TMI Blog2012 (8) TMI 392X X X X Extracts X X X X X X X X Extracts X X X X ..... s escaped assessment attributable to failure on part of the assessee in disclosing material facts. As regards merits, it is found that borrowed amount is for the purpose of business within the meaning of sec. 36(i)(iii). There is no dispute that borrowed funds were used in business. Hence, we see no reason to interfere - Decided in favor of assessee. - ITA No. 2803/M/2011 - - - Dated:- 15-6-2012 - SHRI G.E. VEERABHADRAPPA, AND SHRI S.S.GODARA, JJ. Appellant by: Shri K.V. Ravi Namboodri Respondent by: Shri Vinay Sethy ORDER PER S.S. GODARA, JM: This revenue s appeal is directed against order dated 28.01.2011 passed by Ld. CIT (A) pertaining to AY 2000-01. 2. We reproduce hereunder the following substantive grounds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... more than the earlier was similarly there is an increase of loan during the year as well as increases the asset of the assessee to the tune of Rs. 857.57 lakhs. Out of this an amount of Rs.563.35 lakhs pertain to the capital work in progress or capital advance which was not put to use. This constituted 66% of the increase in asset. Therefore, 66% of the increase in the interest should have been disallowed, which amount to Rs. 74.25 lakhs, as capital expenditure u/s 43(1) explanation 8. I therefore have reason to believe that income to the extent of Rs. 74.25 lakhs has escaped assessment within the meaning of section 147 of the I.T. Act . 5. The assessee appeared in reopening process and prayed that the interest (supra) should be capitaliz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant is the basic ingredients for reopening of the assessment beyond four years. In the case of the appellant assessment was completed u/s 143(3) of the Act dated 17.3.2003 where the appellant had disclosed all the material facts fully and truly and requisite details as called for by the AO were also filed. The original assessment order was framed after perusing the material brought on record by the Assessing Officer. I find that the assessment has been reopened u/s 147 of the Act on the basis of material already available on record and which was collected by the AO during original assessment proceedings. No new material or no new facts have come to the notice of the AO pointing out the escapement of income which warranted the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng has been given by the AO. During the appellate proceedings the appellant has drawn my attention to various court decisions cited supra which are squarely applicable to the facts of the appellant s case. In this connection, the decision of AP High Court in the case of Sirpur Paper Mills Ltd vs. ITO (1978) 114 ITR 404 (AP) is noteworthy. In this case the Hon ble Court has held that the responsibility of the assessee is limited to the disclosure of all primary facts and nothing beyond. It is for the assessing authority to draw proper conclusion from these facts. If the conclusion drawn by the AO from the primary facts disclosed by the AO is erroneous, the AO cannot reopen the assessment merely on basis of change of opinion. The Allahabad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owed by arriving at the following findings:- I have considered the submission of the appellant very carefully and perused the assessment order. The appellant s has used borrowed funds for the purpose of its business and claimed deduction of interest u/s 36(1)(iii) of the Act as revenue expenditure. The AO disallowed a part of the interest amounting to Rs. 10,36,216/- holding that the same is incurred for acquiring capital assets. After going through the facts of the case, as well as the contentions of the appellant, I find that the requirement of law for obtaining funds is its use for the purpose of business only. Once the funds are borrowed and used for the purpose of business, the claim of interest has to be allowed u/s 36(1)(iii) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions in the Act i.e. sec. 147 as there is no failure on part of the assessee to disclose all facts necessary in assessment proceedings. Further, no income of the assessee had escaped assessment at the time of assessment order date 17.3.2003 u/s 143(3) of the Act as no new material has come in the notice of AO which could give rise to any scope for reopening. Hence, he has submitted that the same is mere change of opinion which is not permissible under the provisions of the Act. Further, he has strongly supported the CIT (A) s order in the light of case law reported as 298 ITR 194 (SC) DCIT vs. Core Health Care. 9. Ld. AR has strongly supported CIT (A) order in the light of DCIT vs. Core Health Care 298 ITR 194 (SC). 10. We have hear ..... X X X X Extracts X X X X X X X X Extracts X X X X
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