Gujarat High Court
National Dairy Development Board vs Assistant Commissioner Of Income Tax on 3 August, 2016
Author: Akil Kureshi
Bench: Akil Kureshi, A.J. Shastri
C/SCA/18773/2014 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 18773 of 2014
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NATIONAL DAIRY DEVELOPMENT BOARD....Petitioner(s)
Versus
ASSISTANT COMMISSIONER OF INCOME TAX....Respondent(s)
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Appearance:
MR B S SOPARKAR, ADVOCATE for the Petitioner(s) No. 1
MR KM PARIKH, ADVOCATE for the Respondent(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI
and
HONOURABLE MR.JUSTICE A.J. SHASTRI
Date : 03/08/2016
ORAL ORDER
(PER : HONOURABLE MR.JUSTICE AKIL KURESHI)
1. The additional documents supplied by the learned counsel for the petitioner are taken on record.
2. The petitioner - National Dairy Development Board (for short 'NDDB') has challenged a notice dated 31.3.2014 issued by the respondent - Assessing Officer for reopening the petitioner's assessment for the Assessment Year 2009-10.
3. Brief facts are as under :
The petitioner - NDDB had filed the return of income for the Assessment Year 2009-10 on 11.9.2009 declaring Nil income and carry forward long term capital loss of Rs.33.97 Page 1 of 18 HC-NIC Page 1 of 18 Created On Sat Aug 06 02:48:56 IST 2016 C/SCA/18773/2014 ORDER lacs (rounded off). Such return was taken under scrutiny by the Assessing Officer, who passed the order of assessment under Section 143(3) of the Income-Tax Act,1961 (for short 'the Act') on 4.11.2011 computing the petitioner's total income at Rs.52.61 lacs. To reopen such assessment, the Assessing Officer issued the impugned notice. For issuing such a notice, Assessing Officer had recorded the following reasons :
"REASONS FOR ISSUE OF NOTICE U/S.148 OF THE IT ACT,1961.
The assessee had filed its return of income for the assessment year 2009-10 on 11.9.2009 declaring total business loss at Rs.62,18,088/- and long term capital loss at Rs.33,97,340/-. The assessment was completed u/s.143(3) of the Income-Tax Act,1961 on 4.11.2011 determining total income at Rs.52,61,12200/- and long term capital loss at Rs.33,97,340/-.
2.i) On examination it was found that the assessee is assessed as company. As per provision of Section 114JF(4) every company is required to furnish a report in the prescribed from 29B. It is observed that the assessee company failed to compute book profit and failed to furnish report in prescribed form 29B from the chartered accountant. The book profit of the assessee worked out to Rs.51,85,10,000/- and MAT liability works out to Rs.5,71,91,653/-. Since the tax liability the assessee as per income assessed under normal provision of the act is more than the tax liability under MAT, there is presently no tax liability however MAT liability is to be worked out as per provision of section 115JB of the IT Act which would be tax liability of the assessee in the event of assessee succeeding in appeal.
(ii) On examination, it is found that the assessee has claimed deduction of Rs.11,18,81,780/- on account of bed debts. It is further noticed that an amount of Rs.8,51,00,000/- was received by the assessee as a Page 2 of 18 HC-NIC Page 2 of 18 Created On Sat Aug 06 02:48:56 IST 2016 C/SCA/18773/2014 ORDER onetime final settlement of this loan which was required to be deducted from the claim of bad debts of Rs.11,18,81,780/-. Therefore, bad debts to the extent of Rs.2,67,81,780/- was only allowable u/s.36(20(ii) of the IT Act instead of claim of bad debts of Rs.1,18,81,780/-.
Thus an amount of Rs.8,51,00,000/- is required to be disallowed out of claim of bad debts.
