TaxTMI 
TaxTMI 
2016 (7) TMI 930
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....al income of Rs. 6.88 crores (rounded off). Such return was taken in scrutiny. Assessing Officer passed his order under section 143(3) of the Act on 4.11.2011. To reopen such assessment, the Assessing Officer has issued impugned notice which as can be seen was done within four years from the end of relevant assessment year. To issue the notice, Assessing Officer recorded the following reasons : "... On verification of P&L Account (Schedule 11 : 'Other Expenses') of the assessee ending on 31.3.2009, it revealed that they had debited an amount of Rs. 1,74,79,414/- towards 'Product Development Expenses'. Since the assessment derives enduring benefit from this type of expenditure, the expenditure is capital in nature. As per se....
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....5.15 lakh which was to be brought to tax. 3.1 In view of the above facts, I have reason to believe that income to the tune of Rs. 45.15 lakhs chargeable to tax has been under assessed in the case of the assessee M/s. Fuse + Media Pvt. Ltd. for the assessment year 2009-10 and is required to be reassessed. 4. In view of above, I have reason to believe that income to the tune of Rs. 2.19 Cr (1.74 Cr. +45.15 lakhs) has escaped assessment." 2. The petitioner raised objections to the process of reopening under communication dated 11.6.2014. Such objections were rejected on 16.9.2014. 3. Learned counsel for the petitioner taking us through the material on record contended that the Assessing Officer had examined both the claims mentioned in the....
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....ll of its administrative applications. This system is called Fuse+Media Web Application (FMWA). b) Rs. 95,31,342 for the script, storyboards, writing and voice recording etc. for the animation episodes produced. The script and all the rights like copyrights, trade secret, mask work, rights, trademark, etc. thereto belong to the assessee i.e. the company. The breakup of, the above mentioned amount, as stated above, in enclosed herewith in Annexure No. 8. Please note that the stock of the assessee cannot be measured in terms of unit due to the nature of the stock." 6. In a further communication dated 4.10.2011, the assessee had pointed out as under : "Proportionate disallowance of interest on advance to subsidiary Rs. 4,372,389 FMPL has ....
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.... two international awards. As ultimately, FlPL has been furthering the business objective of FMPL by producing animation episodes, it was commercially expedient for FMPL to advance the said amount to FlPL to enable it to produce the said episodes. in fact, we Would like to bring to your notice that the said episodes have been purchased by FMPL in the subsequent year so that the same can be exploited commercially by FMPL. Given the above, advancing of loan by FMPL to FlPL should be considered as advancing of business of FMPL only. In this regard, we would like to bring to your good self's notice decision of the Hon'ble Supreme Court in the case of SA Builders Limited vs ClT and Anr(289 lTR 26) where in it has been held that where an advance....
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....ncern from the point of view of commercial expediency and not from the point of view whether the amount was advances for earning profits." The above observations of the supreme court clearly states that assessee would be entitled to deduction of interest paid on borrowed capital, even though the funds have been utilized for making advances to the subsidiaries where advancing of such funds to the subsidiary would be considered as a commercially expedient and prudent step. Further reliance can also be placed on the decision of the Hon'ble Madras High Court in the case of CIT vs. Sambandham Spinning Mills Limited (298 lTR 306) wherein the Hon'ble High Court has held that no disallowance of interest paid on borrowed capital be made when the ta....
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....ssessee, need not be elaborately dealt within an assessment order but the chain of events should show that there was application of mind. The view taken by the Assessing Officer should not be a mere view but a judicial view. Being a quasijudicial authority, the Assessing Officer cannot take a view, either against or in favour of the assessee/revenue, without making proper enquiries and without proper examination of the claim made by the assessee in the light of applicable law. Reference is made to the decision of Delhi High Court in the case of GEE VEE Enterprise v. Addl. CIT (99 ITR 375) wherein after considering the decision of Supreme Court in cases of Ram Pyari Devi Saraogi v. CIT( 67 ITR 84) and Smt. Tara Devi Agarwal v CIT (88 ITR 323....