TMI Blog2014 (11) TMI 1033X X X X Extracts X X X X X X X X Extracts X X X X ..... al payment. The clause (d) of the said section covers interest payment to the banks. The interest payment has to be made in cash or in actual terms of money has not been specified. The only rider given in Explanation 3C is that, interest payable is allowable when the interest is actually paid and it should not be converted into loan or borrowings. There is no prohibition or embargo that the sum actually paid will not cover payments through allotment of shares. The shares are tradable commodity and has a value which can be sold in the market as per the value of the share on the date of sale. It is easily convertible into money as and when required. Once there is no such prohibition u/s 43B for discharging the payment of interest liability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in upholding the action of the learned Deputy Commissioner of Income tax (hereinafter referred to S THE Assessing Officer ) in reopening the assessment under section 148. The appellant submits that the order passed under section 143(3) r.w.s. 147 of the Act is illegal, null and void and bad in law as the appellant has filed full, correct and complete particulars of its income along with the return of income as well as during the course of assessment proceedings. The appellant submits that the reopening is illegal and contrary to provisions of the Act as the appellant has not concealed the particulars of its income nor filed any inaccurate particulars thereof. The Ld.CIT(A) erred in upholding the action of the Assessing Officer in dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cables, wires, conductors, strips of all types etc. For the A.Y. 2005-06, the assessee has filed is return of income on 29.10.2005 declaring Nil income. Subsequently a revised return was filed on 19.10.2006, offering tax on income tax refund during the year. This income was however set off against brought forward business loss and the income was again shown at Nil income. The said return of income was subjected to scrutiny and assessment was completed u/s 143(3), vide order dated 31.12.2007 at Nil income. Thereafter the assessee s case was reopened u/s 147, vide issuance of notice u/s 148 dated 19.11.2009. In response, the assessee sought reasons recorded which was made available by the AO vide letter dated 03.06.2009, vide which f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest as well as the principal amount, therefore, the assessee entered into One Time Settlement (OTS), with the bank for the settlement of its dues. As per the proposal, the assessee was required to settle the set liabilities by paying:-(a) 100% outstanding principal amount of ₹ 2128.28 lakhs; (b) 50% simple interest of ₹ 433 lakhs; Out of the interest component, ₹ 217 lakhs to be paid along with the entire principal amount and the balance interest of ₹ 216 lakhs was to be converted into equity shares of ₹ 10/- per share of the assessee s company. During the relevant previous year, the assessee claim deduction of ₹ 4,33,00,000/- u/s 43B, being interest paid to IDBI Bank under OTS. He submitted that from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by allotting equity shares cannot be termed as sum actually paid within meaning of section 43B. He also referred to Explanation 3C and submitted that a sum payable as mentioned in section 43B has to be reckoned with the actual amount paid and not any conversion of equity shares. He thus submitted that reopening u/s 147 on such reasons recorded has rightly been done and also strongly relied upon the order of the AO and Ld.CIT(A). 5. We have heard the rival submissions qua the issue of validity of reopening the assessment u/s 147 as raised in ground no. 1. As per the terms of OTS, the interest liability on loan of 4.33 crores has been discharged by making the payment of ₹ 2.17 crores and the balance sum of ₹ 2.16 crores have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be sold in the market as per the value of the share on the date of sale. It is easily convertible into money as and when required. Once there is no such prohibition u/s 43B for discharging the payment of interest liability and claiming of deduction thereof, by converting the payment through allotment of shares, then how the assessing officer sans any legal provision or any judicial authority could have entertained reason to be believe that such a deduction is not allowable. On these facts we are of the opinion that the reasons as recorded by the AO, do not clothe him with the jurisdiction u/s 147 to reopen the completed assessment. No legal provision or legal proposition has been brought to our notice in support the ground raised by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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