(iii) On examination, it is found that the assessee has claimed expenditure under the head professional services & legal fees and which are of personal in nature and not expended wholly and exclusively for the purpose of business of the assessee. The expenditure of Rs.75,000/- was in the nature of personal expenditure and of Rs.93,55,633/- was in the nature of expenditure relatable to the other assessee. Accordingly, the expenditure amounting to Rs.94,30,633/- is not an allowable expenditure in terms of provisions of section 37 of the Act and is required to be disallowed.
(iv) The assessee has claimed expenditure amounting to Rs.3,15,90,000/- on account of the premium paid on purchases of debenture/bond in govt. companies / financial institution and debited the same against interest income. The said expenditure was claimed by the assessee as revenue expenditure whereas it was required to be capitalized tot he cost of investment since the assessee is not a bank and there is no mandatory requirement for the assessee to make such investment. Accordingly, the non capitalization of said expenditure as resulted in under assessment to tune of Rs.3,15,90,000/-.
3. In view of the above facts and circumstances, I have reason to believe that the income as mentioned above has escaped assessment within the meaning of Sec.147 of the Income Tax Act,1961 for the assessment year 2009-10. I therefore, issue notice u/s.148 of the act for A.Y.2009-10 to the assessee."
4. The petitioner raised objections to the notice for reopening under a letter dated 20.8.2014. Such objections were, however, rejected by the Assessing Officer by an order dated 11.12.2014.
Page 3 of 18HC-NIC Page 3 of 18 Created On Sat Aug 06 02:48:56 IST 2016 C/SCA/18773/2014 ORDER
5. From the record it can be seen that the impugned notice has been issued within a period of 4 years from the end of relevant assessment year. With this background in mind referring to the reasons recorded by the Assessing Officer, learned counsel for the petitioner raised the following contentions ;
(i) Regarding the first ground mentioned in the reasons, namely, a possibility MAT liability, learned counsel submitted that the petitioner is not a company and therefore, not subjected to provisions of Section 115JB of the Act. In any case, mere possibility that MAT provisions would apply, would not be a ground to hold that income chargeable to tax has escaped the assessment for which reopening is necessary.
(ii) With respect to Ground Nos.2 and 3 as mentioned in the reasons recorded, learned counsel submitted that these issues were scrutinized by the Assessing Officer during the original assessment. The Assessing Officer made no disallowance in the order of assessment. Any attempt on his part to reopen the assessment therefore, would be based on change of opinion. Even otherwise there was no escapement of income as suggested by the Assessing Officer on these issues.
(iii) With respect to 4th ground, learned counsel submitted that assessee had not claimed the expenditure of Rs.3.15 crores (rounded off) as suggested by the Assessing Officer and the entire amount was added back and offered to tax.
(iv) Learned counsel lastly contended that the notice for Page 4 of 18 HC-NIC Page 4 of 18 Created On Sat Aug 06 02:48:56 IST 2016 C/SCA/18773/2014 ORDER reopening was issued at the instance of the audit party and therefore, was not valid.
6. On the other hand, learned counsel, Mr.K.M.Parikh for the department opposed the petition contending that Assessing Officer had recorded proper reasons for issuing the notice for reopening. Various issues mentioned in the reasons were not examined during the scrutiny assessment. The notice which has been issued within a period of 4 years from the end of relevant assessment year therefore, is valid.
