M/s Louis Berger Group INC., Hyderabad V. Director of Income Tax, Hyderabad

ITA 1048/HYD/2014

• Counselvise Citation: 104822514 RSA 2014
• Duration Of Justice: 3 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 27-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P SOMASEKHAR REDDY
• Keywords: Depreciation; Transfer pricing; Double taxation relief; Period of limitation; Retrospective amendment; Bad and doubtful debts; Assessment record; Reason to believe; Reassessment proceedings
• Section: 43B; 147; 148; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI P.M.JAGTAP, ACCOUNTANT MEMBER AND SMT. P.MADHAVI DEVI, JUDICIAL MEMBER ITA NO.1048/HYD/2014 (ASSESSMENT YEAR 2006 - 07) M/S. LOUIS BERGER GROUP INC., HYDERABAD ( PAN - AAACL 4067 F) V/S. ASST. DIRECTOR OF INCOME - TAX(INTERNATIONAL TAXATION), HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : MS . KANCHAN KAUSHAL AND SHRI DHANESH BAFNA RESPONDENT BY : SHRI P.SOMA SEKHAR REDDY DATE OF HEARING 23 .0 9 .2014 DATE OF PRONOUNCEMENT 26.09.2014 O R D E R PER P.M.JAGTAP, ACCOUNTANT MEMBER: THIS APPEAL FIL E D BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF TH E LEARNED DIRECTOR OF INCOME - TAX (IT&TP), HYDERABAD DATED 27.3.2014, PASSED UNDER S.263 OF THE INCOME TAX ACT, 1961. 2. THE R ELEVANT FACTS OF THE CASE GIVING RISE TO THIS APPEAL ARE AS FOLLOWS : THE ASSESSEE IN THE PRESENT CA S E I S A COMPANY WHICH IS TAX NON - RESIDENT IN I NDIA. IT IS I NCORPO R ATED UNDER THE LAWS OF U NI T ED STATES OF AMERICA AND RUN S CONSULTANCY SERVICES IN INDIA IN RESPECT OF VARIOUS ROAD PROJECTS, OTHER PUBLIC INFRAST R UC T URE PROJECTS BY ENT E RING INTO AGREEMENTS WITH NATIONAL HIGHWAYS AUTHO R ITY OF INDIA AND PUBLIC WORKS DEPARTMENTS OF DIFFERENT STATE GOVERNM E N T S. FOR THE PURPOSE OF R ENDERING I T S SERVICES, THE ASSESSEE COMPANY HAS A P ERMANENT E STABLISHMENT IN INDIA IN TERMS OF ARTICLE 5 OF DTAA BETWEEN INDIA AND USA IN THE FORM OF I TA NO. 1048/HYD/2014 M/S. LOUIS BERGER GROUP INC., HYDERABAD 2 PROJECT/SITE OFFICES. T H E RETURN OF INCOM E FOR THE Y E AR UNDER CONSIDERATION WAS FILED BY TH E ASSESSEE ON 1.12.2006, DECLARING TOTAL INCOME OF RS .14,78,07,194, IN THE ASSESSMENT ORIGINA L LY COMPLETED UNDER S.143(3) VIDE ORDER DATED 31.12.20 08, THE INCOME DECL A RED BY TH E ASSESSEE F R OM THE PROJ EC TS STARTED IN INDIA AFTER 1.4.2003 AT RS.1,24,55,756, AT THE TAX RATE OF 40% AS PER THE PROVISIONS OF S.44DA OF THE ACT, WAS ACCEPTED BY THE ASSESSING OFFICER, AND THE SAME WAS BROUGHT TO TAX IN INDIA . THE INCOME OF THE ASSESSEE F R OM THE PROJECTS STARTED IN INDIA BEFORE 1.4.2003 , HOWEVER, WAS DETERMINED BY THE ASSESSING OFFICER AT RS.18,86,95,273 AS FOLLOWS - I . REMUNERATION RECEIVED IN FOREIGN CURRENCY II . R E MUN E RATION RECEIVED IN LOCAL CURRENCY III . TDS RECEIPTS BORNE BY THE CLIENTS IV . TDS ON TAXES RECEIVED V . REIMBURSABLE EXPENDITURE RS. 7,98,89,239 RS. 3,78,24,605 RS. 1,80,91,356 RS. 3,44,809 RS. 5,25,45,264 RS. 18,86,95,273 .. 