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2022 (6) TMI 21 - AT - Income TaxReopening of assessment u/s 147 - eligibility of reasons to believe - change of opinion - interest income earned on its fixed deposits to be brought to tax under the residuary head of income, i.e, income from other Sources - HELD THAT:- We find substantial force in the claim of the Ld. AR that the reopening of the concluded assessment of the assessee company was prompted on the basis of a mere ‘change of opinion’ on the same set of facts as were there before the A.O while framing the original assessment vide his order passed u/s. 143(3), dated 23.12.2011. As stated by the Ld. AR, and rightly so, it is a matter of fact borne from record, that the A.O in the course of original assessment proceedings had vide his query letter issued a/w. notice u/s. 142(1), dated 10.10.2011 at Sr. No.20 specifically called upon the assesee to furnish details of its interest income. In reply, we find that the assessee had furnished complete details of the interest earned on the short term deposit. Backed by the aforesaid facts, we are of a strong conviction, that the A.O in the course of the regular assessment proceedings after calling for the requisite details had found no infirmity in the claim of the assessee company that prior to commencement of its commercial operations, the interest earned on the funds that were received by it as share capital and temporarily parked as short term fixed deposits with the banks, being in the nature of a capital receipt was to be reduced from the pre-operative expenses. As stated by the Ld. AR, and rightly so, in the absence of any fresh tangible material coming to the notice of the A.O after the original assessment proceedings had culminated vide his order passed u/s. 143(3), dated 23.12.2011, the reopening of its case on an issue which had been deliberated upon by him in the course of the regular assessment proceedings would be nothing short of taking recourse to re-assessment proceedings on the basis of a mere ‘change of opinion’, which as observed by us hereinabove is not permissible under law. Thus such a substitution of a view of a successor A.O cannot form a justifiable basis for reopening the case of an assessee. We find that the Hon'ble Supreme Court in its landmark judgment in the case of CIT Vs. Kelvinator of India [2010 (1) TMI 11 - SUPREME COURT] had observed, that the case of an assessee cannot be reopened on the basis of a mere “change of opinion". At this stage, we may herein observe, that as per the mandate of law, even where a concluded assessment is sought to be reopened by the A.O within a period of 4 years from the end of the relevant assessment year, it is must that the A.O has fresh material or information with him, that had led to the formation of belief on his part that the income of the assessee chargeable to tax has escaped assessment. Thus quash the assessment framed by the A.O u/s. 143(3)/147 - Decided in favour of assessee. Correct head of income - characterization of receipts - interest income on funds that were received by way of share capital and were temporarily parked as short term fixed deposits with the banks - whether the interest income earned by the assessee company on the funds that were received by it by way of share capital and were temporarily parked as short term deposits with the banks, was rightly claimed by the assessee prior to commencement of its commercial operations as a capital receipt and reduced from the pre-operative expenses i.e project cost or, was liable to be assessed as its income under the residuary head of income, i.e, income from the sources, as claimed by the department? - HELD THAT:- As relying on Indian Oil Panipat power Consortium Ltd [2009 (2) TMI 32 - DELHI HIGH COURT] the interest income received by the assessee prior to commencement of its commercial operations on the amount of share capital that was temporarily parked as short term deposits with the banks could not have been brought to tax as its income from other sources and had rightly been claimed by the assessee as a capital receipt which was reduced from its pre-operative expenses, i.e, from the cost of the project. We, thus, not being able to persuade ourselves to subscribe to the view taken by the lower authorities set-aside the order passed by the CIT(Appeals) and, vacate the addition of interest income made by the A.O by treating the same as income of the assessee from other sources. - Decided in favour of assessee.
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