2018 (12) TMI 1747 - HC - Income Tax

Reopening of assessment u/s 147 - reasons to believe - interest on borrowed capital from sister concerns - HELD THAT - Tribunal in the impugned order has specifically recorded that the question of disallowance of interest paid in view of interest free loans and investment by way of share application money in sisters concerns was raised and examined by the AO during the original assessment proceedings. The said findings of fact have not been challenged before us as perverse or contrary to evidence and material on record. This being the factual position, the impugned order does not require interference as it is in consonance with the ratio and law laid down by the Supreme Court in Commissioner of Income Tax versus Kelvinator of India Limited 2010 (1) TMI 11 - SUPREME COURT and the Full Bench decision of the Delhi High Court in Commissioner of Income Tax versus Usha International Limited, 2012 (9) TMI 767 - DELHI HIGH COURT - No substantial question of law.

Summary

Issues:
Delay in re-filing condonation, Disallowance of interest paid on borrowed capital, Examination of interest free loans and investment, Challenge of findings, Interference with impugned order, Substantial question of law.

Delay in re-filing condonation:
The court condoned a 30-day delay in re-filing, allowing the application.

Disallowance of interest paid on borrowed capital:
The case involved an amount paid as interest on borrowed capital from sister concerns due to interest-free loans and investments in sister concerns by the respondent-assessee. The Tribunal had examined the disallowance of interest during the original assessment proceedings, and the findings were not challenged as perverse or contrary to evidence. Citing legal precedents, the court held that the impugned order did not require interference.

Examination of interest free loans and investment:
The Tribunal had specifically considered the disallowance of interest paid in relation to interest-free loans and investments in sister concerns during the original assessment proceedings. The findings on this matter were not contested as incorrect or unsupported by evidence.

Challenge of findings:
The findings of the Tribunal regarding the disallowance of interest paid were not challenged before the court as being perverse or contrary to the evidence on record. As a result, the court did not find any grounds to interfere with the Tribunal's decision.

Interference with impugned order:
The court determined that the impugned order did not necessitate any interference as it aligned with established legal principles and previous judgments by the Supreme Court and the Delhi High Court. The decision was considered to be in accordance with the law laid down in relevant cases.

Substantial question of law:
The court concluded that the appeal did not raise any substantial question of law and, therefore, dismissed the appeal. The judgment was based on the assessment that the impugned order was consistent with legal precedents and did not warrant further review.