TMI Blog2018 (5) TMI 1639X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO has power to re-open, provided there is “tangible material” to come to the conclusion that there is escapement of income from assessment. Therefore, we are of the view that an error discovered on a reconsideration of the same material (and no more) does not give AO, the power to assume jurisdiction to make reassessment. - Decided in favour of assessee - ITA Nos.736 And 737/Kol/2016 - - - Dated:- 23-5-2018 - SHRI A. T. VARKEY, JM And DR. A. L. SAINI, AM For The Appellant : Shri G. Mallikarjuna, CIT-DR, Shri Saurabh Kumar, Addl. CIT-Sr.DR For The Respondent : Shri B. K. Chaturvedi, AR ORDER Per Dr. A. L. Saini: Thesetwo captioned appeals filed by the Revenue, pertaining to Assessment Years 2009-10 2012-13, are directed against orders passed by the Commissioner of Income Tax(Appeals)-6, Kolkata, which in turn arise out of assessment orders passed by the Assessing Officer u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ). 2. Since these two appeals filed by the Revenue pertain to same assessee, identical issues are involved, therefore, these have been clubbed and heard together and a consolidated order is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing, stated in the reassessment order, the Assessing Officer observed that the assessment of the assessee was completed u/s 143(3) of the Act on 27/12/2011, and he had reasons to believe that the disallowance made on account of section 14A of the Act in respect of proportionate interest and the average value of investment were not considered properly and, therefore, the income chargeable to tax escaped assessment to that extent and based on this reasoning he reopened the assessment and made the disallowance u/s 14A r.w.r 8D of the I.T Rules to the tune of ₹ 3,83,41,572/- ( ₹ 5,06,72,445 ₹ 1,23,30,872). That is, as per assessment order completed U/s 143(3) of the Act on 27.12.2011, the disallowance computed to the tune of ₹ 1,23,30,872/- has been reduced by the AO from the total disallowance computed in reassessment proceedings at ₹ 5,06,72,445/-, to arrive at the net disallowance to the tune of ₹ 3,83,41,572/-. 5. On appeal by the assessee, the ld. CIT(A) deleted the addition. The ld CIT(A) held that it was merely a change of opinion and Assessing Officer has not brought any tangible material on record to show that the income chargeable to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest of ₹ 1,00,55,126/-, as per Rule 8D(2) (ii) and ₹ 22,75,746/-, as per Rule 8D (2) (iii). Therefore, it is abundantly clear that assessing officer did not give any evidence of any tangible material in his possession in the recorded reasons other than the original material on which disallowance under section 14A was based in the original assessment order under section 143(3) of the Act. Hence there is no tangible material to come to the conclusion that there is escapement of income. The reasons must have a live link with the formation of belief, therefore in the assessee`s case under consideration, we note that there is change of opinion and hence the reassessment is bad in law. 9.We note that theConditions laid down in section 147 of the Act to reopen the assessment are as follows: If the A.O. has reason to believe that any income chargeable to tax has escaped assessment for any assessment year then following conditions may exist: - There must be material for the belief. - Circumstances must exist and cannot be deemed to exist for arriving at an opinion; - Reasons to believe must be honest and not based on suspicion, gossip, rumour or conjecture; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overed on a reconsideration of the same material (and no more) does not give AO, the power to assume jurisdiction to make reassessment. That being so, we decline to interfere in the order passed by the ld CIT(A), his decision on this issue is hereby upheld and appeal of the Revenue is dismissed. 11. In the result, the appeal filed by the Revenue is dismissed. 12. Now, we take Revenue s appeal in ITA No.737/Kol/2016, for A.Y. 2012- 13.The Grievances raised by the Revenue in this appeal are as follows: Ground No.1: On the facts and in the circumstances of the case whether Ld. CIT(A) has erred in law as well as on facts in holding that disallowance 14A of proportionate interest under rule 8D(2)(ii) was not warranted, ignoring the fact that for disallowance u/s 14A rule 8D is mandatory from Assessment Year 2008-09 as held by the Hon ble Bombay High Court in the case of Godrej and Boyce Manufacturing Ltd. vs. CIT (328 ITR 81). Ground No.2: On the facts and in the circumstances of the case whether Ld. CIT(A) has erred in law as well as on facts in holding that addition of notional interest of ₹ 37,50,000/- on sticky loan was not warranted, ignor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same are not