-1- IN INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C.SHARMA, ACCOUNTANT MEMBER PAN NO. : AACCS4152N I.T.A.No.635, 636, 634/Ind/2006 & 613/Ind/2005 A.Y. : 2001-02, 2003-04, 1999-2000 & 2000-01 Samruddhi Swastik Trading ACIT, Circle 2(1), and Investments Limited, Ujjan Birlagram, vs Nagda. (Appellant) (Respondent) Appellant by : Shri Yogesh A. Thar and Shri Amritlal Jain, CAs Respondent by : Shri R.K. Chaudhary, CIT DR ORDER PER R. C. SHARMA, A.M. These are appeals filed by assessee against order of ld. CIT(A) for assessment years 1999-2000, 2000-01, 2001-02 and 2003-04 in matter of order passed u/s 143(3)/148 of Income-tax Act, 1961. 2. Rival contentions have been heard and record perused. Facts in brief are that assessee company belongs to Birla group of companies. It is mainly deriving income from properties let out. Investments are also made in certain shares. income from properties let out was disclosed by assessee under head business income so as to claim depreciation and other expenditure. return was simply accepted by processing -2- same u/s 143(1) of IT Act. Subsequently cases were re-opened by A.O in view of various Supreme Court judgments wherein it was held that when no services are rendered, income from property should be disclosed as income from house property and not as business income. Accordingly, income was assessed by Assessing Officer u/s 143(3)/147 as income from House property and assessee s claim of depreciation as business expenditure was declined. By impugned order ld. CIT(A) confirmed action of AO against which assessee is in further appeal before us. Following common grounds have been taken by assessee in all years under consideration. Ground No.1 Issuance on Notice u/s 148 is invalid That on facts and in circumstances of case and in law, Ld. CIT(A) erred in holding that reopening of assessment u/s 147 by issuance of notice u/s 148 was valid. Ground No.2 Order passed u/s 143(3)/148 is barred by limitation: That Ld. CIT(A) further erred in holding that order passed u/s 143(3)/148 was valid and was not barred by limitation in view of Section 153(2) and in view of judgment of Hon ble M.P.High Court in case of Jijeebai Shinde Vs. CGT 46 CTR 122, ignoring that : (a) Order should have been passed up to 31.03.2006 and passing thereof should be evidenced by its dispatch up to 31.03.2006, only putting date on Order 31.03.2006 is not sufficient. (b) Order was delivered to Government Speed Post Centre, Ujjain only on 03.04.2006 ( As per certificate of Postal Department). -3- pleas taken by A.O that order was handed over to dispatch section working under instruction and direction of Assessing Officer is not sufficient. Ground No.3.Assessment of leave and license income as income from house property instead of business income is invalid. That Ld. CIT(A) further erred in holding that : Leave and License Income is chargeable under head Income from House Property instead of head Business Income . Ground No.4.Disallowance of depreciation on property used for business of assessee: That Ld. CIT(A) also erred in confirming disallowance of depreciation of claimed on property used for purpose of business of Appellant. Ground No.5 Wrong withdrawal of interest u/s 244A of Act That on facts and in circumstances of case and in law, CIT(A) erred in confirming withdrawal of interest granted u/s 244A. Ground No.6 Wrong charging of intrest u/s 234-D That Ld. CIT(A) also erred in holding that interest charged u/s 234-D was valid. Ground No.7 Initiating penalty proceedings u/s 271 (1)(c): That Ld. CIT (A) also erred in not holding that initiation of penalty proceedings U/s 271 (1) (c) was not correct. -4- 3. Shri Yogesh Jain, CA appeared on behalf of assessee. Various grounds have been taken by assessee with regard to legality of reopening and consequent assessment made thereon, however, during course of hearing ld.Authorized Representative pressed legality of reopening of assessment in absence of any new material found by Assessing Officer. It was contended by ld.Authorized Representative that assessee has furnished all information with respect of his source of income and assessment was framed u/s 143(1), thereafter, there was no any additional information or new material before AO to justify AO s action for reason to believe that there was escapement of income. On other hand, ld. CIT DR supported reopening of assessment on basis of detailed finding recorded by Assessing Officer and justification given by CIT(A) both on facts and law, upholding validity of reopening. From record we found that assessee is investment company of Grasim Group of Industries. Return was filed at loss, which was processed u/s 143(1) for relevant assessment year under consideration and returned income was accepted. Thereafter, AO recorded detailed and specific reasons for issue of notice u/s 148 to effect that rental income declared by assessee was to be charged under head Income from House property and depreciation claimed on such property was not allowable as business expenditure and such excess claim has resulted in to under assessment of income. Contention of ld.Authorized Representative was that office premises were being used for purpose of assessee s business, hence, question of taking rentals in respect thereof as income from house property does not arise. He further contended that assessee is exclusive owner of these office premises and same have been given on lease and licence