CHAMBAL FERTILISERS AND CHEMICALS LTD. ,KOTA V. ACIT, CIRCLE-2, KOTA, KOTA

ITA 566/JPR/2025

AI Insights

The case involves Chambal Fertilisers and Chemicals Ltd., which appealed against the order of the Learned PCIT that set aside their assessment order regarding the assessment year 2020-21. The primary issue was the classification of an income of Rs. 71,80,35,464/- received as dividend, which the Learned PCIT contended should have been included in the profits of the assessee as business income and subjected to taxation under the provisions of the India-Morocco Double Taxation Avoidance Convention. The Tribunal examined whether the PCIT's order was justified in setting aside the original assessment, which had not proposed any variation on this issue after thorough scrutiny.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 312331 (ITAT-JAIPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2020-2021
• Other Referred Cases: ITA No. 694/JPR/2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALKA GAUTAM
• Assessee Lawyers: SANJAY JHANWAR; MUKESH SONI
• Keywords: Set aside; Business income; Difference of opinion; Change of opinion; Revised return; TDS; Earning of tax free income; Double taxation relief; Revision of order; Application of stay
• Section: 263; 90; 115JB

Judgement Text

"vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”B-Bench” JAIPUR Jh xxu xks;y] ys[kk lnL; ,o aJh ujsUnz dqekj] U;kf;d lnL; ds le{k BEFORE: SHRI GAGAN GOYAL, AM & SHRI NARINDER KUMAR, JM vk;dj vihy la-@ITA No. 566/JPR/2025 fu/kZkj.ko\"kZ@Assessment Year : 2020-21 Chambal Fertilisers and Chemicals Ltd, Gadepan, Kota-325208. cuke Vs. The ACIT, Circle-2, Kota. LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAACC9762A vihykFkhZ@Appellant izR;FkhZ@Respondent Stay Application No. 10/JPR/2025 (arising out of ITA No. 566/JPR/2025) fu/kZkj.ko\"kZ@Assessment Year : 2020-21 Chambal Fertilisers and Chemicals Ltd, Gadepan, Kota-325208. cuke Vs. The ACIT, Circle-2, Kota. LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAACC9762A vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksjls@Assessee by : Shri Sanjay Jhanwar, Adv. & Shri Mukesh Soni, C.A. jktLo dh vksjls@Revenue by: Ms. Alka Gautam, CIT lquokbZ dh rkjh[k@Date of Hearing :24/04/2025 mn?kks\"k.kk dh rkjh[k@Date of Pronouncement: 28/04/2025 vkns'k@ORDER PER: NARINDER KUMAR, JUDICIAL MEMBER . Assessee-appellant is before this Appellate Tribunal, feeling dissatisfied with the order dated 19.03.2025 passed by Learned PCIT 2 ITA No. 566/JPR/2025 & SA No. 10/JPR/2025 Chambal Fertilisers and Chemicals Ltd., Kota exercising powers u/s 263 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”). Vide impugned order, Learned PCIT has set aside assessment order dated 28.09.2022, passed by the Assessing Officer, as regards the assessment year 2020-21, and at the same time directed the Assessing to complete the assessment as regards the issue of dividend (as per section 115BBD) vs. finance income of Rs. 71,80,35,464/-. The reason for setting aside of the impugned assessment order is that in the opinion of Learned PCIT, said order was found suffering from specific defects, was erroneous and also prejudicial to the interests of the Revenue. 2. Arguments heard. Filed perused. 3. The assessee-appellant is engaged in the business of manufacturing and trading of fertilizer and allied products in India. As per case of the department, which is not disputed on behalf of the assessee, revised return of income was filed on 29.05.2021, thereby, once again declaring total income of Rs. 3,63,30,01,380/- and deemed total income u/s 115JB at Rs. 11,51,84,83,948/-, as was initially declared in the original ITR. Said revised return is stated to have been selected for complete scrutiny, on the following 11 issues:- 3 ITA No. 566/JPR/2025 & SA No. 10/JPR/2025 Chambal Fertilisers and Chemicals Ltd., Kota i. Double Taxation Relief u/s 90/91. ii. Stock Valuation iii. Increase in TDS in Revised Return iv. Claim of Any Other Amount Allowable as Deduction in Schedule BP v. High creditors/liabilities. vi. Ind-AS compliance and adjustment vii. Refund claim viii. ICDS compliance and adjustment ix. Expenses incurred for earning exempt income x. Taxability of business liability written off u/s 41 or any other section xi. Deduction from total income under Chapter VI-A” 4. On 29.06.2021, a notice u/s 143(2) was issued to the assessee. 