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TMI Blog2011 (11) TMI 391X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and should be struck down as invalid. (ii) The CIT(A) has erred in upholding the reopening of assessment for asst. years 1999-2000 to 2002-03. (iii) Whether the CIT(A) is justified in upholding the AO's finding that interest received from surplus funds is 'income from other source' as against 'business income'. ITA Nos.1147 to 1152 (Revenue's appeals) 5. The assessee is a company. It is engaged in the business of development, operating and maintenance of a technology park. In completing the assessment for the asst. years 1999-2000 to 2004-05, the AO treated the lease rentals received by the assessee company as income from 'house property' as against 'business income' claimed by the assessee. The related disallowances were also made by the AO. 5.1 Aggrieved by the order of the AO, the assessee company contested the issue before the first appellate authority. 5.2 The CIT(A), following his order in the case of Golf Link Software Park (P.) Ltd. (IT Appeal No. 269/DC-11(3)/CIT(A)-I/07-08 dated 12.10.2009), decided the issue in favour of the assessee by holding that the rental income and maintenance charges are income to be assessed unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company has been formed with the intention of commercially exploiting the property by developing and maintaining a Technology Park. "To establish and maintain Information Technology Park with factories, commercial officers, residential complexes and other allied facilities and amenities such as gardens, swimming pools, internal roads, satellite communication facilities, shops etc. on the land to be allotted near Bangalore by the Government of Karnataka". A copy of the 'MOA' is attached at page 41 of the paper book filed by the assessee for reference. 5.7 The Central Board of Direct Taxes and the Ministry of Commerce require the Technology Park to spend significant expenditure on amenities ['infrastructure development'] to be provided along with built up space. This showcases the fact that the company is engaged in a complex commercial activity of running a Technology Park which includes provision of space and provision of facilities/amenities - both activities being interconnected. 5.8 The indenture of sale deed between Karnataka Industrial Areas Development Board and Information Technology Park Limited for transfer of land provides that the land will be transf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Global Tech Park (P.) Ltd. (supra). 5.12 In the light of the aforesaid reasoning, we affirm the order of the CIT(A) and dismiss the grounds raised by the revenue. 5.13 In the result, the appeals filed by the revenue are dismissed. C.O.Nos. 35 to 40/Bang/2011 (By Assessee) 6. The first ground in the cross objection is that the revenue's appeal before the Tribunal is time barred and should be struck down as invalid. 6.1 It is a case of the assessee that as per section 253 of the Act, every appeal shall be filed within sixty days from the date on which the order sought to be appealed against is communicated to the assessee or to the Commissioner. In the instant case, it is submitted that in revenue's Form 36A, it is clearly mentioned that the order sought to be appealed against was communicated to the revenue authorities on 10th August, 2010 and the appeal was filed on 14th October, 2010, which is beyond the stipulated period of sixty days from the date on which the order sought to be appealed against was communicated to the revenue authorities. 6.2 The learned DR, on the other hand, submitted that the date of receipt of impugned order by the revenue authorities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the High Courts and orders of the Tribunal:- CIT v. Batra Bhatta Co. [2008] 174 Taxman 444 (Delhi); State Bank of Indore v. ITAT [2006] 152 Taxman 196 (MP) & Mitsui-Marubeni Corpn. v. Dy. DIT [2008] 110 ITD 535 (Delhi) 7.4 The learned DR supported the conclusion of the first appellate authority. 7.5 We have heard the rival submissions and perused the material on record. The relevant provisions, namely section 147, reads as follows:- "If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recomputed the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year)". Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son to believe" but not the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed the requisite belief. Whether material would conclusively prove escapement of income is not the concern at that stage. This is so because the formation of the belief is within the realm of the subjective satisfaction of the Assessing Officer. For the above proposition, we rely on the judgement of the Hon'ble Supreme Court in the case of Asstt. CIT v. Rajesh Jhaveri Stock Brokers (P.) Ltd. [2007] 291 ITR 500/161 Taxman 316 (SC). 7.7 The Hon'ble Supreme Court in the Rajesh Jhaveri Stock Brokers (P.) Ltd. case cited supra held "In other words if the AO for whatever reason has reason to believe that income has escaped assessment it confers jurisdiction to reopen the assessment. It is, however, to be noted that both the conditions must be fulfilled if the case falls within the ambit of the proviso to section 147". It was further held by the Hon'ble Supreme Court that "So long as the ingredients of section 147 are fulfilled, the AO is free to initiate proceedings u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he funds in a bank and, hence, such funds may be said to be incidental to the business of the assessee; Relies on the case laws: (a) CIT v. Paramount Premises (P.) Ltd. [1991] 190 ITR 259 (Bom.) & (b) CIT v. Lok Holdings [2010] 189 Taxman 452 (Bom.) 8.1 We have carefully considered the submissions of the Ld. A R on the issue and also the case laws relied on by the assessee. The assessee was engaged in the business of developing, operating and maintaining an industrial park and not a financial consultancy like chit funds. Admittedly, the assessee had surplus funds in its kitty which it wanted to earn interest on such funds and, thus, it had deposited in the bank for specified period with a sole intention of earning interest which cannot be categorized as income from business, but, clearly from 'other sources'. The assessee in its written submission conceded that the interest income earned by it was from surplus funds not immediately required for the purpose of business. It makes abundantly clear that the sole intention of the assessee was to earn interest from its surplus funds and thus such surplus funds cannot be classified as incidental to the business of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n'ble Court by means of a reference application which has been rejected by the Hon'ble Court. In this regard, we would like to reiterate that the present assessee had deposited the surplus funds lying at its kitty in the bank. The assessee had brought on record any justification to even remotely suggest that it was required to give a guarantee to the bank in respect of the land taken on lease for construction work or maintenance of the park and so on. On its own accord, it had conceded that it had deposited only the surplus amounts and nothing else. In that event, the assessee cannot take refuge in the finding of the Bombay High Court which is, in our considered view, on a different footing. (ii) similarly, yet another ruling of the Hon'ble Bombay High Court in the case of Lok Holdings (supra) cannot come to the present assessee's rescue, the issue before the Hon'ble Court was almost similar and identical to that of the issue which was considered by the Court in the case of Paramount Premises (P.) Ltd. cited supra. 8.3 As mentioned earlier, the interest income is earned from fixed deposits, placed with different banks. The direct and the proximate source fo ..... 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