basis in normal course of business of -5- assessee. ld.Authorized Representative drawn our attention to terms of lease and licecing agreement and submitted that letting out of property was not merely transaction of letting out, but same is commercial exploitation of its property. As per ld.Authorized Representative, when letting out of property is for commercial exploitation of property, income thereof is to be taxed under head Income from business and not as Income from house property . Accordingly, there was correct claim of depreciation on such building, as business expenditure. With regard to validity of reopening, ld.Authorized Representative placed reliance on decision of I.T.A.T., Mumbai Bench in Aipita Marketing (P) Limited vs. ITO, 21 SOT 302, in support of proposition that in absence of any new material, AO is not empowered to reopen assessment whether original assessment was completed u/s 143(1)/143(3). Ld.Authorized Representative further contended that while holding whether in case where assessment is made u/s 143(1) and not u/s 143(3) it is not possible to hold view that income escaping assessment is always justified. As per ld.Authorized Representative, Tribunal has elaborately discussed proposition of law laid down by Hon'ble Supreme Court in case of Rajesh Jhaveri, 291 ITR 500 and have distinguished it while coming to conclusion that there was no valid reopening even if assessment was made u/s 143(1). ld.Authorized Representative also relied on decision of Hon'ble Madras High Court in case of Bapalal & Company Export, 289 ITR 37, in support of proposition that in absence of new material, AO is not empowered to reopen assessment irrespective of whether it is made u/s 143(1) or 143(3). Reliance was also placed on decision of Bombay I.T.A.T., in case of S. Vinod Kumar & Company in I.T.A.No. 3300/Mum/2004, order dated 3rd July, 2008, and decision in case -6- of Drizzle Marketing Private Limited in I.T.A.No. 3737/Mum/2005 order dated 22nd January, 2008, wherein it was held that in absence of fresh material had come to notice of AO, notice u/s 148 could not be issued even where assessment was originally completed u/s 143(1) of Act. 4. On other hand, ld. CIT DR, Shri R.K. Chaudhary, appeared on behalf of Revenue and strongly supported orders of lower authorities with regard to validity of reopening. Reliance was placed on decision of Hon'ble Supreme Court in case of Rajesh Jhaveri Stock Brokers Private Limited (supra), wherein it was held that in case of intimation u/s 143(1), AO can reopen assessment if there are reasons to believe that income of assessee has escaped assessment. As per ld. CIT DR, assessee has wrongly claimed income from house property as income from business in respect of office premises given on lease and licence agreement, accordingly, claim of depreciation under business head was wrong, which necessitated reopening of assessment u/s 147. Reliance was also placed on decision of Hon'ble Supreme Court in case of Raymond Wollens Mills Limited, 236 ITR 34, whrein reopening of assessment was held to be justified u/s 147(a). 5. We have considered rival contentions, carefully gone through orders of authorities below and also deliberated on case laws cited by ld.Authorized Representative, dealt with by lower authorities in their respective orders and also case laws cited by ld. CIT DR in context of factual matrix of case. From record, we found that assessee was earning rental income in respect of building given on lease and licence. assessee was claiming such income as income from business and thereby claimed depreciation on such property as business expenditure. return so filed was processed by Assessing Officer u/s 143(1), thereafter -7- within specified limit prescribed under statute, AO initiated proceedings u/s 147 by issue of notice u/s 148. Reasons for reopening was also recorded. crux of provisions of sec.143(1) up to 31st March, 1989, was that after return of income was filed Assessing Officer could make assessment under section 143(1) without requiring presence of assessee or production by him of any evidence in support of return. Where assessee objected to such assessment or where officer was of opinion that assessment was incorrect or incomplete or officer did not complete assessment under section 143(1), but wanted to make inquiry, notice under section 143(2) was required to be issued to assessee requiring him to produce evidence in support of his return. After considering material and evidence produced and after making necessary inquiries, officer had power to make assessment under section 143(3). 6. With effect from 1st April 1989, provisions underwent substantial and material changes. new scheme was introduced and new substituted section 143(1) prior to subsequent substitution with effect from 1st June 1999 in clause(a), provision was made that where return was filed under section 139 or in response to notice under section 142(1) and any tax or refund was found due on basis of such return after adjustment of tax deducted at source, any advance tax or any amount paid otherwise by way of tax or interest, intimation was to be sent u/s 143(1)(a), without prejudice to provisions of section 143(2) to assessee specifying sum so payable and such intimation was deemed to be notice of demand issued under section 156. first proviso to section 143(1)(a) allowed department to make certain adjustments in income or loss declared in return. They were as follows: -8- a) arithmetical error in return, accounts and documents accompanying it were to be rectified. b) any loss carried forward, deductions, allowance or relief which on basis of information available in such return, accounts or documents, was prima facie admissible, but which was not claimed in return was to be allowed; and c) any loss carried forward, relief claimed in return which on basis of information as available in such return, accounts or documents were prima facie inadmissible was to be disallowed. 