7. Having thus heard learned counsel for the parties, we may deal with the 4 grounds mentioned by the Assessing Officer in the reasons recorded one by one. The first ground pertains to the possible MAT liability. The Assessing Officer noted that in the order of assessment, book profit of the assessee was worked out at Rs.51.85 crores. The MAT liability would work out to Rs.57.1 crores. Since the tax liability on the assessee as per the normal computations is higher than the tax liability under the MAT provisions, at present there is no tax liability arising. However, if the assessee succeeds in appeal against the order of assessment, the question of applying MAT provisions would arise. In our opinion, these reasons by itself would not be sufficient to permit reopening of the assessment as was held by this Court in identical situation concerning this very assessee in our order dated 18.7.2016 in SCA No.2524 of 2016 in which following observations were made :
"4. Having heard learned counsel for the parties and having perused reasons on record, it emerges that even Page 5 of 18 HC-NIC Page 5 of 18 Created On Sat Aug 06 02:48:56 IST 2016 C/SCA/18773/2014 ORDER as per the Assessing Officer, presently there is no escapement of income chargeable to tax. If we put the reasons cited by the Assessing Officer in simple terms, his case is that by making some additions and disallowances in the order of assessment, the assessee has been taxed. As per the income so computed, the provision for Minimum Alternative Tax would not apply. However, the assessee has challenged such additions and disallowances. If these additions and disallowances are set aside, the net income of the assessee would dip below, the minimum prescribed for a company and therefore, the assessee would be covered under the MAT regime. In the original assessment, no computation of MAT was carried out. In short, the apprehension of the Assessing Officer is that if the appeal by the assessee in connection with the assessment order in question is allowed, there may arise the question of applying MAT formula.
5. For various reasons, reopening of assessment cannot be permitted on such ground. Firstly even as per the Assessing Officer, presently there is no escapement of income chargeable to tax. Secondly, and equally importantly, if the assessee succeeds in appeal, by virtue of which, the normal tax computation comes to below the prescribed limit so as to kickin MAT provisions, the same can always be applied as a consequence of the appellate order or by way of giving effect to the order in appeal. To this, even learned counsel for the petitioner raised no dispute, of course, except for contending that whether the MAT provision applies to the petitioner at all, itself would be a question which the petitioner can even at that stage raise before the authority."
8. Providing the same safeguards as mentioned in the said order, this ground of the Assessing Officer for reopening is turned down.
9. The ground No.2 mentioned in the reasons recorded pertains to a claim of deduction of Rs.11.18 crores (rounded off) on account of bad debts. Assessing Officer noticed that Page 6 of 18 HC-NIC Page 6 of 18 Created On Sat Aug 06 02:48:56 IST 2016 C/SCA/18773/2014 ORDER the assessee had received a sum of Rs.8.51 crores as one time full and final settlement of the loan. According to him, therefore after deducting such sum from the loan amount of Rs.11.18 crores, the balance of Rs.2.67 crores (rounded off) alone was allowable under Section 36(2)(ii) of the Act. Instead the assessee had claimed the entire amount of Rs.11.18 crores. Thus, said sum of Rs.8.51 crores was required to be disallowed towards the claim of bad debts.
10. In the context of this ground, the assessee in the objections raised before the Assessing Officer had pointed out as under :
"B. Bad debts written off :
NDDB had given loan to Regional Telibiya Utpadak Sangh Ltd. Mehsana, i.e. Mehsana Oil Union, from which Rs.11.18 crores of principal amount and Rs.11.13 crores of interest was receivable in aggregate.
A one-time settlement was reached with the said party and the party paid Rs.8.51 crores as full and final settlement against its total outstanding against principal & loan.
As per 3.9 of the terms of the original loan agreement any payments due and payable are to be appropriated in the following manner :
1. Towards other costs, charges, expenses and other money.
2. Interest for delayed payment of instalments of principal and interest.
3. Towards interest.
4. Towards instalment of principal due.
Accordingly, NDDB adjusted the amount received of Page 7 of 18 HC-NIC Page 7 of 18 Created On Sat Aug 06 02:48:56 IST 2016 C/SCA/18773/2014 ORDER Rs.8.51 crores against the interest outstanding of Rs.11.13 crores and the balance interest amount of Rs.2.62 crores was written of against the provisions.
The principal loan amount of Rs.11,18,81,780/- which was not recovered were written off to the Income & Expenditure A/c and reducing the party account to Nil.
NDDB has satisfied the conditions prescribed under section 36(1)(vii) read with section 26(2) of the Act, the bad debts has been written off as irrecoverable in the books of account and the amount written off represents the money lent in the ordinary course of the business of money-lending which is carried on by NDDB as Public Financial Institution. Accordingly the amount written off is rightly allowed as deduction in the regular assessment.
