ITO 2(1)(4), MUMBAI V. CANARA BANK SECURITIES LTD, MUMBAI

ITA 821/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8179 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2008-2009
• Appeal Filed On: 17-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Assessment record
• Section: 143(3); 142(1); 115JB; 56; 263

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, C MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER ITA NO.821/MUM/2016 ASSESSMENT YEAR: 2008-09 INCOME TAX OFFICER-2(1)(4), ROOM NO.553, 5 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020 / VS. M/S CANARA BANK SECURITIES LTD. 7 TH FLOOR, MAKER CHAMBER-III, NARIMAN POINT, MUMBAI-400021 ( / REVENUE) ( !'# $ /ASSESSEE) PAN. NO . AAACG2218H % & $ ' / DATE OF HEARING : 07/12/2017 & $ ' / DATE OF ORDER: 07/12/2017 ! / REVENUE BY SHRI H.N.SINGH CIT-DR !'# $ ! / ASSESSEE BY SHRI MILIN DATTANI ITA NO. 821/MUM/2016 CANARA BANK SECURITIES LTD. 2 / O R D E R PER JOGINDER SINGH(JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATE D 31/11/2015 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI, TO ISSUE DIRECTION TO THE ASSESSING OFFICER BY FOLLOWI NG THE ORDER OF THE TRIBUNAL, WITHOUT APPRECIATING THE FACT THAT THE ORDER OF THE TRIBUNAL IS BOUND TO CONTESTED ON THE ISSUE OF TREATING INTEREST INCOME UNDER THE HEAD BUSINESS INCOME A ND SETTING OF LOSSES OF EARLIER YEARS. 2. DURING HEARING, SHRI H. N. SINGH, LD. CIT-DR, ADVANCED ARGUMENTS WHICH ARE IDENTICAL TO THE GROUN D RAISED BY DEFENDING THE ADDITION MADE BY THE LD. ASSESSING OFFICER. ON THE OTHER HAND, SHRI MILLIN DATTANI, LD. COUNSEL FOR THE ASSESSEE, DEFENDED THE IMPUGNED ORDER BY CONTENDING THAT FOR ASSESSMENT YEAR 2008-09 (ITA NO.2637/MUM/2013), VIDE ORDER DATED 28/10/2015, THE TRIBUNAL ALLOWED THE AP PEAL OF THE ASSESSEE ON IDENTICAL ISSUE THOUGH U/S 263OF TH E INCOME TAX ACT, 1961 (HEREINAFTER THE ACT). 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW O F THE ABOVE, WE ARE REPRODUCING HEREUNDER THE RELEVANT PO RTION ITA NO. 821/MUM/2016 CANARA BANK SECURITIES LTD. 3 FROM THE AFORESAID ORDER OF THE TRIBUNAL DATED 28/1 0/2015 FOR READY REFERENCE AND ANALYSIS:- THIS APPEAL HAS BEEN FILED BY THE ASSESSEE COMPANY AGAINST THE ORDER DATED 19TH MARCH 2013 PASSED BY THE COMMISSIONER OF INCOME TAX-2 MUMBAI,(HEREINAFTER CA LLED THE CIT) U/S 263 OF THE INCOME TAX ACT,1961 (HERE INAFTER CALLED THE ACT) FOR THE ASSESSMENT YEAR 2008-09. 2. THE EFFECTIVE GROUNDS OF APPEAL RAISED IN THIS A PPEAL BY THE ASSESSEE COMPANY IN THE MEMO OF APPEAL FILED ARE WI TH RESPECT TO ORDER DATED 19TH MARCH 2013 PASSED BY THE CIT SETTING ASIDE THE ASSESSMENT ORDER DATED 8TH OCTOBE R 2010 U/S 143(3) OF THE ACT PASSED BY THE ASSESSING OFFICER(HEREINAFTER CALLED THE AO) FOR ASSESSMENT YEAR 2008-09 TREATING IT TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE FOR RE-DECIDING THE ISSUE AS TO WHETHER THE INTEREST EARNED FROM FIXED DEPOSIT WAS TO BE ASSESS ED UNDER THE HEAD INCOME FROM OTHER SOURCES OR AS BUSINE SS INCOME . 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY IS A SUBSIDIARY OF CANARA BANK . THE ASSESSEE COMPANY WAS PRIMARY DEALER (PD) IN GOVERNMENT SECURITIES ACCRED ITED BY RBI , TILL FEBRUARY 2007 AND DIVERSIFIED INTO STOCK BROKING BUSINESS, CONSEQUENT UPON TAKEOVER OF THE PD BUSINE SS BY THE PARENT BANK. THE CASE OF THE ASSESSEE COMPANY WAS S ELECTED FOR SCRUTINY FOR THE ASSESSMENT YEAR 2008-09 AND TH E ASSESSMENT WAS FRAMED U/S 143(3) READ WITH SECTION 143(2) OF THE ACT VIDE ORDERS DATED 08TH OCTOBER 2010 WHER EBY RETURNED INCOME WAS ACCEPTED AS ASSESSED INCOME AND INCOME OF RS.7,97,150/- WAS ASSESSED UNDER NORMAL PROVISIONS OF THE ACT AND AT RS.20,20,44,671/- U/S 115JB OF THE ACT . 