7. What were permissible under first proviso to section 143(1)(a) to be adjusted were (i) only apparent arithmetical errors in return, accounts or documents accompanying return, (ii) loss carried forward, deduction, allowance or relief, which was prima facie admissible on basis of information available in return but not claimed in return, and similarly, (iii) those claims which were on basis of information available in return, prima facie inadmissible, were to be rectified/allowed/disallowed. What was permissible for correction of errors apparent on basis of documents accompanying return? Assessing Officer had no authority to make adjustments or adjudicate upon any debatable issue. In other words, Assessing Officer had no power to go behind return, accounts or documents either in allowing or in disallowing deduction, allowance or relief. -9- 8. provisions of section 143(1)(a) are without prejudice to provisions of section 143(2). Though, technically intimation issued was deemed to be demand notice issued under section 156 that did not per se preclude right of Assessing Officer to proceed under section 143(2). That right is reserved and not taken away. Between period from 1st April, 1989 to 31st March 1998, second proviso to section 143(1)(a), required that where adjustments were made under first proviso to section 143(1)(a) , intimation had to be sent to assessee notwithstanding that no tax or refund was due from him after making such adjustments. With effect from 1st April 1998, second proviso to section 143(1)(a) was substituted by Finance Act, 1997, which was operative till 1st June 1999. requirement was that intimation was to be sent to assessee whether or not any adjustments had been made under first proviso to section 143(1) and notwithstanding that no tax or interest was found due from assessee concerned. Between 1st April, 1998 to 31st March 1999, sending of intimation under section 143(1)(a) was mandatory. This position continued till all assessment years under consideration before us. 9. Thus, legislative intent is very clear from use of word intimation as substituted for assessment , Assessing Officer is free to make any addition after grant of opportunity to assessee. By making adjustments under first proviso to section 143(1)(a), no addition which is impermissible by information in return could be made by Assessing Officer. Reason is that under section 143(1)(a) no opportunity is granted to assessee and Assessing Officer proceeds on his opinion on basis of return filed by assessee. very fact that no opportunity of hearing being given under section 143(1)(a) indicates that - 10 - Assessing Officer has to proceed accepting return and making permissible adjustments only. 10. As result of insertion of Explanation to section 143 by Finance Act (No.2) of 1991 with effect from 1-10-1991 and subsequently with effect from 1-6-1994 by Finance Act 1994 and ultimately omitted with effect from 1-6-1999 by Explanation as introduced by Finance Act (No.2) of 1999, intimation sent to assessee under section 143(1)(a) was deemed to be order for purposes of section 246 between 1-6-94 to 31-3-95 and under section 264 between 1-10-1991 and 31-5-1999. expressions intimation and assessment order have been used at different places. Contextual difference between two expressions has to be understood in context of expressions used. Assessment is used as meaning some times computation of income some times determination of amount of tax payable and some times whole procedure laid down in Act for imposing liability upon tax payer . In scheme of things intimation under section 143(1)(a) cannot be treated to be order of assessment. distinction is also well brought out by statutory provisions as they stood at different points of time. Under section 143(1)(a) as stood prior to 1st April 1989, Assessing Officer had to pass order if he decided to accept return, but under amended provisions, requirement of passing of assessment order has been dispensed with and instead intimation is required to be sent. 11. Central Board of Direct Taxes (CBDT) had issued various circulars in this regard explaining purpose behind provisions of section 143(1)(a), namely, to minimize Departmental work in scrutinizing each and every return, and to concentrate on selective scrutiny of returns. - 11 - 12. Under first proviso to section 143(1) with effect from 1st June,1999, except as provided in provision itself, acknowledgment of return shall be deemed to be intimation under section 143(1) where (a) either no sum is payable by assessee, or (b) no refund is due to him. It is significant that acknowledgement is mostly done by ministerial staff and not by Assessing Officer. Thus intimation does not have all characteristics of assessment as understood in common parlance or even during taxing statutes. Further, intimation under section 143(1)(a) was deemed to be notice of demand under section 156 for purpose of making machinery provisions relating to recovery of tax applicable. By such application only tax amount indicated to be payable by intimation became permissible and nothing more can be inferred from deeming section. 