Revenue for the reason that in all those decisions, the interest was earned on deposit of surplus funds. In the instant case, the position is somewhat different in as much as the deposits are not simplicitor but the deposits are as margin money required for obtaining letter of credit or bank guarantee, etc., The factum as to whether the deposits were made for the aforesaid margin money has neither been disputed by AO nor by CIT. The accounts of assessee-company are audited and auditors have certified in the Sch. VII to the balance sheet that finance charges are net of Rs. 9,31,572, being interest on margin money deposits. In (1999) 236 ITR 315 (SC) the Hon'ble Supreme Court has held that interest on advances to contractors and other receipts like rent from quarters, let out to employees of contractor, hire charges on plant and machinery let out to contractors and royalty on stones removed from assessee's land are. amounts being inextricably linked with the process of setting up of plant and machinery by assessee and are capital receipts and not income of assessee from any i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nish confirmations from shareholders and the assessee accordingly furnished confirmations from shareholders holding 84 per cent of share capital and the share applicants of 62 per cent of share application money. It is also revealed from record that the AO had called upon the assessee to furnish bank statements of individual shareholders on random basis covering major portion of subscribed capital and the assessee, in compliance thereof, furnished the same to AO. It is also revealed from record that the AO had written letters to some of the shareholders who, in turn, gave their replies to the AO. All the above material/evidence on record were duly considered by AO and thereafter she passed the assessment order dt. 30th Nov., 1998. It is also revealed from record that the assessee has furnished the list of shareholders alongwith their addresses and so if the AO had any doubt regarding identity of or investment by shareholders/share applicants, the AO could have issued summons under s. 131 of the IT Act 1961, but considering the material available on record the AO did not feel any such necessity. There is no material on record to raise doubt or suspicion regarding the identity of or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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