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2017 (5) TMI 108 - AT - Income TaxReopening of assessment - disallowance u/s 43B as the said amount of interest was payable and had not been actually paid before the due date of filing of return of income - Held that:- It is seen that there is a specific finding as well as observation in the impugned order that during the course of the original assessment proceedings the Assessing Officer in his detailed questionnaire had required the assessee to furnish all the details of interest payment as appearing in the balance sheet. In response thereof, the entire details were furnished by the assessee along with the details of liabilities and also the interest accrued but not due and interest payable as appearing in the balance sheet. Based on such scrutiny assessee’s claim was allowed by the AO. Once all these facts relating to interest and claim of deduction, both in relation to interest paid and interest payable were there before the Assessing Officer during the time of the original assessment proceedings, then without there being tangible material coming on record, it cannot be held that, there is any failure on the part of the assessee to disclose fully and truly all material facts necessary for the purposes of assessment. The impugned notice u/s 148 for reopening the assessment is purely based on material already on record which has been also considered by the Assessing Officer and once that is so, then ostensibly, reopening u/s 147 is not permissible in law as it amounts to “change of opinion”. Not only that, as submitted by the ld. counsel and also noted by the Learned CIT(Appeals), the amount of interest which is a subject matter of reassessment in the impugned proceedings was not payable to any Public Financial Institution or any Scheduled Bank, albeit out of total interest accrued but not due for sums amounting to ₹ 184.66 lakhs, interest aggregating to ₹ 44.33 lakhs was paid before filing of the return on which deduction was allowed u/s 43B and balance interest payable of ₹ 140.33 lakhs was unpaid liability on cumulative FDR (Rs. 137.90 lakhs) and other interest liability (Rs. 2.41 lakhs) and therefore, prima facie such interest amount was not hit by the provision of section 43B. On this count also, the Assessing Officer was not justified for reopening the assessment u/s 147 as there could not be any prima facie “reason to believe” based on any tangible material. Thus, the order of the Learned CIT(Appeals) holding that reassessment proceeding is bad in law is upheld - Decided in favour of assessee Addition u/s 36(1 )(iii) - interest free loan given to subsidiary - Held that:- Once it is found that the assessee company had huge surplus funds then it can be safely presumed that any such advance or interest free loan given to subsidiary is out of such surplus funds only unless the department brings on recrd that the surplus funds have been utilized for some other purposes and borrowed funds have been diverted to subsidiary/sister concern. The sole reliance placed by the Assessing Officer on the judgment of CIT vs. Abhishek Industries Ltd. (2006 (8) TMI 123 - PUNJAB AND HARYANA High Court) for making the disallowance, now does not hold ground in view of the judgment in the case of Munjal Sales Corporation vs. CIT (2008 (2) TMI 19 - Supreme Court ), wherein the judgment of CIT vs. Abhishek Industries Ltd. (supra) has been reversed and it has been specifically held by the Hon’ble Apex Court that so long as funds have been given to the sister concern out of interest free funds, no disallowance u/s 36(1)(iii) can be made. Thus, without their being material to controvert the finding of the Learned CIT (Appeals) that advance standing in the name of the subsidiary is out of assessee’s own interest free funds, we do not find any reason to deviate from such a finding of fact. Accordingly, the order of the Learned CIT (Appeals) is upheld - Decided in favour of assessee
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