3. THE ABOVE INCOME W AS BROUGHT TO TAX BY TH E ASSESSING OFFICER IN THE HANDS O F TH E ASSESSEE IN IN D IA AT THE RATE OF 20% AS P E R THE P R OVI SI ON S OF S44D READ WI T H S.115A OF THE AC T, AND ACCO RD INGLY, THE TOTAL TAX PAYA B LE BY TH E ASSESSEE IN IN D IA FOR ASSESSMENT YEAR 2006 - 0 7 WAS DETERMINED BY THE ASSESSING OFFICER AT R S .4,46,65,189. 4. TH E REAFTER , IT C AM E TO THE NOTICE OF THE ASSESSING OFFICER THAT SER V ICE TAX PAYABLE BY THE ASSESSEE COMPANY TO THE I TA NO. 1048/HYD/2014 M/S. LOUIS BERGER GROUP INC., HYDERABAD 3 EXTENT OF R S .8,67,107 WAS LIABL E TO BE DISALLOWED UNDER S. 43B OF THE AC T, A S THE S AME WAS NO T PAID BY THE ASSESSEE ON OR BEFORE THE DUE DATE OF FILING O F THE RETURN BY TH E ASSESSEE FOR THE Y E AR UN D ER CONSIDERATION AND BY NOT MAKING THE SAID DISALLOWANCE IN TH E ASSESSMENT ORIGINAL L Y COMPLETED UN D ER S.143(3) OF THE ACT, INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT . HE , TH E R E FORE, REOPENED THE ASSESSMENT AND ISSUED A NOTICE UNDER S.148 TO THE ASSESSEE ON 28.9.2011. DURIN G TH E COU R SE OR RE - ASSESSMENT PROCEEDINGS, THE ASSESSEE AGREED FOR THE DISALLOWANCE U NDER S.43B ON ACCOUNT OF SER V ICE TAX PAYABLE TO THE EXTENT OF R S .8,677,107 AS THE SAME HAD NOT BEEN ADMITTEDLY PAID ON OR BEFORE THE DUE D A TE OF FILIN G OF THE RETURN. ACCOR D INGLY, THE ASSESSMENT UNDER S.143(3) R E AD W I T H S.147 WAS CO M PL E TED BY THE ASSESSING OFFICER VIDE ORDER DATED 23.11.2011 MAKIN G AN AD D ITION OF RS .8,67,107 TO THE INCOME OF THE ASSESSEE FROM THE PROJECT S START E D AFTER 1.4.2003 AND TAX AT THE RATE OF 40% WAS L EVI E D THEREON AS PER THE PROVISION S OF S .44DA OF THE A C T. 5. SUBSEQUENTLY, THE ASSESSMENT RECORDS IN THE C A S E OF THE ASSESSEE FOR THE YEAR UNDER CON S I D ERATION, I.E. ASSESSMENT YEAR 2006 - 07 CAME TO BE EXAMINED BY THE LEARNED DIRECTOR OF INCOME - TAX (INTERNATIONAL TAXATION & TRANSFER PRICING) AND ON SUCH EXAMINATION, HE FOUND THAT THE ASSESSEE COMPANY H A D RE PORTED INCOME OF RS .1,81,88,656 AS EXPENSES REIMBURSED AND CLAIMED EXPENDITURE OF RS .5,25,33,190 AS REIMB U R S ABLE EXP E NSES . ACCOR D ING TO HIM, THE ASSESSING OFFICER , HOW E VER , DID NO T VERIFY THE AGREEMENT ON RECORD TO ASCERTAIN THE EXA C T AMOUNT O F EXPENDITURE INCURRED, CLAIM MADE BY TH E ASSESSEE AND THE ADDITIONAL EXPENDITURE INCURRED OVER AND ABOVE THE BUDGETED AMOUNT ETC. H E WAS ALSO O F THE OPINION THAT THE ASSESSING OFFICER EVEN DID NOT VERIFY AS TO WHETHER THE ASSESSEE HAD OFFERED THE REIMBUR SABLE I TA NO. 1048/HYD/2014 M/S. LOUIS BERGER GROUP INC., HYDERABAD 4 RECEIPTS TO THE EX TENT CLAIM MADE ON THE CLEAR CUT BUDGETED AMOUNT S AND WHETHER THE ASSESSEE S CL A IM WITH REGARD TO THE AMOUNT S INCURRED OVER AND ABOVE THE B UDGE TED CO S T WA S ACCEPTED BY THE GOVERNMENT AGENCY. HE NOTICED FROM THE RECORD THAT NO SUCH ENQUIRY WAS EVER INITIATED BY TH E ASSESSING OFFICER . H E ALSO NOTED THAT IN TH E ABSENCE O F THE ITEMIZED BREAK UP OF