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2022 (4) TMI 626 - HC - Income TaxReopening of assessment u/s 147 - broken period interest should be treated as capital expenditure and not revenue expenditure - HELD THAT:- Having read the reasons, we are satisfied that reasons do not disclose any such non-disclosure. The reasons relied purely on the Judgment of Vijaya Bank Ltd. [1990 (9) TMI 5 - SUPREME COURT] and CBDT Circular and disallowance made in the assessment year 2010-11 for reopening. As regards, Judgment of Apex Court in Vjaya Bank [1990 (9) TMI 5 - SUPREME COURT] this Court has, in the case of American Express International Banking Corporation. [2002 (9) TMI 96 - BOMBAY HIGH COURT] distinguished Vijay Bank (supra) and held that broken period interest should be treated as revenue expenditure and not capital expenditure. An SLP against this Judgment in American Express International Banking Corporation (supra) was also dismissed by the Supreme Court. We note that during the assessment proceedings, Petitioner was called upon to, by a letter dated 16th September, 2010 from DCIT, to file complete details of broken period interest as on 31st March, 2008 and also explain as to why the same should not be taken into income and taxed accordingly. Petitioner filed its response by a letter dated 11th October, 2010 and informed DCIT that Petitioner has been consistently treating the broken period interest as revenue item - Thus where a query is raised and answer is given, even if there is no discussion in the assessment order, it should be treated as having been considered by the Assessing Officer during assessment proceedings. Even reliance on the disallowance made for assessment year 2010-2011 is of no assistance to revenue because ITAT has, in its order pronounced on 12th January, 2018, relying upon American Express International Banking Corporation (supra) and other Judgments, has held that broken period interest has to be treated as revenue expenditure and not capital expenditure. Therefore, the basis for forming reasons to believe has to fail. - Decided in favour of assessee.
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