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TMI Blog2012 (8) TMI 392X X X X Extracts X X X X X X X X Extracts X X X X ..... ad in law without appreciating the facts that assessee failed to bring the entire facts to the notice of Assessing Officer during the original course of scrutiny proceedings u/s 143(3) and therefore, there is a failure on the part of assessee. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in deleting the disallowance of Rs. 10,36,210/- being interest expenses not capitalized holding that only requirement is that of utilization of fund for the purpose of business and therefore, ignoring the facts that the said interest was paid on the borrowed funds, which were utilized for the purpose of obtaining capital assets." Since, both grounds are inter-connected, they are being decided together. 3. Relevan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c contention of the assessee is that interest should be capitalized on the basis of addition to WIP. I have carefully gone through the arithmetic calculation of the assessee and I am of the opinion that the submission of the assessee is acceptable as per the arithmetic calculation submitted. Total income determined vide order u/s 154 dated 17.3.2008. Rs. 6,57,669/- Add: Addition made as per discussion above Total Income.................. Rs. 10,36,216/- Rs. 16,93,885/- Rounded off to................ Rs. 16,93,885/- 6. In appeal, the ld CIT (A) has accepted assessee's contention on validity of 'reopening' or assessment as also on merits. On the issue of legality, it has been held as under: "I have considered the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tify the reopening of the assessment and also fail to point out as to what was the failure on the part of the appellant to disclose all material facts fully and truly require for the purpose of reopening of assessment. So far as the appellant is concerned, the appellant has in good faith filed all the requisite information and details at the time of original assessment and the appellant has in no way withheld any information and details at the time of original assessment and the appellant has in no way withheld any information required for the completion of assessment at the first stage itself. In my considered opinion, I feel that there was no failure on the part of the appellant to disclose fully and truly all the necessary information. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able with him during original assessment proceedings. Besides this basis of reason to believe, there is nothing on record to show that there is a failure to disclose fully and truly the material facts by the appellant. It is therefore, seen that the reopening of the assessment is not in accordance with the proviso to sec. 147 of the Act inasmuch as that no failure is seen on the part of the appellant that the appellant failed to disclose all material facts necessary for completion of assessment. The AO has not brought any material facts on record to prove this fact. No assessment can be reopened on the basis of change of opinion. The basis for escapement of income in an assessment beyond four years is to be based only on the failure on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and therefore the claim of interest u/s 36(1)(iii) is justified. The reliance of the appellant on the Supreme Court decision in the case of Dy. CIT vs. Core Health Care Ltd. reported in 298 ITR 194 (SC) is a well placed reliance and the ratio of this judgment is fully and squarely applicable to the facts of the appellant's case. Thus I find that even on merit the disallowance cannot be upheld. The addition, therefore deleted. The appellant thus succeeds on both the grounds." 7. The ld DR in support of the issues has argued that in the instant case, the assessee's income had escaped assessment as interest in excess @ 66% of Rs. 74.25 lakhs as capital expenditure u/s 43(1) Explanation 8 of the Act as it was only in this view of the facts tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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