2025 (4) TMI 1883

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....hich do not call for recording of any specific finding. In the remaining three grounds of appeal, grievance of the assessee revolves around two fold, namely ; a) The ld. CIT(A) has erred in upholding the reopening of assessment by issuance of a notice under Section 148 of the Income Tax Act; b) The ld. CIT(A) has erred in upholding the addition of Rs. 48,62,035/- which was added by the AO with the aid of Section 36(1)(iii) of the Income Tax Act. 3. The brief facts of the case are that assessee company is a manufacturer and exporter of terry towels. It has filed its return of income on 29.10.2007 declaring loss of Rs. 86,40,279/-. The case of the assessee was selected for scrutiny assessment and a notice under Section 14....

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....s assigned by the AO are available at page 8 of the Paper Book which read as under : Disallowance of Interest under Section 36(1)(iii) :- A perusal of the Balance-Sheet for the A.Y. 2007-08 shows that there is a Capital work in progress as on 01.04.2006 at Rs. 12,17,65,666/- and as on 31.03.2007 at Rs. 6,43,261/-. The assessee has paid interest of Rs. 1,47,52,591/- on borrowed funds of Rs. 17,44,09,332/-.As per proviso to section 36(1)(iii) interest on borrowed funds used for procuring assets for extension of business are not to be allowed for the period till the assets is put to use for business purpose. Average investment in capital work in progress during the year is estimated at Rs. 6,12,04,463/- ( 12,17,65,666 + 6,43,....

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....rmation in his possession which exhibits escapement of income. This information should have a live nexus with the formation of belief that income has escaped. In the light of the above position of the law as applicable at that time for re-opening of assessment, if we examine the reasons, then it would reveal that AO was not able to lay his hands on any new information. He has perused the Balance Sheet for the assessment year 2007-08. Whether this Balance Sheet was considered by him or not when scrutiny assessment under Section 143(3) was made on 18.12.2009, the ld. Counsel for the assessee has brought to our notice a questionnaire dated 15.01.2009 whose copy is available at page No. 225 of the Paper Book. At Sr.No. 7 of this questionnaire, ....

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....sing Officer has further disallowed interest of Rs. 77,191/- u/s 36(1)(iii) which is unjust. The assessee has already capitalized the total interest on term loan taken for capital asset amounting to Rs. 18,65,819/- upto the date of capitalization of assets ie. 21st August, 2006. The statement of term loan account is enclosed. The interest on term loan should be capitalized upto 21 August 2006 as on this date the assets were put to use. The additions made after this date in these assets were for purchases of assets put to use within one to two weeks of their purchases." 6.2 I have perused the assessment order and examined the reply of the appellant. The appellant has not given the working of total loan on capital w....