4. THE CIT OBSERVED THAT IN THE ASSESSMENT ORDER DA TED 08TH OCTOBER 2010, INCOME UNDER THE HEAD INCOME FROM BUSINESS HAS BEEN COMPUTED AT RS.18,85,06,203/- WH ICH WAS SET OFF AGAINST THE BROUGHT FORWARD BUSINESS LOSES PERTAINING TO THE ASSESSMENT YEAR 2005-06. THE CIT OBSERVED TH AT THE ASSESSEE COMPANY HAD EARNED INTEREST INCOME OF RS.15,18,20,478/- ON FIXED DEPOSIT WITH BANK WHICH WAS ITA NO. 821/MUM/2016 CANARA BANK SECURITIES LTD. 4 OFFERED TO TAX BY THE ASSESSEE COMPANY UNDER THE HE AD INCOME FROM BUSINESS WHICH WAS ACCEPTED BY THE AO , AND THE SAID INCOME IS INCLUDED IN THE BUSINESS INCOME OF RS.18,85,06,203/- AND WAS SET OFF AGAINST THE BROUG HT FORWARD BUSINESS LOSSES. THE CIT OBSERVED THAT SINC E INTEREST INCOME OF RS. 15,18,20,478/- WAS EARNED BY THE ASSE SSEE COMPANY ON BANK FIXED DEPOSITS BY INVESTING SURPLUS FUNDS, THE SAME SHOULD HAVE BEEN ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES U/S 56 OF THE ACT AND BROUGHT F ORWARD LOSSES CANNOT BE SET OFF AGAINST THE INCOME ASSESSE D UNDER THE HEAD INCOME FROM OTHER SOURCES . THE CIT HELD THA T THE AO BY TREATING THE INTEREST INCOME OF RS. 15,18,20, 478/- FROM FDRS AS BUSINESS INCOME HAS ALLOWED EXCESS SET OFF OF BROUGHT FORWARD BUSINESS LOSSES AMOUNTING TO RS.15,18,20,478/- AND HENCE IN VIEW OF THESE FACTS , THE ASSESSMENT ORDER PASSED BY THE AO U/S 143(3) OF THE ACT ON 08TH OCTOBER 2010 WAS CONSIDERED TO BE ERRONEOUS AN D PREJUDICIAL TO THE INTEREST OF REVENUE AND HENCE SH OW CAUSE NOTICE DATED 26TH FEBRUARY 2013 WAS ISSUED U/S 263 OF THE ACT TO THE ASSESSEE COMPANY ASKING IT TO EXPLAIN AS TO WHY THE ASSESSMENT ORDER U/S 143(3) OF THE ACT DATED 08TH O CTOBER 2010 PASSED BY THE AO SHOULD NOT BE SET ASIDE. 5. THE ASSESSEE COMPANY IN REPLY TO AFORE-STATED SH OW CAUSE NOTICE REPLIED THAT THE ASSESSEE COMPANY IS A SUBSI DIARY COMPANY OF CANARA BANK WITH THE BASIC OBJECTIVE OF DEALING IN GOVERNMENT SECURITIES AND ITS BUSINESS WAS FLOUR ISHING TILL 2004 . DUE TO CHANGE IN DIRECTION OF INTEREST RATES , THE ASSESSEE COMPANY LIKE OTHER SIMILAR DEALERS IN GOVE RNMENT SECURITIES FLOATED BY OTHER PUBLIC SECTOR BANKS SUF FERED HEAVY LOSSES AND IT DID NOT MADE SENSE TO CONTINUE AS STANDALONE ENTITY BURDENED WITH SUCH HEAVY LOSSES. THE RESERVE BANK OF INDIA ALLOWED PARENT COMPANIES OF A LL SUCH SUBSIDIARIES COMPANIES TO TAKE OVER THE BUSINESS OF PRIMARY DEALERSHIP. IN THE CASE OF THE ASSESSEE COMPANY, TH E PARENT BANK I.E. CANARA BANK TOOK OVER THE BUSINESS OF PRI MARY DEALERSHIP FROM IT W.E.F. 20.02.2007. THEREAFTER, T HE ASSESSEE COMPANY STARTED LIQUIDATING ITS STOCK-IN-TRADE OF G OVERNMENT SECURITIES AND TREASURY BILLS WHICH GENERATED HEAVY LIQUID MONEY. THE ASSESSEE COMPANY STATED THAT IT ALSO LIQ UIDATED STOCK-IN-TRADE OF EQUITY SHARES AND BOOKED PROFIT S . THESE SECURITIES WERE CONTINUOUSLY LIQUIDATED OVER A YEAR I.E. FINANCIAL YEAR 2007-08 WHICH CREATED GENERATION OF LIQUID MONEY, WHICH WAS TEMPORARILY PARKED INTO FIXED DEPO SIT ITA NO. 821/MUM/2016 CANARA BANK SECURITIES LTD. 5 WITH BANKS FOR SHORT PERIODS, MAINLY UP TO 6 MONTHS TILL THEY ARE DEPLOYED IN THE NEW BUSINESS OF STOCK BROKING. THESE LIQUID MONEY GENERATED DURING THE YEAR FROM LIQUIDA TION OF STOCK-IN-TRADE (GOVERNMENT SECURITIES AND TREASURY BILLS ) WAS PART OF THE ASSESSEE COMPANYS CIRCULATING CAPI TAL AND RETURN ON CIRCULATING CAPITAL IS A BUSINESS INCOME. THE FDR WITH BANK BEING ASSESSEES CIRCULATING CAPITAL , AN Y INTEREST INCOME GENERATED THEREON IS BUSINESS INCOME AND N OT INCOME FROM OTHER SOURCES. THE ASSESSEE COMPANY R ELIED UPON THE FOLLOWING DECISION IN SUPPORT OF ITS CONTE NTIONS : (I) CIT V. TAMILNADU DAIRY DEVELOPMENT CORPORATION LTD., (1995) 216 ITR 535 (MAD.) (II) CIT V. COCANDA RADHASWAMI BANK , (1995) 57 ITR 306(SC) (III) BIHAR STATE COOP BANK V. CIT , (1960) 39 ITR 114(SC) (IV) CIT V. TIRUPATI WOOLLEN MILLS LTD. , (1992) 19 3 ITR 252(CAL.) (V) CIT V. PRODUCIN P. LTD. , (2007) 290 ITR 598 (K AR.) (VI) EVEREADY INDUSTRIES LTD. V. CIT , (2010) 323 I TR 312(CAL.) THE ASSESSEE COMPANY FURTHER SUBMITTED THAT ORDER O F THE AO IS NOT ERRONEOUS AS THE AO HAS TAKEN ONE OF THE POS SIBLE VIEW WHICH IS A PLAUSIBLE VIEW WHICH CANNOT BE CONSIDERE D AS BEING ERRONEOUS VIEW. THE ASSESSEE COMPANY CONTENDE D THAT REQUIREMENTS OF SECTION 263 OF THE ACT IS THAT THE ORDER OF AO SHOULD BE ERRONEOUS AS WELL PREJUDICIAL TO THE INTE REST OF REVENUE WHICH IN THIS CASE IS NOT CUMULATIVELY MET AND PROCEEDINGS U/S 263 OF THE ACT ARE VITIATED. THE AS SESSEE COMPANY RELIED UPON THE FOLLOWING DECISIONS TO SUPP ORT ITS CONTENTIONS : (I) MALABAR INDUSTRIAL CO. LTD. V. CIT 243 ITR 83(S C) (II) CIT V. GREENWORLD CORPORATION 314 ITR 81(SC) (III) CIT V. GABRIEL INDIA LIMITED (1993) 203 ITR 0 108 (BOM.) ITA NO. 821/MUM/2016 CANARA BANK SECURITIES LTD. 6 6. THE CIT HELD THAT INTEREST ON SHORT TERM DEPOSIT WITH BANK RECEIVED FROM INVESTMENT OF SURPLUS FUNDS IS TO BE ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES . THE CI T RELIED