In view of these facts, since NDDB has written off the amount in the books of accounts the bad debt write off has been correctly allowed.
As per NDDB it is entitled to deduction of Rs.2.62 crores of interest which was not recovered and was written off against the provision, though not claimed in the return nor assessment."
11. In the additional documents provided today, the petitioner has produced a statement of bad debts written off during the said year which contains the following information :
"Statement of Bad Debts Written Off Particulars Principal Amt. (Rs.) Interest Amt.(Rs.) Balance Outstanding 111881781 111324442 Adjustment of amount received in - 85100000 One Time Settlement Net Balance 111881781 26224442
12. As per the case of the petitioner, the principal sum of the loan was Rs.11.18 crores and there was accumulated unpaid Page 8 of 18 HC-NIC Page 8 of 18 Created On Sat Aug 06 02:48:56 IST 2016 C/SCA/18773/2014 ORDER interest of Rs.11.13 crores on such loan. Thus, when the debtor paid Rs.8.51 crores, he discharged only partially the interest liability. The entire principal sum of Rs.1.11 crores remains outstanding and was written off and was in addition to the interest amount of Rs.2.62 crores which also remained unpaid and was written off.
13. Quite apart from this explanation, we notice that during the scrutiny assessment, this question had come up for consideration by the Assessing Officer. In a letter dated 25.7.2011, the Assessing Officer had called upon the petitioner to justify this claim as under :
"17. Justify claim of bad debts written off of Rs.11.18 crores debited to income and expenditure a/c."
14. In reply to such query, the petitioner under a letter dated 25.8.2011 had conveyed the following :
"Reply to Point no.17 (Justification of bad debts written off) During the year under consideration NDDB has written off as bad debts Rs.11,18,81,780.93 on one time settlement with Regional Telibiya Utapdak Sangh Ltd.
Mehsana in respect of the loan given to them. This has been done after the receipt of Rs.8.51 crores from the said party in full and final settlement towards outstanding. NDDB has written off the principal amount of Rs.11,18,81,780.93 by debiting the Income and Expenditure account. Due to this write-off, loan account of the party became nil. Copy of account of the said party evidencing the write off is enclosed at Annex.L. It is submitted that said amount written off during the year satisfied all the conditions prescribed under section 3691)(vii) read with section 36(2) of the Act. Therefore, Page 9 of 18 HC-NIC Page 9 of 18 Created On Sat Aug 06 02:48:56 IST 2016 C/SCA/18773/2014 ORDER total amount written off is allowable as deduction. In this respect we also rely on the decision of Supreme Court in case of TRF Vs. CIT, Ranchi 230 CTR 14."
15. The petitioner had also produced the accounts showing the said loan of Rs.11.18 crores which had remained outstanding and which was written off.
16. In the final order of assessment, the Assessing Officer made no disallowance against this claim. In other words, without giving reasons he accepted the petitioner's version of written off of the bad debts of Rs.11.18 crores. The Assessing Officer having scrutinized the claim in the final order of assessment accepted the claim though without stating the reasons. Any attempt on his part to reopen the issue is based on change of opinion.
17. The 3rd ground mentioned in the reasons recorded by the Assessing Officer refers to the claim of expenditure under the head of 'Professional Services and Legal Fees'. According to him, the sum of Rs.75,000/- expended under this was in the nature of personal expenditure and further sum of Rs.93.55 lacs was in the nature of expenditure relatable to other assessee. In this respect, in the objections raised by the petitioner, following averments were made :
"C. Legal Fees :
In the assessment proceedings under section 143(3), the AO had asked to furnish the details regarding claim of legal fees vide point 3 of the notice dated 25.7.2011. We had vide our letter dated 25.8.2011 given our reply enlisting in detail the nature and purpose of various expenditures incurred on legal fees vide Annexure-B1 Page 10 of 18 HC-NIC Page 10 of 18 Created On Sat Aug 06 02:48:56 IST 2016 C/SCA/18773/2014 ORDER (relevant invoices page 202 to 206). We had also enclosed the copy of the invoices in respect of all the expenses. The AO was satisfied with our explanations and considering the said reply, did not make any disallowance regarding the same while completing assessment u/s.143(3)."
