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The Tax Publishers--- 1998 TaxPub(DT) 0018 (Karn-HC) : (1998) 234 ITR 0070 Satishchandra & Co. v. CIT () INCOME TAX --Rectification under s. 154----MISTAKE APPARENT--Setting off of carried forward business losses--Interest income whether assessable as <169>business income<170> or <169>income from other sources<170>.-- Ratio : The issue as to whether interest income is assessable as <169>business income<170> or <169>income from other sources<170> is debatable point giving rise to the possibility of two views, therefore, it cannot be said that there was mistake apparent from record, the same is debatable issue thus assessing officer was not justified in invoking provision of section 154 in the circumstances of the case. Held : The assessee had to make deposit in the bank as a condition for obtaining bank guarantee to be filed before the excise authorities as required under the Excise Rules. The interest income which arose out of the transaction is closely connected with the business of the assessee and so the interest income was also part of the business income. If the income is assessable as business income, then the mere circumstance that assessee had shown it as <169>income from other sources<170> or that it was assessed under the head <169>income from other sources<170>, should not be made the ground for denying the set off of the carried forward losses. In any case the assessee could not be precluded from establishing before the authorities that it was a business income. The predominant view of the various High Courts is that interest income arising from the transaction connected with the business would be interest income. From the judgments referred to above of the Delhi and Madras High Court possibly a view could be taken that interest income on these facts was business income. It was a debatable point and two opinions were possible. Since the point was debatable giving rise to the possibility of two views it could not be said to be a mistake apparent on the face of the record and, therefore, the assessing officer was precluded from exercising his jurisdiction under section 154 of the Act for rectification of the orders passed earlier by him. Case Law Analysis : Snam Progetti S. P. A. v. CIT (Addl.) (1981) 132 ITR 70 (Del) and CIT v. Madras Refineries Ltd. (1997) 228 ITR 354 (Mad) followed. Application : Also to current assessment years. A. Y. : 1979-80 to 1981-82 Dt. Judg. : 24-7-1998 SUBSCRIBE FOR FULL CONTENT

The Tax Publishers---
1998 TaxPub(DT) 0018 (Karn-HC) : (1998) 234 ITR 0070

Satishchandra & Co. v. CIT ()

INCOME TAX

--Rectification under s. 154----MISTAKE APPARENT--Setting off of carried forward business losses--Interest income whether assessable as <169>business income<170> or <169>income from other sources<170>.--

Ratio :

The issue as to whether interest income is assessable as <169>business income<170> or <169>income from other sources<170> is debatable point giving rise to the possibility of two views, therefore, it cannot be said that there was mistake apparent from record, the same is debatable issue thus assessing officer was not justified in invoking provision of section 154 in the circumstances of the case.

Held :

The assessee had to make deposit in the bank as a condition for obtaining bank guarantee to be filed before the excise authorities as required under the Excise Rules. The interest income which arose out of the transaction is closely connected with the business of the assessee and so the interest income was also part of the business income. If the income is assessable as business income, then the mere circumstance that assessee had shown it as <169>income from other sources<170> or that it was assessed under the head <169>income from other sources<170>, should not be made the ground for denying the set off of the carried forward losses. In any case the assessee could not be precluded from establishing before the authorities that it was a business income. The predominant view of the various High Courts is that interest income arising from the transaction connected with the business would be interest income. From the judgments referred to above of the Delhi and Madras High Court possibly a view could be taken that interest income on these facts was business income. It was a debatable point and two opinions were possible. Since the point was debatable giving rise to the possibility of two views it could not be said to be a mistake apparent on the face of the record and, therefore, the assessing officer was precluded from exercising his jurisdiction under section 154 of the Act for rectification of the orders passed earlier by him.

Case Law Analysis :

Snam Progetti S. P. A. v. CIT (Addl.) (1981) 132 ITR 70 (Del) and CIT v. Madras Refineries Ltd. (1997) 228 ITR 354 (Mad) followed.

Application :

Also to current assessment years.

A. Y. :

1979-80 to 1981-82

Dt. Judg. :

24-7-1998