IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCH `B', HYDERABAD
BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER
and SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER
ITA No. 185/Hyd/2011
Assessment year 2001-02
DCIT Vs. M/s. Lanco Kondapalli Power
Circle-16(1) Pvt. Ltd., Hyderabad
Hyderabad PAN: AAACK5423A
Assessee Respondent
ITA No. 127/Hyd/2011
Assessment year 2001-02
M/s. Lanco Kondapalli Vs. DCIT
Power Pvt. Ltd., Hyderabad Circle-16(1)
PAN: AAACK5423A Hyderabad
Assessee Respondent
Revenue by: Shri M. Dayakar
Assessee by: Shri S. Rama Rao
Date of hearing: 17.07.2012
Date of pronouncement: 17.07.2012
ORDER
PER CHANDRA POOJARI, AM:
The above appeals are cross appeals directed against the
order of the CIT(A)-V, Hyderabad dated 18.11.2010 for assessment
year 2001-02.
2. The assessee raised the following grounds of appeal:
a) The order of the learned CIT(A) is erroneous both
on facts and in law.
b) The learned CIT(A) ought to have seen that the
provisions of sec. 147 are not applicable to the
facts of the case and that the assessment made
u/s. 143(3) read with sec. 147 is not valid.
2 ITA Nos. 185 & 122 / Hyd/2011
M/s. Lanco Kondapalli Power Pvt. Ltd.
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c) The learned CIT(A) erred in confirming the action of
the Assessing Officer in treating the interest earned
of Rs. 25,74,968, Rs. 26,36,802 and Rs. 34,76,199
on margin money kept for providing bank
guarantee as the income from other sources. The
learned CIT(A) ought to have seen that the said
income represents business income and not
income from other sources.
d) The learned CIT(A) ought to have considered the
fact that only the net interest income after deduc
ting the expenditure in earning such interest
income could be treated as income from business.
e) The learned CIT(A) ought to have considered the
fact that such interest arose to the appellant on the
deposits made by it in the process of its business
activity and the earning of such income is
inextricably linked to the activity of business.
3. The Revenue raised the following ground of appeal:
a) Whether the Hon'ble ITAT erred in holding that the
reimbursement of taxes for which the company is
eligible as per the Power Purchase Agreement with
APTRANSCO/APSEB is not to be treated as taxable
income in the hands of the assessee.
4. As seen from the grounds raised by the assessee, the main
issue is on reopening of assessment and the assessee raised the
same before the CIT(A) stating that reopening of assessment u/s.
147 is bad in law which issue was not at all adjudicated by the
CIT(A). The CIT(A) without adjudicating the issue relating to
reopening of assessment, disposed of the other grounds on merit
which is not proper. The issue relating to reopening of assessment
goes to the root of the matter. Being so, this issue has to be
adjudicated first before adjudicating the other grounds raised by
the assessee which the CIT(A) failed to do so. In our opinion, it is
fair and proper to set aside the order of the CIT(A) and remit back
the issue relating to reopening of assessment to the file of the
CIT(A) to decide this issue first and thereafter decide the other
issues raised by the assessee before him.
3 ITA Nos. 185 & 122 / Hyd/2011
M/s. Lanco Kondapalli Power Pvt. Ltd.
============================
5. Accordingly, the issue relating to reopening of assessment is
remitted back to the file of the CIT(A) for his consideration to
decide the same in accordance with law. It is needless to say that
the CIT(A) shall give proper opportunity of hearing to the assessee
before deciding the same.
6. In the result, assessee appeal is partly allowed for statistical
purposes and Revenue appeal is dismissed being infructuous.
Order pronounced in the open court on 17th July, 2012.
Sd/- Sd/-
(ASHA VIJAYARAGHAVAN) (CHANDRA POOJARI)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Hyderabad, dated the 17th July, 2012
Copy forwarded to:
1. The DCIT, Circle-16(1), Room No. 612, 6th Floor, Aayakar
Bhavan, Basheerbagh, Hyderabad.
2. M/s. Lanco Kondapalli Power Pvt. Ltd., Lanco House, Plot
No. 4, Software Units Layout, Hitec City, Madhapur,
Hyderabad.
3. The CIT(A)-V, Hyderabad.
4. The CIT-IV, Hyderabad
5. The DR B Bench, ITAT, Hyderabad.
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