UPON THE FOLLOWING DECISIONS: (I) KRISHNA POLYESTER LTD. V. DCIT, 274 ITR 21 (BOM .) (II) FERRO CONCRETE CONSTRUCTION (INDIA) PVT. LTD. V. CIT, 290 ITR 713(MP) (III)SOUTH INDIA SHIPPING CORPORATION L TD. V. CIT, 240 ITR 24 (MAD.) (IV) CIT V. MONARCH TOOLS PVT. LTD. , 260 ITR 258(M AD.) THE CIT HELD THAT IN VIEW OF THESE ABOVE STATED DEC ISIONS, THE ISSUE IS NOT FREE FROM DOUBT THAT THE INCOME EARNED BY THE ASSESSEE COMPANY FROM FIXED DEPOSITS KEPT WITH THE BANKS COULD BE ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES AND PERUSAL OF ASSESSMENT RECORDS REVEALS THAT THE AO HAS NOT APPLIED HIS MIND TO THIS ISSUE AND HAS N OT EXAMINED THIS ISSUE DURING ASSESSMENT PROCEEDINGS. THUS , THE CIT HELD VIDE ORDERS DATED 19TH MARCH 2013 PASS ED U/S 263 OF THE ACT THAT THE ASSESSMENT COMPLETED IN THI S CASE IS WITHOUT APPLICATION OF MIND BY THE AO AND HENCE , T HE ORDER OF THE AO IS HELD TO BE ERRONEOUS AND PREJUDICIAL T O THE INTEREST OF REVENUE AND SAME IS SET ASIDE TO THE FI LE OF THE AO TO RE-DECIDE THE ISSUE AS TO WHETHER THE INTEREST I NCOME EARNED FROM FIXED DEPOSIT WITH BANK IS TO BE ASSESS ED UNDER THE HEAD INCOME FROM OTHER SOURCES OR AS BUSINES S INCOME. THE CIT RELIED UPON THE FOLLOWING DECISION S : (I) CIT V. JAGDISH CHAND WALIA & SONS. 234 ITR 595( P&H) (II) CIT V. EMERY STONE MANUFACTURING CO. 213 ITR 8 43 (RAJ.) (III) MOFUSSIL WAREHOUSE & TRADING CO. LTD. V. CIT 238 ITR 867(MAD.) (IV) MALABAR INDUSTRIAL CO. LTD. V. CIT 243 ITR 83 (SC) 7. AGGRIEVED BY THE ORDERS DATED 19TH MARCH 2013 PA SSED U/S 263 OF THE ACT BY THE CIT, THE ASSESSEE COMPANY IS IN APPEAL BEFORE US. 8. THE ASSESSEE COMPANY SUBMITTED BEFORE US THAT TH E CIT HAS ISSUED NOTICE DATED 26TH FEBRUARY 2013 U/S 263 OF T HE ACT ON ITA NO. 821/MUM/2016 CANARA BANK SECURITIES LTD. 7 THE GROUND THAT THE AO HAS ERRED IN TREATING INTERE ST OF RS.15,18,20,478/- EARNED FROM FIXED DEPOSIT WITH BA NK BY INVESTING SURPLUS FUNDS BY THE ASSESSEE COMPANY AS INCOME FROM BUSINESS WHILE THE SAME SHOULD HAVE BEEN ASSE SSED UNDER THE HEAD INCOME FROM OTHER SOURCES AND THE AO ERRED IN ALLOWING EXCESS SET OFF OF BROUGHT FORWARD BUSINESS TO THE TUNE OF RS.15,18,20,478/- AND HENCE HELD THE ASSESSMENT ORDERS DATED 08TH OCTOBER 2010 PASSED U/ S 143(3) OF THE ACT TO BE ERRONEOUS AND PREJUDICIAL T O THE INTEREST OF THE REVENUE . THE ASSESSEE COMPANY SUBMITTED THAT BUT WHILE PASSI NG ORDERS DATED 19TH MARCH 2013 U/S 263 OF THE ACT , T HE CIT HAS HELD THAT THIS ISSUE OF IS NOT FREE FROM DOUBT THAT THE INCOME EARNED BY THE ASSESSEE COMPANY FROM FIXED DE POSITS KEPT WITH THE BANKS COULD BE ASSESSED AS INCOME FR OM OTHER SOURCES INSTEAD OF BEING ASSESSED AS BUSINESS INC OME AND PERUSAL OF ASSESSMENT RECORDS REVEALS THAT THE AO H AS NOT APPLIED HIS MIND TO THIS ISSUE AND HAS NOT EXAMINED THIS ISSUE DURING ASSESSMENT PROCEEDINGS . THUS , THE CIT HELD VIDE ORDERS DATED 19TH MARCH 2013 PASSED U/S 263 OF THE ACT THAT THE ASSESSMENT COMPLETED IN THIS CASE IS WITHOUT AP PLICATION OF MIND BY AO AND HENCE , THE ORDER OF AO IS HELD T O BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E AND SAME IS SET ASIDE TO THE FILE OF THE AO TO RE-DECIDE THE ISSUE AS TO WHETHER THE INTEREST INCOME EARNED FROM FIXED DEPOS IT WITH BANK IS TO BE ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES OR AS BUSINESS INCOME. THUS, THE ASSESSE E COMPANY SUBMITTED THAT IT IS NOT PERMISSIBLE FOR THE CIT TO ISSUE NOTICE U/S 263 OF THE ACT ON ONE GROUND AND TO PASS THE OR DERS U/S 263 OF THE ACT ON OTHER GROUND. THE ASSESSEE COMPAN Y RELIED UPON THE FOLLOWING DECISIONS TO SUPPORT ITS ABOVE-S TATED PROPOSITION AS UNDER: (I) STAR INDIA LTD. V. ADDL. CIT, 143 TTJ 307(MUM. TRIB.) (II) B S SANGWAN V. ITO ,67 SOT 447 (DEL. TRIB.) (III) VESUVIUS INDIA LIMITED V. CIT , 54 SOT 172(KO L. TRIB.) (IV) CIT V. CONTIMETERS ELECTRICALS PVT. LTD. , 317 ITR 249(DEL.) (V) CIT V. G K KABRA , 211 ITR 336 (AP) ITA NO. 821/MUM/2016 CANARA BANK SECURITIES LTD. 8 (VI) CIT V. ASHISH RAJPAL , 320 ITR 674. THE ASSESSEE COMPANY SUBMITTED THAT IF TWO VIEWS AR E POSSIBLE AND THE AO HAS TAKEN ONE VIEW WHICH IS A P OSSIBLE VIEW, THEN THE ASSESSMENT ORDERS CANNOT BE HELD TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E. THE ASSESSEE COMPANY REFERRED TO NOTICE DATED 09TH JULY 2010 U/S 142(1) OF THE ACT ISSUED BY THE AO ALONG WITH QUEST IONNAIRE