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2018 (9) TMI 781 - AT - Income TaxReopening of assessment - Interest expenditure on External Commercial Borrowings claimed as a deductible expenditure - share application money pending allotment which includes ECB and interest accrued thereupon has been issued and shares allotted in A.Y. 2008-09 - Held that:- With the assistance of assessee, we have gone through the profit and loss account of the assessee company for the past year as submitted in paper book. The amount sought to be disallowed was debited in the financial year 2006-07 which is not at all relevant for the assessment year 2008-09 in which assessment is sought to be done. No interest whatsoever has been debited in the assessment year 2008-09. Hence, in our considered opinion, there is no question at all of disallowing the interest as capital expenditure which has not at all been debited in the impugned assessment year. Since, there is no debit of interest in the current assessment year, there is no question whatsoever of disallowing the same on the ground that there has been escapement of income. When the amount in question has not been debited in the profit and loss account as expenditure, nor the assessee has claimed any deduction and the assessee is following mercantile system of accounting, there is no question of disallowing the deduction which has not at all been claimed by the assessee. As regards the merits of the case, on similar analogy, since the impugned expenditure was not incurred during the current year, there is no question of disallowing the same in the current assessment year. As we have already given a finding that there was no question of making a disallowance of interest expenditure for whatever reason as the said expenditure was not at all debited during the year, the assessee succeeds on both the counts of lack of validity of reopening as well as merits of addition. In this regard, we are not inclined to accede to DR's request that a direction should be given for making the addition in earlier assessment year. We are of the opinion that in doing so, we shall be exceeding our jurisdiction. The ITAT is not mandated to exercise revisionary powers which are vested with CIT u/s. 263 to cure fatal errors and omission on the part of the Revenue authorities. - Decided in favour of assessee.
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