Itxa/1761/2016 Of Pr. Commissioner Of Income Tax - 2 v. Canara Bank Securities Limited

Priya Soparkar 1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.1761 OF 2016 Pr.Commissioner of Income-Tax-2 … Appellant V/s. Canara Bank Securities Limited… Respondent --- Mr.Suresh Kumar for the Appellant.Mr.Hiro Rai with Mr.Subhash Shetty for the Respondent. --- CORAM : AKIL KURESHI AND B.P.COLABAWALLA, JJ. DATE : FEBRUARY 11, 2019. P.C.:- 1. Revenue has filed this appeal against the judgment of theIncome Tax Appellate Tribunal raising following question forour consideration:- “Whether on the facts and in the circumstances ofthe case, the Income Tax Appellate Tribunal wascorrect in law in holding that order 08.10.2010passed by the AO is not erroneous and prejudicialto the interest of the revenue and thus exercise ofjurisdiction by the CIT is unsustainable in law?” Priya Soparkar 218 itxa 1761-16-o For the return filed by the assessee for the assessment year2008-09, issue before the Assessing Officer was of such incomegenerated out of the assessee's investment funds in fixeddeposits. The Assessing Officer accepted the assessee's stand thatsuch income arose out of assessee's business activity. The orderof assesment was taken in suo-moto revision by the Commissionerof Income Tax in exercise of powers under section 263 of theIncome Tax Act (“the Act” for short). He was of the opinion thatthe Assessing Officer had not undertaken proper inquiries andhad not examined the issue whether the interest income was tobe assessed under the head “Income from business income or ofother source”. He was therefore of the opinion that the order ofassessment was erroneous and prejudicial to the interest of therevenue. He passed an order directing the Assessing Officer tocomplete the assessment by examining such an issue. 3.The assessee carried the matter in appeal. The Tribunal bythe impugned judgment allowed the assesssee's appeal and setaside the order of the Commissioner of Income Tax. The Tribunalnoted that the assessee was previously engaged in the business Priya Soparkar 318 itxa 1761-16-o primary dealing of securities. The assessee was in the process ofswitching over to the new business of stock broking. Theassessee had liquidated its investment from the past business andparked the surplus fund in fixed deposit awaiting commencementof activities in the new business. It was on account of such factsthat the assessee had claimed the interest income as arising outof its business activity. The Tribunal was of the opinion that thiswas entirely plausible view. Assessing Officer having acceptedsuch contention after due inquiries, it was not open for theCommissioner to take such order in revision. The Tribunal alsonoted that the Commissioner himself had not come to aconclusion that in law the income of the assessee was taxableas income from other sources. He had merely asked the AssessingOfficer to undertake the exercise of hearing and deciding theissue afresh. 4.Having heard learned counsel for the parties and havingperused the documents on record, we see no reason to interferewith the view of the Tribunal. The question whether the incomeshould be taxed as business income or as arising from the other Priya Soparkar 4 18 itxa 1761-16-o source was a debatable issue. The Assessing Officer has taken aplausible view. More importantly, if the Commissioner was of the opinion that on the available facts from record it could beconclusively held that income arose from other sources, he couldand ought to have so held in the order of revision. There wassimply no necessity to remand the proceedings to the AssessingOfficer when no further inquiries were called for or directed. 5.In the result, no question of law arises. Income Tax Appealis dismissed. (B.P.COLABAWALLA,J.) (AKIL KURESHI,J.)….