9911796707
TMI Blog2014 (2) TMI 172X X X X Extracts X X X X X X X X Extracts X X X X ..... erest, commission and sale of assets amounting to Rs. 9715587/- by allegedly holding that these income are not assessable under the head "income from business". 3. The assessee craves the permission to add or to amend to any of ground of appeal or to withdraw any of them." 2. The grievance of the assessee in this appeal relates to the invoking of provisions of Section 263 of the IT Act, 1961 (hereinafter referred to as the Act) by the Ld. CIT. 3. Facts of the case that the assessee was engaged in the business of manufacturing and trading of Copper/Wires/Cables and Electric Items and had shown total business income at Rs. NIL after set off of earlier business losses of Rs. 19,70,402/- in its return of income. The Assessing Officer completed the assessment at an income of Rs. NIL after set off of brought forward unabsorbed business losses of Rs. 36,57,073/-. The Ld. CIT observed that the Assessing Officer while completing the assessment had treated the income from interest, commission and sale of assets as income from other sources but had wrongly allowed set off of the brought forward unabsorbed business losses against the said income from interest, commission and sale of assets ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e not short term advances but are long term advances. The moneys on which interest was earned were advanced in course of business. The assessee company utilized business funds lying temporarily surplus for earning interest and, therefore, such interest was assessable as business income. Reliance is placed on CIT Vs. Tirupati Woolen Mills Ltd. (1992) 193 ITR 252 (Cal.). In all the earlier assessments completed u/s 143(3) the interest receipts from these parties have been treated as business income and thus rule of consistency also applies and no different treatment can be accorded in this year. It is a settled law that interest can be assessed under the head 'Income from other sources' only it cannot be brought within other specific head. (ii) Commission receipts Rs. 67,60,123/-:- The commission has been received for rendering services to other persons dealing in the similar products as that of company. The commission receipt is always a business receipt as having received through a systematic and organized activity. It is wrong to held that the assessee company being a manufacturer it could not have business income from commission. The notice does not point out how commission inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, it cannot be treated as income from business or professional. (f) The profit earned from sale of assets does not fall under the head of business income but is assessable under a separate Head of Income from Capital Gains, thus the assessee's contention is not acceptable. The reliance was placed on the following case laws:- (a) Ferro Concrete Construction (India) Pvt. Ltd V. CIT, 290 ITR 713 (MP). (b) CIT Vs. Gimpex P. Ltd. 268 ITR 0377 (Mad). (c) CIT Vs. Haribhai Estate Pvt. 242 ITR 0706 (SC) (d) CIT Vs. Monarch Tools Pvt. Ltd. 260 ITR 0258 (Mad.). (e) Tuticorin Alkali Chemicals and Fertilizers Ltd. Vs. CIT, 227 ITR 0172(SC). 6. The Ld. CIT considered the assessment order as erroneous and prejudicial to the interest of the revenue and accordingly directed the Assessing Officer to complete the assessment de novo by observing in para 9 of the impugned order as under:- "In the assessment completed u/s 143(3) of the Act for A.Y. 2007-08 in the assessee's case the A.O. has allowed set off of earlier years business losses against the income from other sources which cannot be allowed to be set off in view of express provisions of Section 72(1)(i) of the Act. Thus after cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... persons dealing in the similar products as that of company and the commission receipt was always a business receipt as having received through a systematic and organized activity. So it was wrong to held that the assessee company being a manufacturer, could not have disclosed income from commission. 8. As regards to profit on sale of business assets, it was stated that this income was not from other sources but was to be dealt in accordance with Section 32 of the Act i.e. by reducing sale value of assets from Written Down Value of block of assets and the assessee had also met treatment to profit on sale of assets in the same way as was evident from computation of income and depreciation chart. It was further stated that in earlier years also, the similar incomes were considered as business income by passing the assessment order u/s 143(3) of the Act. It was, accordingly, submitted that the Ld. CIT was not justified in considering the assessment order as erroneous and prejudicial to the interest of the revenue. 9. In his rival submissions, the Ld. D.R. supported the impugned order passed by the Ld. CIT. 10. We have considered the submissions of both the parties and carefully gone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e as business income and allowed the set off of unabsorbed losses. The said view was taken in consonance with the view than in earlier year. In the present case, it is noticed that the Ld. CIT in the show cause notice dated 22/12/2011 u/s 263 of the Act in para 4 observed as under, "scrutiny of assessment records revealed that the failure of the Assessing Officer to make proper verification and allowing incorrect set off has made the assessment order erroneous in so far it is prejudicial to the interest of the revenue." From the above observation, it appears that the Ld. CIT wanted that the Assessing Officer should make re- verification, therefore, it cannot be said that the assessment order passed by the Assessing Officer was without making proper enquiry and when the Assessing Officer has taken one of the possible view, it cannot be said that the assessment order passed by the Assessing Officer was erroneous or prejudicial to the interest of the revenue. On a similar issue, the Hon'ble Supreme Court in the case of CIT Vs. Green World Corporation (2009) 314 ITR 81 (SC) (supra) has held as under:- The Income-tax Officer, while passing an order of assessment performs a judicial fun ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
