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c) Re-opening on the basis of audit objection is on borrowed satisfaction and non-application of mind on the part of the Ld. AO.

1.1. Accordingly, the Ld. CIT(A) ought to have held that the action of the AO of not allowing deduction u/s. 36(1)(viii) on interest income of Rs. 24,11,75,651/- cared from HUDCO Bonds constitutes change of opinion and therefore, ought to have quashed / annulled the reassessment order dated 22.12.2019 passed w/s. 143(3) r.w.s. 147.

1.2. In view of the same, it is humbly prayed that the re-assessment initiated by notice dated 30.03.2019 u/s. 148 is illegal and bad-in-law and the order dated 22.12.2019 passed u/s. 143(3) r.w.s. 147 of the Act be quashed / annulled.

Without prejudice to the above and in the alternate

2. In the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in confirming the action of the AO of holding that the interest income of Rs. 24,11,75,651/- on HUDCO bonds is an investment income and not income earned on loan / advances provided in connection with the activities of providing long- term finance in terms of Explanation (h) to Section 36(I)(viii) of the Act. The Ld. ITAs No.9465 & 9466/Mum/2025 (A.Ys. 2012-13) 3 CIT(A) ought to have held that said income is eligible for determination of deduction u/s. 36(1)(viii).

ITAs No.9465 & 9466/Mum/2025 (A.Ys. 2012-13) 4

5. Subsequently, the notice under section 148 of the Act was issued on 30/03/2019, initiating the reassessment proceedings in the case of the assessee, after the expiry of 4 years from the end of the relevant assessment year, on the basis that the perusal of the record shows that while working deduction under section 36(1)(viii) of the Act, the assessee has considered the interest earned on HUDCO bonds as being eligible for the purpose of quantifying deduction. However, the assessee has failed to explain how the interest earned on these loans can be termed as profit derived from the business of providing long-term finance in India. In response to the notice issued under section 148 of the Act, the assessee filed its return of income on 26/04/2019, declaring a total income of INR 1,311,98,97,340. Upon receipt of the reasons recorded for reopening the assessment, the assessee filed its objections to the reassessment proceedings, which were disposed of vide order dated 11/11/2019.

6. Thereafter, statutory notices under section 143(2) and section 142(1) of the Act were issued and served on the assessee, seeking details regarding the allowability of deduction under section 36(1)(viii) of the Act in respect of interest earned on HUDCO bonds. After considering the submissions of the assessee, the Assessing Officer ("AO"), vide order dated 22/12/2019 passed under section 144 read with section 147 of the Act, held that as per the provisions of section 36(1)(viii), profits derived from long term finance lease can be considered for the purpose of allowing deduction and hence the receipts being interest earned on deposits are not in the nature of income from long term finance, and therefore, cannot be included in the total income ITAs No.9465 & 9466/Mum/2025 (A.Ys. 2012-13) 5 for the purpose of computing deduction allowable to the assessee under section 36(1)(viii) of the Act. In support of its conclusion, the AO placed reliance upon the decision in the case of M/s Tourism Finance Corporation, reported in (2010) 2 ITR (Trib.) 1 (Delhi) and National Co-operative Development Corporation, reported in (2012) 204 Taxman 6 (Delhi). Accordingly, the amount of INR 77,15,084, being the interest received on HUDCO bonds, which was claimed as a deduction under section 36(1)(viii) of the Act, was disallowed and added to the total income of the assessee.