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2019 (9) TMI 382 - AT - Income TaxReopening of assessment u/s 147 - disallowance of expenditure claimed u/s 35D - HELD THAT:- AO has recorded reasons for reopening of the assessment on the basis of tangible material, as per which, income chargeable to tax had been escaped assessment within the meaning of section 147 on account of excessive claim of deduction u/s 35D in respect of share issue expenses. We, further noted that it is not a statutory requirement that the reasons to belief should be proved to the hilt before reopening of assessment. The requisite condition is that the AO should have reason to believe that income chargeable to tax has escaped assessment. In this case, the AO had reasons to believe that deduction claimed u/s 35D was excessive and formation of belief by the AO is within realm of subjective satisfaction as held by the Hon’ble Supreme Court in the case of ACIT vs Rajesh Jaweri Stock Brokers Pvt Ltd. [2007 (5) TMI 197 - SUPREME COURT] On perusal of facts available on record, we find that the AO has formed reasonable belief of escapement of income, on the basis of tangible materials in his possession, which suggest escapement of income within the meaning of section 147. Therefore, we are of the considered view that there is no merit in the argument taken by the assessee. Reopening after expiry of four years from the end of the relevant assessment year - HELD THAT:- We find that the assessee, neither provided any note in its financial statements explaining, the computation of deduction, nor the AO has examined the issue, at the time of original assessment proceedings u/s 143(3). Therefore, we are of the considered view that there is no merit in arguments taken by the assessee, in light of proviso to section 147 of the I.T.Act, 1961. Insofar as various case laws relied upon by the assessee, we find that although assessee has relied upon various case laws, but none of case laws are directly applicable to facts of assessee case and hence, all case laws relied upon by the assessee have been rejected. CIT(A) was right in upholding reopening of the assessment in the given facts and circumstances of this case. Hence, we are inclined to uphold order of the Ld.CIT(A) and reject ground taken by the assessee challenging reopening of assessment. Disallowances of excess claim of deduction u/s 35D - consequent enhancement u/s 251 - HELD THAT:- The issue on merit because, the Hon’ble Supreme Court in the case of Berger Paints India Ltd.vs CIT [2017 (3) TMI 1531 - SUPREME COURT] held that premium collected by assessee company on its subscribed share capital is not ‘capital employed’ in business of company within the meaning of section 35D of the Act, so as to enable assessee to claim deduction of said amount. We find that the Hon’ble Supreme Court has settled the issue and held that for the purpose of capital employed, share premium collected on issue of share capital is not part of capital employed. Therefore, we are of the considered view that the AO, as well as the CIT(A) were right in re-computation of eligible deduction u/s 35D by excluding share premium from capital employed and accordingly, we are inclined to uphold order of the Ld. CIT(A) and reject ground taken by the assessee.
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