Meghmani Organics Ltd., Ahmedabad V. The DY.CIT., Cent.Circle-1(1), Ahmedabad

ITA 2165/AHD/2011

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9335 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 5 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 24-01-2017
• Assessment Year: 2000-2001
• Appeal Filed On: 01-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Retrospective amendment; Question of law; Difference of opinion; Unabsorbed depreciation; Change of opinion
• Section: 143(3); 80HHC; 153A; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 2165/AHD/2011 (ASSESSMENT YEAR: 2000-01) MEGHMANI ORGANICS LIMITED MEGHMANI HOUSE, SHRINIVAS SOCIETY, VIKAS GRUH ROAD, AHMEDABAD-7 V/S DCIT, CENTRAL CIRCLE-1(1), AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AABCM0644E APPELLANT BY : MS. URVASHI SODHAN, AR RESPONDENT BY : SHRI K. MADHUSUDAN, SR. D.R. ( )/ ORDER DATE OF HEARING : 24 -01-201 7 DATE OF PRONOUNCEMENT : 07 -02-2017 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. WITH THIS APPEAL, THE ASSESSEE HAS CHALLENGED THE C ORRECTNESS OF THE ORDER OF THE LD. CIT(A)-I, AHMEDABAD DATED 02.06.2011 PER TAINING TO A.Y. 2000- 01. ITA NO. 2165 /AHD/2011 . A.Y. 2000- 01 2 2. THE ASSESSEE HAS RAISED 10 SUBSTANTIVE GROUNDS OF A PPEAL. WITH GROUND NO. 1, THE ASSESSEE HAS CHALLENGED THE VALIDITY OF THE ACTION OF THE A.O. IN RE- OPENING ASSESSMENT U/S. 147 OF THE ACT. THE ASSESSE E HAS CHALLENGED THE RE-OPENING ON THE GROUND THAT THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL THE MATERI AL FACTS NECESSARY FOR ASSESSMENT MADE U/S. 143(3) OF THE ACT. GROUNDS NO. 2 TO 10 ARE ON MERIT OF THE CASE. 3. WE WILL FIRST TAKE UP GROUND NO. 1. 4. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE A SSESSEE IS IN THE BUSINESS OF MANUFACTURING OF DYE, DYE INTERMEDIATES, PIGMENTS A ND OTHER CHEMICALS. IN THIS CASE, AN ORDER U/S. 153C R.W.S 153A R.W.S 1 43(3) WAS MADE BY THE ASSESSING OFFICER ON 31.12.2007. THE IMPUGNED ASSES SMENT ORDER WAS CHALLENGED BEFORE THE FIRST APPELLATE AUTHORITY WHE RE THE ASSESSEE GOT PART RELIEF. THE ORDER OF THE FIRST APPELLATE AUTHORITY WAS CHALLENGED BEFORE THE TRIBUNAL BY THE ASSESSEE AS WELL AS BY THE REVENUE. THE TRIBUNAL IN ITA NO. 3933/AHD/2003 BEING ASSESSEES APPEAL GAVE PART REL IEF TO THE ASSESSEE AND IN ITA NO. 4016/AHD/2003 BEING REVENUES APPEAL , THE TRIBUNAL DISMISSED THE APPEAL. 