The ACIT, Circle-1(1)(1), Vadodara V. M/s. Jyoti Ltd., Vadodara

ITA 433/AHD/2022

AI Insights

The case revolves around the appeal by the Revenue against the order of the CIT(A) which had deleted the additions made by the Assessing Officer (AO) on account of disallowances under sections 40(a)(i) and 43B of the Income Tax Act, 1961. The primary contention was whether the payment of interest on conversion of loan into equity shares was an allowable expense under section 43B. The Tribunal also considered the validity of the reassessment proceedings initiated by the AO. The Tribunal concluded that the reassessment was not valid as there was no escapement of income, and thus, the additions made were not justified.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 114084 (ITAT-AHMEDABAD)
• Duration Of Justice: 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 08-08-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 15-11-2022
• Other Referred Cases: Glittek Granites Ltd., Rathi Graphics Technologies Ltd., Motto Tiles Pvt. Ltd. v. ACIT, India Gelatine and Chemicals Ltd. v. ACIT, Peter Vaz v. CIT, Central Circle, Dahod Sahakari Kharid Vechan Sangh Ltd. v. CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Question of law; TDS
• Section: 148; 43B; 139; 143(3); 115JB; 73; 22; 153C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “A” BENCH Before: Shri Waseem Ahmed, Accountant Member And Shri T.R. Senthil Kumar, Judicial Member ACIT, Circle-1(1)(1), Vadodara (Appellant) Vs M/s. Jyoti Ltd., Nanubhai Amin Marg, Industrial Area, P.O. Chemical Industries, Vadodara-390003 PAN: AAACJ4909N (Respondent) Assessee Represented: Shri M.J. Shah, A.R. & Shri Rushin Patel, A.R. Revenue Represented: Shri Sudhendu Das, CIT-DR Date of hearing : 09-08-2023 Date of pronouncement : 11-08-2023 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:- This appeal is filed by the Revenue as against the appellate order dated 22.09.2022 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, (in short referred to as “NFAC”), arising out of the reassessment order passed under section 143(3) r.w.s. 147 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year (A.Y) 2011- 12. ITA No. 433/Ahd/2022 Assessment Year 2011-12 I.T.A No. 433/Ahd/2022 A.Y. 2011-12 Page No ACIT Vs. M/s. Jyoti Ltd. 2 2. The solitary ground raised by the Revenue in this appeal is that the Ld. CIT(A) erred in deleting the addition of Rs. 760.75 lacs made by the A.O. on the ground that the payment of interest on conversion of loan into equity shares is not an expense allowable u/s. 43B of the Act. 2.1. The brief facts of the case is that the assessee is a Company 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 as well as on the disallowance proposed u/s. 40(a)(i) and u/s. 43B I.T.A No. 433/Ahd/2022 A.Y. 2011-12 Page No ACIT Vs. M/s. Jyoti Ltd. 3 of the Act, however the same were being overruled by the Assessing Officer and thereby made addition of Rs. 4,72,50,695/- u/s. 40(a)(i) and Rs. 7,60,75,000/- u/s. 43B of the Act and after setting off the carry forward losses determined the gross total income at Rs. 7,50,66,456/- and determined tax thereon at Rs. 2,49,35,200/- and whereas the tax under MAT provisions u/s. 115JB of Rs. 3,04,62,588/- remains the same. This MAT tax was already paid by the assessee, during the original assessment proceedings itself. 3. Aggrieved against the reassessment order, the assessee filed an appeal both on reopening of assessment as well as on merits of the case. The Ld. NFAC dismissed the ground on reopening of assessment, however on merits of the case deleted the additions made u/s. 40(a)(i) of Rs. 4,72,50,695/- as well as u/s. 43B of Rs. 7,60,75,000/- and partly allowed the assessee appeal observing as follows: “....5.3 Ground No. 3: This ground is regarding the disallowance u/s 438 on account of issuance of equity shares. The assessee has liquidated interest recompense amounting to Rs. 1521.51 Lakh by cash payment of Rs. 760.75 Lakh and by issue of equity shares for the balance amount of Rs. 760.75 Lakh to the lenders. The AO held that Rs. 760.75 Lakh is not actually paid by the assessee but the interest liability has been discharged by issuing shares to the lenders. He held that this interest component is not allowed within the ambit of section 43B of the Act. He has relied on