REIMBURSED AMOUNTS, IT WAS NO T POSSIBLE TO REL ATE WHAT WAS THE EXPENDITURE INCURRED BY THE ASSESSEE UNDER A PARTICULAR HEAD AND WHAT PART OF THAT CLAIM WAS ADMITTED AND REIMBURSED BY THE CLIENT TO THE ASSESSEE COMPANY . HE FURTHER NOTED THAT NO CURRENT ASS E T IN THE FORM OF RECEIVABLE WAS SHOWN BY TH E ASSESSEE , CLEARLY IN D I C ATIN G THAT REIMBU R SED R E CEIP T S WE RE OFFERED BY TH E ASSESSEE ON CASH BASIS. ACCOR D ING TO THE LEARNED DIT , THIS AMOUNTED TO HYBRID METHOD O F A C COUNTIN G FOLLO W ED BY TH E ASSESSEE , WHICH WAS INCON S I S TENT WITH THE P R O V I SI ON S OF S.145(1) OF THE AC T. 6. KEEP I N G IN V IEW THE ERRORS POINTED OUT BY HIM I N THE ORDER OF THE ASSESSING OFFICER, AS NARRATED ABOVE, THE LEARNED DIT ISSUED A NOTICE UNDER S.263 OF THE AC T ON 21.3.2014, R E QUIRIN G THE ASSESSEE TO SHOW CAU S E AS TO WHY THE ASSESSMENT MADE BY THE ASSESSING OFFICER SHOULD NOT BE T R EAT E D AS ERRONEOUS AND PREJUDIC I AL TO TH E INTERESTS OF THE R E VENUE AND THE SAME SHOULD NO T BE REVISE D UNDER S.263 OF THE ACT. IN R E SPON S E TO TH E SAID NOTICE, A DETAILED REPLY WAS FIL E D BY TH E ASSESSEE , R A ISING OBJ E CTION S TO THE ASSUMPTION OF JU R I S DI C TION BY THE DI T UNDER S.263 AS WELL AS OFFERING ITS EXPLANATION AS TO HO W THERE WAS NO E R ROR IN TH E O R DER OF THE ASSESSING OFFICER, AS ALLEGED BY THE LEARNED DIT. AFTER CON S ID E RING AND DISCUSSING THE SUBMIS S ION S O F THE ASSESSEE IN DETAIL, THE LEARNED DIT HELD THAT THE ASSESSING OFFICER EITHER AT THE TIM E OF ASSESSMENT OR AT THE TIME OF RE - ASSESSMENT, DID NO T CON S I D ER VERIFICATION, GENUINENESS, A CCOU N TIN G AND ALLOWABILITY OF I TA NO. 1048/HYD/2014 M/S. LOUIS BERGER GROUP INC., HYDERABAD 5 REIMBURSABLE EXP E NS E S CLAIMED BY THE ASSESSEE. HE ALSO HELD T HAT THERE WAS NO VERIFICATION BY TH E ASSESSING OFFICER WITH REGARD TO REIMBU R SABLE RECEIPTS OFFERED BY TH E ASSESSEE TO TAX, AND THERE WAS NO ENQUIRY WHATSOEVER THAT WAS CON D U C TED BY THE ASSESSING OFFICER IN RESP EC T OF PROJECTS STARTED AFTER 1.4.2003. HE HELD THAT TH E FAILURE ON THE APART OF THE ASSESSING OFFICER IN NO T CONDUCTING SUCH ENQUIRIES OR NO T EXAMINING TH E CLAIM OF TH E ASSESSEE IN ACCORDANCE WITH LAW, REND E RED THE ASSESSMENT ORDER ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE. AND THE SAME WAS SET ASIDE BY HIM TO BE MAD E AFRESH BY THE ASSESSING OFFICER AS PER THE FOLLO WI N G DIR E CTIONS - 1. IN RESPECT OF PROJECTS STARTED AFTER 01.04.2003 THE ASSESSEE DEBITED AN AMOUNT OF RS.5,25,33,190/0 TO P&L ACCOUNT. THE ASSESSING OFFICER SHALL EXAMINE THE ALLOWABILITY OF THE SAME BY MAKING PROPER ENQUIRY ON THE EXPENDITURE SO CLAIMED. 2. THE ASSESSING OFFICER SHALL VERIFY THE REIMBURSABLE RECEIPTS THAT SHOULD HAVE BEEN OFFERED TO TAX AS PER THE CLAUSES OF THE AGREEMENT. 