5. THE A.O. ISSUED NOTICE U/S. 148 OF THE ACT INITIATI NG RE-ASSESSMENT PROCEEDINGS VIDE LETTER DATED 12.10.2009. THE REASO NS RECORDED FOR ISSUING NOTICE U/S. 148 READ AS UNDER:- 'REASON RECORDED IN THE CASE OFMEGHMANI ORGANICS LT D. FOR REOPENING ASSESSMENT UNDER SECTION 147 OF THE INCOM E TAX ACT,1961. ITA NO. 2165 /AHD/2011 . A.Y. 2000- 01 3 IN THIS CASE THE ASSESSEE HAS FILED ITS RETURN OF I NCOME FOR A.Y. 2000-01 ON 30.11.2000 DECLARING TOTAL LOSS AT RS. 5,12,05,120/ -. THE ASSESSMENT WAS MADE U/S. 143(3) ON 4.3.2003. ON PERUSAL OF THE RECORDS, IT IS NOTICED THAT THERE IS ESCAPEMENT OF INCOME CHARGEABLE TO TAX ON THE FOLLOWING POINTS; -. (1) WHILE CALCULATING PROFIT ON EXPORT OF TRADING GOODS , THE LOSS FIGURE WAS TAKEN AT RS. 2,21, 285/~ AGAINST THE CORRECT FIGURE OF RS . 67.48.608/-AS WORKED OUT IN THE COMPUTATION STATEMENT. THUS, THE FIGURE OF L OSS FROM EXPORT OF TRADING GOODS HAS BEEN TAKEN LESS BY RS. 65,27,327/-. (2) AS PER SCHEDULE 21 IS FOR FINANCIAL EXPENSES WHERE NOT INTEREST TO BANK HAS BEEN SHOWN AFTER CONSIDERING THE INTEREST INCOME, B UT THE FIGURE OF INTEREST INCOME IS NOT ON RECORD. HOWEVER, IT IS SEEN FROM T DS CERTIFICATE THAT ASSESSEE HAS EARNED INTEREST INCOME OF RS. 5,87,321 /-. THIS INTEREST INCOME HAS NOT BEEN EXCLUDED FROM THE PROFIT OF THE BUSINE SS WHILE WORKING OUT DEDUCTION U/S.80HHC. (3) WHILE COMPUTING THE DEDUCTION U/S.80IA, THE DETAIL S OF OTHER INCOME AS PER SCHEDULE 14 OF THE P&L ACCOUNT WHICH INCLUDES DUTY DRAW BACK OF RS. 4,45,469/-PREMIUM ON SALE OF IMPORT LICENSE AT RS. 1,80,8687- AND DEPB BENEFITS AT RS. 2,25,35,429/- WERE NOT EXCLUDED FOR WORKING OF DEDUCTION U/S.80IA. THUS, BY THESE REASONS THERE WAS UNDER ASSESSMENT O F INCOME. IN THE CIRCUMSTANCES, THE ASSESSMENT FOR A. Y. 2000-01 IS HEREBY REOPENED. ISSUE NOTICE U/S. 148 OF THE IT ACT, 1961,' 6. THE ASSESSEE CHALLENGED THE VALIDITY OF THE IMPUGNE D NOTICE STATING THAT THE CLAIMS MADE IN THE RETURN OF INCOME WERE EXHAUSTIVE LY SCRUTINIZED DURING THE ASSESSMENT PROCEEDINGS U/S. 143(3) OF THE ACT A ND THE ASSESSMENT ORDER WAS PASSED AFTER MAKING DETAILED ENQUIRIES. 7. THE ASSESSEE ALSO CHALLENGED EACH AND EVERY ISSUE W HICH PROMPTED THE A.O. TO INITIATE RE-ASSESSMENT PROCEEDINGS AND THE SAME READ AS UNDER:- 1. REGARDING THE FIGURE OF LOSS FROM EXPORT OF TRADING GOODS TAKEN LESS BY RS.67,27,327: ITA NO. 2165 /AHD/2011 . A.Y. 2000- 01 4 IN THIS REGARD, WE WOULD LIKE TO DRAW YOUR KIND ATT ENTION TO THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3 ) DATED 4 TH MARCH, 2003. IN THE SAID ORDER THE ASSESSING OFFICER HAS DISALLOWED THE LOSS FROM EXPORT TURNOVER OF RS. 67,48,608/- AS PER THE CALCULATION GIVEN IN ANNEXURE -/ OF THE ASSESSMENT ORDER. SINCE THE SAME HAS ALREADY BEEN DEDUCTED-WHI LE CALCULATING THE DEDUCTION UNDER SECTION 80HHC, THERE IS NO QUESTION OF MAKING FURTHER DEDUCTION AT THIS STAGE. A COPY OF THE ASSESSMENT ORDER IS ATTACHED H ERETO FOR READY REFERENCE AND KIND PERUSAL YOUR GOODSELVES WILL KINDLY APPRECIATE THAT THIS ISSUE IS ALREADY CONSIDERED WHILE PASSING THE ORDER UNDER SECTION 14 3(3). OF THE INCOME-TAX ACT, 1961. THEREFORE, YOU ARE REQUESTED NOT TO TAKE ANY ADVERSE VIEW IN THIS REGARD AT THIS STAGE. 