5. It may be mentioned here that after perusing the information furnished by the assessee and verifying the same with reference to the ITR and TAR, the Assessing Officer was of the opinion that no variation was proposed on following 10 , out of the abovesaid 11 issues:- i. Double Taxation Relief u/s 90/91. ii. Stock Valuation iii. Increase in TDS in Revised Return iv. High creditors/liabilities. v. Ind-AS compliance and adjustment vi. Refund claim 4 ITA No. 566/JPR/2025 & SA No. 10/JPR/2025 Chambal Fertilisers and Chemicals Ltd., Kota vii. ICDS compliance and adjustment viii. Expenses incurred for earning exempt income ix. Taxability of business liability written off u/s 41 or any other section x. Deduction from total income under Chapter VI-A” In other words, the Assessing Officer proceeded to deal with only following issue:- “Claim of Any Other Amount Allowable as Deduction in Schedule BP” 6. Ultimately, the Assessing Officer made an addition of Rs. 7,74,04,212/- on the abovesaid only issue, and thereby assessed total income of the assessee at Rs. 3,71,04,05,492/-. 7. As noticed above, vide impugned order, Learned PCIT has directed the Assessing Officer for completion of assessment as regards the only issue of dividend. Contentions 8. Ld. AR for the appellant has submitted that in the previous year, the Assessing Officer felt satisfied , specially taking into consideration reply and documents submitted by the assessee, that the income earned was in the nature of dividend income. 5 ITA No. 566/JPR/2025 & SA No. 10/JPR/2025 Chambal Fertilisers and Chemicals Ltd., Kota The contention is that in the given situation this is a case of only change of opinion and not a case of erroneous order passed by the Assessing Officer or prejudicial to the interest of the Revenue. In support of his contention, Ld. AR has relied on decision of Coordinate Bench, ITAT, Jaipur Benches in ITA No. 694/JPR/2024, i.e. in the case of the assessee itself, relating to the assessment year 2018-19, decided on 25.10.2024. 9. On the other hand, Ld. DR for the department has referred to para 6 of the impugned order passed by Learned PCIT and also to para 4.1(iv), (V) and (vi) of the impugned order, and contended that Learned PCIT was justified in holding the assessment order to be erroneous and also prejudicial of the interest of the Revenue as the given amount of Rs. 71,80,35,464/- paid to the assessee in the form of dividend, should have been included in the profits of the assessee as its business income and subjected to taxation, in view of provisions of Article – 9 of the Convention between the Republic of India and the Kingdom of Morocco for the Avoidance of double Taxation and for the prevention of fiscal evasion. Discussion 10. As already noticed above, case of the assessee was selected for complete scrutiny as regards the above mentioned 11 points, but the 6 ITA No. 566/JPR/2025 & SA No. 10/JPR/2025 Chambal Fertilisers and Chemicals Ltd., Kota Assessing Officer felt satisfied as regards all the issues except on the issue under the head “ Claim of any other amount allowable as deduction in schedule BP”. The Assessing Officer categorically recorded in para 3.4 of the assessment order as to why verification was not required on the above 10 issues. He so expressed his satisfaction after perusing the information provided by the assessee and having verified the same with reference to the ITR and TAR. This goes to shows that the Assessing Officer had satisfied himself even on the first mentioned issue of double taxation relief u/s 90 and 91 of the Act, which Ld. PCIT picked up to hold the assessment order as erroneous. Assessing Officer must record reason(s), even though same may be in brief, to apprise the higher authorities that he had applied his mind in recording his satisfaction and while framing the assessment. Otherwise, how the higher authorities would come to know about application of mind by the Assessing Officer. It is true that here, the Assessing Authority should have recorded, even though in brief, some reason in respect of each of the 10 points selected for scrutiny, but he did not record. 