C. Legal fees :
In order to help the Salt Farmers, NDDB initiated in forming Sabarmati Salt Farmer Society. As per the Memorandum of Association of the Society, Chairman of NDDB shall be the Chairman of the Society.
A criminal case was filed against the said society under PFA Act. Considering the society had become defunct and NDDB's chairman was the chairman of the society, the case was defended by NDDB.
In this regard, NDDB made payment to Advocate Nageswara Rao of Rs.75,000/- on 29.1.2009.
Considering the facts mentioned above, the legal expenses of Rs.75,000/- are allowable as business expenditure under section 37 of the Act.
D. Professional fees :
NDDB has drawn up National Dairy Plan (NDP). The implementation of the same was a complex task which required time, investment and enhanced professional management skills. Therefore, to accomplish this task NDDB was considering the decision to introduce the strategic partner in its subsidiary company, Mother airy Fruits & Vegetables Pvt. Ltd. (MDFVL).
Generally such specialized issues are required to be examined by a Merchant Banker / Investment Banker, who evaluates the business plan and derives the requirement of fund. Based on their valuation, they would also advise on the proportion of dilution of shareholding by the promoter / fresh issues and extent of debt to be raised.
Accordingly as per advice of Board members, SBI Capital Markets Ltd. and Matt Macdonald were Page 11 of 18 HC-NIC Page 11 of 18 Created On Sat Aug 06 02:48:56 IST 2016 C/SCA/18773/2014 ORDER appointed by NDDB to value the equity shares and Assets of MDFVL located all over India.
For ease of operations, MDFVL had made payment of the professional fees of Rs.80,92880/- and NDDB had reimbursed the same to MDFVL on 31.3.2009.
The expenditure is incurred by NDDB to meet the objective of development of the Dairy industry in India. Since the expenses have been incurred wholly and exclusively for the purpose of business of the assessee, the said expenditure is as an allowable expenditure under section 37 of the Act."
18. Apart from these objections, during the original assessment also, this question had come up for consideration before the Assessing Officer when under a letter dated 25.7.2011 he asked the petitioner to supply the following details :
"3. In respect of the following expenses, please furnish party wise details along with full name and complete communication addresses. PAN & TDS deducted and/or paid (as may be applicable to the relevant exp.) a. Communication charges of Rs.100000/- and above.
b. Legal fee of Rs.50000/- and above.
c. Professional fee of Rs.100000/- and above."
19. In response to such queries, the petitioner under a letter dated 25.8.2011provided the details as under :
"a. Communication charges of Rs.1,00,000/- and above
- Annexure-B b. Legal fee of Rs.50,000/- and above - Annex B1 c. Professional fee of Rs.1,00,000/- and above -Page 12 of 18
HC-NIC Page 12 of 18 Created On Sat Aug 06 02:48:56 IST 2016 C/SCA/18773/2014 ORDER Annex B2."
20. The Annexures-B1 and B2 referred to in the said reply dated 25.8.2011 have been supplied along with the additional documents today. Part of Annexure-B1 is payment of sum of Rs.75,000/- to Advocate Mr.Nagewswara Rao. In Annexure- B2, we find as part of the details of professional fees in excess of Rs.1 lacs, the following details :
Party's Communic PAN Amount TDS Remarks name -ation Address Mother Patparganj, AACC 80,92,880/- Not Amount Dairy Fruit Delhi 110 M3174 Applicab reimbursed to and 092 A le MDFVPL since Vegetable they have engaged the services of SBI Capital Markets Ltd.
(AAACS7914E),
Mumbai
(Rs.67,44,560)
and Mott
McDonald Pvt.
