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2017 (10) TMI 103 - HC - Income TaxReopening of assessment - reasons to believe - depreciation under section 32(iia) - written off inventory treating them as non moving and absolute in nature - Held that:- The Revenue's contention that the Assessing Officer had not made specific mention of these issues in the assessment order also did not find favour of the Tribunal observing that the assessee would have no control over the manner in which the Assessing Officer would treat such issues in the order of assessment after full scrutiny. With respect to written off inventory there was no dispute that such issue did not come up for consideration before the AO in the original assessment. However, on this ground the Tribunal entered into the merits and held that the same could not have formed the basis for making any additions. Without so elaborating, the Tribunal examined the question whether on the third ground, the Assessing Officer could have formed a belief that income chargeable to tax had escaped the assessment. The Tribunal ultimately held it against the Revenue. If we peruse the order in this respect more minutely, the issue pertains to offering certain interest income to tax. The assessee had given a loan to one GSIL but had not received interest on such loan for a long time, perhaps on the ground that there was no interest stipulation in the loan document. In the past, the assessee would offer notional interest on accrual basis. However during the period relevant to the assessment year in question, the issue came to be referred for arbitration. The Board of Directors of the assessee company therefore, passed a resolution not to offer the interest income to tax in view of such uncertainty in its receipt itself. The Tribunal noted that much later the arbitral award was available holding the assessee entitled to interest at the rate of 11.5%. The Tribunal therefore, found that the assessee was justified in not accounting for such interest in the return when there was no stipulation for interest in the agreement between the parties. - Decided in favour of assessee.
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