7 . AGGRIEVED BY THE O R DER OF THE LEARNED DIT PASSED UNDER S .263, ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 8 . LEARNED COUNSEL FOR THE ASSESSEE, AT TH E TIME OF HEARING BEFORE US, RAISED A PRELIMINARY LEGAL ISSUE CHALLENGING THE VALIDITY OF TH E IMPU G N E D ORDER PASSED BY THE DIT UNDER S.2 6 3 ON THE GROUND THAT THE SAME IS BARRED BY LIMITATION. HE SUBMITTED THAT THE ORIGIN A L ASSESSMENT ORDER IN THI S CA S E UNDER S .143(3) WAS PASSED BY THE ASSESSING OFFICER ON 31.12.2008, AFTER TAKING INTO CON S I DE RATION ALL I TA NO. 1048/HYD/2014 M/S. LOUIS BERGER GROUP INC., HYDERABAD 6 TH E REL E VANT ASPECTS INCLU D IN G THE EXPEN S ES R EIMBU R SED AND REIMBU R SABLE EXPENSES. HE SUBMITTED THAT THE SAID ASSESSMENT WAS REOPENED BY THE ASSESSING OFFICER ONLY ON THE ISSUE OF DISALLOWANCE OF RS.8,67,107 TO BE MADE UNDER S.43B ON ACCOUNT O F SERVICE TAX PAYABLE AND IN TH E ASSESSMENT COMPLETED U NDER S.143(3) READ WITH S.147 ON 23.11.2011, THE SAID ISSUE ALONE WAS CONSIDERED AND D ECIDED BY THE ASSESSING OFFICER. HE CONTENDED THAT VIDE HIS IMPUGNED ORDER PASSED UNDER S.263, THE LEARNED DIT HAS SOUGHT TO REVISE THE ASSESSMENT ON THE ISSUE OF INC OME OFF E RED BY TH E ASSESSEE ON ACCOUNT OF EXPENSES REI M BU R SED AND DEDUCTION CLAIMED ON ACCOUNT OF EXPENSES R E I M BURSABLE . HE CON T EN D ED THAT SIN C E TH E SE ISSUES W E RE NOT INVOL V ED IN TH E RE - ASSESSMENT MADE BY THE ASSESSING OFFICER UNDER S .143(3 ) READ WIT H S.147, WHAT THE LEARNED DIT HAS ACTUALLY REVISED BY THE IMP UGNED ORDER PASSED UNDER S.263 IS THE ORDER PASSED BY THE ASSESSING OFFICER UNDER S.143(3) OF THE ACT ON 31.12.2008, AND THE SAME THER E F O R E , IS BARRED BY LIMITATION, AS PER S.263(2) WHICH PROVIDES THAT NO ORDER UNDER S . 263(1) SHALL B E MADE AFTER THE EXPIRY OF TWO Y E ARS F R OM THE END OF THE FINANCIAL YEAR IN WHI C H THE O R DER SOU G HT B E REV IS ED WAS PASSED. IN SUPPORT OF THIS CONTENTION, THE LEARNED COUNSEL FOR THE ASSESSEE PLACED RELIANCE ON TH E FOLLOW I NG JUDICIAL PRONOUNCEMENTS - A ) COMMISSIONER OF INCOME - TAX V/S. M/S. ALAGENDRAN FINANCE LTD. (2007) 211 CTR (SC)69 B ) CIT V/S. SHRIRAM ENGG CONSTRUCTION CO. LTD. (2011 330 ITR 568(MAD) C ) ASHOK BUILDCON LTD. VS/ ACIT & ANR. (2011) 239 CTR(BOM)318) D ) CIT V/S. ICICI BANK LTD.(2012) 343 ITR 74(BOM) I TA NO. 1048/HYD/2014 M/S. LOUIS BERGER GROUP INC., HYDERABAD 7 E ) CIT DELHI V/S. BHARTI AIRTEL LIMITED (2013) 85 CCH 178(DEL) F ) DECISION OF HYDERABAD BENCH A OF THE TRIBUNAL IN GVK INDUSTRIES LTD., SECUNDERABAD V/S. ACIT CIRCLE 2(2), HYDERABAD DATED 18.10.2013 IN ITA NO.620/HYD /2009 FOR ASSESSMENT YEAR 2002 - 03 9 . LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE O T H E R HAND, STRONGLY SUPPORTED THE IMPUGNED ORDER PASSED BY THE DIT UNDER S .263 ON THE ISSUE OF LIMITATION, RELYING ON TH E AMENDMENT MADE TO S.147 BY THE IN SE RTION OF EXPLA NATION (3) BY TH E FINAN C E ACT, 2009 WITH R E TROSP E CTIVE EFFECT FROM 1.4.1989. HE CONTENDED THAT THE CASE - LAWS RELIED ON BY THE LEARNED COUN S EL FO R THE ASSESSEE ARE RENDERED PRIOR TO THIS AMEN D M E N T AND THE EFFECT THERETO, WHI C H CLEARLY SUPPORTS THE CASE OF THE RE VENUE ON THE ISSUE OF LIMITATION, AS RAISED BY THE LEARNED COUNSEL FOR THE ASSESSEE HAS NOT BEEN CONSIDERED IN THE CITED CASES. 