13. On comparison of provisions as it stood before Direct Tax Laws (Amendment) Act, 1987 and provisions as substituted by Direct Tax Laws (Amendment) Act, 1987, it would be clear that: - scope and effect of section 147 as substituted with effect from 1st April 1989, as also sections 148 to 152 are substantially different from provisions as stood prior to such substitution. 14. Under old provisions of section 147, separate clauses (a) and (b) laid down circumstances under which income escaping assessment for past assessment years could be assessed or reassessed. To confer jurisdiction under section 147(a) two conditions were required to be satisfied: firstly, Assessing Officer must have reason to believe that income, profits or gains chargeable to income-taxable have escaped assessment, and secondly, he must also have reason to believe that such - 12 - escapement has occurred by reason of either omission or failure on part of assessee to disclose fully or truly all material facts necessary for his assessment of that year. Both these conditions are conditions precedent to be satisfied before Assessing Officer could have jurisdiction to issue notice under section 148 read with section 147(a). But under substituted new section 147, existence of only first condition would suffice. In other words, if Assessing Officer for whatever reason has reason to believe that income has escaped assessment, it confers jurisdiction to reopen assessment. It is, however, to be noted that both conditions must be fulfilled, if case falls within ambit of proviso to section 147 as stood after amendment. 15. Thus as per amended provisions of sec.147, for re-opening of assessment there should be reason to believe that income chargeable to tax had escaped assessment for any assessment year. Such reason to believe can be raised in any manner and is not qualified by pre-condition of faith and true disclosure of material facts by assessee as contemplated in pre-amended section 147(a) and Assessing Officer can, under amended provisions, legitimately re-open assessment in respect of income which had escaped assessment. Viewed in that angle, power to re- assessment is much wider under amended provisions and can be exercised even after assessee has disclosed fully and truly all material facts. Reasons which may weigh with Assessing Officer may be result of his own investigation and may also come from any source that he considers reliable. Forming of this belief is administrative decision to be arrived at in judicial manner. Assessing Officer is required to act fairly and judiciously. His belief must have substance and must not be shadow. There is no dispute to well settled legal proposition that such belief - 13 - should be bona fide and should not be based on vague, arbitrary and non- specific information. 16. In case of Rajesh Jhaveri (supra), Hon'ble Supreme Court categorically dealt with reopening of assessment with regard to mode under which assessment has been done, either by way of intimation u/s 143(1) or by way of scrutiny assessment order u/s 143(3). It was observed that there is contextual difference between two expressions in context expressions are used. word assessment is used as meaning something computation of income , sometimes determination of amount of tax payable and sometimes whole procedure laid down in Act for imposing liability upon tax payers. It was further observed that in scheme of things, intimation u/s 143(1)(a) cannot be treated to be order of assessment. This distinction is also well brought out by statutory provisions as they stood at different points of time, prior to 1st April, 1989, u/s 143(1)(a), AO had to pass assessment order if he decided to accept return, but under amended provisions, requirement of passing of assessment order has to be dispensed with and instead of it intimation is required to be sent. It was further elaborated that under first proviso to newly substituted Section 143(1) w.e.f. 1st June, 1999, except as provided in provision itself, acknowledgement of return shall be deemed to be intimation u/s 143(1), where no sum is payable by assessee or where no refund is due to him. It was categorically observed that acknowledgement is not done by Assessing Officer, but by ministerial staff. Under these circumstances, it cannot be said that assessment has been made by ministerial staff. intimation u/s 143(1)(a) is deemed to be notice of demand u/s 156. For apparent purpose of making machinery provision relating to recovery of tax - 14 - applicable. By such application only recovery indicated to be payable in intimation becomes permissible and nothing more can be inferred from deeming provision. Thus, there is no assessment u/s 143(1)(a) of Act. 17. It is crystal clear from above decision of Hon'ble Supreme Court which is having binding effect on us under Constitution of India that processing of return u/s 143(1) does not amount to assessment order. Therefore, neither any opinion is formed nor there is question of change of opinion. Since intimation u/s 143(1) is not assessment, there is no question of any new material to empower AO to reopen assessment u/s 147, when there is reason to believe that there is escapement of income. In instant case