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TMI Blog2013 (10) TMI 415X X X X Extracts X X X X X X X X Extracts X X X X ..... furnished full facts, is not permissible under proviso to sec 147(1) – Reliance has been placed upon the judgment in case of CIT Vs M/s Kelvinator of India Limited [2010 (1) TMI 11 - SUPREME COURT OF INDIA] - Reopening is without jurisdiction and hence invalid – Decided in favor of Assessee. - ITA Nos. 1943, 1944 & 1945/Hyd/2011 - - - Dated:- 4-10-2013 - Smt. P. Madhavi Devi And Shri B. Ramakotaiah,JJ. For the Petitioner : Srhi S. Anantham Smt. Lalitha Rameswaran For the Respondent : Shri P. Soma Sekhar Reddy ORDER Per B. Ramakotaiah, A. M. These three appeals are by the Assessee against separate orders of CIT(A)-III, Hyderabad dated 08/09/2011 for the AYs 2002- 03, 2003-04 and 2004-05. In all these appeals, Assessee contests the issue of reopening of assessment u/s 147 of the assessment in Ground No. 2 and merits of the addition made by the AO in Ground No. 3. 2. Briefly stated, the Assessee filed the returns of income originally, and assessments u/s 143(3) of the IT Act were completed. Thereafter, after the end of the four years from the end of assessment year, the AO by recording the reasons u/s 147 of the Act, reopened the assessment by issuance of noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 3 - Held for trading The revised guidelines were applied by the Assessee bank as applicable for AY 2001-02 on wards, accordingly, the Assessee bank made a claim for the depreciation of the securities claimed under Available for sale/held for Trading and Claimed amortization on Held to Maturity category of securities for the AY 2002-03. However, on perusal of CBDT Circular No. 665 and revised RBI guidelines as stated as above and has elaborately been discussed in the above stated Board's letter, is emerged as follows: i) No depreciation is to be provided for investments classified under the category Held to Maturity. ii) Valuation of investments classified under categories Available of Sale and Held for Trading is required to be done scrip-wise and thereafter depreciation/appreciation is required to be provided for each classification category and only net depreciation, if any is required to be provided for and net appreciation, if any, is required to be ignored. In the case of M/s Andhra Bank for the AY 2002-03, the Assessee's claim of amortization on Held to Maturity category has been rightly disallowed and brought to tax and the same has been upheld by the CIT(A). Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment for the AY 2002-03 for bringing the income that has escaped assessment to tax." 4. Similar reasons were recorded in other years also. However, at the time of completion of assessment, the AO made the addition only with reference to the issue of unrealized interest on NPAs in the years under consideration. 5. Before the learned CIT(A), the Assessee contested the issue of reopening of assessment u/s 147 as there is no failure on the part of the Assessee in furnishing the details at the time of assessment completed u/s 143(3) and it also contested the addition made by the AO by disallowing the claim of unrealized interest on NPAs, which was adjusted in the interest income offered during the year on the reason that these details were furnished at the time of original assessment and the law permits for adjustment of such unrealized income based on the guidelines issued by the RBI. 6. The learned CIT(A) after considering the submissions of the Assessee and following the decision of her predecessor in AY 2001- 02, upheld the disallowance made by the AO. However, the learned CIT(A) did not discuss the issue of reopening contested by the assessee in appeal, may be on the reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usive of interest upto the date of purchase. As interest earned from the securities are assessed as business income, interest for the broken period included in the purchase price of the securities are to be allowed as a deduction. (American Express International Banking Corporation vs. CIT (2002) 258 ITR 601 Bom. CIT vs. Nedungadi Bank Ltd. (2003) 264 ITR 545 Ker).That being so, the allowance of broken period interest as a deduction in cases of securities purchased has been allowed by various courts. Therefore in allowing the broken period interest in the original assessment, the AO can not said to have committed any error. The particulars about the broken period interest claimed was before the Assessing officer as he has taken the figure from the original assessment for disallowing. The AO had not come across any fresh material which will lead him to the satisfaction that income has escaped assessment. Therefore the present reopening on this issue is merely a change of opinion on the part of the Assessing officer. 15. The third issue, viz., depreciation on securities, is also subject matter of numerous decisions in the case of banks. Once the investment in securities are made wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... support this view: CIT Vs M/s Kelvinator of India Limited 320 ITR 561 SC Mihir Textiles Ltd. v. JCIT 347 ITR 546 Guj. NYK Line (India) Ltd. v. DCIT (No. 2) 346 ITR 361 Bom. 18. The AO has substantiated reopening stating that that disallowances on the above issues have been made and were adjudicated by Appellate Authorities. It was not as if there was any factual and tangible material regarding these issues which came to light in the subsequent years. It was only a conclusion based on a different interpretation on the same set of facts. Thus the AO had merely changed his conclusion, on the same set of facts available for this year. Legal conclusion arrived at on similar set off facts in the subsequent year cannot be the reason for reopening. It is a settled proposition that reopening is not permitted on the basis of subsequent decision of the High Court or Supreme Court. Commercial Co-operative Bank Ltd. v. ITO 336 ITR 196 Guj Austin engineering Co Ltd v CIT 312 ITR 70 Guj CIT v. Baer Shoes (India) Pvt. Ltd 331 ITR 435 Mad. 19. Thus a different legal interpretation of a provision in the subsequent year, on the same set of facts cannot be the basis of reopening for a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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