(AAACD2029F)
Ltd., Mumbai
(Rs.13,48,320) on
behalf of NDDB.
Applicable TDS
has been
deducted by
MDFVPL. No.
service charges
has been charged
by MDFVPL.
Accordingly, no
TDS has been
deducted for the
reimbursement
made to MDFVPL.
21. It was after such examination during the original Page 13 of 18 HC-NIC Page 13 of 18 Created On Sat Aug 06 02:48:56 IST 2016 C/SCA/18773/2014 ORDER assessment that the Assessing Officer in the order of assessment made no disallowance. It can thus be seen that all legal and professional fees paid by the petitioner during the year under consideration in excess of Rs.50,000/- and Rs.1 lacs respectively, came up for consideration of the Assessing Officer when he called upon the petitioner to supply partywise details along with full name, complete communication address, PAN and TDS deducted and/or paid to such parties.
If in the final order of assessment he made no disallowance without giving reasons, surely it cannot be argued that he had not scrutinized the issue. We may recall that in response to queries raised by the Assessing Officer in this respect, the petitioner had given minute details. The petitioner had pointed out that sum of Rs.75,000/- was paid to an Advocate and sum of Rs.80.92 lacs was paid regarding professional fees which was by way of reimbursement to the Mother Dairy since it had engaged the services of SBI Capital Markets and other professionals on behalf of NDDB. If the Assessing Officer was of the opinion that what are the reasons these expenditures were not required to be allowed, it was well within his rights to do so in the order of assessment.
22. In case of Gujarat Power Corporation Ltd. V/s. Assistant Commissioner of Income-Tax, reported in (2013) 350 ITR 266 (Guj.), it was held and observed as under :
"41. The powers under section 147 of the Act are special powers and peculiar in nature where a quasi- judicial order previously passed after full hearing and which has otherwise become final is subject to reopening on certain grounds. Ordinarily, a judicial or quasi-judicial order is subject to appeal, revision or Page 14 of 18 HC-NIC Page 14 of 18 Created On Sat Aug 06 02:48:56 IST 2016 C/SCA/18773/2014 ORDER even review if statute so permits but not liable to be re- opened by the same authority. Such powers are vested by the Legislature presumably in view of the highly complex nature of assessment proceedings involving large number of assessees concerning multiple questions of claims, deductions and exemptions, which assessments have to be completed in a time frame. To protect the interest of the revenue, therefore, such special provisions are made under section 147 of the Act. However, it must be appreciated that an assessment previously framed after scrutiny when reopened, results into considerable hardship to the assessee. The assessment gets reopened not only qua those grounds which are recorded in the reasons, but also with respect to entire original assessment, of course at the hands of the revenue. This obviously would lead to considerable hardship and uncertainty. It is precisely for this reason that even while recognizing such powers, in special requirements of the statute, certain safeguards are provided by the statute which are zealously guarded by the courts. Interpreting such statutory provisions courts upon courts have held that an assessment previously framed cannot be reopened on a mere change of opinion. It is stated that power to reopening cannot be equated with review.