1 0 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ALSO PERUSED THE RELEVANT MATERIAL ON R ECORD. IT IS OBSERVED THAT THE LEARNED DIT BY THE IMPU G N E D ORDER P A SSED UNDER S.263 OF THE AC T, HAS SOU G HT TO REVI S E THE ASSESSMENT MADE IN TH E CA S E OF THE ASSESSEE FOR THE YEAR UNDER CON S ID E RATION, I.E. ASSESSMENT YEAR 2006 - 07, ON THE IS S UES RELATING TO I NCOME OFFERED BY TH E ASSESSEE ON ACCOUNT OF EXPEN S ES REIMBU R SED AND DEDUCTION CLAIMED ON ACCOUNT OF REI MB URSABLE EXPENSES WHICH, ACCORDING TO HIM, WERE NOT PROPERLY VERIFIED AND EXAMINED BY THE ASSESSING OFFICER AT ANY STAGE. IT IS PERTINENT TO NOTE T HAT THE ASSESSMENT ORIGINALLY COMPL E TED UNDER S .143(3) FOR THE Y EA R UNDER CON S I D ERATION WAS SUBSEQUE N TLY REOPEN E D BY THE ASSESSING OFFICER ONLY ON THE ISSUE OF DISALLOWANCE MADE UNDER S.43B ON ACCOUNT OF SERVICE TAX PAYABLE AND A PERUSAL O F THE O R DER PASSED BY THE ASSESSING OFFICER UN D ER I TA NO. 1048/HYD/2014 M/S. LOUIS BERGER GROUP INC., HYDERABAD 8 S.143(3) READ WITH S.147 CLEARLY SHOWS THAT THIS WAS THE SOLITARY ISSUE, WHICH WAS CONSIDERED AND DECIDED BY TH E ASSESSING OFFICER IN TH E SAID ASSESSMENT. THE ASSESSMENT COMPLETED ORIGINALLY UN D ER S.143(3) THUS WAS NEITHER REOPENED ON TH E I SS U E OF INCOME OFFERED BY TH E ASSESSEE ON ACCOUNT OF EXPENSES REIMBURSED AND DEDUCTION CLAIMED BY THE ASSESSEE ON ACCOUNT OF REIMBU R SABL E EXPENSES NOR THE SA ID ISSUES WERE CON S I D ERED OR DEALT WITH IN ANY MANNER IN THE ASSE SSMENT COMPLETED UNDER S.143(3) READ WITH S.147. 11. I N TH E CA S E OF CIT V/S. ALAGENDRAN FIN A N C E LTD. (SUPRA) , CITED BY THE LEARNED COUNSEL FOR THE ASSESSEE, SIMILAR FACT SITUATION WAS INVOL V ED IN AS MUCH AS THE CLAIM MADE BY THE ASSESSEE UNDER THE HEAD LEA S E E QU A LI Z ATION F UN D WAS ACC E PT E D BY T HE ASSESSING OFFICER IN TH E ASSESSMENT ORIGINALLY COMPL E TED UN D ER S.143(3) AND THE SAID ASSESSMENT WAS SUBSEQUENTLY REOPENED ONLY IN RESPECT OF THREE ITEMS, VIZ. ( 1) THE EXPEN S ES CLAIMED FOR SH ARE ISSUE ; ( 2) BAD AND DOUBTFUL DEBTS; AND (3) EXCESS DEPRECIATION ON GAS CYLINDER AND GOOD CONTAINER S . ALTHOUGH THE ISSUE REL A TING TO ASSESSEES CLAIM IN RESPECT OF LEASE EQUALIZATION FUND WAS NOT THE SUBJECT MATTER O F THE R E - ASSESSMENT PROCEE D IN G S, THE LEARNED COMMISSIONER PURPORT ED TO INVOKE HIS REVISIONAL JURI S DI C T I ON IN TERMS OF S.263 OF THE A C T AND DIR E CTED THE ASSESSING OFFICER BY AN ORDER DATED 29 TH MARCH, 2004 TO CHECK AND ASSESS THE L EASE RENTAL FROM LEASE E Q U A LIZATION FUND, I F ANY, AND TO B R IN G TO TAX THE SAME. I N TH E SE FACTS AND CIR C UMSTANCES OF THE CA S E, WHICH ARE SIMILAR TO THE FACTS INVOLVED IN THE PRESENT CA S E, THE HONBLE SUPREME COURT , AFTER DISCUSSING ELABO R AT E LY THE LEGAL POSITION ON THE ISSUE OF SCOPE OF RE - ASSESSMEN T PROCEED I NGS