WHEREBY THE AO HAS ENQUIRED ,INTER-ALIA, ABOUT THE COMPUTATION OF INCOME EARNED BY THE ASSESSING COMPA NY DURING THE IMPUGNED ASSESSMENT YEAR WITH DIRECTION TO SUBMIT AUDITED BALANCE SHEET ALONG WITH NOTES AND ANNEXURES, NATURE OF BUSINESS OF THE ASSESSEE COMPA NY, DETAILS OF CARRY FORWARD LOSSES, DETAILS OF OTHER I NCOME EARNED BY THE ASSESSEE COMPANY AND THE DETAILED REP LY SUBMITTED BY THE ASSESSEE COMPANY BEFORE AO VIDE LE TTER DATED 28TH JULY 2010. THE ASSESSEE COMPANY SUBMITTE D THAT IT HAS GIVEN DETAILED REPLY ON ALL QUERIES MADE BY THE AO VIDE LETTER DATED 28TH JULY 2010 AND ALSO AS PER AUDITED BALANCE SHEET OF THE ASSESSEE COMPANY , THE INTEREST INCOME FROM FDR WITH BANK IS INCLUDED IN PROFIT AND LOSS A/C UN DER SCHEDULE 11 TITLED INTEREST AND FINANCIAL INCOME WHEREBY IT IS CLEARLY REFLECTED AND INCLUDED AS INTEREST ON BANK DEPOSITS AMOUNTING TO RS.15,18,20,478.73 AND IT IS INCOMPREHENSIBLE THAT THE AO HAS ALLOWED THE SAME A MOUNT WHICH IS SUBSTANTIAL AMOUNT TO BE TREATED AS BUSIN ESS INCOME AND ALLOWED SET OFF OF BROUGHT FORWARD BUSI NESS LOSS AGAINST THIS INCOME FROM INTEREST ON FDR WITHOUT AP PLICATION OF MIND AND HENCE THE ORDER OF THE AO IS NEITHER ER RONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE AS THE A O HAS TAKEN ONE VIEW AFTER DUE APPLICATION OF MIND WHICH IS A P OSSIBLE VIEW AND JUST BECAUSE TWO VIEWS ARE POSSIBLE, THE C IT CANNOT SUBSTITUTE HIS VIEW WITH THAT OF THE AO WHICH IS IM PRESSIBLE UNDER PROCEEDINGS U/S 263 OF THE ACT. THE ASSESSEE COMPANY RELIED UPON THE FOLLOWING DECISIONS TO ADVANCE AND SUPPORT ITS CONTENTIONS: (I) CIT V. MAX INDIA LIMITED 295 ITR 282 (BOM.) (II) CIT V GABRIEL INDIA LIMITED 203 ITR 108 (BOM.) (III) MRS PRAVEEN P BHARUCHA V. DCIT 348 ITR 325(BO M.) THE ASSESSEE COMPANY ALSO SUBMITTED THAT IN THE ORD ERS DATED 19TH MARCH 2013 U/S 263 OF THE ACT, THE CIT HAS OBS ERVED ITA NO. 821/MUM/2016 CANARA BANK SECURITIES LTD. 9 THAT THIS ISSUE IS NOT FREE FROM DOUBT THAT THE INC OME EARNED BY THE ASSESSEE COMPANY FROM FIXED DEPOSITS KEPT WI TH THE BANKS COULD BE ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES INSTEAD OF BEING ASSESSED AS BUSINESS INC OME WHILE THERE IS NO FINDING OF THE FACT THAT THE ASSE SSMENT ORDERS DATED 08TH OCTOBER 2010 PASSED U/S 143(3) OF THE ACT BY THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTER EST OF THE REVENUE. THE ASSESSEE COMPANY RELIED UPON THE FOLLO WING DECISIONS TO ADVANCE AND SUPPORT ITS CONTENTIONS: (I) CIT V. GABRIEL INDIA LIMITED 203 ITR 108(BOM.) (II) JEWELS OF INDIA V. ACIT 325 ITR 92(BOM.) (III) GLOBUS INFOCOM LIMITED V. CIT 369 ITR 1 (DEL. ) (IV) STAR INDIA LIMITED V. ADDL. CIT 143 TTJ 307(MU M. TRIB.) 9. THE LD DR RELIED UPON THE ORDERS DATED 19TH MARC H 2013 U/S 263 OF THE ACT PASSED BY THE CIT. THE LD. DR ST ATED THAT THERE IS NO DISCUSSION IN THE ASSESSMENT ORDER DATE D 08TH OCTOBER 2010 U/S 143(3) OF THE ACT PASSED BY THE AO ABOUT THE TREATMENT OF THIS INCOME FROM INTEREST ON FDR W ITH BANK BY DEPLOYING SURPLUS FUNDS BY THE ASSESSEE COMPANY TO BE TREATED AS INCOME FROM BUSINESS OR INCOME FROM O THER SOURCES WHICH SHOWS THAT THE AO HAS NOT MADE DETAI LED ENQUIRY IN RESPECT OF THIS MATTER AND HENCE HAS NOT APPLIED HIS MIND BEFORE ACCEPTING THE INTEREST INCOME EARNE D FROM FDR WITH BANK ON DEPLOYMENT OF SURPLUS FUNDS. THUS, THE LD. DR SUBMITTED THAT THE ORDERS DATED 08TH OCTOBER 201 0 U/S 143(3) OF THE ACT OF THE AO IS ERRONEOUS AND PREJUD ICIAL TO THE INTEREST OF THE REVENUE AND HENCE THE ORDERS DA TED 19TH MARCH 2013 OF CIT U/S 263 OF THE ACT SETTING ASIDE THE ASSESSMENT ORDERS DATED 08TH OCTOBER 2010 U/S 143(3 ) OF THE ACT OF THE AO IS CORRECT AND NEEDS TO BE UPHELD. TH E LD. DR ALSO SUBMITTED THAT THAT THE CONTENTIONS OF THE ASS ESSEE COMPANY THAT THE CIT HAS ISSUED NOTICE ON ONE GROUN D U/S 263 OF THE ACT WHILE ORDERS ARE PASSED BY THE CIT U /S 263 OF THE ACT ON ANOTHER GROUND CANNOT BE ACCEPTED AS THE CIT HAS NOT DEVIATED FROM THE MAIN ISSUE OF TREATMENT OF TH E INTEREST INCOME FROM FDR WITH BANK ON DEPLOYMENT OF SURPLUS FUNDS TO BE TREATED AS INCOME FROM BUSINESS OR TO BE AS SESSED UNDER THE HEAD INCOME FROM OTHER SOURCES AND HENC E THE LD. DR SUBMITTED THAT TOTALITY OF THE SITUATION IS TO BE SEEN. THE LD. DR ALSO SUBMITTED THAT THE ASSESSMENT ORDER DATED ITA NO. 821/MUM/2016 CANARA BANK SECURITIES LTD. 10 08TH