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2023 (8) TMI 818 - AT - Income TaxReopening of assessment u/s 147 - Disallowance u/s 43B - payment of interest on conversion of loan into equity shares - addition made as it is not an expense which has been actually paid and therefore same is not allowable u/s 43B - HELD THAT:- It is an admitted fact as per the Return of Income filed by the assessee for the AY 2011-12 resulting in a loss under the normal provisions of the Act and Book Profit u/s. 115JB and the assessee paid the MAT tax. Pursuant to the Ld. CIT(A) order, against the above assessment order which has resulted in a revised loss and no change in the computation of Book Profit u/s. 115JB of the Act. When the re-assessment was done by the Assessing Officer there is no tax liability in the hands of the assessee since the MAT tax was higher than the normal computation of tax, thereby it appears the reassessment itself is invalid, since there is no income chargeable to tax has escaped assessment. This view of ours is supported by case of M/s. Motto Tiles (P.) Ltd. [2016 (6) TMI 381 - GUJARAT HIGH COURT] which has followed M/s. India Gelatine and Chemicals Ltd. [2015 (2) TMI 808 - GUJARAT HIGH COURT] Thus we are of the considered view that income chargeable to tax has not escaped assessment and the reopening of assessment by issuing notice u/s. 148 is not sustainable in law. Disallowance u/s. 43B deleted by CIT(A) by following case of Rathi Graphics Technologies Ltd [2015 (8) TMI 376 - DELHI HIGH COURT] and held that it is not a case where the interest liability has been converted into a loan or borrowing or debenture, where the liability to pay is deferred to a future date. This is a case of complete extinguishment of liability. Therefore the said conversion of interest into shares should be taken as actual payment u/s. 43B and thereby Ld. CIT(A) deleted the additions correctly - Decided against revenue.
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