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2020 (3) TMI 783 - AT - Income TaxReopening of assessment us 147 - waiver of principal component under O.T.S scheme which was already considered by the appeal order passed by the learned CIT(A) against the original assessment order and allowed in assessee’s favour - HELD THAT:- It is clear from the assessment order that the assessment was reopened by issue of notice u/s 148 on 19.03.2012 to disallow the expenditure as the assessee had not carried on any business activity during the year. The claim of expenditure, therefore, was not in relation to the income offered - In the re-assessment made under Section 143(3) r.w.s.147 dated 18.03.2013, the A.O., inter alia made disallowance of ₹ .2,23,92,916/- towards interest and finance charges and waiver of principal component under O.T.S Scheme. Reason for reopening the assessment was for assessing the expenditure claimed at ₹ 3,83,62,305/- and not to consider the waiver of principal component under O.T.S Scheme. Since notice under Section 147 was issued within four years from the end of the relevant assessment year, in the absence of any material/evidence from the assessee’s side that the issues on which reopening was made was already examined and considered by the A.O., it is not possible to hold that re-opening of the assessment was invalid. Therefore, corresponding grounds of assessee fail. There is merit in the assessee’s plea that in the re-assessment made the A.O. should not have made addition towards waiver of principal component under O.T.S Scheme, which was originally proposed by the A.O for an enhancement before the learned CIT(A) against the original assessment order, which was duly considered by the learned CIT(A) and rejected it in his order, which was ultimately sustained by the ITAT. Therefore,, the A.O. should not have once again added such sum in this re-assessment order. Hence, the A.O. is directed to delete that addition. With regard to assessee’s plea that the expenditure disallowed in respect of interest and finance charges paid is allowable under Section.43B of the Act etc., it is clear from the Appellate Authorities order that the assessee pleaded that it has carried on various activities, which required to upkeep the business infrastructure and to maintain business sustainability etc. The assessee has also pleaded that it had paid the interest and finance charges, thereafter only it got the one time settlement, part of which was already assessed. Interest and finance charges actually paid by the assessee should be allowed under Section 43B. On this issue, it appears that the facts and associated circumstances have not been properly examined by the lower authorities. Therefore, we deem it fit to remit this issue back to the file of A.O. for a fresh examination, to verify as to whether the assessee continued its business or not during the period relevant to assessment year, why and how the assessee has incurred the impugned interest and finance charges whether such expenditure was connected to its business or other sources of income, whether if the interest and finance charges were paid during the year, whether it is allowable under Sections 28 to 43 of the Act or under the head “other sources” etc., and then decide the issues in accordance with law. The assessee shall place relevant materials in support of its contentions before the A.O. and comply with the requirements of the A.O. in accordance with law. The A.O. is also free to conduct appropriate enquiry as deemed fit. The A.O. after affording effective opportunity to the assessee shall decide the matter on merits. - Appeal of assessee is partly allowed for statistical purposes.
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