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TMI Blog2024 (2) TMI 467X X X X Extracts X X X X X X X X Extracts X X X X ..... me of Rs. 5,61,89,376/- and the treatment of those figures in the accounts of petitioner were subject matter of consideration. It is true that these issues have not been specifically discussed in the original assessment order dated 29th February 2016. But in the assessment order, the assessing officer has reworked the work in progress, which indicates that these issues were certainly subject matter of consideration during the assessment proceedings. As held by the Division Bench of this Court in Aroni Commercials Ltd. [ 2014 (2) TMI 659 - BOMBAY HIGH COURT] the settled law is once a query is raised during the assessment proceedings and the assessee has replied to it, it follows that the query raised was a subject of consideration of the AO while completing the assessment. It is not necessary that an assessment order should contain reference and/or discussion to disclose its satisfaction in respect of the query raised. The only requirement is that the AO ought to have considered, the objection now raised in the grounds for issuing notice under Section 148 of the Act, during the original assessment proceedings. In the case at hand, the AO having raised a query and the peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 61,89,376/- on loans and advances. On perusal of the assessment records, it is seen that the assessee instead of offering the said interest income of Rs. 5,61,89,376/- under the head Income from Other Sources has treated the said interest income as its capital receipts and accordingly netted off the said interest income against the interest expense of Rs. 33,06,72,763/- and the balance interest expense of Rs. 27,44,83,087/- was capitalized to its WIP. The treatment of the said interest income as capital receipt was not correct accounting. The interest income earned from loans and advances is always in the nature of revenue and is taxable accordingly. Since the assessee is not engaged in the business of lending of loans, the interest income earned from loans and advances is taxable under the head Income from Other Sources . The Hon'ble Apex Court in the case of Tuticorin Alkali Chemicals and Fertilizers Ltd vs CIT(1997) 227 ITR 172 (SC) has clearly held that the interest income earned from short-term parking of borrowed funds is always taxable under the head Income from Other Sources and same cannot be treated as capital receipt and therefore same cannot be netted off ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is its business receipts and therefore can be netted of against the interest expense. In the absence of any material on record; it is clear that the assessee has failed to bring any cogent evidence suggesting that accounting of the said interest income is correct. Therefore, considering the decision of Hon'ble Apex court and Rajasthan High Court, the said interest income of Rs. 5,61,89,376/- is taxable under the head Income from Other Sources . From the above, it is clear that the assessee company has failed to make true and full disclosure of the material facts before the AO during the course of original assessment proceedings. Therefore, the said sum of Rs. 5,61,89,376/- has escaped the assessment due to failure on the part of the assessee to make full and true disclosure with respect to netting of interest income with interest expenses which was capitalized to its WIP. 4. Further, on perusal of the audit report it is seen that the amount of Rs. 4,28,036/- is inadmissible u/s 40(a) being provision for income tax. However, while computing of total income of the assessee the same has not been added in the computation of income. Therefore, the said amount of Rs. 4,28,636 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he head income from Other Sources has treated the said interest income as its capital receipts and accordingly netted off the said interest income against the interest expense of Rs. 33,06,72,763/- and the balance interest expense of Rs. 27,44,83,087/- was capitalized to its WIP. The treatment of the said interest income as capital receipt was not correct accounting Later it is mentioned that ...However, in the instant case, the assessee treated the said interest receipt as capital in nature and also its business receipt and therefore netted off the said interest expenditure against the said interest income which is not correct accounting of the interest receipt. In paragraph 3 of the reasons it is mentioned that Further, on perusal of the assessment records, it is seen that the during the course of assessment proceedings . So also in paragraph 4 it is mentioned that Further, on perusal of the audit report it is seen that the amount of Rs. 4,28,636/- is inadmissible u/s 40(a) being provision for income tax. However, while computing of total income of the assessee the same has not been added in the computation of income 7. Therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14) We find that during the assessment proceedings the petitioner had by a letter dated 9 July 2010 pointed out that they were engaged in the business of financing trading and investment in shares and securities. Further, by a letter dated 8 September 2010 during the course of assessment proceedings on a specific query made by the Assessing Officer, the petitioner has disclosed in detail as to why its profit on sale of investments should not be taxed as business profits but charged to tax under the head capital gain. In support of its contention the petitioner had also relied upon CBDT Circular No. 4/2007 dated 15 June 2007. (The reasons for reopening furnished by the Assessing Officer also places reliance upon CBDT Circular dated 15 June 2007). It would therefore, be noticed that the very ground on which the notice dated 28 March 2013 seeks to reopen the assessment for assessment year 2008-09 was considered by the Assessing Officer while originally passing assessment order dated 12 October 2010. This by itself demonstrates the fact that notice dated 28 March 2013 under Section 148 of the Act seeking to reopen assessment for A.Y. 2008-09 is based on mere change of opinion. Howev ..... 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