the ITAT, Kolkata Bench decision in the case of Glittek Granites Ltd. The appellant argues that its case is not covered under 43B of the IT Act. He has relied on CBDT circular no 007 dated 17.07.2006, he submits that the assessee's liability of interest has extinguished for all time and its ceases to exist in the books of the company. Appellant has issued equity shares at a price arrived at as per applicable statutes. He also relied on Delhi High Court judgment in the case of Rathi Graphics Technologies Ltd. I have considered facts of the case. The Delhi High Court in the case of Rathi Graphics Technologies Ltd. referred by the appellant has observed as under I.T.A No. 433/Ahd/2022 A.Y. 2011-12 Page No ACIT Vs. M/s. Jyoti Ltd. 4 "When pursuant to a settlement the creditor agrees to convert a portion of interest into shares, it must be treated as an extinguishment of liability to pay interest 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 addition of Rs.760.75 lacs made by the AO on the ground that payment of interest on conversion of loan or borrowing in to equity shares is not an expense which has been actually paid and therefore same is not allowable u/s 43B of Income tax Act, 1961." 5. Per contra, the assessee filed an Application under Rule 27 of the Income Tax Appellate Tribunal Rules, 1963 which reads as follows: “.....3. It is humbly submitted that, the Respondent had filed its original return of income u/s 139 for A.Y. 2011-12 on 29.09.2011, declaring a total income of Rs. Nil/- (Loss of Rs.1,09,53,204/-) under the normal provisions and Book Profit u/s 115JB of Rs.15,28,44,072/- under the MAT provisions. Since tax under the MAT provisions was higher, tax of Rs.3,04,62,588/- was paid as per MAT provisions. A copy of the ITR acknowledgement along with computation of total income is attached herewith at pages 25 to 29. 4. It can be observed on the last page (page no.11) of the reassessment order u/s 147 dated 30.12.2016 that, after making additions on the issues for which reopening was done, the ultimate amount of tax remains to be Rs.3,04,62,588/- under the MAT provisions on the Book Profit u/s 115JB of Rs.15,28,44,072/-. I.T.A No. 433/Ahd/2022 A.Y. 2011-12 Page No ACIT Vs. M/s. Jyoti Ltd. 5 5. It is therefore, humbly submitted that, without prejudice to the contentions on merits of the additions made by the ld. Assessing Officer, even if the entire additions were to be sustained, there would be no addition to the tax liability of the Respondent and the Respondent would still be governed by the MAT provisions and be taxed on the book profit u/s 115JB. In this view of the matter, the question of any income having escaped assessment would not arise and therefore, notice u/s 148 and assumption of jurisdiction u/s 147 itself is bad in law. 6. Reliance in this regard is placed on the binding judgment of the Hon'ble jurisdictional Gujarat High Court in the case of Motto Tiles Pvt. Ltd. v. ACIT -(2016) 386 ITR 280 (Guj). A copy of this judgment is attached herewith at pages 30 to 35. In view of whatever has been stated hereinabove, it is most humbly prayed that, the Respondent may kindly be permitted to support the order appealed against by the Appellant on the grounds aforesaid and the order appealed against may kindly be upheld in view of the invalid assumption of jurisdiction u/s 147, in the interest of justice.” 6. Ld. CIT-DR Shri Sudhendu Das 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. I.T.A No. 433/Ahd/2022 A.Y. 2011-12 Page No ACIT Vs. M/s. Jyoti Ltd. 6 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 ITAT Rules is no more res integra as held by the Jurisdictional High Court in the case of PCIT Vs. Sun Pharmaceuticals Industries Ltd. reported in [2017] 86 taxmann.com 148 as follows: “....11. To put the controversy beyond doubt, Rule 27 of the Rules makes it clear that the respondent in appeal before the Tribunal even without filing an appeal can support the order appealed against on any of the grounds decided against him. It can be easily appreciated that all prayers in the appeal may be allowed by the Commissioner (Appeals), however, some of the contentions of the appellant may not have appealed to the Commissioner. When such an order of the Commissioner is at large before the Tribunal, the respondent before the Tribunal would be entitled to defend the order of the Commissioner on all grounds including on grounds held against him by the Commissioner without filing an independent appeal or cross-objection. 