OCTOBER 2010 PASSED BY THE AO U/S 143(3) OF TH E ACT IS A TWO PAGE ORDER ACCEPTING RETURNED INCOME AS ASSES SED INCOME WHERE-IN THERE IS NO DISCUSSION ABOUT TREATM ENT OF THIS INCOME FROM INTEREST ON FDR WITH BANK ON DEPLO YMENT OF SURPLUS FUNDS AND HENCE IT CLEARLY SHOWS THAT THE A O HAS NOT APPLIED HIS MIND TO THE TREATMENT OF INTEREST INCOM E FROM FDR ON DEPLOYMENT OF SURPLUS FUNDS TO BE TREATED AS INCOME FROM BUSINESS OR INCOME FROM OTHER SOURCES BEFOR E PASSING THE ASSESSMENT ORDER DATED 08TH OCTOBER 2010 U/S 14 3(3) OF THE ACT AND THE CONTENTIONS OF THE ASSESSEE COMPANY THAT IT SHOULD BE DEEMED THAT THE AO HAS APPLIED HIS MIND T O THIS ISSUE BEFORE PASSING THE ASSESSMENT ORDER DATED 08T H OCTOBER 2010 U/S 143(3) OF THE ACT BY THE AO IS TO BE REJEC TED AT THE THRESH-HOLD ITSELF . THE LD. DR RELIED UPON THE ORD ERS DATED 19TH MARCH 2013 PASSED U/S 263 OF THE ACT BY THE CI T. 10. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, PERUSED T HE MATERIAL ON RECORD AND CASE LAWS RELIED UPON BY BOT H THE PARTIES. WE HAVE OBSERVED FROM THE FACTS AS EMERGIN G FROM THE ORDERS OF THE AUTHORITIES BELOW THAT THE ASSESS EE COMPANY IS A SUBSIDIARY OF CANARA BANK . THE ASSESSEE COMPA NY WAS PRIMARY DEALER (PD) IN GOVERNMENT SECURITIES ACCRED ITED BY RBI , TILL FEBRUARY 2007 AND DIVERSIFIED INTO STOCK BROKING BUSINESS, CONSEQUENT UPON TAKEOVER OF THE PD BUSINE SS BY THE PARENT BANK. THE ASSESSEE COMPANY BUSINESS WAS FLOU RISHING TILL 2004 BUT DUE TO CHANGE IN DIRECTION OF INTERES T RATES, THE ASSESSEE COMPANY LIKE OTHER SIMILAR DEALERS IN GOVE RNMENT SECURITIES FLOATED BY OTHER PUBLIC SECTOR BANKS SUF FERED HEAVY LOSSES AND IT DID NOT MADE SENSE TO CONTINUE AS STANDALONE ENTITY BURDENED WITH SUCH HEAVY LOSSES. THE RESERVE BANK OF INDIA ALLOWED PARENT COMPANIES OF A LL SUCH SUBSIDIARIES COMPANIES TO TAKE OVER THE BUSINESS OF PRIMARY DEALERSHIP(PD). IN THE CASE OF THE ASSESSEE COMPANY , THE PARENT BANK I.E. CANARA BANK TOOK OVER THE BUSINESS OF PRIMARY DEALERSHIP FROM THE ASSESSEE COMPANY W.E.F. 20.02.2007 AND THEREAFTER THE ASSESSEE COMPANY DELV ED INTO STOCK BROKING BUSINESS . THE ASSESSEE COMPANY ON CE SSATION OF BUSINESS OF PD STARTED LIQUIDATING ITS STOCK-IN- TRADE OF SECURITIES AND TREASURY BILLS WHICH GENERATED HEAVY LIQUID MONEY. THE ASSESSEE COMPANY ALSO LIQUIDATED STOCK- IN- TRADE OF EQUITY SHARES AND BOOKED PROFIT . THESE S ECURITIES WERE CONTINUOUSLY LIQUIDATED OVER A PERIOD OF ONE Y EAR I.E. FINANCIAL YEAR 2007-08 WHICH CREATED GENERATION OF LIQUID MONEY, WHICH WAS TEMPORARILY PARKED INTO FIXED DEPO SIT ITA NO. 821/MUM/2016 CANARA BANK SECURITIES LTD. 11 WITH BANKS FOR SHORT PERIODS, MAINLY UP TO 6 MONTHS TILL THEY ARE DEPLOYED IN STOCK BROKING BUSINESS VENTURED BY THE ASSESSEE COMPANY . THE ASSESSEE COMPANY AFTER CESSA TION OF PD BUSINESS DIVERSIFIED INTO STOCK BROKING BUSINESS . THE CONTROVERSY REVOLVES AROUND WHETHER THE INTEREST IN COME EARNED FROM FDR WITH BANKS BY DEPLOYMENT OF LIQUID FUNDS ARISEN FROM LIQUIDATION OF GOVERNMENT SECURITIES AN D TREASURY BILLS ON CESSATION OF PD BUSINESS IN THE INTERIM PE RIOD AND BEFORE THE DEPLOYMENT OF THE FUNDS IN STOCK BROKING BUSINESS SHALL CONSTITUTE THE INCOME FROM BUSINESS TO BE A SSESSED AS BUSINESS INCOME AS CONTENDED BY THE ASSESSEE COMPAN Y OR SHALL BE ASSESSED TO TAX UNDER THE HEAD INCOME FRO M OTHER SOURCES AS CONTENDED BY THE CIT. WE HAVE OBSERVED THAT GOVERNMENT SECURITIES AND TREASURY BILLS WHICH WERE LIQUIDATED BY THE ASSESSEE COMPANY WAS STOCK-INTRA DE OF THE ASSESSEE COMPANY AND WAS PART OF ITS CIRCULATING CA PITAL AND THESE FUNDS ARISING FROM LIQUIDATION OF GOVERNMENT SECURITIES AND TREASURY BILLS WHICH ARE PART OF CIRCULATING CA PITAL OF THE ASSESSEE COMPANY , IS DUE TO CESSATION OF PD BUSINE SS OF THE ASSESSEE COMPANY AS THE SAME IS TAKEN OVER BY ITS P ARENT BANK AND BEFORE DEPLOYMENT OF THESE FUNDS INTO STOC K BROKING BUSINESS IS INTRIXIABLY LINKED TO CIRCULATING CAPIT AL OF THE ASSESSEE COMPANY AND IN-FACT FUNDS SO GENERATED ON LIQUIDATION OF GOVERNMENT SECURITIES AND TREASURY B ILLS IN THE INTERIM PERIOD BEFORE DEPLOYMENT IN STOCK BROKING B USINESS ITSELF IS CIRCULATING CAPITAL BEING ARISEN FROM BUS INESS ITSELF AND CANNOT BE CATEGORISED AS SURPLUS FUNDS AS THE F UNDS ARE MERELY IN THE SWITCHOVER MODE FROM ONE BUSINESS I.E PD BUSINESS WHICH HAS JUST CEASED TO