Agri Gold Comstructions Pvt Ltd., Vijayawada V. THE CIT, VIJAYAWADA., Vijayawada

ITA 452/VIZ/2012

• Counselvise Citation: 45225314 RSA 2012
• Duration Of Justice: 1 year(s) 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 12-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K V N CHARYA
• Keywords: Business income; Depreciation; Principle of natural justice; Rule of consistency
• Section: 143(3); 263; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI J.SUDHAKAR REDDY, AM AND SHRI SAKTIJIT DEY, JM ITA NO.452/VIZAG/2012 : ASST.YEAR 2010-2011 M/S. AGRI GOLD CONSTRUCTIONS PVT.LTD. AGRI GOLD HOUSE, D.NO.40-6-3, NIMMAGADDA SOMASANKARA RAO STREET OLD REVENUE COLONY, LABBIPET, VIJAYAWADA 520 010. PAN : AADCA5210E. VS. THE COMMISSIONER OF INCOME - TAX VIJAYAWADA. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI G.V.N.HARI RESPONDENT BY : SHRI K.V.N.CHARYA, CIT DATE OF HEARING : 0 4 .03 .2014 DATE OF PRONOUNCEMENT : 06 .0 3 .2014 O R D E R PER J.SUDHAKAR REDDY (AM) : THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AG AINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX, VIJAYAWADA, U/S 263 OF THE ACT, DATED 22.03.2012. 2. FACTS IN BRIEF ARE THAT THE ASSESSEE IS A COMPAN Y ENGAGED IN REAL ESTATE BUSINESS. IT ACQUIRES LAND, DEVELOPS THE SAME AND S ELLS THE PLOTS TO THE CUSTOMERS. IN ADDITION TO REAL ESTATE BUSINESS, THE ASSESSEE I S ALSO ENGAGED IN CONSTRUCTION ACTIVITY I.E. CONSTRUCTION OF RESIDENTIAL FLATS, CO MMERCIAL COMPLEXES, CIVIL WORKS ETC. THE ASSESSEE FILED ITS RETURN OF INCOME ON 30.10.20 10 ADMITTING THE INCOME OF RS.3,67,75,880. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S 143(3) ON 22.03.2012. THE CIT, VIJAYAWADA, INITIATED REVISION ARY PROCEEDINGS U/S 263. AFTER CONSIDERING VARIOUS SUBMISSIONS OF THE ASSESSEE, TH E LEARNED CIT, VIJAYAWADA, CAME TO A CONCLUSION THAT THE ORDER PASSED U/S 143( 3) ON 22.03.2012 IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE, FOR THE REASONS GIVEN IN HIS ORDER. HE CONCLUDED THAT ITA NO.452/VIZAG/2012. M/S.AGRI GOLD CONSTRUCTIONS PVT.LTD. 2 (A) THE ASSESSING OFFICER HAS ERRED IN ESTIMATING THE NET PROFIT FROM CONSTRUCTION BUSINESS OF THE ASSESSEE AT 8% AND THE REAFTER ALLOWING DEPRECIATION THEREON TO THE EXTENT OF RS.57,69,346 AND WHEREAS THE HYDERABAD BENCH OF THE TRIBUNAL HAS BEEN CONSISTENT LY APPROVING ESTIMATION OF PROFIT AT THE RATE OF 12.5% OF THE NE T RECEIPT ON THE TOTAL TURNOVER. (B) THE ASSESSING OFFICER HAS ERRED IN TREATING THE INTEREST INCOME EARNED BY THE ASSESSEE FROM BANKS AS BUSINESS INCOM E AND THAT THE SAID INTEREST INCOME HAS TO BE ASSESSED UNDER THE HEAD ` INCOME FROM OTHER SOURCES. 