42. Bearing in mind these conflicting interests, if we revert back to central issue in debate, it can hardly be disputed that once the Assessing Officer notices a certain claim made by the assessee in the return filed, has some doubt about eligibility of such a claim and therefore, raises queries, extracts response from the assessee, thereafter in what manner such claim should be treated in the final order of assessment, is an issue on which the assessee would have no control whatsoever. Whether the Assessing Officer allows such a claim, rejects such a claim or partially allows and partially rejects the claim, are all options available with the Assessing Officer, over which the assessee beyond trying to persuade the Assessing Officer, would have no control whatsoever. Therefore, while framing the assessment, allowing the claim fully or partially, in what manner the assessment order should be framed, is totally beyond the control of the assessee. If the Assessing Officer, therefore, after scrutinizing the claim minutely during the assessment proceedings, does not Page 15 of 18 HC-NIC Page 15 of 18 Created On Sat Aug 06 02:48:56 IST 2016 C/SCA/18773/2014 ORDER reject such a claim, but chooses not to give any reasons for such a course of action that he adopts, it can hardly be stated that he did not form an opinion on such a claim. It is not unknown that assessments of larger corporations in the modern day, involve large number of complex claims, voluminous material, numerous exemptions and deductions. If the Assessing Officer is burdened with the responsibility of giving reasons for several claims so made and accepted by him, it would even otherwise cast an unreasonable expectation which within the short frame of time available under law would be too much to expect him to red flapcarry. Irrespective of this, in a given case, if the Assessing Officer on his own for reasons best known to him, chooses not to assign reasons for not rejecting the claim of an assessee after thorough scrutiny, it can hardly be stated by the revenue tred flaphat the Assessing Officer can not be seen to have formed any opinion on such a claim. Such a contention, in our opinion, red flapwould be devoid of merits. If a claim made by the assessee in the return is not rejected, it stands allowed. If such a claim is scrutinized by the Assessing Officer during assessment, it means he was convinced about the validity of the claim. His formation of opinion is thus complete. Merely because he chooses not to assign his reasons in the assessment order would not alter this position. It may be a non-reasoned order but not of acceptance of a claim without formation of opinion. Any other view would give arbitrary powers to the Assessing Officer."
23. Coming to the last ground in the reasons recorded, the same pertains to the expenditure amount of Rs.3.15 crores (rounded off) towards the premium paid on purchases of debentures / bonds in Government companies or financial institutions which was debited against the interest income. According to the Assessing Officer, this expenditure was in the nature of capital expenditure and could not have been claimed deduction by way of revenue expenditure. In this respect, learned counsel for the petitioner drew our attention to audited accounts of the petitioner in which the sum of Page 16 of 18 HC-NIC Page 16 of 18 Created On Sat Aug 06 02:48:56 IST 2016 C/SCA/18773/2014 ORDER Rs.4.38 crores of premium was amortised and added back to the income of the assessee. With the aid of the additional documents produced today, he drew our attention to the statement of premium amortised during the financial year 2008-09 in which the following break up has been given :
"Statement of Premium Amortised during FY2008-09 Particulars Amt.(Rs.) Due to Policy Change National Housing Bank 2218256 Indian Railway Finance Corporation 25,222910 Nuclear Power Corporation of India Ltd. 504062 Power Finance Corporation Ltd. 2345744 Punjab National Bank 1,303019 Shown in note no.6 sub total (a) 31593991 Pertaining to current financial year National Housing Bank 592292 Indian Railway Finance Corporation 4360294 Nuclear Power Corporation of India Ltd. 74457 Power Finance Corporation Ltd. 6759664 Punjab National Bank 427315 National Bank for Agriculture and Rural 82212 Development (NABARD) Sub total (b) 12296234 Total offered to tax (as per computation) 43890225
24. From the above materials on record, it can be seen that this amount of Rs.3.15 crores which the Assessing Officer disputes by way of expenditure was never claimed as such in the original return itself. The audited account referred to a larger sum of Rs.4.38 crores which was amortised and the break up of premium amortised during the period under Page 17 of 18 HC-NIC Page 17 of 18 Created On Sat Aug 06 02:48:56 IST 2016 C/SCA/18773/2014 ORDER consideration includes a total of Rs.3.15 crores which is a total of premium with respect to 5 different investments. This precise figure which the Assessing Officer wants to take into consideration for the purpose of disallowance as capital expenditure. When we find that no such claim of revenue expenditure was made, the essential requirement of income chargeable to tax having escaped assessment on this ground fails.
25. In the result, the impugned notice dated 31.3.2014 is hereby quashed and set aside. The petition is allowed and disposed of.
(AKIL KURESHI, J.) (A.J. SHASTRI, J.) vipul Page 18 of 18 HC-NIC Page 18 of 18 Created On Sat Aug 06 02:48:56 IST 2016