2013 (4) TMI 826 - AT - Income Tax

Summary

Issues Involved:

1. Validity of notice u/s 148 for reopening assessment.
2. Eligibility for deduction u/s 80-IA on rental income.
3. Applicability of Sec 43B on interest payable.

Summary:

1. Validity of notice u/s 148 for reopening assessment:

The Revenue contended that the CIT(A) erred in holding that the notice u/s 148 issued on 17.03.2010 was invalid. The CIT(A) should have upheld the reopening of assessment on the grounds that the issue relating to Sec. 43B was not considered in the earlier assessment. The ITAT found that the Assessing Officer (AO) had already considered the nature of income and the eligibility for deduction u/s 80-IA during the original assessment and that the reopening was based on a change of opinion without new tangible material. Thus, the reassessment was rightly invalidated by the CIT(A).

2. Eligibility for deduction u/s 80-IA on rental income:

The AO denied the deduction claimed u/s 80-IA on rental income, arguing that it should be assessed as income from other sources based on jurisdictional High Court decisions. The CIT(A) and ITAT found that the AO had already considered the nature of each item of income during the original assessment and allowed the deduction u/s 80-IA, except for some categories. The ITAT upheld the CIT(A)'s decision that the reassessment was invalid as it was based on a change of opinion and not on new tangible material.

3. Applicability of Sec 43B on interest payable:

The AO contended that the interest payable to TIDCO should be disallowed u/s 43B as it was not paid before the due date of filing the return. The ITAT found that the AO had already inquired about the interest payments during the original assessment, and the assessee had provided details showing compliance with Sec 43B. The ITAT concluded that the AO's reason for reopening based on Sec 43B was a wrong presumption and not supported by new tangible material. Thus, the reopening was invalid.

Conclusion:

The ITAT dismissed the Revenue's appeal for the Assessment Year 2003-04 and held that the reassessment was invalid. Consequently, the Cross Objections filed by the assessee for the Assessment Year 2003-04 and the Revenue's appeal for the Assessment Year 2005-06 were dismissed as infructuous. The Cross Objection of the assessee for the Assessment Year 2005-06 was allowed, quashing the reopening and reassessment.