2. REGARDING INTEREST INCOME NOT EXCLUDED FROM THE PRO FIT OF THE BUSINESS WHILE WORKING OUT DEDUCTION UNDER SECTION 80HHC: IN THIS REGARD, WE HAVE TO INFORM YOU THAT THIS ISS UE HAS ALSO BEEN CONSIDERED BY THE ASSESSING OFFICER WHILE PASSING THE ORDER DATED 31 ST DECEMBER, 2007 UNDER SECTION 153C OF THE INCOME-TAX ACT, 1961. THE LEARN ED COMMISSIONER OF INCOME TAX (APPEALS) HAS PARTLY DELETED THIS ADDITION MADE BY THE ASSESSING OFFICER. THIS ISSUE IS ALREADY DISCUSSED IN THE ASSESSMENT ORDER UNDER SECTION 153C OF THE INCOME-TAX. ACT, 1961 ON PAGE NO. 13. THEREFORE, YO U WILL KINDLY APPRECIATE THAT THERE IS NO QUESTION OF TAKING ANY FURTHER ADVERSE VIEW IN THIS REGARD AT THIS STAGE. THE DETAILS OF INTEREST INCOME ARE ALREADY GIVEN IN OUR EARLIER ASSESSMENT PROCEEDINGS. 3. AS REGARDS NON-EXCLUSION OF DUTY DRAW-BACK, PREMIUM ON SALE OF IMPORT LICENSE AND DEPB, WE. WISH TO INFORM YOU THAT WE HAVE ALREA DY FURNISHED A DETAILED EXPLANATION ON THE ISSUE. HOWEVER, IF YOU WOULD SO DESIRE, WE SHALL BE GLAD TO FURNISH ANY FARTHER EXPLANATION AND/OR CLARIFICATIO N IN THIS REGARD UPON HEARING FROM YOUR GOODSELVES. 8. THE CONTENTIONS OF THE ASSESSEE DID NOT FIND ANY FA VOUR WITH THE A.O. WHO WAS OF THE FIRM BELIEF THAT THIS IS NOT A CASE OF M ERE CHANGE OF OPINION. THE A.O. DREW SUPPORT FROM THE EXPLANATION 3 WHICH IS I NSERTED IN SECTION 147 OF THE ACT WITH RETROSPECTIVE EFFECT FROM 01.04.198 9 AND THE SAME READ AS UNDER:- ITA NO. 2165 /AHD/2011 . A.Y. 2000- 01 5 'FOR THE PURPOSE OF ASSESSMENT OR REASSESSMENT UNDE R THIS SECTION, THE ASSESSING OFFICER MAY ASSESS OR REASSESS THE INCOME IN RESPECT OF ANY ISSUE, WHICH HAS ESCAPED ASSESSMENT, AND SUCH ISSUE COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF PROCEEDINGS UNDER THIS SECTION, NO TWITHSTANDING THAT THE REASONS FOR SUCH ISSUE HAVE NOT BEEN INCLUDED IN TH E REASONS RECORDED UNDER SUB-SECTION (2) OF SECTION 148' 9. DISMISSING THE CONTENTION OF THE ASSESSEE, THE A.O. PROCEEDED BY COMPLETING THE RE-ASSESSMENT PROCEEDINGS AND MADE C ERTAIN DISALLOWANCES. 10. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT( A) AND ONCE AGAIN QUESTION THE VALIDITY OF THE RE-ASSESSMENT PROCEEDI NGS. 11. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS, TH E LD. CIT(A) OBSERVED AS UNDER:- 8. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CAS E, THE SUBMISSIONS OF THE APPELLANT AND THE ASSESSMENT ORDER. IN THIS CASE, R ETURN WAS FILED ON 30.11.2000 AND NOTICE U/S. 148 OF THE INCOME-TAX ACT WAS SERVE D ON 31.03.2006 I.E. BEYOND PERIOD OF 4 YEARS AND THEREFORE THE 1 ST PROVISO TO SECTION 148 IS ATTRACTED. IT IS TO BE ASCERTAINED WHETHER THE REOPENING IS FOR REASONS OF THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY, AND TRULY OF .MATER IAL FACTS. IT IS NOTICED THAT IN THE REASONS FOR REOPENING, IT IS MENTIONED THAT AS PER SCHEDULE 21 FILED ALONGWITH THE RETURN FOR FINANCE EXPENSES, THE NET INTEREST HAS B EEN SHOWN BUT THE FIGURE OF INTEREST INCOME IS NOT RECORDED AND THAT THE INTERE ST INCOME OF RS.5,87,321/- HAS NOT BEEN EXCLUDED FROM PROFITS OF BUSINESS OF COMPU TATION OF SECTION 80HHC OF THE INCOME-TAX ACT. THIS FACT HAS ALSO NOT BEEN REB UTTED IN ANY OF THE SUBMISSIONS BEFORE THE ASSESSING OFFICER, THEREFORE, TO THAT EX TENT IT CANNOT BE SAID THAT THERE WAS TRUE AND FULL DISCLOSURE OF ALL MATERIAL FACTS, NECESSARY FOR ASSESSMENT OF INCOME. FURTHER, IN VIEW OF EXPLANATION 1 TO SECTIO N 147 OF THE INCOME-TAX ACT, THE PRODUCTION BEFORE THE ASSESSING OFFICER OF ALL ACCOUNTS OF BOOKS AND OTHER ITA NO. 2165 /AHD/2011 . A.Y. 2000- 01 6 EVIDENCES WILL NOT NECESSARILY AMOUNT TO DISCLOSURE WITHIN THE MEANING OF THE PROVISO. THE OTHER PLEA OF THE APPELLANT THAT THERE WAS CHANGE OF OPINION BY THE ASSESSING OFFICER IS ALSO NOT CORRECT AS IN FACT TH ERE WAS NO ADDITION ON THE ISSUE OF NETTING OF INCOME BY THE EARLIER ASSESSING OFFIC ER IN ORIGINAL ASSESSMENT PROCEEDINGS AND THUS, THERE WAS NO OPINION IN THE F IRST PLACE. THEREFORE, THE QUESTIONS OF CHANGE OF OPINION DOSE NOT ARISE. THE GROUND NO. L & 2 ARE THUS, DISMISSED. 12. AGGRIEVED BY THIS, THE ASSESSEE IS BEFORE US. THE L D. COUNSEL FOR THE ASSESSEE VEHEMENTLY STATED THAT THE RE-ASSESSMENT PROCEEDING S ARE BAD IN LAW IN AS MUCH AS THE FIRST PROVISO TO SECTION 147 OF THE ACT SQUARELY APPLY ON THE FACTS OF THE CASE. IT IS THE SAY OF THE LD. COUNSEL THAT THE ASSESSEE HAD DISCLOSED FULLY AND TRULY ALL THE MATERIAL FACTS IN THE FIRST ROUND OF LITIGATION IN ITS RETURN OF INCOME. THE LD. COUNSEL CONTINUED BY STATING THAT THE RETURN OF INCOME WAS THOROUGHLY SCRUTINIZED BY THE A.O. AN D THE ASSESSMENT ORDER TRAVELLED UP TO THE TRIBUNAL. THE LD. COUNSEL CONCL UDED BY SAYING THAT SINCE THE ISSUES UNDER CONSIDERATION WERE FULLY EXAMINED THE ISSUE OF NOTICE U/S. 148 IS BASED ON THE CHANGE OF OPINION AND WHICH IS NOT PROPER IN LAW. 13. PER CONTRA, SUPPORTING THE ORDERS OF THE REVENUE AU THORITIES, THE LD. D.R. STATED THAT THE CLAIM OF DEDUCTION U/S. 80HHC OF TH E ACT HAS SEVERAL ISSUES AND THE A.O. HAS NOT CONSIDERED ALL THE ISSUES WHIL E FRAMING THE ASSESSMENT ORDER. IT IS THE SAY OF THE LD. D.R. THAT SINCE THE A.O. HAS NOT FORMED ANY OPINION INSOFAR AS ALL THE ISSUES INVOLVED