2.1 HE, THEREFORE, CONCLUDED AS FOLLOWS:- UNDER THESE CIRCUMSTANCES THE ORDER PASSED BY THE ASSESSING OFFICER IS CONSIDERED TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE FOR THE PURPOSE OF SECTI ON 263 OF THE I.T.ACT, 1961. HENCE, I SET ASIDE THE ASSESSMENT OR DER MADE BY THE AO U/S 143(3) FOR REDOING THE ASSESSMENT DENOVO WITH A DIRECTION TO THE AO TO ESTIMATE THE INCOME AT 12.5% AS HELD BY THE ITAT `B BENCH IN THE CASE OF M/S.KNR CONSTRUCT ION LTD., ON THE INCOME FROM CONSTRUCTION ACTIVITY AND ASSESS TH E INTEREST INCOME AS INCOME FROM `OTHER SOURCES. 3. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 4. THE LEARNED COUNSEL FOR THE ASSESSEE, SRI G.V.N. HARI, SUBMITTED THAT THE LEARNED CIT, VIJAYAWADA, EXCEEDED HIS JURISDICTION BY REVISING THE ORDER OF THE ASSESSING OFFICER AND THUS IT IS BAD IN LAW. HE SUB MITTED THAT THE DIRECTION OF THE LEARNED CIT TO THE ASSESSING OFFICER TO ESTIMATE TH E PROFIT FROM CONSTRUCTION BUSINESS AT THE RATE OF 12.5% IN PLACE OF RATE OF 8 % ADOPTED BY THE ASSESSING OFFICER, IS AGAINST THE LAW AS THE ESTIMATION MADE BY THE ASSESSING OFFICER IS A POSSIBLE VIEW BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE. HE PLEADED THAT SUCH A REVISION IS NOT PERMITTED IN LAW AND FOR THA T PROPOSITION, HE RELIED ON THE FOLLOWING CASE LAWS:- ITA NO.452/VIZAG/2012. M/S.AGRI GOLD CONSTRUCTIONS PVT.LTD. 3 (I) JEEWANRAM CHOUDHARY V. CIT (2013) 35 CCH 490 ( DEL) (TRIB.) (II) ITA NO.25/VIZAG/2009 IN THE CASE OF MOOKAMBIC A CONSTRUCTIONS, ORDER DATED 13.11.2009. 4.1 ON THE ISSUE OF ASSESSING INTEREST INCOME OF TH E ASSESSEE UNDER THE HEAD `INCOME FROM OTHER SOURCES, THE LEARNED COUNSEL SU BMITTED THAT ADVANCES RECEIVED FROM CUSTOMERS FOR PURCHASE OF PROPERTY, A RE INVESTED IN FIXED DEPOSITS FOR THE SHORT PERIOD AND INTEREST HAS BEEN EARNED FROM IT. HE SUBMITTED THAT THE FUNDS ARE REQUIRED FOR THE DEPLOYMENT AT SHORT NOTICE AND UNDER THOSE CIRCUMSTANCES THE INTEREST THEREON IS ASSESSABLE ONLY UNDER THE HEAD `INCOME FROM BUSINESS. IT WAS FURTHER SUBMITTED THAT FOR THE EARLIER THREE YEARS, THE ASSESSEE HAS CONSISTENTLY OFFERED INTEREST INCOME UNDER THE HEAD `INCOME FROM BUSINESS AND THE SAME HAS BEEN ACCEPTED BY THE REVENUE AND THAT ON THE PRINCI PLE OF CONSISTENCY, HE SUBMITS THAT THE LEARNED CIT SHOULD NOT HAVE REVISED THE OR DER OF THE ASSESSING OFFICER. HE FURTHER RELIED ON THE DECISION OF THE HONBLE BOMBA Y HIGH COURT IN THE CASE OF CIT V. LOK HOLDINGS (SUPRA) FOR THE PROPOSITION THAT IN TEREST ON DEPOSITS MADE OUT OF ADVANCES RECEIVED FROM INTENDING PURCHASERS SHOULD BE ASSESSABLE AS `BUSINESS INCOME AND NOT UNDER THE HEAD `INCOME FROM OTHER S OURCES AND ON THE DECISION OF THE HONBLE KOLKATA HIGH COURT IN THE CASE OF EVERE ADY INDUSTRIES INDIA LTD. V. CIT & ANR. (2010) 323 ITR 312 FOR THE SAME PROPOSITION THAT INCOME ON SHORT TERM DEPOSITS INVESTED FROM BUSINESS FUNDS IS ASSESSABLE UNDER THE HEAD `INCOME FROM BUSINESS AND ARGUED THAT THIS BEING A POSSIBLE VIE W APPROVED BY THE HIGH COURT, THE CIT COULD NOT HAVE REVISED THE ORDER OF THE ASS ESSING OFFICER U/S 143(3). HE RELIED ON THE DECISIONS OF THE HONBLE SUPREME COUR T IN THE CASE OF CIT V. GABRIAL INDIA LTD.[(1993) 203 ITR 108 (SC)] AND MALABAR IND USTRIAL CO. LTD. V. CIT [(2000) 243 ITR 83 (SC)]. ITA NO.452/VIZAG/2012. M/S.AGRI GOLD CONSTRUCTIONS PVT.LTD. 4 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE, SRI K.V .N.CHARYA, CIT, ON THE OTHER HAND, OPPOSED THE CONTENTIONS OF THE ASSESSEE AND SUBMITTED THAT LARGE REAL ESTATE COMPANY, WITH CRORES OF RUPEES TURNOVER, WAS SHOWING VERY LOW PERCENTAGE OF INCOME. HE SUBMITTED THAT THE ASSESSING OFFICER WITHOUT APPLICATION OF MIND, HAS SIMPLY ACCEPTED THE PERCENTAGE OF 8% AND THERE FROM HE ALLOWED DEPRECIATION, WHICH IS CONTRARY TO THE FACTS OF THE CASE. HE SUBM ITTED THAT THE CIT HAS POINTED OUT A NUMBER OF ERRORS IN THE ORDER OF THE ASSESSING OF FICER WHICH IS NOT DISPUTED BY THE ASSESSEE AND HENCE THE ASSESSMENT ORDER IS NOT ONLY ERRONEOUS BUT PREJUDICIAL TO THE INTEREST OF THE REVENUE. ON THE ISSUE OF ASSESS ING INTEREST INCOME, HE SUBMITTED THAT INTEREST EARNED FROM SURPLUS FUNDS I S ASSESSABLE ONLY UNDER THE HEAD `INCOME FROM OTHER SOURCES AND AS THE ASSESSI NG OFFICER HAS FAILED TO CONSIDER THIS ISSUE, THE CIT WAS RIGHT IN RELYING O N THE DECISION OF THE HONBLE KERALA HIGH COURT IN T.O.ABRAHAM & CO. V. DCIT & OR S. [(2010) 325 ITR 201 (KER.)] AS WELL AS THE DECISION OF THE VISAKHAPATNA M BENCH OF THE TRIBUNAL IN BBC INDUSTRIES V. DCIT [(2011) 44 SOT 55] AND THE JUDGM ENT OF THE HONBLE SUPREME COURT IN THE CASE OF TUTICORIN ALKALI CHEMICALS & F ERTILIZERS LTD. V. CIT [(1997) 227 ITR 172 (SC)]. HE PRAYED THAT THE ORDER OF THE CIT U/S 263 BE UPHELD. 