12. Rule 27 of the Rules is akin to Rule 22 Order XLI of the Civil Procedure Code. Sub-rule (1) provides that any respondent, though he may not have appealed from any part of the decree, may not only support the decree but may also state that the finding against him in the Court below in respect of any issue ought to have been decided in his favour; and may also take any cross-objection to the decree which he could have taken by way of an appeal. In case of Virdhachalam Pillai v. Chaldean Syrian Bank Ltd. AIR 1964 SC 1425 in context of the said Rule the Supreme Court observed as under: "32. Learned Counsel for the appellant raised a short preliminary objection that the learned Judges of the High Court having categorically found that there was an antecedent debt which was discharged by the suit-mortgage loan only to the extent of Rs. 59,000/- and odd and there being no appeal by the Bank against the finding that the balance of the Rs. 80,000/- had not gone in discharge of an antecedent debt, the respondent was precluded from putting forward a contention that the entire sum of Rs. 80,000/- covered by Exs. A and B went for the discharge of antecedent debts. We do not see any substance in this I.T.A No. 433/Ahd/2022 A.Y. 2011-12 Page No ACIT Vs. M/s. Jyoti Ltd. 7 objection, because the respondent is entitled to canvass the correctness of findings against it in order to support the decree that has been passed against the appellant." 13. Likewise, in case of S. Nazeer Ahmed v. State Bank of Mysore AIR 2007 SCW 766 it was held 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 t might have been rendered by the trial court against himself. For supporting the decree passed by the fr 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 memorandum of cross- objections, was not entitled to canvass the correctness of the finding on the bar of Order II Rule 2 rendered by the trial court." 14. Similar issue came-up before Division Bench of this Court in case of Dahod Sahakari Kharid Vechan Sangh Ltd. v. CIT [2006] 282 ITR 321/[2005] 149 Taxman 456 (Guj.) in which the Court observed as under: "17. Taking up the second issue first, the Tribunal has committed an error in law in holding that the assessee having not filed cross-objection against findings adverse to the assessee in the order of Commissioner (Appeals), the said findings had become final and remained unchallenged. The Tribunal apparently lost sight of the fact that the assessee had succeeded before the Commissioner (Appeals). The appeal had been allowed and the penalty levied by the assessing officer deleted in entirety. In fact, there was no occasion for the assessee to feel aggrieved and hence, it was not necessary for the assessee to prefer an appeal. The position in law is well settled that a cross objection, for all intents and purposes would amount to an appeal and the I.T.A No. 433/Ahd/2022 A.Y. 2011-12 Page No ACIT Vs. M/s. Jyoti Ltd. 8 cross objector would have the same rights which an appellant has before the Tribunal. 18. Section 253 of the Act provides for appeal to the Tribunal. Under sub-section (1), an assessee is granted right to file an appeal; under sub-section (2), the Commissioner is granted a right to file appeal by issuing necessary direction to the assessing officer; sub-section (3) prescribes the period of limitation within which an appeal could be preferred. Section 253(4) of the Act lays down that either the assessing officer or the assessee, on receipt of notice that an appeal against the order of Commissioner (Appeals) has been preferred under sub-section (1) or subsection (2) by the other party, may, notwithstanding that no appeal had been filed against such an order or any part thereof, within 30 days of the notice, file a memorandum of cross objections verified in the prescribed manner and such memorandum shall be disposed of by the Tribunal as if it were an appeal presented within the period of limitation prescribed under sub-section (3). Therefore, on a plain reading of the provision, it transpires that a party has been granted an option or a discretion to file cross objection. 