before us, return was processed u/s 143(1) and no assessment was framed by issue of notice u/s 143(2). Under these facts and circumstances, proposition of law laid down by Hon'ble Supreme Court in case of Rajesh Jhaveri is clearly applicable. It is pertinent to mention here that Section 147 authorizes AO to assess or reassess income chargeable to tax, when, he has reason to believe that income for any assessment year has escaped assessment. In instant case, observation of AO to effect that by claiming returned income under wrong head, assessee has claimed excess depreciation, which is not permissible in case of income is assessable under head Income from House property . This is sufficient reason to believe that income of assessee has escaped assessment, which is sufficient to empower AO to reopen assessment by issue of notice u/s 148. Hon'ble Supreme Court in case of Rajesh Jhaveri has further observed that under earlier provisions of Section 147(a), two conditions were required to be satisfied, firstly, AO must have reason to believe that income, profits or gains chargeable to tax have escaped assessment and , - 15 - secondly, he must also have reason to believe that such escapement has occurred by reason of either omission or failure on part of assessee to disclose fully and truly all material facts necessary for assessment. Both these conditions were required to be satisfied before AO could have justification to issue notice u/s 148 read with Section 147(a), but under substituted Section 147, existence of only first condition suffices, meaning thereby if AO has reason to believe that income has escaped assessment, it confers valid jurisdiction to reopen assessment. It is pertinent to mention here that both conditions must be fulfilled if case is within ambit of proviso to Section 147. Thus, if more than four years have been passed after completion of assessment u/s 143(3), no reopening can be made unless there is failure on part of assessee to disclose fully and truly all material facts in return of income. It was concluded by Hon'ble Supreme Court that so long as ingredients of Section 147 are fulfilled, AO is free to initiate proceedings u/s 147 and failure to take steps u/s 143(3) will not render AO powerless to initiate reassessment proceedings even when intimation u/s 143(1) had been issued. 18. In view of above discussion, we do not find any infirmity in order of CIT(A) for confirming action of AO for reopening assessment when same was made with reference to intimation passed u/s 143(1). 19. Next ground taken by assessee relates to CIT(A) s action for holding leave and licence income as chargeable under head Income from house property instead of head Business income . 20. With regard to charging of leave and licence as income from house property, we found that office premises of assessee was given on rent and rental income was offered as income from business against - 16 - which various expenditure including expenditure under head Depreciation on Building was claimed. issue as regard taxing of income relatable to property has been elaborately discussed by Hon'ble Calcutta High Court in case of Shambhu Investment Private Limited, 249 ITR 47, which has been subsequently affirmed by Hon'ble Supreme Court and reported at 263 ITR 143. It was held by Hon'ble Court that while taxing income in respect of immovable property what is to be seen is what was primary object of assessee while exploiting property. If it is found by applying such test that main intention is letting out property or any portion thereof, same must be considered as rental income or income from house property. However, if it is found that main intention is to exploit property by way of complex commercial activity, in that event, it must be held that it is assessable as business income . In instant case before us, after going through terms and conditions of leave and licence agreement, we found that intention of parties to said agreement are clear and unambiguous by which assessee has allowed second party to enjoy said property upon payment of comprehensive monthly rent. By said agreement, prime object of assessee was to let out said property with various rights to use facility attached to said property. Composite rental income was charged covering all facilities. Thus, main intention was to let out property on rent rather than exploitation of property by way of complex commercial activity. rental income was, therefore, assessable as income from house property. 21. In support of its contention that rental income is to be assessed as income from business, ld.Authorized Representative highly relied on decision of Hon'ble Supreme Court in case of Karnani Properties Limited, 82 ITR 547. In this case, on basis of finding recorded by - 17 - Tribunal to effect that income was derived by assessee, owner of flats and shops, from services rendered in organized and systematic manner with help of large staff for same, income was assessable as business income. When decision of Tribunal was reversed by Hon'ble High Court, in appeal filed by assessee before Hon'ble Supreme Court, it was held that when question referred to High Court speaks of On facts and circumstances of case , it means facts and circumstances found by Tribunal and not facts and circumstances that may be found by High Court. It was observed that neither High Court nor Hon'ble Supreme Court has jurisdiction to go behind or to question statement of facts made by Tribunal and that statement of case is binding on parties. Under these facts and circumstances, Hon'ble Supreme Court affirmed finding of Tribunal to effect that since activity was carried on systematically and in organized manner, income was assessable as income from business . 