6. AFTER HEARING RIVAL CONTENTIONS, WE HELD AS FOLL OWS. 6.1 ON THE FIRST ISSUE OF ESTIMATION OF PROFIT, THE CIT HAS AT PAGE 4 OBSERVED AS FOLLOWS:- AN OPERATION U/S 132 OF THE INCOME TAX ACT, 1961 W AS CONDUCTED IN THIS CASE DURING THE F.Y. 2005-06 AND ASSESSMENT S WERE COMPLETED FROM THE A.Y. 2000-01 TO 2006-2007. THE I NCOME WAS ESTIMATED SINCE THE ASSESSEE HAS FAILED TO PRODUCE BOOKS OF ACCOUNT AND OTHER RELEVANT DOCUMENTS. THE ASSESSEE BEING A REPUTED COMPANY AND HAVING A TURNOVER OF AROUND 120 CRORES, THE ASSESSEE COMPANY HAS FAILED TO SET RIGHT ITS STATE OF FINANCIAL AFFAIRS EVEN AFTER S&S OPERATION AND CONSTANTLY FAI LING TO FURNISH BOOKS OF ACCOUNT AND OTHER RELEVANT DOCUMENTS BEFOR E THE ASSESSING OFFICERS. UNDER THESE CIRCUMSTANCES THE A SSESSING OFFICERS HAD NO OTHER GO EXCEPT TO RESORT FOR ESTIM ATION OF PROFIT. IN ITA NO.452/VIZAG/2012. M/S.AGRI GOLD CONSTRUCTIONS PVT.LTD. 5 THIS CASE, THE ESTIMATION OF SUCH PROFIT HAS BEEN C ONSISTENTLY HAPPENING BECAUSE THE ASSESSEE IS CONSISTENTLY FAIL ING TO PRODUCE ITS BOOKS OF ACCOUNT AND OTHER RELEVANT DOCUMENTS D URING THE COURSE OF ASSESSMENT PROCEEDINGS. SURPRISINGLY, NOW THE A.R. PLEADS FOR THE PRINCIPLE OF CONSISTENCY BY RELYING ON SOME DECISIONS OF THE APPELLATE AUTHORITIES, WHICH ARE N OT AT ALL RELATED TO THE ESTIMATION OF INCOME. 6.2 HAVING HELD SO, THE LEARNED CIT WAS OF THE OPIN ION THAT THE ASSESSING OFFICER GRANTED DOUBLE BENEFIT TO THE ASSESSEE, ONE IN THE FORM OF LOWER PERCENTAGE OF 8% ON THE TOTAL SALES RECEIPT AND SECONDLY BY AL LOWING DEPRECIATION BENEFIT THERE FROM. HE DIRECTED THE A.O. TO ESTIMATE THE INCOME A T 12.5% IN PLACE OF 8%. THE QUESTION BEFORE US IS WHETHER SUCH SUBSTITUTION OF A PERCENTAGE FOR ESTIMATION OF PROFIT CAN BE MADE BY THE CIT IN PROCEEDINGS U/S 26 3. THE VISAKHAPATNAM BENCH OF THE TRIBUNAL IN MOOKAMBICA CONSTRUCTION AT PARA 5, 6 AND 7 HELD AS FOLLOWS:- 5. HAVING GIVEN A THOUGHTFUL CONSIDERATION TO THE RIVAL SUBMISSIONS AND FROM THE PERUSAL OF RECORD, WE FIND THAT THE ASSESSING OFFICER HAS DELIBERATED THE ISSUE IN DETA IL IN HIS ORDER. BEFORE COMING TO THE CONCLUSION OF ESTIMATING THE P ROFIT AT 2% OF THE GROSS RECEIPT HE MADE A DETAILED ENQUIRY AND AN ALYSIS OF THE FACTS AVAILABLE BEFORE HIM. IN THESE CIRCUMSTANCES, IT CANNOT BE SAID THAT ASSESSING OFFICER HAS NOT APPLIED HIS MIN D TO THE ISSUE IN DISPUTE. 6. IT IS SETTLED POSITION OF LAW THAT THE CIT CANN OT SIT OVER JUDGMENT OF THE ASSESSING OFFICER IF HE HAS ADJUDIC ATED THE ISSUE IN DETAIL BY PASSING A SPEAKING ORDER. IT WAS A QUE STION OF ESTIMATE OF THE NET PROFIT AFTER REJECTING THE BOOK S OF ACCOUNTS AND THE CIT CANNOT TRUST UPON HIS VIEW UPON THE A.O. MO REOVER, IN EARLIER YEARS A DISALLOWANCE OF PARTICULAR PERCENTA GE WAS MADE TO THE EXPENDITURE CLAIMED BY THE ASSESSEE WHICH WAS L ATER ON REDUCED BY THE CIT(A). 