AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2015 (4) TMI 397
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....he assessment, beyond 4 years but within 6 years after the original assessment under section 143(3) of the Income tax Act, 1961 was completed on the issue which was already dealt with in the proper manner in the original assessment. 1.2 On the facts and circumstances of the case and in law the Commissioner of Income Tax, Appeal-4 Mumbai erred in confirming the additions made on account of interest on the Non Performing Assets amounting to Rs. 27,41,505/- under the provisions contained in section 43D of the Income tax Act, 1961 read with Rule 6EB of the Income tax Rules 1962. 1.3 Your appellant craves leave to add, to modify or delete all or any of the above grounds". 4. The facts are that the assessee is carrying on the business of providing long term hosing finance and also maintaining investment portfolio. The regular assessment was framed u/s 143(3) vide order dated 12.10.2006. The AO while processing the assessment for assessment year 2008-09, reopened the assessment for the current year by the issue of notice u/s 148 on 02.03.2011, which was received by the assessee on 09.03.2011. The reasons as recorded by the AO are, "Reasons for Re-opening the assessment in the case Of ....
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....lier, after four years. 10. The AR submitted that since the reason as recorded and communicated to the assessee, fell within the proviso to section 147. The AR submitted that since the issue was considered by the AO in regular assessment proceeding of the assessment was bad in law. 11. The AR, therefore submitted that the revenue authorities erred in proceeding to reopen the assessment framed u/s 143(3). 12. The DR primarily relied on the orders of the revenue authorities. 13. We have heard the arguments and have pursued the papers filed by the assessee during the course of regular assessment proceedings as well as in the current proceedings. 14. It is undeniable fact that the issue was raised by the AO in the original/regular assessment proceedings and was dealt with by the AO. 15. This is evident from the note as filed by the assessee as well as the specific query raised by the AO in the questionnaire. 16. In this circumstance, the fact that the current AO proceeded to reopen the assessment on the issue already dealt with by the AO in regular assessment, clearly falls within the expression, "change of opinion", which was dealt with by the Hon'ble Delhi High Court in the ca....
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....1.3 Your appellant craves leave to add, to modify or delete all or any of the above grounds". 24. We find that the reopening has been done on identical facts as in assessment year 2004-05, wherein we have cancelled the notice u/s 148, thereby annulling all consequential proceedings. 25. Since the issue, reasons are the same and action u/s 148 is taken after four years and after regular assessment proceedings u/s 143(3), the reassessment proceedings have been held to be bad in law. We, therefore, following our order in assessment year 2004-05, cancel the notice u/s 148 and as a consequence all the proceedings are annulled. 26. Ground no. 1 & 1.1 are allowed. 27. Ground no. 1.2 becomes academic. ITA No. 6797/Mum/2012 : Asst Year 2009-10 : 28. The following grounds have been raised: "1 On the facts and circumstances of the case and in law, the learned Commissioner of Income Tax, Appeal-4 Mumbai erred in confirming the additions made the Assessing Officer on account of expenditure incurred by way of interest under section 14A of the Income Tax Act, 1961 amounting to Rs. 1,13,18,201/- in relation to exempt income, without appreciating the facts and the submission made during the ....
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....he same are reproduced hereunder for your ready reference. NOTES ON CLAUSES "Clause 11 seeks to insert a new section 14.4 in the Income Tax Act relating to expenditure incurred in relation to in corn e not includible in the total income. The new section seeks to provide that no deduction shall be made in respect of expenditure incurred by the assessee in relation to income, which does not form part of the total income under the Act. This amendment will take effect retrospectively from 1st April, 1962 and will, accordingly, apply in relation to the assessment year 1962-63 and subsequent years". MEMORANDUM EXPLAINING THE PRO VISION OF SECTION 14A OF THE INCOME TAX ACT No deduction for expenditure incurred in respect of exempt in corn e against taxable income. "Certain incomes are not includible while computing the total income, as these are exempt under various provisions of the Act. There have been cases where deductions have been claimed in respect of such exempt income. This in effect means that the tax incentive given by way of exemptions to certain categories of' income is being used to reduce also the tax payable on the nonexempt income by debiting the expenses incurred....
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....roviding loans to then' customers for house building activities and left with no funds for using the same for making any in vestments during the previous year relevant to the assessment year in appeal. Further, lenders always put a stiff conditions in their sanction memo that the end use of the funds borrowed is for the purpose of business only and not for any non business purposes. Further, the appellant submits that, on the review of the financials for the said year, it will be abundantly clear that there were no new investments made during the previous year and that investments shown as per the audited accounts were all made during the earlier periods; the income if any earned from such investments were also offered to tax, in those periods when they were liable to tax. Also, the provisions of section 14A of the Act have to be applied on year to year basis for the expenditure if any incurred and the same read with rule 8D could not be considered on an assumption basis. The above principles have been well settled in the following judicial pronouncements Auchtel Products Ltd., Vs. ACIT (2012) 22 Taxmann.com 99 (ITAT Mumbai) Balarampur Chini Mills Ltd, Vs. DCIT (2012) Taxmann.....