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TMI Blog2014 (6) TMI 845X X X X Extracts X X X X X X X X Extracts X X X X ..... h a borrowed capital and interest is payable in respect of such capital - the claim of the assessee is in clear violation of the provisions of section 24(b) of the Act and it cannot be allowed – Decided in favour of Revenue. Validity of assessment u/s 147 of the Act – Change of opinion – Held that:- There is no fresh basis for which the assessment was sought to be reopened - The AO is harping on the same material to canvass now the amount is not deductible - This amounts to change of opinion - There is no reference to any tangible material coming to the possession of the AO after the completion of the original assessment divulging the escapement of income – Relying upon CIT v. Kelvinator of India Limited [2010 (1) TMI 11 - SUPREME COURT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it has been discovered that the assessee firm reduced/deducted Rs.9,12,257/- on account of interest paid to partners, which is not allowable since, the assessee firm was not engaged in any business, therefore, partners are not entitle for interest as the same is admissible u/s 40(b) read with section 37(1) of the Income Tax Act, 1961 which is applicable only to firm assessable u/s 28 to 44 of the Income Tax Act and not under the head Income from House Property' u/s 22 of the IT Act. Hence, amount of Rs.9,12,257/- escaped assessment for the A.Y. 2004-05 by reasons on the part of the assessee to disclose fully truly all material facts necessary for its assessment. Therefore, I have reason to believe that income to the extent o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x under the head Income from house property.' The assessee claimed deduction of Rs. 9,12,257/-, being the amount of interest paid to partners on their capital contribution u/s 24(b) of the Act. Before proceeding further, it would be relevant to note that there are specific heads of income given under Chapter IV of the Act. Section 14 provides that the total income of the assessee shall be classified under five heads, one of which is Income from house property.' Admittedly, the assessee's income falls under the head Income from house property.' In that view of the matter, the deductions permissible in terms of section 24 alone can be allowed without reference to the deductions allowable under other heads including Profits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been relied by the Revenue in its ground of appeal, it is patent that deduction for interest u/s 24(b) of the Act can be allowed only where the property has been acquired, constructed, etc., with a borrowed capital and interest is payable in respect of such capital. No material worth the name has been placed on record to demonstrate that the payment of interest to partners on their capital accounts represented the borrowing made for acquiring, constructing, repairing, renewing or re-constructing the property, the income of which is chargeable u/s 24 of the Act. 6. The ld. CIT(A), while granting relief to the assessee, has heavily relied on the assessment order passed by the AO for assessment year 2006-07 granting deduction for interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the earlier year, the AO restricted the allowability of interest to Rs. 4,91,066/- as against Rs. 17,93,275/-. Apart from this addition of Rs. 13,12,214/- on account of interest, the AO also disallowed a sum of Rs.2,01,567/- representing lease permission charges, processing fees and maintenance charges. The assessee challenged the initiation of assessment proceedings before the ld. CIT(A), who accepted the assessee's claim by declaring the assessment proceedings null and void. The Revenue has challenged the decision taken by the ld. CIT(A) in annulling the reassessment. 10. We have heard the rival submissions and perused the relevant material on record. It is observed that the assessment order u/s 143(3) was originally passed on 19.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that there is no fresh basis for which the assessment was sought to be reopened. The AO is harping on the same material to canvass now the amount is not deductible. This in our considered opinion amounts to change of opinion. There is no reference to any tangible material coming to the possession of the AO after the completion of the original assessment divulging the escapement of income. The Hon'ble Supreme Court in the case of CIT v. Kelvinator of India Limited [(2010) 320 ITR 561 (SC)] has held that there can be no reopening of assessment simply on the basis of change of opinion. It has further been held in this case that there must be some tangible material with the Assessing Officer proposing to issue notice for reassessment lea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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