TMI Blog2023 (3) TMI 202X X X X Extracts X X X X X X X X Extracts X X X X ..... is an escapement of income from taxation which is in accordance with law. Whether there is no failure on the part of the assessee to disclose the entire income? - As we find that in the return of income, the assessee has not made full and true disclosure. It was only shown as under other liabilities and he has not filed Notes on account before the Assessing Officer. Therefore, AO was not able to assess correct income of the assessee while concluding the assessment under section 143(3) of the Act. Further, we find that the case law relied on by the assessee has no application to the facts of the present case as the facts are entirely different. In view of the above, the issue raised by the assessee in ground Nos. 2 3 are dismissed. Assessee has received the interest amount from M/s. Elnet Technologies Ltd. - The assessee has submitted that it is not income of the assessee and it is income of Government of Tamil Nadu. We find that if the amount received by the assessee from M/s. Elnet Technologies Ltd. is not income of the assessee and if at all it had paid to the Government of Tamil Nadu, the assessee should been remitted through banking channels only. If at all the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e @ 10% was disallowed and added to the total income of the assessee. On appeal, the ld. CIT(A) confirmed the order of the Assessing Officer. We have gone through the assessment order and also appellate order and find that the Assessing Officer has perfectly decided the issue and the ld. CIT(A) has confirmed the same. We find no infirmity in the order passed by the ld. CIT(A). Accordingly, ground Nos. 4 5 raised by the assessee are dismissed. Interest on term loan due from Joint Venture Companies - HELD THAT:- The arguments of assessee is that the interest income is not recoverable from the joint venture companies on the ground that the debt is already bad. In the assessment order, the Assessing Officer has noted that the assessee has not written off the loans in its books of account and the same figure is continuing even in subsequent assessment years. Moreover, the assessee itself treated the loan amount as unsecured considered good and interest due on the same. In view of the above, it cannot be said that the unsecured loan became bad debt and even the assessee company has not written off in the books of account and therefore, it cannot be allowed as bad debt. Thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return of income for the assessment year 2001-02 on 30.10.2001 admitting loss of ₹.3,72,900/- and book profit under section 115JB of the Act of ₹.6,67,950/- and claimed refund of ₹.33,99,523/-. The return of income was processed under section 143(1) of the Act on 30.09.2003 accepting the income returned. Thereafter, the case was selced for scrutiny and assessment under section 143(3) of the Act was completed on 29.10.2003 by raising demand of ₹.45,28,749/-. 3.2 Subsequently, the Assessing Officer has issued notice under section 148 of the Act on 31.03.2008 on the ground that there is an escapement of income within the meaning of section 147 of the Act and asked the assessee to file its reply. The assessee has filed its reply. The Assessing Officer has recorded the reasons for reopening as noted in the assessment order that the assessee company, M/s. ELCOT has promoted a joint venture with Elnet Technologies Limited for establishing Software Technology Parks. The Govt. of Tamil Nadu has allotted land in favour of the assessee company, which in turn agreed to lease out such allotted land for 90 years for construction and use by STPs. The lease deposit is l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment was completed under section 143(3) r.w.s. 147 of the Act dated 23.12.2009 by assessing total taxable income at ₹.1,82,39,997/- after making addition towards disallowance of interest income of ₹.50,01,000/-. On appeal, the ld. CIT(A) confirmed the assessment order. 4. On being aggrieved, the assessee is in appeal before the Tribunal. So far as reopening of assessment is concerned, the ld. Counsel for the assessee has submitted that the notice issued under section 148 of the Act, which is beyond four years, there is no failure on the part of the assessee to disclose fully and truly all the details and therefore, the Assessing Officer, based on the information available on record, which were already filed by the assessee i.e., return of income, came to a conclusion that there is an escapement of income and reopened the assessment is invalid. 4.1 The ld. Counsel for the assessee has further submitted that in the return of income this amount was clearly shown under the head other liabilities and therefore, there is no failure on the part of the assessee to disclose truly and fully all the details. The ld. Counsel has relied on the decisions of Hon ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and circumstances of the case, we are of the opinion that it is a clear case of escapement of interest income from taxation and therefore, the Assessing Officer by issuing notice under section 148 of the Act reopened the assessment under section 147 of the Act on the ground that there is an escapement of income from taxation which is in accordance with law. 6.2 So far as arguments of the ld. Counsel for the assessee is that there is no failure on the part of the assessee to disclose the entire income is concerned, we find that in the return of income, the assessee has not made full and true disclosure. It was only shown as under other liabilities and he has not filed Notes on account before the Assessing Officer. Therefore, the Assessing Officer was not able to assess correct income of the assessee while concluding the assessment under section 143(3) of the Act. Further, we find that the case law relied on by the assessee has no application to the facts of the present case as the facts are entirely different. In view of the above, the issue raised by the assessee in ground Nos. 2 3 are dismissed. 