AND THE DOCTRINE OF MERGER, HELD THAT THE LEARNED CIT HAVING EXE R CISED HIS REVISIONA L JURISDICTION TO REOPEN THE ORDER OF ASSESSMENT ONLY IN RELATION TO LEASE I TA NO. 1048/HYD/2014 M/S. LOUIS BERGER GROUP INC., HYDERABAD 9 EQUALIZATION FUN D , WHICH WAS NO T THE SUBJECT MATTER O F RE - - ASSESSMENT PROCEE D IN GS, TH E PERIOD O F LIMITATION PROVIDED FOR IN S UB - SECTION (2) OF S.263 OF TH E A C T WOULD BEGIN TO RUN FROM THE DATE OF ORDER O F ORIGINAL ASSESSMENT AND NO T FROM THE DATE OF ORDER OF RE - ASSESSMENT. ACCOR D INGLY, THE ORDER P A SSED BY THE CIT UNDER S.263 WAS HELD TO BE INVALID BY THE HON'BLE SUPREME COURT, HAVING BEEN PASSED BEYOND THE PERIOD OF LIMITATION AS PROVIDED IN SUB - S ECTION (2) OF S.263 OF THE A C T. TO THE SIMILAR EFFECT IS THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN T H E CA S E OF ASHOKA BUIL D CO N (S UPRA) CITED BY THE LEARNED C OUN S EL FOR TH E ASSESSEE, WH E REIN IT WAS HELD THAT WHERE AN ASSESSMENT HAS BEEN REOPENED UNDER S .147 IN REL A TION TO PARTICULAR GROUNDS OR IN RELATION TO CERTAIN SPECIFIED GROUND, AN D SUBSEQUENT TO THE P A SSIN G OF THE O R DER OF RE - ASSESSMENT , JURI S DI C TION UNDER S.263 IS SOU G HT TO BE EXERCISED WITH REFERENCE TO THE ISSUE WHICH DID NO T FORM THE SUBJ E CT OF RE - OPENING O F THE ASSESSMENT OR ORDER OF RE - ASSESSMENT, THE PERIOD O F LIMITATION P R OVIDED IN SUB - S ECTION (2) OF S.263 WOULD COM MENCE FORM THE DATE OF TH E O R DER OF ASSESSMENT AND NO T FROM THE DATE ON WHI C H THE ORDER REOPENING THE ASSESSMENT HAS BEEN PASSED. 12. AT THE TIME OF HEARING BEFORE US, THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS RELIED ON THE AMENDMENT MADE TO S.147 BY THE IN SE RTION OF EXPLANATION 3 BY TH E FINANCE ACT, 2009 WITH RETROSPECTIVE EFFECT F R OM 1.4. 198 9, IN O R DER TO SUPPORT THE IMPU G N E D ORDER OF THE DIT ON THE ISSUE OF LIMITATION. IT IS OBSERVED THAT A SIMILAR STAND WAS TAKEN ON BEHALF OF THE RE VENUE IN TH E CASE OF I CICI BANK LTD. (SUPRA), BEFORE THE HON'BLE BOMBAY HIGH COURT RELYING ON EXPLANATION (3) TO S.147, AS INSERTED BY THE FIN A N C E ACT, 2009 WITH RETROSPECTIVE EFFECT FROM 1.4.1989. IT WAS CONTENDED THAT AS A RESUL T OF INSERTION OF THE SAID EXPLANATION , ONCE ASSESSMENT IS REOPENED, THE ASSESSING OFFICER IS ENTITLED TO ASSESS I TA NO. 1048/HYD/2014 M/S. LOUIS BERGER GROUP INC., HYDERABAD 10 OR RE - ASSESS THE INCOME IN R E SPE C T OF A NY ISSUE WHICH HAS ESCAPED THE ASSESSMENT , THOUGH THE REASON S IN R E S P ECT OF SUCH ISSUE S HAVE NOT BEEN INCLUDED IN THE REASONS RECORDED UNDE R S.148(2). IT WAS URGED THAT WHEN THE ASSESSING OFFICER REOPENED THE ASSESSMENT , THE ENTIRE ASSESSMENT WAS AT LARGE, AS PER EXPLANATION (3) AND HENCE, HE OUGHT TO HAVE APPLIED HIS MIND TO ALL THE ISSUES INVOLVED IN THE CASE OF THE ASSESSEE. THIS PLEA RAISED ON BEHALF OF THE R E VENUE RELYING ON EXPLANATION (3) TO S.147 HOW E VER, WAS NO T ACCEPTED BY THE HONBLE BOMBAY HIGH COURT RELYING ON ITS DECISION IN TH E