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2020 (2) TMI 69 - AT - Income TaxReopening of assessment u/s 147 - expenditure not allowable under section 37 - HELD THAT:- There was no fresh tangible material before the Assessing Officer on the basis of which he formed his belief that income escaped in the case of the assessee. The only reason which has been recorded by the Assessing Officer is that it appeared to him that those expenses were not allowable under section 37 of the Act. In our opinion, this is mere change of opinion based on the suspicion without any tangible information that said expenditure was not allowable under section 37 of the Act. The Assessing Officer was not sure whether the said expenditure was not allowable under section 37 of the Act. We find that Hon’ble Gujarat High Court in the case of Nitin P Shah Vs DCIT, [2004 (12) TMI 64 - GUJARAT HIGH COURT] quashed the reopening of the assessment, where the Assessing Officer only stated that note attached to return of income indicated “possible escapement of income” and was not sure about it. In the order passed u/s 143(3) in the case of MGFD, the amount of ₹ 57 crores has been accepted by the AO as the share of revenue @ 60% of the hotel project at Jaipur. We, therefore, find merit in the submission of the ld. Counsel for the assessee that when the AO is not discarding the contribution of MGFD towards the completion of the project which is for the financing, implementation, providing brand name and other technical assistance for completion of the project, therefore, there is a commercial expediency in incurring the expenditure and the AO has no power to sit in the arm chair of the businessman and decide as to what would be the reasonable expenditure which is required to be incurred. - Decided in favour of assessee.
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