TaxTMI 
TaxTMI 
TaxTMI 
2023 (7) TMI 348
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....e Madras High Court approved another scheme of amalgamation between Sterlite Industries (India) Ltd. and other companies and Sesa Goa Limited on 25th March 2013. The name of the company, Sesa Goa Limited was changed to Sesa Sterlite Limited on 18th September 2013 and thereafter to Vedanta Limited on 21st April 2015. Petition was accordingly amended pursuant to leave granted by this court by its orders dated 6th January 2022 and 3rd February 2022. 3. Petitioner on 28th November 2003 filed return of income under Section 139 of the Act for AY-2003-2004 showing a total loss of Rs.13,52,36,525/-. Alongwith annual returns, petitioner also filed audited profit and loss account and balance sheet, as also the Tax Audit Report under Section 44AB of the Act and other documents. The return was processed under Section 143(1) of the Act and was subsequently selected for random scrutiny as per score based system. Statutory notices under Sections 143(2) and 142(1) of the Act were issued and petitioner responded to those notices. Petitioner also received letters dated 9th September 2005 and 26th October 2005 from the Assessing Officer (AO), calling upon petitioner to furnish various information an....
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.... loans taken by the assessee but the details available in Schedule 9 of the audited balance sheet of the company indicates that the amount of Rs.22,43,79,054/- consisted of interest on intercorporate deposits - Rs.17,20,75,343/-, guarantee commission-Rs.3,54,78,171/-, loan arrangement fees - Rs.1,60,79,000/-, trustee fees - Rs.7,45,583/- and bank charges-Rs.957/-. Therefore, since this break up indicates that Rs.22,43,79,054/- was not only on account of interest but other finance charges as well, the notice under Section 148 has been mechanically issued without any application of mind and without any reason to believe. 7. It is also submitted that just because the assessee revised the return of income for AY-2005-2006 by disallowing the expenses on account of interest income, the refund was for assessment year entirely different from the impugned assessment year, each assessment year is separate and that can never be a ground for re-opening the assessment. The primary thrust was, of course, on change of opinion. 8. Ms Sethna also submitted that in any event the interest on borrowing can never be capitalised because as held by the Apex Court in Deputy Commissioner of Income Tax Vs....
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....f a capital nature. The legislature has, therefore, made no distinction in Section 36(1)(iii) between "capital borrowed for a revenue purpose" and "capital borrowed for a capital purpose". An assessee is entitled to claim interest paid on borrowed capital provided that capital is used for business purpose irrespective of what may be the result of using the capital which the assessee has borrowed. Further, the words "actual cost" do not find place in Section 36(1)(iii) of the 1961 Act which otherwise find place in Sections 32, 32A etc of the 1961 Act. The expression "actual cost" is defined in Section 43(1) of the 1961 Act which is essentially a definition section which is subject to the context to the contrary." Paragraph 16 of Maharashtra Hybrid Seeds Co. Ltd.(Supra): "16 Coming to the third question, Mr. Suresh Kumar submitted that the Revenue's stand was that deduction for interest under Section 36(1)(iii) of the Act was allowable only if the assets acquired out of the borrowed capital has been put to use. Mr. Suresh Kumar in fairness submitted that the judgment of the Apex Court in Deputy Commissioner of Income Tax V/s. Core Health Care Ltd. (2008) 167 Taxmann 206 (SC) squ....
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....apital provided that capital is used for business purpose irrespective of what may be the result of using the capital which the assessee has borrowed. Further, the words "actual cost" do not find place in Section 36(1)(iii) of the 1961 Act which otherwise find place in Sections 32, 32A etc of the 1961 Act. The expression "actual cost" is defined in Section 43(1) of the 1961 Act which is essentially a definition section which is subject to the context to the contrary. 9. In the case of Commissioner of Income-tax v. Associated Fibre and Rubber Industries (P) Ltd. (1999) 236 ITR 471, the Division Bench of this Court held as follows: "Even though the machinery has not been actually used in the business at the time when the assessment was made, the same has to be treated as a business asset as it was purchased only for business purposes. In the circumstances, the interest paid on the amount borrowed for purpose of such machinery is certainly a deductible amount." In our view, if petitioner would succeed on the issue of change of opinion itself, we do not have to go further on the issue whether the interest paid on moneys for the purpose of business will be an item of expendit....
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....erest and other expenditure as revenue expenditure, in which petitioner has pitched its case as under: "The Assessee-Company is registered as a Non-banking Financial Company ("NBFC") with the Reserve Bank of India. Interest and other expenses incurred by the company is allowable as a deduction as the same is revenue in nature and has been incurred exclusively for the purpose of business, investment being a business for a NBFC. The assessee company submits that the interest expenses incurred by the assessee company is allowable as deduction under Section 36(1)(iii) of the Act. As the money is actually borrowed by the company, it has paid interest on the same and it is for the purpose of business of the company as the main business is to make investment since it is NBFC. The propositions laid down by the following case laws support the allowability of interest expenses." 11. After considering these submissions, the assessment order dated 6th March 2006 came to be passed. Mr. Suresh Kumar states there is no discussion in the assessment order. As held in Aroni Commercials Ltd. Vs. Deputy Commissioner of Income Tax-2(1) (2014) 44 taxmann.com 304 (Bombay), once a query is raised duri....
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....oceedings and the assessee has replied to it, it follows that the query raised was a subject of consideration of the Assessing Officer while completing the assessment. It is not necessary that an assessment order should contain reference and/or discussion to disclose its satisfaction in respect of the query raised. If an Assessing Officer has to record the consideration bestowed by him on all issues raised by him during the assessment proceeding even where he is satisfied then it would be impossible for the Assessing Officer to complete all the assessments which are required to be scrutinized by him under Section 143(3) of the Act. Moreover, one must not forget that the manner in which an assessment order is to be drafted is the sole domain of the Assessing Officer and it is not open to an assessee to insist that the assessment order must record all the questions raised and the satisfaction in respect thereof of the Assessing Officer. The only requirement is that the Assessing Officer ought to have considered the objection now raised in the grounds for issuing notice under Section 148 of the Act, during the original assessment proceedings. There can be no doubt in the present facts....