CASE OF ASHOKA B UI L DCO N LTD. V/S. ACIT (SUPRA), WH E R E IN I T WAS H E LD AFTER TAKING IN T O CONSIDERATION THE EFFECT OF THE SAID EXPLANATION AS UNDER - WHERE A REASSESSMENT HAS BEEN MADE PURSUANT TO A NOTICE UNDER SECTION 148 THE ORDER OF REASSESSMENT PREVAILS IN RESPECT OF THOSE ITEMS WHICH FORM PART OF REASSESSMENT. ON ITEMS WHICH DO NOT FO RM PART OF THE REASSESSMENT, THE ORIGINAL ASSESSMENT CONTINUES TO HOLD THE FIELD. WHEN THE ASSESSING OFFICER REOPENS AN ASSESSMENT ON A PARTICULAR ISSUE, IT IS OPEN TO HIM TO MAKE A REASSESSMENT ON THAT ISSUE AS WELL AS IN RESPECT OF OTHER ISSUES WHICH SUB SEQUENTLY COME TO HIS NOTICE DURING THE COURSE OF THE PROCEEDINGS UNDER SECTION 147. THE SUBMISSION OF THE REVENUE IS THAT BY NOT PASSING AN ORDER OF REASSESSMENT IN RESPECT OF OTHER INDEPENDENT ISSUES. THE ORDER OF THE ASSESSING OFFICER CAN BE CONSTRUED T O BE ERRONEOUS AND TO BE PREJUDICIAL TO THE INTERESTS OF THE REVENUE WITHIN THE MEANING OF SECTION 263. THE SUBMISSION CANNOT BE ACCEPTED IN THE FACTS OF THE PRESENT CASE. THE SUBSTANTIVE PART OF SECTION 147 AS WELL AS EXPLANATION ENABLES THE ASSESSING OF FICER TO ASSESS OR REASSESS INCOME CHARGEABLE TO TAX WHICH HE HAS REASON TO BELIEVE HAD ESCAPED ASSESSMENT AND OTHER INCOME WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THE SECTION. THERE IS NOTHING ON THE RECORD OF THE PRESENT EASE TO INDICATE THAT THERE WAS ANY OTHER INCOME WHICH HAD COME TO THE NOTICE OF THE ASSESSING OFFICER AS HAVING ESCAPED ASSESSMENT IN THE COURSE OF THE PROCEEDINGS UNDER SECTION 147 AND WHEN HE PASSED THE ORDER OF REA SSESSMENT. THE COMMISSIONER, W \ HEN HE EXERCISED HIS JURISDICTION UNDER SECTION 263, IN THE FACTS OF THE PRESENT CASE, WAS UNDER A BAR OF LIMITATION SINCE LIMITATION WOULD BEGIN TO RUN FROM THE DATE ON WHICH THE ORIGINAL ORDER OF ASSESSMENT WAS PASSED. WE M UST HOWEVER CLARIFY THAT THE BAR OF LIMITATION IN THIS CASE ARISES BECAUSE THE REVISIONAL JURISDICTION UNDER SECTION 263 IS SOUGHT TO BE EXERCISED IN RESPECT OF ISSUES WHICH DID NOT FORM THE SUBJECT MATTER OF THE REASSESSMENT PROCEEDINGS UNDER SECTION 143 (3) READ WITH 147. IN RESPECT OF THOSE ISSUES, LIMITATION WOULD COMMENCE WITH REFERENCE TO THE I TA NO. 1048/HYD/2014 M/S. LOUIS BERGER GROUP INC., HYDERABAD 11 ORIGINAL ORDER OF ASSESSMENT. IF THE EXERCISE OF THE REVISIONAL JURISDICTION UNDER SECTION 263 WAS TO BE IN RESPECT OF ISSUES WHICH FORMED THE SUBJECT MATTER OF THE REASSESSMENT AFTER THE ORIGINAL ASSESSMENT WAS REOPENED, THE COMMENCEMENT OF LIMITATION WOULD BE WITH REFERENCE TO THE ORDER OF REASSESSMENT. THE PRESENT CASE DOES NOT FALL IN THAT CATEGORY.' 