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2010 (1) TMI 730 - HC - Income TaxIncome escaping assessment u/s 147/148 - Interest paid on loans borrowed - interest free loans given to sister concerns - deduction under Section 36(1)(iii) of the Act - Held that:- Tribunal has wrongly assumed that reassessment was completed beyond four years from the end of the relevant assessment year and there is no failure on the part of the assessee to make full and true disclosure of material facts necessary for assessment as referred to in the first proviso to the Section. In this context Explanation 2 to Section 147 has to be referred to which exhaustively states certain cases where income chargeable to tax has escaped assessment. Under sub-clause (iii) of clause (c) of Explanation 2, if income has been made the subject of excessive relief under the Act, then the same is one of the circumstances of income escaping assessment. Therefore if excessive deduction of interest is allowed under Section 36(1)(iii) then certainly it is a case of income escaping squarely covered by Explanation 2 to Section 147 of the Act. - While deciding the issue in favor of revenue, matter remanded back to tribunal.
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