reiterated for the sake of brevity. Admittedly the disallowance u/s 14A to the tune of ₹ 92,89,825/- have been made by the ld. AO by invoking the provisions of Rule 8D(2)(ii) of the Rules. We find that the assessee company is having share capital of ₹ 10.67 crores and sufficient free reserves of ₹ 123.67 crores as on 31.3.2007 and ₹ 137.99 crores as on 31.3.2008, but whereas the total investments as on 1.4.2007 was ₹ 105.86 crores and as on 31.3.2008 was ₹ 94.68 crores. We find that the ld. CIT(A) had given relief after going through the copy of the agreement of consortium of the banks and sanction letters of the banks submitted by the assessee that the loan was sanctioned for the purpose of working capital and purchase of fixed assets. We hold that the assessee has got sufficient own funds to make the investments and when that point is not in dispute, no disallowance could be made u/s 14A of the Act read with Rule 8D(2)(ii) of the Rules. Reliance in this regard is placed on the following decisions:- CIT-vs.- Reliance Utilities Power ltd. reported in 313 ITR 340 (Bom.) Interest on borrowed capital- investments by assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raised by the revenue is dismissed . As the issue involved in the year under consideration as well as all the material facts relevant thereto are similar to that of A.Y. 2008-09, we respectfully follow the decision of the Coordinate Bench rendered in A.Y. 2008-09 and uphold the impugned order of the ld. CIT(Appeals) deleting the disallowance made by the Assessing Officer on account of proportionate interest under Rule 8D(2)(ii). Ground No.1 of the Revenue's appeal is accordingly dismissed. Respectfully following the decision of co-ordinate Bench in assessee's own case (supra) as there was no change in the facts of the case. We uphold the impugned order of the Ld. CIT(A). Hence, AO is directed accordingly. This ground of Revenue's appeal is dismissed. 15. We have given a careful consideration to the rival submissions and perused the materials available on record, we note that as the issue is squarely covered in favour of the assessee by the decision of the Coordinate Bench of this Tribunal (supra)and there is no change in facts and law and the Revenue is unable to produce any material to controvert the aforesaid findings and the ld. CIT(A) has allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arely covered in favour of the assessee by the decision of the Coordinate Bench of this Tribunal and there is no any change in facts and law and the Revenue is unable to produce any material to controvert the aforesaid findings and the ld. CIT(A), who has allowed the appeal of the assessee, by following the decision of the Tribunal in assessee s own case (supra). We find no reason to interfere in the said order of the ld. CIT(A), his order on this issue is hereby upheld and ground raised by the Revenue is dismissed. 18. Ground No.3 relates to amount of depreciation of ₹ 16,40,567/- on plant and machinery purchased out of amount withdrawn from credit available with NABARD. At the outset itself, the ld. counsel for the assessee has pointed out that this issue is squarely covered by the assessee s own case by the judgment of Hon ble ITAT, Kolkata in ITA No.1777/Kol/2010, dated 07-08-2012, wherein it was held as follows: 10. The Revenue, during hearing, pressed an additional (fourth) ground of appeal, stating that the omission to include the same along with the original memo of appeal was only accidental; the issue raised thereby being a perennial issue in the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of the claim of the assessee to depreciation as made by the learned Commissioner of Income Tax (Appeals). 19. We have given a careful consideration to the rival submissions and perused the materials available on record, we note that as the issue is squarely covered in favour of the assessee by the decision of the Coordinate Bench of this Tribunal and the decision of Hon ble Calcutta High Court in assessee s own case (supra) and there is no any changein facts and law and the Revenue is unable to produce any material to controvert the aforesaid findings and the ld. CIT(A) has allowed the appeal by following the decision of the Tribunal in assessee s own case (supra). We find no reason to interfere in the said order of the ld. CIT(A),his order on this issue is hereby upheld, and ground raised by the Revenue is dismissed. 20. Ground No.4 raised by the assessee relates to addition of ₹ 1,87,73,760/- made by the Assessing Officer at the time of computation of book profit ignoring the clear provision of clause (f) of Explanation I to section 115JB of the Act. At the outset itself, the ld. counsel for the assessee has pointed out that the said issue is squarely covere ..... X X X X Extracts X X X X X X X X Extracts X X X X
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