7. So far as merits of the case is concerned, in the assessment order, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hrough the orders of authorities below. The assessee, M/s. ELCOT had entered into an agreement with Government of Tamil Nadu for allotment of land. According to the agreement, the Government of Tamil Nadu allotted some land to the assessee for development of STPs. Thereafter, the assessee also entered into a joint agreement with M/s. Elnet Technologies Ltd. for establishing STPs. These two agreements are different agreements. The assessee, in connection with the establishment of STPs received interest amount from M/s. Elnet Technologies Ltd. and M/s. Elnet Technologies Ltd. deducted TDS and paid ₹.50,01,000/- to the assessee. When the Assessing Officer has pointed out that the assessee has received the amount of ₹.50,01,000/- from M/s. Elnet Technologies Ltd. and it would be income of the assessee and called for explanation. The assessee has submitted that it is not income of the assessee and it is income of Government of Tamil Nadu. We find that if the amount received by the assessee from M/s. Elnet Technologies Ltd. is not income of the assessee and if at all it had paid to the Government of Tamil Nadu, the assessee should been remitted through banking channels only. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the transaction involving the state government and the M/s ELNET Technologies Limited was fully captured in the notes on arguments dated 18.05.2017 and ought to have appreciated that the full facts were not taken into consideration, thereby vitiating the mechanical finding in para 8.3 of the impugned order. 9. The CIT (Appeals) erred in sustaining the addition of Rs.19,86,480/- representing interest on the presumption of accrual of such sum on the unsecured loans given to joint venture companies in the computation of taxable total income without assigning proper reasons and justification. 10. The CIT (Appeals) failed to appreciate that there was no proper opportunity given before passing of the impugned order and any order passed in violation of the principles natural justice would be nullity in law. 11. The Appellant Graves leave to file additional grounds/arguments at the time of hearing. Ground Nos. 1, 10 11 are general in nature and requires no adjudication. 10. Ground Nos. 2 3 raised by the assessee relates to reopening of assessment under section 147 of the Act. During the course of scrutiny assessment proceedings in the assessment year 2006-07 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r reopened the assessment without assigning proper reasons and the assessment order was passed out of time and that the Assessing Officer failed to appreciate that there was no failure on the part of the assessee to disclose material facts. The ld. CIT(A) has considered the submissions of the assessee and observed that the submissions of the assessee are exactly similar to the submissions made for the assessment year 2001-02. Since the submissions of the assessee have already been considered and decided against the assessee for the assessment year 2001-02, the ld. CIT(A) has rejected the similar submissions made for the assessment year 2003-04 and confirmed that the reopening of assessment under section 147 of the Act is valid. 12. Before us, the ld. Counsel for the assessee has relied on the grounds raised by the assessee. We find that it is a clear case of escapement of assessment for taxation and the Assessing Officer by considering the entire facts, issued the notice under section 148 of the Act on the ground that there is an escapement of income as per section 147 of the Act, which was confirmed by the ld. CIT(A). Thus, we also find that the reopening of assessment under se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have not been included in the Profit Loss account. As judicially held by Supreme Court in the case of Moris Industries Ltd., reported in 82 ITR 835, income can be said to accrue when it is due and postponement of payment does not affect the accrual of income. Hence, the assessee was asked to show cause why this amount of ₹.19,86,480/- should not be treated as the income of the company for the assessment year 2003-04. In response, the assessee submitted that the interest on the loan given to the four joint venture companies as mentioned in the notes on accounts is only information to their Shareholders, i.e., Tamilnadu State Government. The same was not provided in the accounts during the year as they were all foreclosed by the term loan lenders (Financial Institutions). The company further stated that their investments in the above JV s had also been written off during the earlier years as per the advice of AG and Statutory Auditors. After considering the submissions of the assessee and verification with reference to records, the Assessing Officer noticed that under Sch. 10 to Balance sheet - Loans and advances, an amount of ₹.86,72,000/- was shown as loans to joint v ..... X X X X Extracts X X X X X X X X Extracts X X X X
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