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TMI Blog2018 (5) TMI 123X X X X Extracts X X X X X X X X Extracts X X X X ..... that:- investments in shares were not at all considered as stock in trade as the assessee was not dealing in shares. Once the shares are treated as investments, loss arising out of purchase and sale of shares is only a capital loss and it is not a business loss. In other words, assessee having carried on no business activity and treated the shares as investments from year to year, income or loss arising out of sale of such shares is to be considered as capital gain or capital loss. The share being a capital asset cannot acquire different character because of treatment accorded to it by the assessee in its return of income; contrary to the treatment given in the books of accounts. Hence, this ground of appeal of assessee stands rejected. Non-granting of deduction u/s.36(i)(viii) towards interest on deposit - Held that:- The interest income earned on deposit of surplus money would be assessable as income from other sources. If the interest income is from a fund, which has been kept as deposit from surplus capital, it would be assessable as income from other sources only. If the surplus funds are invested instead of keeping them idle, the income by way of interest should be treated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etter dated 03.02.2014 stated that the return filed originally filed may be treated as one in response to notice u/s.148 of the Act. While framing the assessment, the AO made addition by disallowing the loss on sale of shares at ₹ 1,35,99,036/- and disallowance of interest u/s.36(i)(vii) of the Act at ₹ 63,52,015/-. Aggrieved by the order of ld. Assessing Officer, the assessee carried the appeal before the Ld.CIT(A). On appeal, the CIT(Appeals) observed that the re-assessment has been taken up in the assessee s case within 4 years and the AO had supplied reasons for re-opening the assessment. The assessee had filed objections, which have been disposed of by the AO. Hence, Ld.CIT(A) confirmed the re-opening of assessment as well as the addition made by the ld. Assessing Officer. Against the order of Ld.CIT(A), now the Assessee is in appeal before us. 4. Before us, the ld. AR contended that all the facts were specifically disclosed and examined in the original assessment proceedings. Since, no new fresh facts have come to the AO for resorting to the reassessment of concluding proceedings u/s.143(3) of the Act, the AO cannot reopen the case u/s.147 of the Act. Further, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action could be taken after the expiry of four years from the end of the relevant assessment year unless the assessee has disclosed fully and truly all material facts necessary for the assessment for that assessment year, inter alia. 6.2 As seen from the assessment order, it gives a clear picture that the Assessing Officer has got material evidence to form his opinion for taking recourse to section 147 r.w.s 148 of the Act. There cannot be two opinions. At the point of time when the reasons are recorded, forming opinion of escapement of income is only relevant. It is true that u/s 147, the Assessing Officer can either assess or reassess but for taking action there under, he has to record reasons that income chargeable to tax has escaped assessment . It is also mandated by section 148(2) to record reasons in writing. The reassessment proceedings u/s 147 are further subject to sections 148,149,150,151,152 and 153. But in the present case, we are required to decide the limited issue regarding the validity of proceedings undertaken within four years from the end of relevant assessment year in question. The Assessing Officer is required to see if the conditions laid in Explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he course of original assessment, though it was completed u/s.143(3) of the Act and mere production of records by the assessee before the AO at the time of original assessment itself cannot be led to the conclusion that the AO had applied his mind wherein it requires due diligence and application of mind from the end of the AO. 6.4 The ld.A.R relying on the judgement of Supreme Court in the case of CIT Vs. Kelvinator of India Ltd., in (2010) 320 ITR 561(SC)cannot be of any assistance to the facts of the case in hand on the reason that where the AO has not applied his mind and not taken any decision on the disputed issue. Hence, in our opinion, the original assessment is valid and the same is confirmed. Therefore, this ground of appeal raised by the assessee is dismissed. 7. The second ground is with regard to non-granting of loss on loss of shares by treating the same as capital loss of ₹ 1,35,99,036/-. 8. The brief facts of the issue are that the assessee had deducted a sum of ₹ 1,35,99,036/- being a loss on sale of shares as business loss while computing the income earned from the business or profession. According to the ld.A.R, the assessee had converted the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee was not dealing in shares. Once the shares are treated as investments, loss arising out of purchase and sale of shares is only a capital loss and it is not a business loss. In other words, assessee having carried on no business activity and treated the shares as investments from year to year, income or loss arising out of sale of such shares is to be considered as capital gain or capital loss. The share being a capital asset cannot acquire different character because of treatment accorded to it by the assessee in its return of income; contrary to the treatment given in the books of accounts. Hence, this ground of appeal of assessee stands rejected. 10. The third ground in this appeal is with regard to non-granting of deduction u/s.36(i)(viii) towards interest on deposit at ₹ 63,52,015/-. 11. The facts of the issue are that the assessee borrowed funds for the purpose of advancing housing loan. The assessee made a fixed deposit between the span of time lag in borrowing and advancing the housing loan to the borrower and earned interest on fixed deposit. The assessee claimed set off of the said interest from the interest expenditure. The ld. Assessing Officer ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of keeping them idle, the income by way of interest should be treated as income from other sources. More, so the assessee before the AO accepted this disallowance and at this stage, the assessee cannot have any grievance. Hence, this ground of appeal of assessee stands rejected. 13. In the result, the appeal of assessee in ITA No.2732/Mds./2016 stands dismissed. 14. Next we take ITA No.2733/Mds./16 (A.Y2009-10) The sole grievance of the assessee in this appeal is with regard to disallowance u/s.14A r.w.Rule 8D. 15. The facts of the issue are that the assessee has earned dividend income for financial year 2011-12. However, the AO invoked provisions of the section 14A r.w.Rule 8D and disallowed ₹ 43,82,057/-. Aggrieved by the order of ld. Assessing Officer, the assessee carried the appeal before the Ld.CIT(A). On appeal, Ld.CIT(A) confirmed the disallowance made by the AO amounting to ₹ 43,82,057/-. Against the order of Ld.CIT(A), now the Assessee is in appeal before us. 16. Before us, ld.A.R pleaded that there is no exempted income earned by the assessee and placed reliance in the judgement of jurisdictional High Court in the case of CIT Vs.Chettinad Lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ile of the assessing officer to be considered de novo and after conducting a proper enquiry. Inter alia a direction was issued to the assessee to tender a proper explanation for the interest payments. The open remand was made in the facts and circumstances of that case and no conclusion was drawn by the Bench on the position of law involved. In fact, the substantial question of law raised in that case for the consideration of the Court was couched in general terms as follows Whether on the facts and in the circumstances of the case, the Income Tar Appellate Tribunal is right in law in confirming the disallowance under Section 11.1 of the income Tax Act, of an amount of ₹ 55,00.000/- in relation to assessment year 2007- 2008? 14. Nothing much turns on the use of the word includable and the phrase under the act in s. 14A and we are not persuaded to accept the emphasis laid or the interpretation of the same by the Revenue. An assessment in terms of the Income tax Act is specific to an assessment year and the related previous year. S.4 of the Act, which imposes the charge to tax reads thus: Charge of income-tax 4. (1) Where any Central Act enacts th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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