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TMI Blog2019 (12) TMI 909X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the interest received against the project expenditure. Admittedly, this is the only project conducted by the assessee and there is no other project. In such an event, it is not the passive submission to be recorded to the AO, but also actively pleading before him that the interest received was adjusted against the project expenditure. Hon ble jurisdictional High court considered the decision of the Hon ble Apex Court in the case of M/s. Tuticorin Alkali Chemicals and Fertilizers Ltd.(supra) and Bokaro Steel Ltd. [ 1998 (12) TMI 4 - SUPREME COURT] in Indian Oil Panipat Power Consortium Ltd. Vs. ITO [ 2009 (2) TMI 32 - DELHI HIGH COURT] and held that the interest earned on funds primarily brought for infusion in the business could not have been classified as income from other sources. Further, unlike in the case of M/s. Tuticorin Alkali Chemicals and Fertilizers Ltd.(supra), in the case on hand, the assessee had already commenced business. Viewing from another angle, we are of the considered opinion that the ld. PCIT is not justified in invoking the jurisdiction u/s. 263 of the Act or to hold that the assessment order is erroneous or prejudicial to the interest of Revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of the same, the order renders itself erroneous in so far as it is prejudicial to the interest of the Revenue. According to the ld. PCIT, during the course of scrutiny proceedings, assessee merely provided a chart showing bifurcation of inventory and the ITR reconciliation without filing any details to justify that the FDRs have intrinsic and direct nexus with the real estate projects. 5. Aggrieved by such an order passed u/s. 263 of the Act, the assessee preferred this appeal contending that the ld. CCIT failed to consider the prescribed conditions to hold the order erroneous insofar as it is prejudicial to the interest of Revenue. The assessee further contended that the ld. Ld. Assessing Officer made necessary enquiries and verification with respect to the taxability of interest income of ₹ 9,47,04,585/- and on this aspectdisregarded the submissions of the assessee. According to the assessee ld. PCIT failed to notice that the assessee had placed all the necessary in the case before him to satisfy that incomes earned had intrinsicallyreal estate project and were accordingly reduced from the cost of the project. 6. Arguments of the ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r u/s. 263 of the Act holding it erroneous in so far as it is prejudicial to the interest of Revenue. 8. Per contra, it is the submission on behalf of the Revenue that in this matter, there was no enquiry made by the Ld. Assessing Officer specifically as to the issue of interest because the record does not show that the ld. AO put any specific question as to why the interest shall not been taxed as income from other sources. It is only an attempt of the assessee to reconcile the difference of income reported in form-26AS and the income offered to tax under the head income from other sources basing the ITR. Next contention of the ld. DR is that there is no scope for further inquiry in this matter by the ld. PCIT because all the details were available on record and it is only non-consideration of binding principle laid down by Hon ble Supreme Court in the case of M/s. Tuticorin Alkali Chemicals and Fertilizers Ltd.(supra) that renders the order of assessment to be erroneous in so far as it is prejudicial to the interest of Revenue. Further, he submitted that in view of this decision it cannot be said that the view taken by the ld. Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter dated 14.09.2017, the ld. Ld. Assessing Officer issued notice to the assessee proposing rectification in respect of certain items including the one relating to interest of ₹ 9,47,04,585/- to which the assessee has issued reply dated 12.10.2017 where under it was explainedthat the company was engaged in the business of promotion, construction and development of commercial projects on the project land allotted by Haryana State Industrial and Infrastructure Development Limited (HSIIDC). Consequent to the arrangement with HSIIDC, the assessee was required to make payment in instalments to HSIIDC towards acquisition of land. In this regard the company raised funds from non-resident shareholders outside India through Compulsory Convertible Debentures (CCDs) to fulfil its payment obligations towards HSIIDC and in that connection they temporarily parked the funds in FDRs, which earned interest. The assessee, therefore, submitted that in this way, such an interest has intrinsic nexus with the Real Estate Projects undertaken and therefore, they have adjusted the same against the project expenditure. The ld. AR submitted that the proceedings u/s. 148 were dropped. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue. If we accept the submission of the ld. DR that since all the material was available on record, there was no need for the PCIT to conduct any further inquiry, it also inures to the benefit of the assessee because all these things are available on record and the assessee specifically submitted that the difference in the ITR and 26AS occurred because of the adjustment of the interest received against the project expenditure. Admittedly, this is the only project conducted by the assessee and there is no other project. In such an event, it is not the passive submission to be recorded to the AO, but also actively pleading before him that the interest received was adjusted against the project expenditure. 15. Hon ble jurisdictional High court considered the decision of the Hon ble Apex Court in the case of M/s. Tuticorin Alkali Chemicals and Fertilizers Ltd.(supra) and Bokaro Steel Ltd. (supra) in Indian Oil Panipat Power Consortium Ltd. Vs. ITO (2009) 315 ITR 255(Del) and held that the interest earned on funds primarily brought for infusion in the business could not have been classified as income from other sources. Further, unlike in the case of M/s. Tuticorin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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