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SARDAR SAROVAR NARMADA NIGAM LIMITED Versus JOINT COMMISSIONER OF INCOME TAX

2016 (6) TMI 942 - GUJARAT HIGH COURT

Reopening of assessment - Held that:- ITAT has committed an error travelling beyond the scope of its jurisdiction.Commissioner of Income-Tax Versus Bokaro Steel Limited [1998 (12) TMI 4 - SUPREME Court] - TAX APPEAL NO. 478 of 2004 - Dated:- 7-6-2016 - MR. KS JHAVERI AND MR. G.R.UDHWANI, JJ. FOR THE APPELLANT : MRS SWATI SOPARKAR, ADVOCATE FOR THE OPPONENT : MR SUDHIR M MEHTA, ADVOCATE ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) By way of this Tax Appeal, the appellant has challenged .....

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he case of I.N. Dalmia, the assessee borrowed money for acquiring shares in company named Punalur Paper Mills Ltd., [hereinafter referred to as the PPM ] and had paid interest thereon. The assessee floated another company named Laxminiwas and Co. (Export) P. Ltd. [hereinafter referred to as the LNE ] and sold aforesaid shares of PPM to this newly floated company. Till then it was not incorporated, but the transaction was ratified on its incorporation. The A.O. also held that the LNE was dummy of .....

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ost of the said shares. The Tribunal and Appellate Asstt. Commissioner uphold the findings of the AO and on reference to the High Court it is held that the assessee was holding the shares as his investments portfolio for controlling interest and therefore it could not be but a capital loss, which formed a cushion against the future gain and capable of set off against the capital gain. It further observed that the though the paper loss, it had farreaching effect on the tax liability. As regard in .....

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dded to its cost of acquisition for compensation of capital loss. On this issue, the appellate authorities answered it in the affirmative. The interest was paid allegedly on the moneys borrowed for the acquisition of the shareholding by the assessee. The interest was not claimed as capital investment and no claim was made for the capitalization of the same. The Assessing held that the assessee did not earn anything from the shares purchased out of the borrowed amount. As there was no income from .....

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se of CIT v. Mithlesh Kumari (1973) 92 ITR 9 (Delhi), holding that interest paid on borrowed capital is to be allowed as capital expenditure. In this case, the Delhi High Court considered that interest was paid on money borrowed for purchase of and open plot of land which constituted part of the actual cost. The facts before us are different from the facts in the case cited. There the plot of land was for a building purpose and it was not intended for using as incomeearning investment while the .....

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submitted on behalf of the assessee that the assessee is entitled to submit before this court that the said deduction should be allowed under the head Other sources though against the decision of the Tribunal that such interest was to be capitalized being part of cost of acquisition of shares has not been appealed against. It is well settled that an allowance for deduction can be upheld on a ground other than that on which it was allowed by the Tribunal. We, accordingly, hold that the interest .....

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in the facts and circumstances of the case the ITAT was right in law in holding that the reopening proceedings are valid, legal and within the jurisdiction of the Respondent ? 3. The appellant has failed to file its return of income for AY 198990 as provided under Section 139 of the Income Tax Act, 1961. Accordingly, notice under Section 148 of the Act has been issued by the Department on 31/12/1997 after recording the reasons and taking approval of the then Asst. Commissioner of Income Tax, Ah .....

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uned Dadani [2013] 30 taxmann.com 1 (Gujarat) wherein the Hon'ble Court has observed in paragraph Nos.30, 31 and 33 as under: 30. We may also approach the question from a slightly different angle. It is not in dispute that once an assessment is reopened by a valid exercise of jurisdiction under Section 147 of the Act, it is open for the Assessing Officer to assess or reassess any income which had escaped assessment which comes to his light during the course of his assessment proceedings whic .....

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ll etc. is available to the Assessing Officer. If such nondisclosure of material facts is established with respect to the reason recorded for issuing notice for reopening the assessment, it would be open for the Assessing Officer to thereafter even assess other income which might have escaped assessment but which may not necessarily satisfy the requirement of nondisclosure of true and full material facts. If in such a situation, the stand of the revenue is accepted, a very incongruent situation .....

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