TMI Blog2012 (12) TMI 449X X X X Extracts X X X X X X X X Extracts X X X X ..... d under Section 143(3). Thus no infirmity with the order of the Tribunal so far as it held that the reopening of proceedings under Section 147 and 148 was unwarranted for the assessment years 2004-05 and 2005-06 - in favor of the assessee. Interest on borrowed Capital - Held that:- On an analysis of the balance sheet it can be viewed that the assessee is able to demonstrate, utilization of funds for the purpose of the construction. Learned revenue authorities without specifying any reason refused to take cognizance of the balance sheet of the partners. The order of the Tribunal extensively considered the submissions made on behalf of the parties and its reasoning for all the years in respect of the interest claimed for deduction under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal in regard to the taxability of the amounts claimed by the assessee as payments made towards interest on borrowed capital for construction of the property in computing the property income; (c) the legality of the Tribunal s view in respect of the inapplicability of Section 45(4) for assessment year 2004-05. 2. The facts of the case briefly are that the assessee is a firm comprised of two partners which was allotted an industrial plot in Mohan Cooperative Industrial Estate (MCIE), Mathura Road, New Delhi and had constructed a building which was completed in the financial year 2000-01; it started getting rent for that assessment year 2001-02. It had obtained a term loan of Rs.4.33 crores from Canara Bank for 1997-98, for constru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23. We have duly considered the rival contentions and gone through the record carefully. The assessee has submitted a statement exhibiting the utilization of current loan taken from Vysya Bank which has been noticed by the Learned CIT(Appeals) and extracted by us in the foregoing paragraphs. The stand of the assessee is that if the balance sheet of the partners and of the assessee are read together then it would reveal that the assessee is not having any other fixed assets on the assets side except this building. In the balance sheet of the partners, they have shown liability towards borrowed funds as well as capital investment in the assessee s firm. The claim of the assessee that partners have borrowed funds, which was utilized ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e between the department and the assessee. The interest expenses incurred by the assessee on the borrowed funds if sued for the purpose of construction then deduction of such expenses will be admissible to the assessee under Section 24(b) of the Income Tax Act, 1961. The only dispute between the parties relates to the quantification of amounts used for the purpose of construction. On an analysis of the balance sheet, we are of the view that the assessee is able to demonstrate, utilization of funds for the purpose of the construction. Learned revenue authorities without specifying any reason refused to take cognizance of the balance sheet of the partners. In view of the above discussion, we allow this ground of appeal raised by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act, nothing new has been brought to the notice of this Court to warrant the conclusion that the inference drawn by the Tribunal on the materials available were unreasonable or perverse. Consequently, question no.2 is answered in favor of the assessee and against the revenue. 6. As regards the correctness of the Tribunal s findings on the reassessment proceedings, there are two Full Bench decisions of this Court (refer CIT v. Kelvinator of India Ltd. 2002 (256) ITR 1 (Del) [FB]) and CIT v. Usha International Ltd. 2012 (348) ITR 485 (Del). In fact Kelvinator (supra) was later confirmed in CIT v. Kelvinator of India Ltd. 2010 (320) ITR 561 (SC). 7. In this connection, the Court also notices the recent Full Bench decision in Usha Internati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings are relevant and material. Sometimes application of mind and formation of opinion can be ascertained and gathered even when no specific question or query in writing had been raised by the Assessing Officer. The aspects and questions examined during the course of assessment proceedings itself may indicate that the Assessing Officer must have applied his mind on the entry, claim or deduction, etc. It may be apparent and obvious to hold that the Assessing Officer would not have gone into the said question or applied his mind. However, this would depend upon the facts and circumstances of each case. 8. Having regard to the chequered history of the litigation in the present case, it cannot be argued that the assessee did not make full di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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