TaxTMI 
TaxTMI 
2014 (6) TMI 845
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....ital to the partners of the assessee firm. 3. Briefly stated, the facts of the case are that the assessee furnished its return which was processed u/s 143(1). Thereafter, notice u/s 148 was issued after recording the following reasons:- "Assessment in this case was completed u/s 143(1) on 10.06.2005 at an income of Rs.20,66,063/- issuing a refund of Rs.50,470/-. Now, 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 whi....
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....ed that the interest on partners' capital was allowed as deduction in the assessments framed u/s 143(3) of the Act for other years without raising any dispute having been raised by the AO. That is how the Revenue is aggrieved against the deletion of addition. 5. We have heard the rival submissions and perused the relevant material on record. It is not disputed that the only income of the assessee is chargeable to tax 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 A....
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....mputing income from house property. When the matter finally came up before the Hon'ble Punjab & Haryana High Court, their Lordships reversed the Tribunal order upholding granting of such deduction by noticing that there was no specific borrowing to acquire the property and further no relationship of borrower and lender came into existence and, as such, the interest was not deductible. From the above judgment, which has 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 ....
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....t the original assessment in this case was completed u/s 143(3) of the Act as against u/s 143(1) for the said earlier year. The AO recorded reasons almost on the same lines as those for assessment year 2004-05 with the further addition that the assessee claimed deduction of lease permission charges, processing fees and maintenance which were also not allowable u/s 24(b) of the Act. Following his view taken for 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 ini....
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....T(A) has also noticed that the reopening of the present assessment amounted to change of opinion. In this regard, it is observed that during the course of original assessment proceedings, the aspect of interest and other expenses now sought to be disallowed by the AO, was properly investigated and then decided. From the reasons recorded by the AO, as reproduced at page 1 of the assessment order, it is clear 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 ori....