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TMI Blog2017 (5) TMI 540X X X X Extracts X X X X X X X X Extracts X X X X ..... of the following substantial questions of law :- "1. Whether in the facts and circumstances of the case, the interest earned on Fixed Deposit receipts used by the assessee as borrowing margin money for funds for setting up the industry can be termed as inextricably linked with the process of setting up of industry so as to be considered as capital receipt and not revenue income ? 2. Whether in the facts and circumstances of the case the Tribunal was justified in law in holding that the enquiry conducted by the Assessing Officer before the assessment order was passed was proper and adequate enquiry so as not to render the assessment order erroneous and prejudicial to the interest of the revenue, as held by the CIT in his order u/s.263 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in 227 ITR 172(SC). A challenge was given to the order passed by the Commissioner of Income Tax invoking powers under Section 263 of the Act of 1961 by way of filing an appeal before the Income Tax Appellate Tribunal, Jodhpur Bench, Jodhpur. The Tribunal by its order dated 28.3.2003 accepted the appeal and set aside the order passed under Section 263 of the Act of 1961. To challenge the order passed by the Income Tax Appellate Tribunal this appeal is before us with the contention that the interest earned by the assessee on Fixed Deposits is not business income but from other sources and, therefore, is liable to be taxed. It is also stated that the Assessing Officer passed order of assessment without proper and adequate enquiry and that was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he entire issue in detail and that deserves to be quoted as follows :- "It is true that the company will have to pay interest on the money borrowed by it. But that cannot be a ground for exemption of interest earned by the company by utilising the borrowed funds as its income. It was rightly pointed out in the case of Kedar Narain Singh vs. CIT [1938] 6 ITR 157 (All.) that 'anything which can properly be described as income is taxable under the Act unless expressly exempted'. The interest earned by the assessee is clearly its income and unless it can be shown that any provision like Section 10 has exempted it from tax, it will be taxable. The fact that the source of income was borrowed money does not detract anything from the Revenue char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioner of Income Tax rightly treated the same as income taxable. So far as the second question is concerned as to whether the Commissioner of Income Tax was justified in invoking powers under Section 263 of the Act of 1961 by holding that the enquiry conducted by the Assessing Officer before the assessment order was neither proper nor adequate, we would like to state that the order passed by the Assessing Officer nowhere reflects about any enquiry said to be made. It simply refers the explanation given by the assessee and nothing beyond that. In view of whatever stated above, we are inclined to accept this appeal. Accordingly, the appeal is allowed. The order passed by the Income Tax Appellate Tribunal dated 28.3.2003 is set aside. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment which was made as a consequence to a revisional order under Section 263 of the Income Tax Act on the count that the order passed by the revisional authority was already set aside ?" It is the position admitted that the order passed by the revisional authority under Section 263 of the Act of 1961 was set aside by the Income Tax Appellate Tribunal and, therefore, the consequential order of assessment was certainly not sustainable, as such, the Income Tax Appellate Tribunal under the order impugned did not commit any wrong in setting aside the same, however, the position has now been altered in view of the fact that the revisional order has already been restored, therefore, the order or assessment too deserves to be restored. Accordi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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