Change of opinion — The change of opinion is only possible if there was application of mind in the first assessment, but in the instant case, there was no assessment and the intimation under s 143(1)(a) was neither an assessment nor did it involve application of mind.
As per Explanation 2(b) to s 147 of the Act, where a return of income is furnished but no assessment has been made and it is noticed by the AO that an assessee had understated the income, it will be deemed to be a case where the income chargeable to tax had escaped assessment
Where only intimation was sent, a notice under s 148 of the Act could be issued in terms of Explanation 2(b) to s 147 of the Act.
Income from other source vis-à-vis business income — Interest income earned by making FDs with banks, which was not in any way linked to the business of the assessee that the assessee was carrying on, is assessable as “income from other sources” and any set-off of the same cannot be given to the assessee as pre-operative expenses.
The assessee had retained the money received from the investing company without any purpose as the bid of the assessee had already been rejected by the MPSEB. Though the assessee was contesting the rejection of the bid in the High Court, the amount was kept deposited in the shape of FDs only to earn interest till such time when the issues with the MPSEB and the investing company were resolved. The interest earned on these investments cannot be related to the setting up of a business and was also not in any way linked to the business that the assessee was carrying on and, therefore, the interest income was held to be “income from other sources” and not “business income”, and any set-off of the same cannot be given to the assessee as pre-operative expenses.
Decided on: 11 July 2011.
No comments:
Post a Comment