TaxTMI 
TaxTMI 
2023 (8) TMI 818
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....any engaged in the manufacturing of Engineering Goods. For the Assessment Year 2011-12, the assessee filed its Return of Income declaring a loss of Rs. 1,09,53,204/- under the normal provisions of the Act and Book Profit u/s. 115JB of the Act of Rs. 15,28,44,072/- under the MAT provisions. Since the tax under the MAT provisions was higher, tax of Rs. 3,04,62,588/- was paid by the assessee as per MAT provisions. The Return of Income was taken up for scrutiny assessment and regular assessment u/s. 143(3) dated 21-02-2014 assessing the total income at Rs. 1,87,61,266/-. This assessment order was challenged before the Ld. CIT(A)-I, Baroda and based on CIT(A)'s order the assessment was revised at a loss of Rs. 4,32,59,239/- vide giving effect order dated 17-07-2015 by the A.O. In the meantime the assessment was reopened by issuing notice u/s. 148 dated 27-02-2015, on the ground (a) that the assessee failed to remit TDS amount received from NRI parties which is disallowable u/s. 40(a)(i) of the Act and (b) payment of interest on conversion of loan into equity shares is not an allowable expenditure u/s. 43B of the Act. 2.2. The assessee filed its objection on the reopening of assessment ....
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....est to that extent. In essence there will be no further outstanding Interest to that extent. Consequently, the situation where an interest payable on loan is converted into shares in the name of lender/creditor is different from the situation envisaged in Explanation 3C to Section 438 of the Act viz., conversion of interest into "a loan or borrowing". In the latter instance, the liability continues, although in a different from. However, where the interest or a part thereof is converted into equity shares, the said interest amount for which the conversion is taking place is no longer a liability." This is not a case where the interest liability has been converted into a loan or borrowing or debenture where the liability to pay is deferred to a future date. This a case of complete extinguishment of liability. Therefore the said conversion of interest into shares should be taken as actual payment under 43B and thus allowable. The ground of appeal is thus allowed." 4. Aggrieved against the same, the Revenue is in appeal before raising the solitary Ground of Appeal: 1. "Whether on the facts and circumstances of the case and in law, Ld. CIT(A) was justified in deleting the additi....
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....s appearing for the Revenue strongly objected to the entertainment of Application under Rule 27 of the ITAT Rules and submitted the assessee ought to have filed regular appeal or Cross Objection as again the Revenue appeal, however having not done so, the assessee is not entitled to file the present Application under Rule 27 of the ITAT Rules. 6.1. In reply, Ld. Counsel Shri Manish J Shah appearing for the assessee drawn our attention to the Co-ordinate Bench decision in the case of ACIT Vs. Gujarat Energy Transmission Corporation Ltd. in ITA No. 851/Ahd/2018 dated 28-07-2023 and Hon'ble Bombay High Court judgment in the case of Peter Vaz Vs. CIT, Central Circle reported in (2021) 128 taxmann.com 180 and thereby submitted to entertain the application made under Rule 27 of the ITAT Rules. 7. We heard both parties extensively and decide first the Application filed under Rule 27 of the ITAT Rules. This issue was considered by the Co-ordinate Bench of this Tribunal in the case of ACIT Vs. Gujarat Energy Transmission Corporation Ltd. (cited supra) wherein it was held as follows: "....Non-filing of cross objection by the Assessee/Revenue and filing Application under Rule 27 of the IT....
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....eld and observed as under: "7. The High Court, in our view, was clearly in error in holding that the appellant not having filed a memorandum of cross-objections in terms of Order XLI Rule 22 of the Code, could not challenge the finding of the trial court that the suit was not barred by Order II Rule 2 of the Code. The respondent in an appeal is entitled to support the decree of the trial court even by challenging any of the findings that might have been rendered by the trial court against himself. For supporting the decree passed by the trial court, it is not necessary for a respondent in the appeal, to file a memorandum of cross-objections challenging a particular finding that is rendered by the trial court against him when the ultimate decree itself is in his favour. A memorandum of cross-objections is needed only if the respondent claims any relief which had been negatived to him by the trial court and in addition to what he has already been given by the decree under challenge. We have therefore no hesitation in accepting the submission of the learned counsel for the appellant that the High Court was in error in proceeding on the basis that the appellant not having filed a mem....
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....jection even when an appeal has been preferred by the other party, from that it is not possible to infer that the said party has accepted the order or the part thereof which was against the respondent. The Tribunal has, in the present case, unfortunately drawn such an inference which is not supported by the plain language employed by the provision. 20. If the inference drawn by the Tribunal is accepted as a correct proposition, it would render Rule 27 of the Tribunal Rules redundant and nugatory. It is not possible to interpret the provision in such manner. Any interpretation placed on a provision has to be in harmony with the other provisions under the Act or the connected Rules and an interpretation which makes other connected provisions otiose has to be avoided. Rule 27 of the Tribunal Rules is clear and unambiguous. The right granted to the respondent by the said Rule cannot be taken away by the Tribunal by referring to provisions of Section 253(4) of the Act. The Tribunal was, therefore, in error in holding that the finding recorded by the Commissioner (Appeals) remained unchallenged since the assessee had not filed cross objections." 8.1. Thus we entertain the application....
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....ction 153C of the IT Act. Having regard to the provisions of rule 27 referred to above, the ITAT in our opinion should have permitted the assessees who were Respondents before it, to support the orders of CIT (Appeals) on this ground, even without the necessity of filing any cross-objections." ....................................... "38. In the present case, it is not as if the issue of non-fulfillment of jurisdictional parameters of Section 153C was raised but rejected by the CIT (Appeals). Such an issue was not raised before the CIT (Appeals). Having regard to the provisions of Rule 27 of the Appellate Tribunal Rules, 1963 as also the provisions of section 260A(7) read with Order XLI Rule 22 of CPC as interpreted by the Hon'ble Supreme Court in S. Nazeer Ahmed (supra) we think that the ITAT should not have precluded the assessees from raising the issue in the appeals instituted by the Revenue, even without the necessity of filing any cross-objections. Accordingly, the additional substantial question of law is required to be answered in favor of the Appellants/assessees and against the Revenue." 7.2. Thus the Hon'ble High Court of Bombay directed the Tribunal to entertain....
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....e fact that the revenue has accepted the said decision, the court does not find any reason to refer the matter for consideration to a Larger Bench. 12. In the light of the decision of this court in the case of India Gelatine and Chemicals Ltd. (supra), having regard to the fact that even if the entire amount which is proposed to be added by the Assessing Officer is sustained, there would be no addition to the tax liability of the petitioner and the petitioner would still be governed by the provisions of section 115JB of the Act and assessed on the same book profit, it cannot be said that there was sufficient material before the Assessing Officer to form the belief that income chargeable to tax has escaped assessment. The impugned notice issued under section 148 of the Act, therefore, cannot be sustained. 13. For the foregoing reasons, the petition succeeds and is, accordingly, allowed. The impugned notice dated 02.03.2015 issued by the respondent under section 148 of the Income Tax Act, 1961 is hereby quashed and set aside. Rule is made absolute, accordingly, with no order as to costs." 9. Per contra, Ld. CIT-DR submitted that the reopening of assessment is valid in law as the....