Law:

Section:

ORDER 1. These two writ petitions challenge two separate notices dated 23 March 2005 issued under Section 148 of the Income Tax Act, 1961 (the Act), seeking to reopen the assessment for the Assessment Years 1998-1999 and 1999-2000, respectively. 2. The counsel are agreed that the facts and the issues arising for consideration in both the petitions are identical. Therefore, for the sake of convenience, we shall refer to the facts in Writ Petition No.1360 of 2006 before considering the issues involved in this group of petitions. 3. The petitioner filed its return of income for the Assessment Years 1998-1999 on 2 November 1998 disclosing a loss of Rs.4.98 lakh. On 30 March 2001, the Assessing Officer passed an order under Section 143(3) of the Act determining the petitioner's income at Rs.47.11 lakhs. In the course of the assessment, the Assessing Officer held that the interest paid on borrowings was a business expenditure to be allowed as a revenue expenditure. On the above basis, interest to the extent of Rs.10.31 crores paid on borrowings was allowed as expenditure to determine the petitioner's income at Rs.47.11 lakhs. 4. On 23 March 2005, the impugned notice seeking to reopen the Assessment Year for the year 1998-1999 was issued. The reasons in support of the impugned notice as furnished to the petitioner read as under : "11. Reasons for the belief that income has escaped assessment: While completing the assessment for A.Y.2001-02, it was held that the advances made to the various concerns for promoting and nurturing, with the end intention of acquiring these concerns was not the part of business activities. Therefore, it was held that these advances were of capital nature. 2. During the year under consideration the assessee has claimed that the advances made for promoting and nurturing is a business and the interest of Rs.10,31,89,562/- on the borrowings as business expenditure. However, interest paid on these advances is also of capital nature required to be disallowed. Accordingly interest paid on these advances is also of capital nature requires to be disallowed. 3. Therefore, I have reason to believe that income chargeable to tax to the extent of payment…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492