IN CLAIM ING DEDUCTION U/S. 80HHC OF THE ACT, THERE IS NO QUESTION OF ANY CHANGE OF O PINION. THE LD. D.R. VEHEMENTLY STATED THAT SINCE ALL THE MATERIAL FACTS WERE NOT DISCLOSED FULLY, THEREFORE, PROVISO TO SECTION 147 OF THE ACT DOES N OT APPLY. ITA NO. 2165 /AHD/2011 . A.Y. 2000- 01 7 14. HAVING HEARD THE RIVAL CONTENTIONS, WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORDERS OF THE AUTHORITIES BELO W. THERE IS NO DISPUTE THAT IN THE FIRST ROUND OF LITIGATION, THE ASSESSME NT TRAVELLED UP TO THE TRIBUNAL. IT IS ALSO TRUE THAT ASSESSEE GOT PART RE LIEF WHILE REVENUES APPEAL WAS DISMISSED. A PERUSAL OF THE REASONS RECORDED FOR RE-OPENING THE ASSESSMENT SHOWS THAT THE FIRST ISSUE RELATES TO TH E LOSS FROM EXPORT OF TRADING GOODS. IF THIS ISSUE IS CONSIDERED IN THE L IGHT OF THE ASSESSMENT ORDER MADE U/S. 143(3) OF THE ACT DATED 04.03.2003M, WE F IND THAT IN THE COMPUTATION OF TAXABLE INCOME MADE BY THE A.O. WHIC H IS EXHIBITED AT PAGE 29 OF THE PAPER BOOK CLEARLY SHOW THAT IN ANNEXURE- 1 AT ITEM NO. 3, THE A.O. HAS CONSIDERED THE LOSS. 15. THE SECOND ISSUE RELATES TO THE NETTING OFF OF INTE REST, WE FIND THAT THIS ISSUE WAS CONSIDERED BY THE A.O. WHILE PASSING THE ORDER DATED 31.12.2007 MADE U/S. 153C OF THE ACT AND THE FIRST APPELLATE A UTHORITY HAS GIVEN PART RELIEF TO THE ADDITION MADE BY THE A.O. THIS SHOWS THAT THIS ISSUE WAS EXAMINED AND CONSIDERED IN THE EARLIER ROUND OF ASS ESSMENT. 16. THE THIRD ISSUE RELATES TO THE CLAIM OF DEDUCTION U /S. 80IA OF THE ACT, WE FIND THAT THIS ISSUE WAS CONSIDERED BY THE A.O. IN HIS ORDER DATED 04.03.2003 MADE U/S. 143(3) OF THE ACT QUA PARA 3 O F THE ORDER WHICH IS EXHIBITED AT PAGE 27 OF THE PAPER BOOK. 17. IN THE LIGHT OF THE TOTALITY OF THE FACTS MENTIONED HEREINABOVE, RELIANCE WAS PLACED ON THE DECISION OF THE HONBLE HIGH COURT OF DELHI BY THE LD. D.R. IN ITA NO. 2165 /AHD/2011 . A.Y. 2000- 01 8 THE CASE OF DALMIA (P.) LTD. 348 ITR 469 APPEARS TO BE MISPLACED. IN THAT CASE, THE HONBLE HIGH COURT HAS HELD THAT QUESTION OF CHANGE OF OPINION ARISES WHEN AN ASSESSING OFFICER FORMS AN OPINION A ND DECIDES NOT TO MAKE AN ADDITION AND HOLDS THAT ASSESSEE IS CORRECT. A P ERUSAL OF THE EARLIER ASSESSMENT ORDER CLEARLY SHOWS THAT THE A.O. HAD CO NSIDERED THE IMPUGNED ISSUES AND HAD FORMED AN OPINION AND DECIDED NOT TO MAKE ADDITIONS. 18. THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COU RT OF GUJARAT GIVEN IN THE CASE OF SUN PHARMACEUTICALS INDUSTRIES LTD. 72 TAXM ANN.COM 65 NEEDS SPECIAL MENTION HERE WHEREIN THE HONBLE HIGH COURT OBSERVED AS UNDER:- 8. ON A PERUSAL OF THE REASONS RECORDED WHAT CAN BE CULLED OUT IS THAT IT IS THE CASE OF THE ASSESSING OFFICER THAT: (I) THE ASSESSEE HAD SUBMITTED VOLUMINOUS DETAILS A LONG WITH THE RETURN OF INCOME WHICH ARE VERY CONFUSING AND COMPLICATE THE MATTER PERTAINING TO THE ASSESSMENT; (II) THE ASSESSEE HAS DELIBERATELY PRESENTED THE FA CTS IN SUCH A MANNER SO THAT IT IS NOT UNDERSTOOD BY THE TAX AUTHORITY EASILY; (III) WHILE COMPLETING THE ASSESSMENT UNDER SECTION 143(3 ) OF THE ACT IN THE CASE OF ADITYA MEDISALES LTD., A SISTER CONCERN OF THE S UN GROUP, IT WAS FOUND THAT THE PROFIT OF THE INDUSTRIAL UNIT OF SILVASA OF THE ASS ESSEE HAS BEEN INFLATED BECAUSE THE SAME IS EXEMPT UNDER SECTION 80IA, BY GIVING MO RE INTEREST ON OVERDUE BILLS BY ADITYA MEDISALES LTD.; (IV) BY ADOPTING THIS MODUS OPERAND!, THE SUN GROUP HAS REDUCED THE TAXABLE PROFIT OF M/S. ADITYA MEDISALES LTD. AND AT THE SAM E TIME IT HAS INCREASED THE PROFIT OF THE SILVASA UNIT BECAUSE THE INTEREST INC OME IS DIRECTLY ADDED TO THE SALES FIGURE, ON WHICH THE DEDUCTION UNDER SECTION 80IA IS AVAILABLE; (V) THE ASSESSEE HAS CLAIMED WEIGHTED DEDUCTION UND ER SECTION 35(1) OF RS. 23,04,83,379/- IN THE COMPUTATION OF INCOME. HOWEVE R, DESPITE THE FACT THAT THE TURNOVER OF SILVASA I UNIT AND SILVASA II UNIT IS I N THE RATIO OF 58.6% AND 41.4%, AND ACCORDINGLY, THE ALLOCATION OF 10% OF WEIGHTED DEDUCTION UNDER SECTION 35(1) BETWEEN THE TWO UNITS SHOULD BE RS. 1,35,06,326/- A ND RS. 95,42,012/- RESPECTIVELY, THE ASSESSEE HAS ALLOCATED RS. 18,72, 973/- AND RS. 13,20,088/- ONLY IN THE TWO UNITS RESPECTIVELY. THUS, IT IS THE CASE OF THE ASSESSING OFFICER THAT THE ITA NO. 2165 /AHD/2011 . A.Y. 2000- 01 9 ASSESSEE HAD CLAIMED EXTRA DEDUCTION UNDER SECTION 80IA IN THE COMPUTATION OF INCOME AT RS. 82,21,924/- ON SILVASA UNIT II, WHICH WAS NOT ALLOWABLE AND SHOULD BE ADDED TO THE INCOME OF THE ASSESSEE; (VI) THERE IS INTERMIXING OF R&D EXPENSES OF ALL T HE PRODUCTS, THEREFORE, THE BEST WAY TO ALLOCATE THE EXPENSE UNDER THESE CIRCUMSTANC ES SHOULD BE ON THE BASIS OF PROFITABILITY RATIO OF VARIOUS UNITS. SINCE, THE PR OFITABILITY OF SILVASA UNITS I & II ARE VERY HIGH, THE ALLOCATION OF R&D EXPENSE SHOULD BE MORE IN THESE TWO UNITS BECAUSE THERE IS A DIRECT NEXUS BETWEEN THE PROFITA BILITY OF A UNIT AND R&D EXPENSES (BECAUSE A BETTER R&D MEANS MORE PROFIT MA RGIN IN PHARMACEUTICAL LINE) RATHER THAN ALLOCATING ONLY 10% OF THE R&D EX PENSES. THE ASSESSEE HAD SHOWN EXPORT OF RS. 35.46 LACS OUT THE GOODS PRODUC ED FROM THE SILVASA I UNIT. THIS AMOUNT HAS BEEN CONSIDERED FOR WORKING OUT THE DEDUCTION UNDER SECTION 80HHC. AGAIN, DEDUCTION UNDER SECTION 80IA HAS BEEN CLAIMED ON THIS AMOUNT. THIS MEANS THAT MORE THAN 100% DEDUCTION HAS BEEN C LAIMED ON THE EXPORT OF RS. 35.46 LACS FROM THE SILVASA I UNIT, WHICH IS NOT CO RRECT