TMI Blog2016 (4) TMI 242X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. Brief facts are that the assessee M/s. Gas and Power Investment Pvt. Ltd (hereinafter referred to as GPICL) is a company set up as a special purpose vehicle (SPV) for the specific purpose of settlement of debt claims of offshore lenders of Dabhol Power Co. Ltd. , (DPC), as envisaged under a comprehensive restructuring plan for revival of the DPC's power project finalized by the Indian lenders of DPC under the aegis of the Empowered Group of Ministers constituted by the Government of India. GPICL is registered with Reserve Bank of India as Non Banking Finance Company. It is treated as a Government Company in terms of Sec. 619B of the Companies Act, 1956. GPICL filed return of income on 7.11.2006 declaring loss of ₹ 30,93,56/-. The assessment was completed on 29.12.2008 u/s. 143(3) of the Act accepting the loss returned by the assessee. Subsequently, notice u/s. 148 was issued on 24.10.2011 and the reassessment was completed on 8.12.2011 u/s. 143(3) r.w. Sec. 147 of the Act. While completing the reassessment, the Assessing Officer disallowed expenses of ₹ 13,07,890/- treating it as capital expenditure, disallowance u/s. 43B(e) in respect of interest to financial in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orting evidences. The Ld. Counsel submits that all these details were furnished in the course of original assessment proceedings. The AO having accepted the details furnished and convinced that the expenses are revenue expenses accepted the claim of the assessee. Thus, the Ld. Counsel submits that in the absence of any tangible materials coming on record, the reopening is bad in law. He further placing reliance on the decision of Hon'ble Supreme Court in the case of India Cements Ltd Vs CIT (60 ITR 52) submits that amount spent towards stamp duty, registration fees etc., in obtaining loan is not capital expenditure but it was only business expenses laid out wholly and exclusively for the purpose of business. Therefore, he submits that there is no question of reopening the assessment. 5.2. Placing reliance on the decision of the Punjab Haryana High Court in the case of CIT Vs Sukhjit Starch Chemicals Ltd. (326 ITR 29) the Ld. Counsel submits that expenditure on issue of debentures is deductible. Placing reliance on the decision of the Hon'ble Bombay High Court in the case of CIT Vs Prima Paper and Engineering Industry (364 ITR 222) he submits that this is a case of re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Administrative and operating charges and expenses incurred if any pertaining to non convertible bonds treating them as capital expenditure not allowable as revenue expenditure. We also find from the reasons that the AO came to the conclusion that these expenses are to be treated as capital expenditure. On perusal of the assessment record, there is nothing in the reasons recorded to suggest that any tangible materials have come on record for coming to the conclusion that there is an escapement of income. It is also pertinent to note that in the course of original assessment proceedings, the assessee was required to furnish details in respect of franking charges and stamp duty by letter dated 6.11.2008 and the assessee furnished details by letter dated 21.11.2008. The explanation was accepted by the AO in the original assessment proceedings. Now the reopening was made solely on the basis of materials already available on record at the time of original assessment. Even for the other additions which were made in the reassessment order, there is no tangible material which has come on record subsequent to completion of assessment or at the time of recording reasons for reopening. 7.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns is a sine qua none, before the AO can record reasons for reopening of the case. We begin with the judgment of Hon'ble Supreme Court in the case of CIT vs. Kelvinator India Ltd. 320 ITR 561 (SC), laying down that for reopening of the assessment, the AO should have in its possession 'tangible material'. The term 'tangible material' has been understood and explained by various courts subsequently. There has been unanimity of the courts on this issue that in absence of fresh material indicating escaped income, the AO cannot assume jurisdiction to reopen already concluded assessment. Recently, Hon'ble Delhi High Court in the case of Pr. CIT vs Tupperware India Pvt. Ltd., in its order dt 10-8-15 (ITA no 415/2015) got an occasion to analyse latest position of law on this issue. After discussing many judgments on this issue, it was held that even in the case of original assessment order having been passed u/s 143(1), it is mandatory for the AO to have in its possession, fresh tangible material before reopening of the case. In the case of Bombay Stock Exchange Ltd. (writ petition no.2468 dt. 12.06.2014) (89 CCH 118), Hon'ble Bombay High Court obser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -assessment proceedings themselves were not in accordance with law and consequently dismissing the Revenue's appeal. No question of law arises for consideration. In the case of CIT vs. Shri Atul Kumar Swami in ITA No. 112/2014 dated 18-03-2014 reported at 52 Taxmann.com 47, Hon'ble Delhi High Court observed as under: ..Reopening of assessment is valid if it is based on tangible material to justify conclusion that there was escapement of income-In instant case note forming part of return clearly mentioned and described nature of the receipt under a non-compete agreement-Reasons for issuance of notice u/s 147 nowhere mentioned that revenue came up with any other fresh material warranting reopening of assessment-Mere conclusion of proceedings u/s 143(1) ipso facto does not bring invocation of powers for reopening assessment-Reopening of assessment was unjustified-Revenue's appeal dismissed. Further reliance can be placed on the detailed judgment in the case of Madhukar Khosla vs. ACIT 367 ITR 165 (Delhi), wherein it has been held that the reopening is not permitted under the law unless it is based on fresh tangible material and that if The reasons to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hackjee Ltd vs DCIT ( ITA No 4613/Mumbai/2013 dt 12-5- 2010), in support of this view. Similar view has been expressed by Hon'ble Delhi Bench of ITAT in the case of M/s Nexgen School of Business Vs. Deputy Commissioner of Income Tax, [ITA No. 5609/DEL/2010] holding that the Assessing Officer was not justified to initiate the reopening proceedings in absence of any new information or material on record since the date of filling and processing of the return of income. In the present case, it has already been discussed that admitted facts are that there was no fresh material coming into the possession of the AO, at the time of recording of the 'Reasons'. These facts have not been rebutted by Ld DR also. The case law relied upon by Ld DR in the case of Dr. Amin's Pathology, supra is not applicable on the issue being decided here. The issue that in absence of any fresh material, whether AO can proceed to record Reasons, was not before Hon'ble High Court, therefore Hon'ble High court had decided the issue of Change of opinion in that case. In the case before us, as discussed above, we are not going into that issue. In our considered opinion, at this st ..... X X X X Extracts X X X X X X X X Extracts X X X X
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