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2016 (8) TMI 565 - HC - Income TaxReopening of assessment - disallowing the interest component - Held that:- A close scrutiny of the reasons recorded would find a mention of the act of assessee not disallowing the interest component on such shares for the assessment year 2005-2006 which according to the Assessing Officer was done to avoid detection. If case of the Assessing Officer was that interest on borrowed funds would be a legitimate deduction, as long as the shares were held as stock, but upon the shares being converted into investment, such interest was not allowable deduction and in that sense income chargeable to tax had escaped assessment, he has not built on such case in his reasons. We say so because in the computation of income chargeable to tax escaping assessment, he has referred to a sum of ₹ 389.03 crores which, as noted earlier, is the total of the profit computed by him upon transfer of shares of M/s. Sun Pharmaceuticals Industries Ltd. and transfer of shares of Zigma Software Ltd. This computation of the profit was based on the original cost of acquisition in the market value on the date of transfer. This figure of income escaping assessment does not in any manner refer to the interest expenditure. In other words, a brief reference to the assessee claiming interest expenditure for the assessment year 2005-2006 was confined only to suggest that the same was done to avoid detection during the scrutiny assessment and the Assessing Officer did not built his case any further in the context of income chargeable to tax having escaped the assessment. - Decided in favour of assessee.
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