Case Law Details

Case Name : M/s. Janus Investment Pvt. Ltd. Vs ITO (ITAT Mumbai)
Appeal Number : ITA No.5057/Mum/2010
Date of Judgement/Order : 17/06/2015
Related Assessment Year : 2007-08
Courts : All ITAT (7350) ITAT Mumbai (2112)

Brief summary of the case

Assessee-company was engaged in the business of leasing of property and development of properties. It filed its return of income on 29/10/2007, declaring total income of Rs. Nil and the AO finalised the assessment order u/s.143(3) of the Act,1961 on 30.12.2009 by disallowing 1/5th of interest of Rs.63.86 lakhs on borrowed capital (relating to the period upto the date of completion of construction of building). Assessee filed an appeal before the First Appellate Authority (FAA) who decided the issue in favour of the assessee. The appeal filed by the AO was decided by the Tribunal on the ground observing that the counsel appearing for the assessee submitted that interest payment was allowed in earlier assessment year. Based on the claim of the assessee the Tribunal, in para 3.2 of its order set aside the matter but the fact remains that even in 2011 the AO has not accepted the plea of the assessee which was not brought to the notice of the Bench. On a specific query by the bench as to whether the assessee had not claimed the interest expenditure under any other section, AR fairly conceded that he was not in a position to make such an averment. FAA has also not given any finding in this regard. As the FAA had not verified that vital fact, tribunal remanded back the matter to the file of FAA for further verification.

Assessing officer now vide application dated 09.01.2015 stated that there were mistakes in the order passed by the tribunal, that same have to be rectified by passing order u/s 254(2) of the Act.

As per the AO the claim made by the assessee with regard to, the interest payment was allowed by the A.O. in the assessment year 2006-07 was not fully correct, that in the original assessment for A.Y. 2006-07 completed u/s. 143(3) on 30/12/2008, total loss was calculated at Rs.6076960/- by allowing 1/5th of accumulated interest, that the income chargeable to tax had escaped assessment for the AY 2006-07 for the reason that the assessee had claimed 1/5th of accumulated interest of construction period of Rs.6386544/-which was not in accordance with provisions of section 24(b) of the Act, that matter was re-opened u/s 147/148 of the Act, that the re-assessment was completed u/s.143(3) r.w.s.147 of the Act, on 30/12/2011 determining the total income at Rs.3,09,584/- by disallowing 1/5th of accumulated interest, that the order of the Tribunal had to be amended accordingly.


During the course of hearing Departmental Representative (DR) could not point out as to what was the mistake apparent in the record that had to be rectified. The Tribunal had decided the issue on the basis of available material. If the AO had reopened the assessment and made a disallowance and these facts could affect the outcome of the issue, the AO should appear before the FAA to file an explanation about the chronology of events. But, in any manner the subsequent decision taken by the AO cannot be held to be a mistake apparent from the record. As there is no mistake in the order passed by the Tribunal, prayer made by the AO under section 254(2) of the Act is rejected.

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