The Bombay High Court today quashed order passed by an assistant commissioner of Income Tax initiating income tax reassessment of Lotus Investments Private Limited, a company owned by superstar Amitabh Bachchan and his brother Ajitabh Bachchan.

Lotus had moved the High Court challenging the reassessment. A division bench of Justices H L Gokhale and J P Deodhar upheld Lotus' contention that reassessment was time-barred as it was ordered more than six years after the original assessment.

Income Tax authorities wanted reassessment, alleging that company had wrongly showed Rs 2.53 crores as income exempted from tax.

It wanted to reassess the tax paid by the company since 1994, alleging the company was not eligible for exemption of tax on the interest it has paid on loan which it took from Vysya Bank (now called ING Vysya Bank) in 1994.

According to the department, the money was supposed to be used for the business purposes but it was invested in shares of other companies.

Hence, exemption granted for the interest paid on the loan taken for the expenses incurred by the company itself would not be applicable, the department had stated.

The company had also claimed Rs 14 lakhs depreciation which it should not have done so, IT counsel argued.

In 2000, the IT department had ordered a block-reassessment of the company from 1989 on the same grounds. But then Commissioner of Income Tax (appeals) set it aside, stating that there was no evidence to prove that the company had wrongly claimed exemptions.