19. In case a party having succeeded before Commissioner (Appeals) opts not to file cross objection 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 filed by the Assessee under Rule 27 of the ITAT Rules by following the series of Judgments rendered by the I.T.A No. 433/Ahd/2022 A.Y. 2011-12 Page No ACIT Vs. M/s. Jyoti Ltd. 9 Jurisdictional High Court in the case of Dahod Sahakari Kharid Vechan Sangh Ltd. and in the case of S. Nazeer Ahmed (cited surpa). Thus the Revenue’s objection in entertaining the Application under Rule 27 is hereby rejected.” 7.1. Further the Hon’ble Bombay High Court in the case of Peter Vaz (cited supra) wherein the assessee raised additional substantial question of law and in answer to the same, by the Hon’ble Bombay High court are as follows: “.....5. After these appeals were heard for some time, we were satisfied that these appeals involve an additional substantial question of law. Accordingly, by our order dated 30th March 2021, we framed the additional substantial question of law and adjourned the matter to enable the learned counsel for the parties to address us on such additional substantial question of law. The additional substantial question of law framed by us reads as follows:- "Whether in the facts and circumstances of the present case, it was open to the appellant/assessee to have supported the orders of the Commissioner (Appeals), based on the ground that the jurisdictional parameters prescribed under section 153C of the I.T. Act were not fulfilled, even without the necessity of filing any cross objections ?" ...................... “29....He submitted that this was an issue of law and therefore, the ITAT should have permitted the assessees to raise this issue even without the necessity of filing any cross-objections. He referred to Rule 27 of the Appellate Tribunal Rules, 1963 to contend that this Rule gives a right to the Respondent in an appeal before the ITAT to support the order appealed against on any of the grounds decided against him, even though he may not have appealed against the order. 30. Rule 27 of the Appellate Tribunal Rules, 1963 reads as follows:- "Respondent may support order on grounds decided against him. 27. The respondent, though he may not have appealed, may support the order appealed against on any of the grounds decided against him." 31. In this case, the assessees merely wanted to support the order made by the CIT (Appeals), which was entirely in their favor. The assessees wished to raise an issue, that was at least prima facie going to the root of jurisdiction to initiate proceedings under section 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 I.T.A No. 433/Ahd/2022 A.Y. 2011-12 Page No ACIT Vs. M/s. Jyoti Ltd. 10 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 the Application filed under Rule 27 of the ITAT Rules and decide the case on jurisdictional issue. 7.3. Respectfully following the above judicial precedents, we hereby entertain the Application filed by the assessee under Rule 27 of the ITAT Rules. 8. Ld. Counsel Mr. Manish J Shah brought to our attention to the original Return of Income filed by the assessee in September, 2011 and the MAT tax paid u/s. 115JB of Rs. 3.04 crores. Ld. Counsel further brought to our notice to the tax calculation, even under the reassessment order passed by the Assessing Officer, wherein tax payable under the normal provisions was Rs. 2,49,35,200/- only after making the disallowances u/s. 40(a)(i) and u/s. 43B of the Act but whereas the assessee had already paid MAT tax of Rs. 3.04 crores. Therefore the entire reassessment proceeding itself is invalid as there is no escapement of income assessable to tax. I.T.A No. 433/Ahd/2022 A.Y. 2011-12 Page No ACIT Vs. M/s. Jyoti Ltd. 11 8.1. In support of the same, the Ld. Counsel relied upon Jurisdictional High Court judgment in the case of Motto Tiles (P.) Ltd. Vs. ACIT reported in (2016) 73 taxmann.com 176 wherein it was held as follows: “Where assessee-company incurred loss and paid tax on book profit computed under MAT provision and it was found that after making proposed addition to F income, assessee would still be governed by provisions of section 115JB and be assessed on same book profit, there would be no excess tax liability under MAT provision, reassessment could not be initiated.” ................... “....11. Insofar