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TMI Blog2018 (12) TMI 1347X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer issued the impugned notice which, as can be seen was done within a period of 4 years from the end of the relevant assessment year. In order to issue the notice, the Assessing Officer had recorded following reasons : "In this case, the original return of income declaring total loss of Rs. 387,662/ and claiming a refund of Rs. 1,10,83,662/ was filed on 30.11.2013. The assessee filed a revised return of income declaring loss of Rs. 387 662/ and refund at Rs.Nil on 31.3.2015. Scrutiny assessment was completed u/s 143(3) of the IT Act on 19.1.2016 accepting the returned income. 2. The assessee company is engaged in the construction and development of infotech parks, cyber parks, business parks and other similar works. 3. It is observed from the details of interest paid and received in Exhit7 of letter dt.23.11.2015 that during the year under consideration, the assessee has incurred interest expenses to the tune of Rs. 47,11,82,441/ on loans taken and has earned interest income of Rs. 11,08,36,618/ on loans given. It has also been mentioned by the assessee that the company has netted off interest received of Rs. 11.08 crores agains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is regularly carried on by the assessee and then with the intention to carry on the business of lending of money or money lending the loan is advanced, the income therefrom would be income from business. The intention has to be gathered with reference to all the activities of advancing money which should be permitted by the objects of the company and also by the resolution of the board of directors to carry on the business of money lending or lending money. 6. The Hon. Supreme Court in Tuticorin Alkali Chemicals and Fertilizers Ltd. v/s CIT 227 ITR 172 has held that where the interest debited by the assessee prior to commencement of its business, from the borrowed funds which were to be utilized for setting up the factory of the company were invested in short term deposits with bank would be chargeable to tax under the head income from other sources. 7. In view of the facts and circumstances of the case and various judicial rulings mentioned supra, interest received by the assessee amounting to Rs. 11,08,36,618/ from loans should have been charged to tax under the head income from other sources and the WIP should have been increased by the whole amount of Rs. 47,11,82, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contending that during the original assessment, the question of correctness of the petitioner's claim of interest expenditure was not examined. The notice of reopening has been issued within a period of 4 years from the end of the relevant assessment year. The concept of true and full disclosure, therefore, would not apply. 9. A perusal of the reasons recorded by the Assessing Officer would show that what he wished to press in service was that the assessee had adjusted the interest income of Rs. 11,08,36,618/ against the interest expenditure of Rs. 47,11,82,441/ which according to the Assessing Officer was not permissible. The Assessing Officer referred to the case law and various judgments on the point to support his contention in this regard. 10. With this background, we may refer to certain material which was part of the original proceedings. Under a letter dated 28.09.2015, the Assessing Officer had called upon the petitioner to provide certain details. Relevant portion of which reads as under : "1. In the original return, you have shown interest income of Rs. 11,08,36,618/ on which TDS of Rs. 1,10,83,662/ deducted and the same has been claimed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Interest Recd AY 201314 (A) Interest Paid Sr. No. Loan Particulars Loan Amount Interest Amount ROI 1 Vinca Developers Pvt. Ltd. 2,68,00,00,000 44,29,49,457 14.75% 2 Deutsche Investment India Pvt. Ltd. 23,50,00,000 2,82,00,000 12% 3 Interest on Delayed payment of Tax - 32,984 2,91,50,00,000 47,11,82,441 (A) Interest Received Sr. No. Loan Particulars Loan Amount Interest Amount ROI 1 Citygold Investments Pvt. Ltd. 56,10,27,968 11,08,36,618 9.50% Reconciliation of interest income shown in profit and loss account Interest received as per above 11,08,36,618 Interest received as per PL 9,16,57,313 Difference 1,91,79,305 Difference of Rs. 1,91,79,305/ pertains to excess interest charged by the Company in the FY 201112 which was reversed during the year by debiting interest received ledger account. However, the company has netted off interest received of Rs. 11.08 crore against interest paid of Rs. 47.12 crores and remaining amount transferred to work in progress account. There is no such interest debited to the profit & loss account." 13. It can thus be seen that dur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 561 held that even after the amendment in Section 147 w.e.f. 01.04.1989, the concept of change of opinion would continue to apply. This Court in series of judgments applied the same principles. Reference in this respect can be made to the decision of the Division Bench in the case of N.J. Pharmaceuticals Ltd. Vs. Dy. CIT, (2008) 297 ITR 119. 16. It is true that in the final order of assessment, the Assessing Officer had not elaborated this aspect but had not made any disallowance or addition in the hands of the assessee. Merely because the order of assessment was silent on a particular claim of the assessee, would not by itself mean that the same was not scrutinized or that the Assessing Officer had not formed an opinion with respect to the same. If after detailed scrutiny during the assessment, the Assessing Officer examines a claim but does not reject the claim of the assessee which had come up for scrutiny, would not enable the Revenue to argue that the Assessing Officer had not formed any opinion on such issue and, therefore, reopening of the assessment would be permissible without there being any new or additional material available to the Assessing Office. We may re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partially rejects the claim, are all options available with the Assessing Officer, over which the assessee beyond trying to persuade the Assessing Officer, would have no control whatsoever. Therefore, while framing the assessment, allowing the claim fully or partially, in what manner the assessment order should be framed, is totally beyond the control of the assessee. If the Assessing Officer, therefore, after scrutinizing the claim minutely during the assessment proceedings, does not reject such a claim, but chooses not to give any reasons for such a course of action that he adopts, it can hardly be stated that he did not form an opinion on such a claim. It is not unknown that assessments of larger corporations in the modern day, involve a large number of complex claims, voluminous material, numerous exemptions and deductions. If the Assessing Officer is burdened with the responsibility of giving reasons for Several claims so made and accepted by him, it would even otherwise cast an unreasonable expectation which within the short frame of time available under law would be too much to expect him to carry. Irrespective of this, in a given case, if the Assessing Officer on his own fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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