TMI Blog2022 (6) TMI 347X X X X Extracts X X X X X X X X Extracts X X X X ..... roved that there is escapement of income, then additions made by the Assessing Officer towards other issues being disallowance of interest expenses also in accordance with law. Therefore, we are of the considered view that reopening of assessment u/s.147 of the Act, is valid in the given facts circumstances of the case and thus, arguments of the assessee are rejected. Disallowance of interest expenses u/s.36(1)(iii) - We find that the assessee has substantiated its claim with necessary evidences, including Board resolution and argued that project developed by the assessee is abandoned. Once project is abandoned, it seizes to become eligible asset to capitalize borrowing cost to the work in progress account, till such asset is put to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R Appellant by : Mr. A.S. Ramakrishnan, C.A Respondent by : Mrs.R.Uma Maheswari, JCIT ORDER PER G.MANJUNATHA, AM: This appeal filed by the assessee is directed against order of the learned Commissioner of Income Tax (Appeals)-1, Trichy, dated 08.05.2019 and pertains to assessment year 2013-14. 2. The assessee has raised following grounds of appeal:- 1. On the facts and circumstances of the case the Learned Assistant Commissioner of Income Tax erred in re-opening the assessment completed u/s.143(3) and making additions to the assessed income. Assessment was completed u/s.143(3) on 31.03.2016 by accepting the returned income and subsequently was re-opened by issuing a notice u/s. 148 on 23.03.2018, with out r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rks Ltd Vs CIT (2007)212 CTR 0562. 6. The appellant also relies on the decision in the case of CIT vs Priya Village Roadshows Ltd (2010) 228 CTR 0271, wherein it has been upheld that when the project is abandoned without creation of a new asset the expenditure related thereto is only that of a revenue expenditure. 3. Brief facts of the case are that the assessee company is engaged in the business of engineering products has filed its return of income for the assessment year 2013-14 on 18.09.2013 declaring total loss of Rs.2,27,51,993/-. The assessment has been completed u/s.143(3) of the Income Tax Act, 1961, on 31.03.2016 and accepted returned income. The case has been subsequently reopened for the reasons recorded, as per whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to be quashed, because the Assessing Officer has formed reasonable belief of escapement of income on the basis of financial statements filed by the assessee along with return of income without there being any fresh tangible materials. Therefore, in absence of any fresh tangible material, reopening of assessment on very same material amounts to change of opinion, which is not permissible under the law. The learned A.R for the assessee further submitted that as regards additions made towards disallowance of proportionate interest, it was explained to the Assessing Officer that when borrowing cost needs to be capitalized in terms of Accounting Standard 16, then asset should be qualified asset. However, in this case, the assessee has abando ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have gone through the reasons given by the Assessing Officer for reopening of assessment in light of arguments advanced by the learned counsel for the assessee and we ourselves do not subscribe to the arguments of the learned counsel for the assessee for simple reason that once there is element of escapement of income, then the Assessing Officer can very well look into other issues which come to his knowledge during the course of assessment proceedings. In this case, the counsel for the assessee himself has conceded fact that there is escapement of income on the issue of deduction towards exceptional items. Therefore, once it is proved that there is escapement of income, then additions made by the Assessing Officer towards other issues bein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lated thereto is only that of revenue expenditure. It was further noted that the assessee has incurred amount towards creation of new asset for expansion of existing project. It is well settled principles of law by various judicial precedents that when there is only expansion of existing business, incidental expenditure for bringing capital asset will be revenue in nature and this principle is supported by the decision of the Hon'ble Supreme Court in the case of India Cements Ltd Vs.CIT (1975) 60 ITR 52 and also decision of the Hon ble Allahabad High Court in the case of Prem Spinning Weaving Mills Co.Ltd. Vs. CIT (1975) 98 ITR 20. Therefore, we are of the considered view that the Assessing Officer has erred in disallowing proportiona ..... X X X X Extracts X X X X X X X X Extracts X X X X
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