AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2022 (1) TMI 945
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....nal, Mumbai by its order dated 09 January 2018 has sanctioned the Scheme of Arrangement between the Lodha Developers Private Limited and Palava Dwellers Private Limited and their respective shareholders and creditors. By the said Scheme, Palava Dwellers Private Limited was merged with Lodha Developers Private Limited. Subsequently, the name of Lodha Developers Private Limited was changed to Macrotech Developers Limited i.e., the petitioner with effect from 24 May 2019. 3. During the year under consideration, the petitioner had filed on 30 September 2012 e-return of income tax disclosing total income of Rs. 208,86,67,827/- and claimed deduction of interest expense amounting to Rs. 74,30,91,206/- in the computation of income under Section 36(1)(iii) of the Act. The petitioner had subsequently revised its income and filed revised return declaring total income of Rs. 120,94,29,942/- on 31 March 2014. 4. Thereafter, on 22 December 2014, a notice under Section 143(2) of the Act was issued to the petitioner calling upon the petitioner to attend the office of the Assessing Officer and produce the copies of balance sheet, profit and loss account, computation of income and audit report etc....
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....ned by the Accounting Standard 7 as well as guidance note on accounting for real estate transaction issued by the Institute of Chartered Accountants of India (ICAI). The said guidance note categorically states that all the expenses directly related to the project have to be carried over and debited to the cost of project. Such expenses can be claimed as deduction in the year in which the corresponding income of the project is credited in the books of account and offered to tax. The assessee had allocated all other expenses to the work in progress except interest. If the interest cost has been claimed in the year of its incurrence for the reason that it is periodic cost then going by the same logic the entire salary cost should also have been claimed as deduction for the same reason that it is also a periodic fixed cost. However, the assessee has allocated the salary cost to the work in progress which is directly related to the project. Thus, the treatments given by the assessee to expenses are contradictory to each other. It is not out of the place to state that the assessee had not followed the correct method of accounting for accounting the expenses towards the project being deve....
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....f the first proviso to Section 147 of the Act. 9. On the other hand, it has been urged on behalf of the Revenue that the reasons which have been indicated in the communication dated 27 March 2019 are sufficient to re-open the assessment. It was submitted that while finalizing the assessment for Assessment Year 2012-13, the Assessing Officer found that the assessee had calculated depreciation on goodwill by adopting wrong method of purchase. According to the learned counsel for the respondents, in the present case, the Assessing Officer has reasonable belief that income chargeable to tax has escaped assessment and on the basis of such belief the respondent authority is entitled to re-open the assessment. 10. It is not in dispute that by the notice under Section 148 issued on 27 March 2019, the assessment pertaining to the year 2012-13 was sought to be re-opened after the lapse of four years and assessment under Section 143(3) has been completed. First proviso to Section 147 applies when the re-assessment proceedings are initiated after four years from the end of the relevant assessment year. The said proviso reads as under:- "Provided that where an assessment under sub section (....
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.... our view, re-opening of the assessment without any basis and merely change of opinion is not permissible while exercising powers under Section 147 r/w Section 148 of the Act. In the present case, the reasons which have been recorded by the assessing officer for reopening of the assessment do not disclose that the assessee had failed to disclose fully and truly all material facts necessary for the purpose of assessment. The duty is cast upon the assessee to make true and full disclosure of the facts at the time of original assessment. The duty of the assessee in any case does not extend beyond making a true and full disclosure of primary facts. It is for the Assessing officer to draw the correct inference from the primary facts. If the assessing officer draws an inference which appears subsequently to be erroneous, mere change of opinion with regard to that inference would not justify initiation of action for reopening assessment. 12. In this context, the legal position is well settled. A profitable reference can be made to the judgement of the Delhi High Court in the case of CIT vs. Kelvinator of India Limited, (2002) 256 ITR 1 (Delhi) (FB) wherein, it was enunciated that a mere ....
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....make necessary enquiries and draw proper inference as to whether from the interest paid of Rs. 75,79,35,292/- an amount of Rs. 7,66,66,663/- has to be allowed as deduction under Section 57 of the Act or the entire interest expenses of Rs. 75,79,35,292/- should have been capitalized to the work in progress against claiming Rs. 7,66,66,663/- as deduction under Section 57 of the Act. The Assessing Officer had had all materials facts before him when he made the original assessment. When the primary facts necessary for assessment are fully and truly disclosed, the Assessing Officer is not entitled on change of opinion to commence proceedings for reassessment. Even if the Assessing Officer, who passed the assessment order, may have raised too many legal inferences from the facts disclosed, on that account the Assessing Officer, who has decided to reopen assessment, is not competent to reopen assessment proceedings. Where on consideration of material on record, one view is conclusively taken by the Assessing Officer, it would not be open to reopen the assessment based on the very same material with a view to take another view. As noted earlier, petitioner has filed the annual returns wit....