7. KEEPING IN VIEW OF THE TOTALITY OF THE CASE, WE ARE OF THE CONSIDERED OPINION THAT ASSESSING OFFICER HAS ADJUD ICATED THE ISSUE IN DISPUTE IN HIS ORDER IN DETAIL BY PROPER A PPLICATION OF MIND AND AS SUCH HIS ORDER CANNOT BE HELD TO BE ERRONEOU S AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. WE THER EFORE DO NOT FIND ITA NO.452/VIZAG/2012. M/S.AGRI GOLD CONSTRUCTIONS PVT.LTD. 6 ANY AGREEMENT WITH THE FINDINGS OF THE CIT AND WAS ACCORDINGLY SET ASIDE HIS ORDER. 6.3 IN ITA NO.353 & 354/VIZAG/2011, THIS BENCH OF T HE TRIBUNAL IN THE CASE OF V.D.REDDY & CO. V. DCIT, UNDER SIMILAR CIRCUMSTANCE S, AT PARA 6 AND 7, HELD AS FOLLOWS:- 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND ALSO P ERUSED THE RECORD. BEFORE PROCEEDING FURTHER, WE FEEL IT PERTI NENT TO DISCUSS ON THE LEGAL POSITION RELATING TO THE REVISION PROC EEDINGS CARRIED OUT UNDER SECTION 263 OF THE ACT. THE HON'BLE BOMBA Y HIGH COURT, IN THE CASE OF GRASIM INDUSTRIES LTD. V C1T (321 IT R 92) HAS DISCUSSED ABOUT THE SCOPE OF PROVISIONS OF SECTION 263 AS UNDER: SECTION 263 OF THE INCOME-TAX ACT, 1961 EMPOWERS TH E COMMISSIONER TO CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDINGS UNDER THE ACT AND, IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN, BY THE ASSESSING OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT ERESTS OF THE REVENUE, TO PASS AN ORDER UPON HEARING THE ASSESSEE AND AFTER AN ENQUIRY AS IS NECESSARY, ENHANCING OR MODI FYING THE ASSESSMENT OR CANCELING THE ASSESSMENT AND DIRE CTING A FRESH ASSESSMENT. THE KEY WORDS THAT ARE USED BY SECTION 263 ARE THAT THE ORDER MUST BE CONSIDERED B Y THE COMMISSIONER TO BE 'ERRONEOUS IN SO FAR AS IT IS PRE JUDICIAL TO THE INTERESTS OF THE REVENUE'. THIS PROVISION HAS BEEN INTERPRETED BY THE SUPREME COURT IN SEVERAL JUDGMEN TS TO WHICH IT IS NOW NECESSARY TO TURN. IN MALABAR INDUS TRIAL CO. LTD. V. CFT [2000] 243 ITR 83, THE SUPREME COURT HE LD THAT THE PROVISION 'CANNOT BE INVOKED TO CORRECT EAC H AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASS ESSING OFFICER' AND 'IT IS ONLY WHEN AN . ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTRACTED'. THE SUPREME COURT HELD T HAT AN INCORRECT ASSUMPTION OF FACT OR AN INCORRECT APPLIC ATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. AN -ORDER PASSED IN VIOLATION OF THE PRI NCIPLES OF NATURAL JUSTICE OR WITHOUT APPLICATION OF MIND, WOU LD BE AN ORDER FALLING IN THAT CATEGORY. THE EXPRESSION 'PRE JUDICIAL TO THE INTERESTS OF THE REVENUE', THE SUPREME COURT HEL D, IT IS OF WIDE IMPORT AND