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TMI Blog2011 (4) TMI 869X X X X Extracts X X X X X X X X Extracts X X X X ..... in appeal before the CIT(A). 4. At the time of hearing before us, the learned representatives of the parties have agreed that this issue is covered by the Hon'ble jurisdictional High Court in the case of Godrej and Boyce Mfg. Co. Ltd., [2010] 328 ITR 81 (Bom.) wherein the Hon'ble Court held as under:- "That the provisions of rule 8D of the Rules which have been notified with effect from March 24, 2008, would apply with effect from assessment year 2008-09. Even prior to assessment year 2008-09, when rule 8D was not applicable, the AO had to enforce the provisions of sub-section (1) of section 14A. For that purpose, the AO is duty bound to determine the expenditure which has been incurred in relation to income which does not form part of the total income under the Act. The AO must adopt a reasonable basis or method consistent with all the relevant facts and circumstances after furnishing a reasonable opportunity to the assessee to place all germane material on the record. The proceedings for assessment year 2002-03 would stand remanded to the AO. The AO should determine as to whether the assessee had incurred any expenditure (direct or indirect) in relation to dividen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 4,68,34,997/- from provisions for contingencies. Before the learned CIT(A) the assessee filed written submissions wherein it was stated that in view of disclosure of full facts with regard to the nonconvertible debentures written off as irrecoverable as brought out in paragraph 4 of the original assessment order, therefore, the proceedings initiated u/s 147 are not valid. It was further stated that since there being no change in the relevant facts, any proposal to withdraw or disallow the deduction under proceedings u/s 147 would tantamount to a mere change of opinion. For this contention, the assessee placed reliance on various case laws including the judgment of the Hon'ble Delhi High Court in the case of CIT vs. Kelvinator of India Ltd., 256 ITR 1. The learned CIT(A) following the decision of the Tribunal in the case of CIBA India P. Ltd., vs. ITO [2009] 31 DTR 374 wherein the claim for deduction u/s 35(1)(iv) was allowed in the original assessment order. Later the assessee found to be engaged in scientific research not for itself but for its group companies. It was held that reopening was valid by holding the condition to disclose fully and truly all material facts nece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee had escaped assessment. The learned CIT(A) has also not disputed this fact that the assessee had not disclosed fully and truly all the material facts necessary for the assessment. According to the learned CIT(A) reopening is valid even if the assessee has disclosed fully and truly all the material facts that are necessary for assessment if the reopening is within 4 years. In our considered opinion this finding of the CIT(A) is contrary to the law laid down by the Hon'ble Supreme Court and also the Hon'ble Jurisdictional High Court. The Hon'ble Supreme Court in the case of CIT vs. Kelvinator India Ltd., 320 ITR 561 held that after 1st April, 1999 the Assessing Officer has power to reopen the assessment u/s 147 of the Act provided the Assessing Officer has reason to believe that the income has escaped assessment and there is a tangible material to come to the conclusion that there is an escapement of income. Mere change of opinion cannot per-se be the reason to reopen the assessment. In the similar circumstances, the Hon'ble jurisdictional High Court in the case of Asian Paints Ltd. vs. DCIT and Others, 308 ITR 195 has held that issuance of notice u/s 148 of the Act for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for the purpose of the business of the company i.e. lending for purchases or construction of residential house. The Assessing Officer noted that the claim that all the borrowings had only been utilized for the advancing loans for purchase and construction of residential house only, had not been substantiated by giving statement of utilization of the specific borrowings, the statement of accounts prepared by the assessee included item of expenditure which had been utilized for earning income including income classified as exempt. The major source of the funds for the assessee was borrowings on which interest was paid. Accordingly, the Assessing Officer worked out by apportioning the interest expenditure of Rs. 652,35,72,508/- to all the activities of the assessee in proportion to the income earned from each activity. Thus, the disallowance was worked out u/s 14A at Rs. 2,92,15,306/-. Aggrieved, the assessee carried the matter in appeal before the CIT(A). 15. Before the CIT(A), the assessee filed written submissions wherein, inter-alia, it was stated that whatever tax free dividend accrued to the assessee was attributable to short term investments made out of internal funds ..... X X X X Extracts X X X X X X X X Extracts X X X X
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