13. HON'BLE BOMBAY HIGH COURT IN TH E CASE OF ICICI BANK LTD. (SUPRA) ACCORDINGLY PROCEED E D TO HO L D THAT THE ORDER UNDER S.143(3) PASSED ORIGINALLY CANNOT STAND MERGED WI T H TH E O R DER OF RE - ASSESSMENT IN RESPE C T OF THOSE ISSUES WHICH DID NO T FORM THE SUBJECT MA T TER OF RE - ASSESSMENT AND EX PLANATION (3) OF S.147 WILL NOT ALTER THIS POSITION. IT WAS H E LD THAT EXPLANATION (3) ONLY ENABLES THE ASSESSING OFFICER, ONCE AN ASSESSMENT IS REOPENED, TO A S SESS OR REASS ESS THE INCOME IN RESPECT OF AN ISSUE IN R E SPECT OF WHICH NO REASONS WERE INDICAT ED IN THE NO T ICE UN D ER S.148(2), BUT THIS WILL NO T OBVIATE THE BAR OF L I M I TATION UN D ER S .263(2). IT WAS HELD TH AT WHER E THE JU R I S DI C TION UNDER S .263(1) OUGHT TO BE EXERCISED WITH REFERENCE TO AN ISSUE WHICH IS COVERED BY THE ORIGINAL ORDER OF ASSESSMENT UNDER S.143(3) AND IT DOES NOT FORM PART OF THE RE - ASSESSMENT, LIMITATION MUST NECESSARILY BEGIN TO RUN FROM THE ORDER UNDER S.143(3). 14. KEEPING IN VIEW THE LEGAL POSITION EMANATING FROM THE JUDICIAL PRONOUNCEMENTS DISCUSSED ABOVE, INCLUDING THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF AL A G E NDRAN FIN A N C E LTD. (SUPRA) AND HAVING REGARD TO THE FACTS OF TH E CA S E, WE ARE OF THE VIEW THAT THE PERIOD OF LIM ITA TION AS PROVIDED UNDER S.263(2) H A S TO B E R ECKONED FROM TH E DATE OF THE ORIGINAL ASSESSMENT PASS ED UN D ER S.143(3) AND NO T FROM THE DATE OF RE - ASSESSMENT PASSED UNDER S.143(3 ) R E AD WITH S.147 OF THE ACT, AS THE ISSUES ON WHICH ASSESSMENT WAS SOUGHT TO BE REVISED WERE NO T THE SUBJECT MATT E R OF RE - ASSESSMENT MADE UNDER S.143(3) REA D WITH S. 147. THIS VIEW ALSO GETS SUPPORT FROM THE DECISION OF THE C OO R DIN A TE BENCH OF I TA NO. 1048/HYD/2014 M/S. LOUIS BERGER GROUP INC., HYDERABAD 12 THIS TRIBUNAL DATED 18.10.2013 IN TH E CASE OF GVK INDUSTRIES LTD., SECUNDERABAD V/S. ASSTT. COMMISSIONER OF INCOME - TAX CIRCLE 2(2) HYDERABAD IN ITA NO.620/HYD/2009 F OR ASSESSMENT YEAR 2002 - 03 . ACCOR D INGLY WE HOL D THAT THE IMPU G N E D ORDER PASSED BY THE DIT UNDER S .263 REVISING THE ASSESSMENT PASSED UN D ER S.143(3) ON 31.12.2008 IS BARRED BY LIMITATION, HAVING BEEN PASSED AFTER A PERIOD O F TWO YEARS FORM THE END OF THE FINANCIAL YEAR IN WHICH THE ORDER UNDER S.143(3) SOUGHT TO BE REVISED WAS PASSED. THE SAID ORDER IS ACCORDINGLY CANCELLED, TREATING THE SAME AS INVALID IN THE EYES OF LAW, AND THIS APPEAL OF THE ASSESSEE IS ALLOWED. 15. IN VIEW OF OUR DECISION ON THE PRELIMINARY LEGAL GROUND RAISED BY THE LEARNED COUNSEL FOR THE ASSESSEE, WHEREBY WE HAVE HELD THE ORDER UNDER S.263 TO BE INVALID IN THE EYES OF LAW, WE ARE NOT INCLINED TO GO INTO OTHER GROUNDS RAISED BY THE ASSESSEE ON MERITS , AS THE ISSUES INVOLVED THEREIN HAVE BECOME ACADEMIC IN NATURE. 16. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 26 TH SEPTEMBER, 2014 SD/ - SD/ - ( P.MADHAVI DEVI) ( P.M.JAGTAP ) JUDICIAL MEMBER ACCOUNTANT MEMBER DT/ - 26 TH SEPTEMBER , 2014 COPY FORWARDED TO: 1. M/S. LOUIS BERGER GROUP INC., FLAT NO.105, LAKE MELODY, H.NO.6 - 3 - 1099/1/14 & 15, SOMAJIGUDA HYDERABAD - 500 082 2 . ASST. DIRECTOR OF INCOME - TAX(INTERNATIONAL TAXATION), HYDERABAD 3. DIRECTOR OF INCOME - TAX(INTERNATIONAL TAXATION& TRANSFER PRICING), HYDERABAD 4. DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S