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TMI Blog2014 (11) TMI 255X X X X Extracts X X X X X X X X Extracts X X X X ..... 14 - Shri H. L. Karwa And B. R. Baskaran (AM),JJ. For the Appellant : Shri Dines Vyas For the Respondent : Shri Rajesh Rajan Prasad ORDER Per B. R. Baskaran, Accountant Member: The appeal filed by the assessee is directed against the order dated 1.2.2005 passed by the ld.CIT(A)-19, Mumbai and it relates to the assessment year 1999-2000. 2. The grounds urged by assessee are related to the following issues : a) validity of re-opening of assessment u/s 147 of the Income Tax Act, 1961 (the Act); b) Disallowance of claim of interest paid under Income tax Act ₹ 3.87 crores; and c) validity of charging of interest u/ss 201(1A), 234C and 244A of the Act. 3. The facts relating to the case are stated in brief. The assessee filed its return of income for the year under consideration declaring a loss of ₹ 39,88,73,782/- under the normal provisions of the Income Tax Act, 1961( the Act) and income of ₹ 3,28,44,770/- under the provisions of Section 115JA of the Act. Along with the return of income, the assessee attached a sheet containing Notes forming part of return of income and the para 11 of the said Notes read as under:- During ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. The amount of interest paid ₹ 3,87,76,670.00 has been deducted and only the balance amount of Rs,9,38,24,849.00 has been offered for tax in the computation of income. Reliance is placed on the decision of Hon'ble Bombay Tribunal in the case of Cynamid India Limited for this claim. Suitable adjustment has been made in the computation of income. The AO has reopened the assessment to disallow the interest amount of ₹ 3.87 crores, which was paid to the income tax department, claimed by the assessee as deduction. The facts relating to the same are discussed in brief. During the year under consideration, the assessee has received interest income from the department on the refunds due to it for earlier assessment years to the tune of ₹ 13.26 crores. During this year, the assessee was also liable to pay interest under various provisions of the Act to the tune of ₹ 3.87 crores. Under normal course, the interest income of ₹ 13.26 crores shall be offered to tax and the interest payment of ₹ 3.87 crores shall not be claimed as deduction. Since, the interest payment was made to the Income Tax Department and interest income was received from the Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e jurisdictional High Court in the cae of Fomento Resorts and Hotels Ltd (supra) has been dismissed by the Hon'ble Supreme Court, vide order dated July 16, 2007. In sum and substance, the case of the Ld A.R is that the impugned assessment order is not valid, since the assessing officer has failed to furnish the reasons for re-opening of assessment to the assessee prior to the completion of the assessment. It is pertinent to note that the AO has extracted the reasons for reopening of assessment in the assessment order as under: The assessee company filed its return of income for the above assessment year on 30.12.99 declaring loss of ₹ 39,88,73,7821/-. The assessment u/s 143(3) was completed on 27.03.2 on a total income of ₹ 11,51,48,375/-. On verification of records, it is seen that the assessee had accounted a sum of ₹ 13,26,61,520/- as interest income received from Department. The department has also charged interest amounting to ₹ 3,87,76,670/-. The assessee company has deducted this amount while computing its income. The interest levied by the department under various provisions of Act is not an allowable ITA No.3455/M/2005 expenditure u/s 37. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e had placed reliance to put forth its claim on the decision rendered by the Tribunal in the case of Cynamid India Ltd (supra), but the said decision was rendered prior to the decision of Hon'ble Supreme Court referred above. He further submitted that the decision of the Apex Court is the law of land and hence the assessee could not have placed reliance on the Tribunal decision on this issue. 8. The Ld D.R further submitted that the assessing officer has extracted the reasons for reopening of assessment in the impugned assessment order. He further submitted that eventhough the reasons were not furnished to the assessee during the course of assessment proceedings, yet the assessee was aware of the reasons for reopening, since it had made a patently wrong claim on the basis of decision of Tribunal referred above. He submitted that the Hon'ble Apex Court does not enact any law, but only interprets the law, meaning thereby the decision of Hon'ble Supreme Court is applicble to the year under consideration, even though it was rendered subsequently. Accordingly, he submitted that the assessing officer was justified in forming belief that the claim for deduction of interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing a speaking order, before proceeding with the assessment in respect of the abovesaid five assessment years. In so far as the appeals filed against the order of assessment before the Commissioner (Appeals), we direct the appellate authority to dispose of the same, expeditiously. The Ld D.R submitted that the assessee in the case of GKN Drive Shafts (India) Ltd (supra) had received notices for reopening of assessments of SEVEN assessment years, viz., 1992-93 to 1998-99. The assessee challenged the validity of issuing notices u/s 148 of the Act for all the seven years by filing writ peitions before the Hon'ble Delhi High Court, but the High Court dismissed the writ petitions by holding that the petitioner therein was not justified in invoking the extraordinary jurisdiction of the Court at that stage as it was premature. The assessee challenged the said order before the Hon'ble Supreme Court. It is pertinent to note that during the pendency of the appeals, the assessing officer had completed the assessments relating to the assessment years 1995-96 and 1996-97 against which appeals were preferred before ld CIT(A) and were pending. The assessments of the remaining fiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Court shall prevail over the decision rendered by Hon'ble High Courts and accordingly pleaded that the Tribunal should follow the decision of Hon'ble Supreme Court. 13. The Ld D.R further submitted that the above said procedures, viz., furnishing of reasons, filing of objections, disposing of objections by a speaking order have been prescribed by the Hon'ble Supreme Court and the non- compliance of the same can only be considered as procedural lapse, which can be cured. The Ld D.R further submitted that the decision rendered by a Court will have to be understood in the context in which it has been rendered. It cannot be read like a statute. A decision must be read in the context in which it appears to have been stated. Such a decision cannot be read in the manner as to nullify the express provisions of an enactment. Accordingly, the Ld D.R submitted that the order of the Hon'ble Supreme Court in the case of GKN Driveshafts India Ltd (supra) was made by way of clarification in order to make way for the stautory authorities to deal with the adjudication covering assessments with the objective of providing an element of fairness in the process of adjudication and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee were furnished only after completion of the assessment. The Tribunal following the judgment of this court in the case of CIT Vs. Fomento Resorts and Hotels Ltd, Income tax Appeal No.71 of 2006 decided on November 27, 2006, has held that though the reopening of the assessment is within three years from the end of the relevant assessment year, since the reasons recorded for reopening of the assessment were not furnished to the assessee till the completion of assessment, the reassessment order cannot be upheld. Moreover, special leave petition filed by the Revenue against the decision of this court in the case of CIT Vs. Fomento Resorts and Hotels Ltd has been dismissed by the apex court, vide order dated July 16, 2007. In this view of the matter, the present appeal is also dismissed with no order as to costs. Though the arguments advanced by the Ld D.R were attractive and there may be merits therein. However, in view of the decision of Hon'ble jurisdictional Bombay High Court referred above, which is binding on us, we hold that the impugned assessment order cannot be upheld, since the assessing officer has failed to furnish the reasons for reopening to the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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