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TMI Blog2012 (11) TMI 702X X X X Extracts X X X X X X X X Extracts X X X X ..... recedent, issue is decided against the assessee in the present two years also - In the result, both the appeals of assessee are dismissed. - ITA No.959/Ahd/2006 & ITA No.1675/Ahd/2007 - - - Dated:- 19-1-2012 - Shri Mukul Kr. Shrawat And Shri A.K.Garodia, JJ. Assessee by Shri A. C Shah, AR By Revenue Shri Semir Tekriwal, SR-DR ORDER PER A.K.Garodia, Accountant Member:- Both these appeals are filed by the assessee which are directed against the two separate orders of Ld. Commissioner of Income-tax (Appeals)-Gandhinagar dated 21-02- 2006 for assessment year 2002-03 and dated 23-02-2007 for assessment year 2003-04. Since the issue involved is similar, both these appeals were heard together and are being disposed off by way of by this common order for the sake of convenience. 2. Only issue involved in both the years is regarding assessing interest income as income from other sources and disallowance of various expenses and depreciation claimed by the assessee in both the years. In A.Y 2002-03 the amount of interest income assessed as income from other sources is Rs.18,94,699/- and deduction disallowed on account of expenditure in that year is Rs.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... development and 55% of the attributable cost of the development of the growth centres was treated as development expenses and the same was classified under the head current assets as stock in trade. The Assessing Officer was of the view that the appellant had not commenced the business and therefore the interest earned was taxable as income under the head 'Other sources' following the principle laid down by the hon'ble Supreme Court in the case of Tuticorin Alkali Chemicals and Fertilizers Ltd. V/s. CIT (227 ITR 172). Assessing Officer also noted that for A.Y. 1998-99, CIT(A) has confirmed the action of the Assessing Officer in assessing income under the head 'Other sources' holding that the appellant company was only in the process of setting up of the growth centres and the above activity was purely of pre-operative 2.1.4 The appellant explained before the Assessing Officer that-the company was incorporated on 11/02/1992 and it had started commercial activity from July 1993. The appellant company had appointed GIDC for establishment of infrastructure facilities at Vagra, Bharuch, Palanpur, Mami sites. The land was purchased and other payments like electricity, water supply, et ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operative nature and commencement of business could be said to have started only when it started exploitation of the project. The object of the company was to set up growth centres and thereafter to exploit them. It was the second limb of activity which provided for regular business activity. The appellant was building capital Form-1. T. S. -7 Notice of Demand under Section 156 of the Income-tax Act, 1961 Status.........CO.. .'...................................... PAN/GIR No.AAACG6988Q To Gujarat Growth Centre De. Co-op. Ltd. 4th floor, Udhyog Bhavan Block No.5, Sec-II, Gandhinagar 1. This is to give you notice that for the assessment year. 2002-03, a sum of Rs.8,94,233 details of which are given on the reverse, has been determined to be payable by you. ' 2. The amount should be paid to the Manager, authorized bank/State Bank of India./Reserve Bank of India at Gandhinagar within Thirty days of the service of this notice. The previous approval of the Deputy Commissioner of Income-tax has been obtained for allowing a period of less than 30 days for the payment of the above sum. A challan is enclosed for the purpose of payment. 3. If you do not pay the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess of setting up of business. The assets were yet to be exploited. The miscellaneous receipts did not constitute income earned out of exploitation of assets. 2.1.8. Assessing Officer also referred to the claim that growth centres in places like Vagra had already been completed. He referred to the minutes of the Board meeting held on 05/03/2002 which stated that the Vagra centre was under commissioning stage. The comments on the working of the company as given in the Annual Report for the year 2001-02 were also referred to by Assessing Officer to show that the other growth centres at Gandhidham, Palanpur and Miyani were being set up and the works were under progress. Accordingly the Assessing Officer came to the conclusion that no growth centre was completely set up. The appellant was only in the process of setting up of business and acquiring capital assets. No plot was sold and there was no exploitation of any capital asstd. There was no income to be computed under the head Business and the interest income was liable to be taxed under the head Other sources . 2.1.9 Regarding the claim that the finding of fact for A.Y 1995-96 was applicable to the present year. Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00 but no action has been taken by the Revenue to reopen the assessment order for A.Ys1996-97 and 1997- 98 though the time-limit was available for doing so and therefore, as per the principle of consistency, no different views should be taken in contradiction to the view taken in A.Ys 1995-96 to 1997-98. 7. In support of this contention, reliance was placed on the judgment of Hon ble apex court rendered in the case of Radhasoami Satsang v. CIT (1992) as reported in 193 ITR 321 (SC). 8. As against this, Ld. DR of the Revenue supported the orders of authorities below. He also submitted that issue involved is squarely covered in favour of Revenue by the Tribunal orders in assessee s own case for A.Ys 1998-99 to 2001-02 and hence, the orders of Ld. CIT(A) should be confirmed in both the years. 9. We have considered rival submissions, perused the materials on record and gone through the orders of authorities below and Tribunal s order in assessee s own case for A.Ys 1998-99 to 2001-02. We have also gone through the various judgments cited by Ld. AR of the assessee. We find that Tribunal order in earlier four years i.e. A.Y 1998-99 to 2001-02 is against the assessee and no case h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Association clearly provide for such activity as has also been emphasized by the learned counsel for the appellant by referring to clause 11(1) 11(d) of the Memorandum of Association. A perusal of Memorandum of Association clearly indicates that the object of the appellant-Corporation was to set up the growth centres and thereafter to exploit the same. It is the second limb of the object, which provides for regular business activity, wherein the appellant-Corporation will interact with other parties for generation of revenue and for exploitation of growth centres so set up by the appellant. It is apparent that the process of setting up the growth centres was purely an activity of pre-operative nature. In this regard reliance may be placed on the decision of Calcutta High Court in the case of Radhadevi Jalan v. CIT (1951) 20 ITR 176 wherein the Hon'ble High Court held that for an activity to be treated as an adventure in nature of trade, it must be shown to have some continuous activity aimed at producing profit. With regard to reliance placed by the Id. Counsel for the appellant on clause 11(1) and 11(d) of Memorandum of Association, I am to point out that the same cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rted in 91 ITR 107 (Guj) was considered. Now the only difference in facts being pointed out by Ld. AR is that the letter dated 27-01-2005 was submitted before the Assessing Officer in the present year for the first time. Copy of this letter is available on page-16 of Paper Book in which it is stated by GIDC that necessary infrastructure like road, water supply, telephone exchange buildings were completed in 1997-98 and all infrastructure at Gujarat Growth Centre Development Corporation Ltd. were made available and hence the land is available for allotment. In contradiction to this letter of GIDC, it is noted by Ld. CIT(A) in his order which is reproduced by the Tribunal in this earlier order that even on 31-03-2002, no growth centre was completly set up and the assessee had only made payment of Rs. 1869.41 lakh to GDIC for the purpose of setting up of growth centre and that same was shown under the head loans and advances and even details of expenditure were pending finalization between assessee corporation and GIDC. Hence, in our considered opinion, this letter dated 27-01-2005 does not make any change in facts during these two years also and hence, we do not find any reason to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... third judgment cited by Ld. AR of the assessee was rendered by Hon ble apex court in the case of Sarabhai Management Corporation Ltd. (supra) as per which, the decision of Hon ble Gujarat High Court rendered in the case of Sarabhai Management Corporation Ltd. (supra) was affirmed. Since, we have already seen that this judgment of Hon ble Gujarat High Court is not applicable in the present case, it does not make any difference that this judgment was duly affirmed by Hon ble apex court. Regarding this contention that principle of consistency should be followed and reliance on the judgment of Hon be apex court rendered in the case of Radhasoami Satsang (supra), we would like to observe that since there is already a Tribunal decision in assessee s own case for A.Ys 1998-99 to 2001-02, it cannot be said that Tribunal should take a contrary view on the basis that a different view was taken by the Assessing Officer in some earlier years. The exiting Tribunal decision is for those years which are after earlier years in which the view taken by the AO was in favour of assessee and hence, even if this claim was to be made regarding principle of consistency, the same should have been made bef ..... X X X X Extracts X X X X X X X X Extracts X X X X
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