A NEW VENTURE WHI CH HAS JUST COMMENCED I.E. STOCK BROKING BUSINESS. THUS, T HE ASSESSEE COMPANY HAS LIQUIDATED ITS STOCK- IN- TRA DE BEING CIRCULATING CAPITAL HELD IN THE FORM OF GOVERNMENT SECURITIES AND TREASURY BILLS AND IN THE INTERIM DEPLOYED THE SAID LIQUID FUNDS SO ARISING FROM LIQUIDATION OF GOVERNMENT SEC URITIES AND TREASURY BILLS IN FDRS WITH BANKS BEFORE DEPLO YMENT OF THE FUNDS FOR STOCK BROKING BUSINESS AND IN OUR VIE W THE SAME CANNOT BE SAID TO BE DEPLOYMENT OF SURPLUS FUNDS AS HELD BY THE CIT RATHER IT IS EFFECTIVE USE OF THE FUNDS IN THE INTERIM BEFORE ITS DEPLOYMENT IN NEW BUSINESS OF STOCK BROK ING AND MORE SO THE ASSESSEE COMPANY WAS DEALER IN PRIMARY DEPOSIT WHICH PRIMARILY DEALT WITH DEPLOYMENT OF MONEY/ FUN DS IN GOVERNMENT SECURITIES AND TREASURY BILLS AND INCOME ARISING THEREOF IS CHARGEABLE TO TAX AS INCOME FROM BUSINE SS OR ITA NO. 821/MUM/2016 CANARA BANK SECURITIES LTD. 12 PROFESSION AND HENCE THE INCOME FROM DEPLOYMENT OF FUNDS/MONEY IN FDRS WITH BANKS , ARISING FROM LIQU IDATING OF GOVERNMENT SECURITIES AND TREASURY BILLS WHICH W ERE STOCK-IN-TRADE OF THE ASSESSEE COMPANY BEING CIRC ULATING CAPITAL OF THE ASSESSEE COMPANY , IS INTRAXIABLY LI NKED TO CIRCULATING CAPITAL OF THE COMPANY BEING ARISEN FRO M THE BUSINESS OF THE ASSESSEE COMPANY AND AS BROUGHT TO TAX BY THE AO UNDER THE HEAD INCOME FROM BUSINESS IS ONE OF THE POSSIBLE VIEWS ADOPTED BY THE AO IN THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT CULMINATING INTO AN ORDER DATED 08TH OCTOBER 2010 AND THE SAME VIEW AS ADOPTE D BY THE AO CANNOT BE HELD TO BE AN ERRONEOUS VIEW. THE AO HAS TAKEN THIS VIEW IN BRINGING TO TAX THIS INCOME FROM INTEREST FROM FDR WITH BANKS AS BUSINESS INCOME WHICH IS O NE OF THE POSSIBLE VIEW AND IT IS ESTABLISHED PRINCIPLE O F TAXING STATUTE THAT IF TWO VIEWS ARE POSSIBLE, THEN THE VI EW WHICH FAVOURS TAX PAYER SHALL PREVAIL AND HENCE IT COULD NOT BE SAID THAT THE VIEW ADOPTED BY THE AO IS AN ERRONEOUS VIE W . IT IS IMPRESSIBLE FOR THE CIT TO SUBSTITUTE HIS VIEW IN S UCH A SITUATION AND THAT TOO IN THE PROCEEDINGS U/S 263 O F THE ACT EVEN IF THE VIEW OF THE CIT IS A BETTER VIEW THAN T HE VIEW ADOPTED BY THE AO UNLESS IT IS ESTABLISHED THAT THE VIEW ADOPTED BY THE AO IS CLEARLY AN ERRONEOUS VIEW AND IS PREJUDICIAL TO THE INTEREST OF REVENUE. THE CIT HAS RELIED UPON THE FOLLOWING DECISIONS WHICH ARE CLEARLY DISTINGUISHABLE AS UNDER: (I) KRISHNA POLYSTER LTD V. DCIT, 274 ITR 21(BOM.)- IN THIS CASE THE TAX PAYER MADE PUBLIC ISSUE AND GOT SURPLU S FUNDS WHICH WERE PLACED IN FDR AND THE TRIBUNAL FOUND THA T THE TAX PAYER IS ENGAGED IN THE BUSINESS OF MANUFACTURE OF SYNTHETIC YARN AND IS NOT IN THE BUSINESS OF MONEY LENDING AND IT WAS HELD THAT THE SURPLUS FUNDS WERE NOT ACQ UIRED FROM BUSINESS ACTIVITIES AND THAT THE INTEREST THEREON I S TO BE ASSESSED AS INCOME FROM OTHER SOURCES WHILE IN THE INSTANT CASE THE ASSESSEE COMPANY HAS LIQUIDATED ITS STOCK -IN-TRADE BEING GOVERNMENT SECURITIES AND TREASURY BILLS WHIC H ARE PART OF CIRCULATING CAPITAL ON CESSATION OF PD BUSINESS BEFORE BEING DEPLOYED INTO ITS NEW VENTURE OF STOCK BROKIN G AND HENCE THE FUNDS SO DEPLOYED ARE INTRIXIABLY LINKED TO CIRCULATING CAPITAL AND ARE IN FACT THEMSELVES CIRC ULATING CAPITAL OF THE ASSESSEE COMPANY BEING ARISEN FROM T HE BUSINESS ACTIVITY OF THE ASSESSEE COMPANY WHICH IS DEPLOYMENT OF FUNDS/MONEY. ITA NO. 821/MUM/2016 CANARA BANK SECURITIES LTD. 13 (II) FERRO CONCRETE CONSTRUCTION (INDIA) PVT. LTD. V. CIT, 290 ITR 713 (MP) THE TAX PAYER IN THIS CASE WAS ENGAG ED IN THE BUSINESS OF CIVIL WORK CONTRACT AND THE OBJECT CLAU SE OF MEMORANDUM OF ASSOCIATION DID NOT SHOW THAT THE TAX PAYER IS IN MONEY LENDING BUSINESS, THE INTEREST ON SHORT TERM DEPOSIT WAS HELD TO BE ASSESSABLE AS INCOME FROM OT HER SOURCES WHILE IN THE INSTANT CASE , THE ASSESSEE CO MPANY WAS IN THE BUSINESS OF DEPLOYMENT OF FUNDS/MONEY INTO GOVERNMENT SECURITIES AND TREASURY BILLS AND STOCK MARKET. (IV) SHIPPING CORPORATION LIMITED V. CIT, 240 ITR 2 4(MAD.) WHEREIN HONBLE MADRAS HIGH COURT FOLLOWING THE DEC ISION OF HONBLE SUPREME COURT IN TUTICORIN ALKALI CHEMIC ALS AND FERTILIZER LIMITED V. CIT, (1997) 227 ITR 172 HAS H ELD THAT INTEREST ON SHORT TERM DEPOSIT FROM BANK IS TO BE A SSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES. IN THE INSTANT CASE , WE HAVE