7 ITA No. 566/JPR/2025 & SA No. 10/JPR/2025 Chambal Fertilisers and Chemicals Ltd., Kota Fact remains that the Assessing Officer expressed his satisfaction after perusing the information provided by the assessee and having verified the same with reference to the ITR and TAR. Had the Assessing Officer not observed even so, in para 3.4 of the assessment order the things would have been otherwise, but, we are satisfied that the Assessing Officer recorded his satisfaction after applying his mind to the material made available. 11. In the given circumstances, we find merit in the contention raised by Ld. AR for the appellant –assessee that this is a case of subsequent opinion given by Learned PCIT which is different from the opinion already given by the Assessing Officer on the same issue. 12. As per well settled law, no resort can be made to the provisions of section 263 of the Act in such like situation i.e. where a different view is expressed by the higher authority or say, two views are possible from the same material. 13. Another point raised on behalf of the appellant is that already in respect of assessment year 2018-19 same issue had cropped up. Therein, after passing of assessment order, Learned PCIT had exercised powers u/s 263 of the Act, but, the Coordinate Bench of ITAT, Jaipur Benches quashed the said order passed by Learned PCIT. Said decision by the 8 ITA No. 566/JPR/2025 & SA No. 10/JPR/2025 Chambal Fertilisers and Chemicals Ltd., Kota Coordinate Bench is dated 25.10.2024. The impugned order under challenge herein is dated 19.03.2025. Admittedly, the decision by the Co-ordinate Bench was brought to the notice of Ld. PCIT. While dealing with same point raised on behalf of the assessee, Ld. PCIT observed that the said order had been challenged by the department before Hon’ble High Court. Even if said decision by the Coordinate Bench has been challenged before Hon’ble High court, it is not case of the department that operation of the said order has been stayed by the Hon’ble High Court. Therefore, simply because the said decision is under challenge before Hon’ble High Court, there is no merit in the abovesaid observations made by Ld. PCIT in exercising powers u/s 263 of the Act. Result 14. In view of the above discussion and the findings, we find that Learned PCIT fell in error while observing that the impugned assessment order dated 28.09.2022 passed by the Assessing Officer was erroneous and also prejudicial to the interest of the revenue as regards the above said issue of dividend. 9 ITA No. 566/JPR/2025 & SA No. 10/JPR/2025 Chambal Fertilisers and Chemicals Ltd., Kota Consequently this appeal is allowed and the impugned order passed by Learned PCIT is hereby set aside. Stay Application No. 10/JPR/2025 15. It may be mentioned here that the said stay application came to be filed alongwith the appeal. Since the appeal itself has been argued on merits and disposed of, this stay application becomes infructuous. Consequently, the stay application is dismissed having become infructuous. Files be consigned to the record room after the needful is done by the office. Copy of the order be also placed in the file of Stay application. Order pronounced in the open court on /04/2025. ¼xxu xks;y½ ¼ujsUnz dqekj½ (GAGAN GOYAL) (NARINDER KUMAR) ys[kk lnL; @Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- /04/2025 *Santosh vkns'k dh izfrfyfivxzsf’kr@Copy of the order forwarded to: 1. The Appellant- Chambal Fertilisers and Chemicals Ltd, Kota. 2. izR;FkhZ@ The Respondent- ACIT, Circle-2, Kota. 3. vk;djvk;qDr@ The ld CIT 10 ITA No. 566/JPR/2025 & SA No. 10/JPR/2025 Chambal Fertilisers and Chemicals Ltd., Kota 4. foHkkxh; izfrfuf/k] vk;djvihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 5. xkMZQkbZy@ Guard File ITA No. 566/JPR/2025 & SA No. 10/JPR/2025) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asstt. Registrar "