INCOME TAX ACT, 1961

Section 147

Reassessment - Validity - Change of opinion by AO -

AO reopened assessment so as to disallow deduction claimed by assessee under section 57(iii) in respect of interest expense on the reasoning that same was of capital in nature. Held: During the course of original assessment proceedings assessee made full and true disclosure in respect of interest expense in its audited financial statement, ROI. After considering such details/information, AO had passed original assessment order under section 143(3) in which he allowed deduction under section 57. After original assessment, AO did not find any fresh information/material yet AO re-opened assessment under section 147 and disallowed interest expense claimed under section 57 which was nothing but mere fresh application of mind by AO to same set of facts based on change of opinion which was bad in law. Accordingly, reassessment was invalid, hence quashed.

Relied:CIT v. Kelvinator of India Ltd. (2010) 320 ITR 561 (SC) : 2010 TaxPub(DT) 1335 (SC), Asian Paints Ltd. v. DCIT (2009) 308 ITR 195 (Bombay) : 2009 TaxPub(DT) 0640 (Bom-HC) and Asteriods Trading & Investments (P) Ltd. v. Dy. CIT (2009) 308 ITR 190 (Bom) : 2009 TaxPub(DT) 643 (Bom-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2007-08

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