HELD THAT THESE FUNDS PLACED BY THE ASSESSEE COMPANY ARE CIRCULATING CAPITAL OF THE COMPANY AND IS NOT A SURPLUS FUNDS RATHER THE FUNDS ARE IN THE MODE OF S WITCHOVER FROM THE BUSINESS OF PD WHICH HAS CEASED SHORTLY BE FORE AND THE LIQUID FUNDS ARE ARISING FROM LIQUIDATION OF GO VERNMENT SECURITIES AND TREASURY BILLS OF PD BUSINESS WHICH WAS HELD AS STOCK-IN-TRADE OF PD BUSINESS AND ARE TO BE DE PLOYED IN THE STOCK BROKING BUSINESS AND IN THE INTERIM ARE P LACED IN FDR WITH THE BANKS AND HENCE CANNOT BE TERMED AS SU RPLUS FUNDS RATHER THE SAID FUNDS ARE CIRCULATING CAPITAL OF THE ASSESSEE COMPANY BEING ARISEN FROM THE BUSINESS ACT IVITY OF THE ASSESSEE COMPANY. (V) CIT V. MONARCH TOOLS PRIVATE LIMITED, 260 ITR 258(MAD.)- IN THE INSTANT CASE, THE TAX PAYER WAS E NGAGED IN THE BUSINESS OF DESIGN, FABRICATION, ERECTION AND COMMISSIONING OF PLANT AND MACHINERY HAVING RECEIVE D ADVANCE FROM CUSTOMERS WHICH WAS NOT IMMEDIATELY RE QUIRED FOR BUSINESS PURPOSES WAS DEPLOYED IN THE FDR, THE INTEREST WAS HELD TO BE INCOME FROM OTHER SOURCES BUT IN THE INSTANT CASE THE ASSESSEE COMPANY IS IN BUSINESS OF DEPLOYM ENT OF FUNDS/MONEY IN GOVERNMENT SECURITIES AND TREASURY B ILLS WHICH HAS JUST CEASED AND IS NOW CONTEMPLATING STAR TING SHARE BROKING BUSINESS. THE FACTS ARE CLEARLY DISTI NGUISHABLE. THE ASSESSING COMPANY DURING THE ASSESSMENT PROCEED INGS HAS DULY REPLIED TO ALL THE QUERIES RAISED BY THE A O , THE ASSESSEE COMPANY REFERRED TO NOTICE DATED 09TH JULY 2010 ITA NO. 821/MUM/2016 CANARA BANK SECURITIES LTD. 14 ISSUED U/S 142(1) OF THE ACT BY THE AO ALONG WITH QUESTIONNAIRE WHEREBY THE AO HAS ENQUIRED, INTER-AL IA, ABOUT THE COMPUTATION OF INCOME EARNED BY THE ASSESSING C OMPANY DURING THE IMPUGNED ASSESSMENT YEAR WITH DIRECTION TO SUBMIT AUDITED BALANCE SHEET ALONG WITH NOTES AND ANNEXURES, NATURE OF BUSINESS OF THE ASSESSEE COMPA NY, DETAILS OF CARRY FORWARD LOSSES, DETAILS OF OTHER I NCOME EARNED BY THE ASSESSEE COMPANY AND THE DETAILED REP LY SUBMITTED BY THE ASSESSEE COMPANY BEFORE AO VIDE LE TTER DATED 28TH JULY 2010 ALONG WITH AUDITED BALANCE SHE ET ALONG WITH NOTES AND ANNEXURES AND TAX AUDIT REPORT U/S 4 4AB OF THE ACT. THE ASSESSEE COMPANY SUBMITTED THAT IT HAS GIVEN DETAILED REPLY ON ALL QUERIES MADE BY THE AO AND AL SO AS PER AUDITED BALANCE SHEET OF THE ASSESSEE COMPANY , THE INTEREST INCOME FROM FDR WITH BANK IS INCLUDED IN PROFIT AND LOSS A/C UNDER SCHEDULE 11 TITLED INTEREST AND FINANC IAL INCOME WHEREBY IT IS CLEARLY REFLECTED AND INCLUDE D AS INTEREST ON BANK DEPOSITS AMOUNTING TO RS.15,18,20, 478.73 AND IT IS INCOMPREHENSIBLE THAT THE AO HAS ALLOWED THE SAME AMOUNT WHICH IS SUBSTANTIAL AMOUNT TO BE TREATED AS BUSINESS INCOME AND ALLOWED SET OFF OF BROUGHT FO RWARD BUSINESS LOSS AGAINST THIS INCOME FROM INTEREST ON FDR WITHOUT APPLICATION OF MIND AND HENCE WE HOLD THAT THE ORDER OF THE AO IS NEITHER ERRONEOUS NOR PREJUDICIAL TO T HE INTEREST OF REVENUE AS THE AO HAS TAKEN ONE VIEW WHICH IS A POSSIBLE VIEW AFTER DUE APPLICATION OF MIND AND JUST BECAUSE TWO VIEWS ARE POSSIBLE, THE CIT CANNOT SUBSTITUTE HIS V IEW WITH THAT OF THE AO EVEN THOUGH VIEW OF CIT MAY BE A BET TER VIEW WHICH IS IMPRESSIBLE IN PROCEEDINGS U/S 263 OF THE ACT. MERELY BECAUSE , THE AO HAS NOT WRITTEN ELABORATELY IN THE ASSESSMENT ORDER ABOUT HOLDING THE INTEREST INCOME FROM FDR AS BUSINESS INCOME DOES NOT MEAN THAT THE ORD ER OF THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE, REFERENCE MAY BE DRAWN TO HONBLE JURISDIC TIONAL HIGH COURT OF BOMBAY IN CIT V. GABRIEL INDIA LIMITE D 203 ITR 108 (BOM.) MORE-SO , WE HAVE OBSERVED THAT THE CIT IN HIS ORDER DATED 19TH MARCH 2013 PASSED U/S 263 OF T HE ACT HAS HELD THAT THE ISSUE IS NOT FREE FROM DOUBT THAT THE INCOME EARNED BY THE ASSESSEE COMPANY FROM FIXED DEPOSITS KEPT WITH THE BANKS COULD BE ASSESSED AS INCOME FROM OTHER S OURCES AND THE AO TO RE-DECIDE THE ISSUE AS TO WHETHER THE INTEREST INCOME EARNED FROM FIXED DEPOSIT WITH BANK IS TO BE ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES OR AS B USINESS ITA NO. 821/MUM/2016 CANARA BANK SECURITIES LTD. 15 INCOME CLEARLY REVEALS THAT THE CIT INSTEAD OF GIV ING FINAL FINDING ON THIS ISSUE OBSERVED THAT THE INCOME EARN ED BY THE ASSESSEE COMPANY FROM THE FIXED DEPOSIT WITH BANK C OULD BE ASSESSED AS INCOME FROM OTHER SOURCES AS MATTER I S NOT