as the second contention raised on behalf of the petitioner is concerned, the controversy stands squarely concluded by the decision of this court in the case of India Gelatine and Chemicals Ltd. (supra) wherein, the court in a case where the assessee had declared a loss of Rs.1.44 crores under the normal computation and the assessment was framed on book profit of Rs.2.89, had held that even if the expenditure of Rs.116.86 lakhs is disallowed, there would be no resultant change in the petitioner's tax liability since the petitioner had already paid much higher tax and had allowed the petition. It appears that the revenue has accepted the said decision and has not challenged the same before the higher forum. The learned counsel for the respondent has urged that the decision requires reconsideration. Having regard to the facts and circumstances of the case, as well as the 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.” I.T.A No. 433/Ahd/2022 A.Y. 2011-12 Page No ACIT Vs. M/s. Jyoti Ltd. 12 9. Per contra, Ld. CIT-DR submitted that the reopening of assessment is valid in law as there is an escape income in the returns filed by the assessee, therefore supported the order passed by the Assessing Officer. Similarly Ld. CIT(A) upheld the reopening of assessment on the ground that mere furnishing of balance sheet and Profit and Loss account does not mean that every entry therein has been examined/enquired into by the A.O. Thus prayed to dismiss the Rule 27 application filed by the assessee. 10. We have given our thoughtful consideration and perused the materials available on record. It is an admitted fact as per the Return of Income filed by the assessee for the Assessment Year 2011-12 resulting in a loss of Rs. 1.09 crores under the normal provisions of the Act and Book Profit u/s. 115JB of the Act of Rs. 15.28 crores and the assessee paid the MAT tax of Rs. 3,04,62,588/-. Pursuant to the Ld. CIT(A) order, against the above assessment order which has resulted in a revised loss of Rs. 4.32 crores and no change in the computation of Book Profit u/s. 115JB of the Act. When the re-assessment was done by the Assessing Officer, the resultant tax computation under the normal provision is Rs. 7.5 crores and Income Tax thereon is Rs. 2,49,35,200/-, whereas the MAT tax remain as Rs. 3,04,62,588/-. Even in that situation, there is no tax liability in the hands of the assessee since the MAT tax was higher than the normal computation of tax, thereby it appears the reassessment itself is invalid, since there is no income chargeable to tax has escaped assessment. This view of ours is supported by the Jurisdictional High Court judgment in the case of M/s. Motto Tiles (P.) Ltd. (cited supra) which has followed I.T.A No. 433/Ahd/2022 A.Y. 2011-12 Page No ACIT Vs. M/s. Jyoti Ltd. 13 M/s. India Gelatine and Chemicals Ltd. Vs. ACIT reported in 364 ITR 649. Thus we are of the considered view that income chargeable to tax has not escaped assessment and the reopening of assessment by issuing notice u/s. 148 is not sustainable in law and therefore we hereby quash u/s. 148 notice issued by the Assessing Officer and allow the Application filed under Rule 27 of the ITAT Rules in favour of the assessee. 11. Before departing even on merits, the Ld. CIT(A) deleted the disallowance u/s. 43B of the Act by following Gujarat High Court Judgment in the case of Rathi Graphics Technologies Ltd. and held that it 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 is a case of complete extinguishment of liability. Therefore the said conversion of interest into shares should be taken as actual payment u/s. 43B and thereby Ld. CIT(A) deleted the additions. Thus in our considered view even on merits of the case, the addition were deleted by the Ld. CIT(A) on this count also. Therefore even on merits of the case, the Revenue ground is devoid of merits. Therefore the appeal field by the Revenue is hereby dismissed. 12. In the result, the appeal filed by the Revenue is dismissed. Order pronounced in the open court on 11-08-2023 Sd/- Sd/- (WASEEM AHMED) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER True Copy JUDICIAL MEMBER Ahmedabad : Dated 11/08/2023 I.T.A No. 433/Ahd/2022 A.Y. 2011-12 Page No ACIT Vs. M/s. Jyoti Ltd. 14 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपीलȣय अͬधकरण, अहमदाबाद