IS NOT CONFINED TO A LOSS OF TAX . WHAT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE IS EXPLA INED IN THE JUDGMENT OF THE SUPREME COURT (HEAD NOTE) : ITA NO.452/VIZAG/2012. M/S.AGRI GOLD CONSTRUCTIONS PVT.LTD. 7 'THE PHRASE 'PREJUDICIAL TO THE INTERESTS OF THE REV ENUE' HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORD ER PASSED BY THE ASSESSING OFFICER. EVERY LOSS OF REVE NUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER, CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS O F THE REVENUE, FOR EXAMPLE, WHEN AN INCOME-TAX OFFICER ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND I T HAS RESULTED IN LOSS OF REVENUE, OR WHERE TWO VIEWS ARE POSSIBLE AND THE INCOME-TAX OFFICER HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE UNLESS THE VIEW TAKEN BY THE INCOME-TAX OFFICER IS UNSUSTAINABLE IN LAW.' THE PRINCIPLE WHICH HAS BEEN LAID DOWN IN MALABAR INDUSTRIAL CO. LTD. [2000] 243 MR 83 (SC) HAS BEEN FOLLOWED AND EXPLAINED IN A SUBSEQUENT JUDGMENT OF THE SUPREME COURT IN CIT V. MAX INDIA LTD. [2007] 295 I TR 282.' 7. THERE MAY NOT BE ANY DISPUTE THAT THE REVISION PROCEEDING SHALL NOT LIE ON THE ISSUES ON WHICH THE ASSESSING OFFICER HAS TAKEN A PLAUSIBLE VIEW AFTER EXAMINING AND APPLYING HIS MIND ON IT. IN THE INSTANT CASE, WE NOTICE THAT THE ASSESSEE HE REIN FILED ITS RETURN OF INCOME ON ESTIMATED BASIS ON THE PLEA THA T IT DID NOT MAINTAIN BOOKS OF ACCOUNT. THIS FACT WAS BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER BY WAY OF NOTE ATTACHED TO TH E RETURN OF INCOME. FURTHER, THE ASSESSEE HAS ALSO BROUGHT THIS FACT DURING THE COURSE OF ASSESSMENT PROCEEDINGS ALSO TO THE NO TICE OF THE ASSESSING OFFICER. ON BEING CONVINCED WITH THE DIFF ICULTIES OF THE ASSESSEE, THE ASSESSING OFFICER HAS ALSO PROPOSED T O ENHANCE THE ESTIMATE MADE BY THE ASSESSEE. THE ASSESSING OFFICE R HAS ALSO NOTICED THE FACT THAT THE ASSESSEE HAS DECLARED THE RENTAL INCOME FROM GODOWNS SEPARATELY IN THE EARLIER YEARS. THUS, WE NOTICE THAT THE ASSESSING OFFICER HAS CONSIDERED ALL ASPECTS WH ILE COMPLETING THE ASSESSMENT. UNDER THESE CIRCUMSTANCES, IN OUR VIEW, THE ASSESSING OFFICER HAS PROPERLY APPLIED HIS MIND AND THE VIEW TAKEN BY HIM IS ONE OF THE POSSIBLE VIEWS. 6.4 APPLYING THE PROPOSITION LAID DOWN THEREIN TO T HE FACTS OF THE CASE, WE HAVE TO HOLD THAT THE CIT CANNOT SEEK TO SUBSTITUTE HIS OPINION ON THE PERCENTAGE OF PROFIT THAT HAS TO BE APPLIED IN THE PLACE OF THE OPINION OF THE ASSESSING OFFICER UNDER THE ITA NO.452/VIZAG/2012. M/S.AGRI GOLD CONSTRUCTIONS PVT.LTD. 8 GARB OF REVISIONARY PROCEEDINGS U/S 263 SPECIFICALL Y WHEN THE AO HAS AT PAGE 4 AND 5 OF HIS ORDER DISCUSSED THE ISSUE IN DETAIL AND PA SSED AN ORDER AFTER DUE APPLICATION OF MIND. THUS, THE ASSESSEE SUCCEEDS ON THIS GROUND. 