FREE FROM DOUBT ITSELF SHOWS THAT THERE IS NO FINDING OR ADJUDICATION BY THE CIT AND HIS OBSERVATIONS ARE BA SED ON MERE SUSPICION AND ARE UNCERTAIN . YET , A DIRECTIO N WAS ISSUED TO THE AO TO CARRY OUT FRESH INQUIRIES TO DO THE EXERCISE ONCE AGAIN AND DECIPHER WHETHER INCOME EAR NED FROM FIXED DEPOSIT WITH BANK BY THE ASSESSEE COMPAN Y COULD BE ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURC ES , THUS CIT WAS UNSURE WHETHER THE TREATMENT METED OUT BY THE ASSESSEE COMPANY IN TREATING THE SAID INCOME FROM I NTEREST ON FDR WITH BANK AS INCOME FROM BUSINESS IS RIGHT OR WRONG WHICH DOES NOT SHOW THAT THE FINDING AS ARRIV ED AT BY THE AO IS ERRONEOUS AND HENCE THE ORDER OF CIT DOES NOT MEET THE REQUIREMENT OF SECTION 263 OF THE ACT. OUR VIEW IS FORTIFIED BY THE JUDGMENT OF HONBLE DELHI HIGH COU RT OF GLOBUS INFOCOM LTD. V. CIT (2014) 369 ITR 14 (DELHI ) AND ALSO HONBLE JURISDICTIONAL HIGH COURT OF BOMBAY IN CIT V. GABRIEL INDIA LIMITED 203 ITR 108 (BOM.) . THE RELI ANCE OF THE CIT ON THE DECISIONS OF CIT V. JAGDISH CHAND WA LIA & SONS 234 ITR 595(P&H.), CIT V. EMERY STONE MANUFACT URING CO. 213 ITR 843(RAJ.) , MOFUSSIL WAREHOUSE AND TRAD ING CO. LTD. V. CIT 238 ITR 867 (MAD.) AND HONBLE SUPR EME COURT DECISION IN MALABAR INDUSTRIAL CO. LTD V. CIT 243 ITR 83(SC) IS ALSO NOT CORRECT AND IN VIEW OF DISCUSSIO NS ABOVE , IT CANNOT BE SAID THAT THE AO HAS PASSED ASSESSMENT ORDER DATED 08TH OCTOBER 2010 U/S 143(3) OF THE ACT WITHO UT ANY APPLICATION OF MIND. WE IN VIEW OF THE DISCUSSIONS ABOVE ARE OF CONSIDERED VIEW AND HOLD THAT THE ORDER OF CIT D ATED 19TH MARCH 2013 U/S 263 OF THE ACT HOLDING ASSESSMENT OR DER DATED 08TH OCTOBER 2010 PASSED U/S 143(3) OF THE AC T OF THE AO TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AND DIRECTING THE SAME TO BE SET ASIDE TO THE FILE OF THE AO TO RE-DECIDE THE ISSUE AS TO WHETHER THE INTEREST INCO ME EARNED FROM FIXED DEPOSIT WITH BANK IS TO BE ASSESSED UNDE R THE HEAD INCOME FROM OTHER SOURCES OR AS BUSINESS INCOME IS UNSUSTAINABLE IN LAW AND IS SET ASIDE AND THE ASSES SMENT ORDER OF THE AO DATED 08TH OCTOBER 2010 PASSED U/S 143(3) OF THE ACT IS RESTORED . WE ORDER ACCORDINGLY. 11. THUS, THE APPEAL OF THE ASSESSEE COMPANY IS ALL OWED FOR REASONS INDICATED ABOVE. ITA NO. 821/MUM/2016 CANARA BANK SECURITIES LTD. 16 12. THIS ORDER IS PRONOUNCED IN THE OPEN COURT ON T HIS DAY OF 28TH OCTOBER 2015. 2.2. WE FIND THAT IN THE AFORESAID ORDER, REVISION AL JURISDICTION U/S 263 OF THE ACT WAS INVOKED BY THE LD. COMMISSIONER ON THE ISSUE OF WHETHER THE INTEREST I NCOME EARNED FROM FIXED DEPOSITS WAS TO BE ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES OR AS BUSINESS I NCOME. THE TRIBUNAL CONSIDERED THE FACTS ALONG WITH THE TR EATMENT GIVEN IN THE ASSESSMENT ORDER AND THE OBSERVATION M ADE BY THE LD. COMMISSIONER. THE TRIBUNAL ALSO CONSIDERED THE REPLY OF THE ASSESSEE WITH ITS BASIC OBJECTIVES ALONG WIT H OTHER FACTS AND THAT TOO IN THE LIGHT OF VARIOUS JUDICIAL PRONO UNCEMENTS INCLUDING FROM HON'BLE APEX COURT AND FROM HON'BLE VARIOUS HIGH COURTS AND THEREAFTER HELD THAT THE INTEREST I NCOME EARNED FROM FIXED DEPOSITS WITH THE BANK AND HELD T HAT THE ASSESSING OFFICER FRAMED THE ASSESSMENT WITH APPLIC ATION OF MIND. THE LD. COMMISSIONER OF INCOME TAX (APPEAL) DIRECTED THE ASSESSING OFFICER TO FOLLOW THE ORDER OF THE TR IBUNAL IN WHICH, WE FIND NO INFIRMITY. THUS, WE FIND NO MERIT IN THE APPEAL OF THE REVENUE. EVEN OTHERWISE, THE SUBORDIN ATE AUTHORITIES ARE EXPECTED TO FOLLOW THE DIRECTIONS O F THE HIGH FORUM UNLESS AND UNTIL CONTRARY FACTS ARE BROUGHT T O THE ITA NO. 821/MUM/2016 CANARA BANK SECURITIES LTD. 17 NOTICE. WE AFFIRM THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL), RESULTING INTO DISMISSAL OF AP PEAL OF THE REVENUE. FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF HEARING ON 07/12/2017. SD/- (MANOJ KUMAR AGGARWAL) SD/- (JOGINDER SINGH) '!# / ACCOUNTANT MEMBER $!# /JUDICIAL MEMBER % MUMBAI; ) DATED : 07/12 /2017 F{X~{T? P.S/. .. %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. +,- / THE APPELLANT (RESPECTIVE ASSESSEE) 2. ./,- / THE RESPONDENT. 3. 0 0 1$ ( + ) / THE CIT, MUMBAI. 4. 0 0 1$ / CIT(A)- , MUMBAI, 5. 34 .$! , 0 +' ! 5 , % / DR, ITAT, MUMBAI 6. 6' 7% / GUARD FILE. ! / BY ORDER, /3+$ .$ //TRUE COPY// /! (DY./ASSTT. REGISTRAR) , % / ITAT, MUMBAI