22. In instant case, facts are quite distinguishable, wherein terms and conditions of lease and licence agreement clearly indicate that income was attached to immovable property, which was clearly assessable under head Income form house property . 23. ld.Authorized Representative relied on decision of I.T.A.T. Calcutta Bench in case of PFH Mall & Retail Management Limited, 110 ITD 337, wherein it was held that income derived by Shopping Malls, Departmental Stores and business centres of properties owned by it and let out to various users which were providing host of service/facilities/amenities in said Mall/Business Centres, income therefrom was assessable as Business income . We had carefully gone through this decision of Tribunal wherein facts were very peculiar - 18 - and assessee company had developed shopping mall/business centres on properties owned by it, same were let out to various users, alongwith letting out assessee has also provided host of services/facilities/amenities in said malls/business centres. By going through peculiar terms and conditions of agreement so entered with use of shops, malls etc., Tribunal found that basic intention of assessee was commercial exploitation of its properties by developing them as shopping mall/the business centres and, therefore, income derived therefrom was assessable as business income. Accordingly, action of CIT u/s 263 was set-aside, who has held that order of AO was erroneous in so far as prejudicial to interests of revenue for taxing such rental income as income from business. 24. However, facts in instant case, are distinguishable and assessee has not undertaken any development of shop, malls/ business centres and also not provided host of service and amenities as were provided in case discussed by Hon'ble Calcutta Bench (supra). It is pertinent to mention here that case laws relied on by ld. AR in case of Aipta Marketing (supra) to support his legal plea of reopening u/s 147 without fresh material before AO, supports view of AO for taxing property income as income from House property. Accordingly, we follow proposition of law laid down by Hon'ble Supreme Court in case of Shambhu Investment and confirmed action of lower authorities for taxing same as income from house property. 25. In view of above discussion respectfully following latest decision of Hon'ble Supreme Court reported at 249 ITR 47, proposition of law laid down therein are applicable to facts of instant case, we confirm - 19 - action of ld. CIT(A) for taxing rental income as income from house property . 26. assessee has also taken ground with regard to charging of interest u/s 234D on excess refund determined by reassessment order u/s 147 of Act. For this purpose, ld.Authorized Representative placed reliance on decision of I.T.A.T., Special Bench in case of Ekta Promoters, 305 ITR 1, which was subsequently affirmed by Hon'ble Delhi High Court while deciding appeal in case of M/s. Mitsubishi Corporation, order dated August 30,2010, wherein it was held that interest u/s 234-D, is not chargeable for period prior to assessment year 2004-05. Both orders were also placed on record. 27. We have carefully considered rival contentions and have gone through orders of authorities below. AO has charged interest u/s 234D which has been challenged by assessee before ld. CIT(A) who has confirmed same. issue with regard to charging of interest u/s 234D, for period falling prior to assessment year 2004-05 is no more res integra in view of decision of I.T.A.T. Special Bench in case of Ekta Promoters, (supra), which was subsequently affirmed by Hon'ble Delhi High Court in case of Mitsubishi Corporation vide order dated August 30, 2010. No contrary decision was brought to our notice by Department. Accordingly, respectively following decision of I.T.A.T. Special Bench we hold that no interest is chargeable u/s 234D prior to assessment year 2004-05. As all assessment years under consideration are prior to assessment year 2004-05, no interest is chargeable u/s 234D. Accordingly, this ground of appeal is allowed in all years under consideration. - 20 - 28. Ground with regard to setting off business loss holding it to be capital loss, was not pressed by ld.Authorized Representative. same is, therefore, dismissed in limine in relevant years under consideration. 29. ground taken with regard to allowing interest u/s 244A is consequential in nature. 30. Ground was also taken by assessee with regard to initiation of penalty proceedings u/s 271(1)(c) of Act with regard to income escaping assessment on account of taxing same under head income from house property. AO has initiated penalty proceedings for income escaped assessment due to taxing of rental income as income from house property. However, since no penalty has been levied and it was just initiation, no interference is required by Tribunal at this juncture. 31. In result, all appeals of assessee are allowed in part in terms indicated hereinabove. This order has been pronounced in open court on 29th October, 2010. (JOGINDER SINGH) ( R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 29.10.2010. CPU* M/s Kriti (India) Ltd v. JCIT Cir 4