6.5 COMING TO THE ISSUE WHETHER THE INTEREST ON DEP OSITS MADE OUT OF FUNDS COLLECTED FROM PURCHASERS / CUSTOMERS IS TO ASSESS UNDER THE HEAD `INCOME FROM BUSINESS OR UNDER THE HEAD `INCOME FROM OTHER SOUR CES, WE FIND THAT THE ASSESSEE HAS CONSISTENTLY DISCLOSING THE INTEREST INCOME UND ER THE HEAD `INCOME FROM BUSINESS FOR THE LAST THREE PREVIOUS YEARS, AND TH E REVENUE HAS BEEN ACCEPTING THE SAME AS SUCH. BASICALLY, ON THE PRINCIPLE OF CO NSISTENCY, THIS SHOULD NOT BE DISTURBED UNLESS THE FACTS WARRANT SUCH ACTION. 6.6. BE THAT AS IT MAY, THE HONBLE BOMBAY HIGH COU RT IN THE CASE OF LOK HOLDINGS, HAS HELD AS FOLLOWS:- INTEREST EARNED BY ASSESSEE A PROPERTY DEVELOPER, BY MAKING TEMPORARY DEPOSITS OF SURPLUS MONEY OUT OF ADVANCES RECEIVED BY IT FROM INTENDING PURCHASES IS BUSINESS INCOME AND CANNOT BE ASSESSED AS INCOME FROM OTHER SOURCES. 6.7 THE HONBLE KOLKATA HIGH COURT IN THE CASE OF E VEREADY INDUSTRIES INDIA LTD. (SUPRA) HAS HELD AS FOLLOWS:- AO WAS RIGHT IN TREATING THE INTEREST INCOME EARNE D BY THE ASSESSEE BY INVESTING SURPLUS FUND OF THE BUSINESS IN SHORT-TERM DEPOSITS AS BUSINESS INCOME IN ACCORDANCE WITH SUB- R (1) OF R.8 OF IT RULES. 6.8 THUS, THE ISSUE WHETHER INTEREST INCOME ON DEPO SITS MADE OUT OF SURPLUS MONEY FROM ADVANCE RAISED FOR PURCHASE IS ASSESSABL E UNDER THE HEAD `INCOME FROM BUSINESS OR NOT HAS BEEN ADJUDICATED IN FAVOU R OF THE ASSESSEE BY THOSE TWO HIGH COURTS. HENCE THE VIEW TAKEN BY THE AO IS A PO SSIBLE VIEW. UNDER THE ITA NO.452/VIZAG/2012. M/S.AGRI GOLD CONSTRUCTIONS PVT.LTD. 9 CIRCUMSTANCES, THE LEARNED CIT CANNOT SUBSTITUTE TH E POSSIBLE VIEW OF THE ASSESSING OFFICER WITH HIS OWN VIEW IN AN ORDER PASSED U/S 26 3 OF THE ACT AS HELD BY VARIOUS HIGH COURTS AS WELL AS THE HONBLE SUPREME COURT. T HUS, WE UPHOLD THE CONTENTIONS OF THE ASSESSEE AND CANCEL THE ORDER OF THE CIT. 7. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED ON THIS 6 TH DAY OF MARCH, 2014. SD/- SD/- ( SAKTIJIT DEY ) (J.SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER VISAKHAPATNAM; DATED : 6 TH MARCH, 2014. DEVDAS* COPY OF THE ORDER FORWARDED TO : BY ORDER, //TRUE COPY// (SENIOR PRIVATE SECRETARY) ITAT, VISAKHAPATNAM 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT, VIJAYAWADA . 4. CIT(A) VIJAYAWADA . 5. DR, ITAT, VISAKHAPATNAM. 6. GUARD FILE.