AS PER THE PROVISIONS OF SECTION 80AB; (VII) WHILE WORKING OUT THE DEDUCTION UNDER SECTION 80H HC OF THE ACT, THE ASSESSEE HAS TAKEN THE TOTAL PROFIT OF THE BUSINESS AT RS. 71,40,20,133/-. THEREFORE, THE BUSINESS HAS TO BE WORKED OUT AFTER REDUCING THE UNABSORBED DEPRECIATION OF RS. 5,39,51,466/- OF M/S. GUJARAT L YKA ORGANICS LTD. (VIII) THE ASSESSEE HAS SET OFF INTEREST PAYMENT AG AINST THE GROSS INTEREST RECEIPT. THIS NETTING OFF IS NOT PROPER. ACCORDINGLY, IF GRO SS INTEREST RECEIVED IS TAXABLE UNDER THE HEAD OF INCOME FROM OTHER SOURCES, THE SA ME HAS TO BE EXCLUDED FROM THE BUSINESS PROFIT FOR THE PURPOSE OF 80HHC. 9. ON THE AFORESAID GROUNDS, THE ASSESSING OFFICER HAS SOUGHT TO REOPEN THE ASSESSMENT OF THE ASSESSEE 10. FROM THE FACTS AS EMERGING FROM THE RECORD, IT IS EVIDENT THAT WHILE FRAMING ASSESSMENT UNDER SECTION 143(3) OF THE ACT, THE ASS ESSING OFFICER HAD CONSIDERED THE DEDUCTIONS UNDER SECTION SOLA, AND 80HHC OF THE ACT. INSOFAR AS THE FIRST GROUND FOR REOPENING THE ASSESSMENT IS CONCERNED, N AMELY, VOLUMINOUS DETAILS HAD BEEN FILED ALONG WITH THE RETURN OF INCOME WHIC H ARE VERY CONFUSING AND COMPLICATE THE MATTER PERTAINING TO THE ASSESSMENT, IT DOES NOT APPEAR TO BE THE CASE OF THE THEN ASSESSING OFFICER AT THE TIME OF F RAMING THE ORIGINAL ASSESSMENT THAT THE DETAILS WERE CONFUSING, INASMUCH AS. THE A SSESSING OFFICER AT THE RELEVANT TIME, COULD HAVE VERY WELL CALLED UPON THE ASSESSEE TO EXPLAIN THE DETAILS WHICH WERE CONFUSING. THUS, ONCE THE ASSESSING OFFI CER, AT THE RELEVANT TIME WHILE FRAMING THE ASSESSMENT UNDER SECTION 143 OF T HE ACT, HAS BEEN SATISFIED ITA NO. 2165 /AHD/2011 . A.Y. 2000- 01 10 WITH THE DETAILS PROVIDED BY THE ASSESSEE AND DID N OT FIND THE SAME TO BE CONFUSING, THE SUCCESSOR ASSESSING OFFICER CANNOT B E PERMITTED TO CONTEND THAT SUCH DETAILS WERE VERY CONFUSING AND COMPLICATED TH E MATTER. 11. THE SECOND GROUND FOR REOPENING THE ASSESSMENT IS THAT THE ASSESSEE HAD DELIBERATELY PRESENTED THE FACTS IN SUCH A MANNER S O THAT IT IS NOT UNDERSTOOD BY THE TAX AUTHORITY EASILY. HERE, THE ASSESSING OFFIC ER WHO FRAMED THE ORIGINAL ASSESSMENT UNDER SECTION 143(3) OF THE ACT, HAS NOT FOUND DIE FACTS TO HAVE BEEN PRESENTED IN SUCH A MANNER THAT THE SAME CANNOT BE UNDERSTOOD EASILY, INASMUCH AS, HE HAS, AFTER HEARING THE ASSESSEE, FRAMED THE ASSESSM ENT. BESIDES, IF ANY FACTS ARE PUT IN A MANNER WHICH THE ASSESSIN G OFFICER CANNOT UNDERSTAND, IT IS ALWAYS PERMISSIBLE FOR THE CONCERNED ASSESSING O FFICER TO CALL UPON THE ASSESSEE TO EXPLAIN THE SAME. THUS, WHEN THE ASSESS ING OFFICER WHO PASSED THE ORIGINAL ASSESSMENT ORDER DID NOT FIND THE FACTS TO BE DIFFICULT TO UNDERSTAND, IT IS NOT PERMISSIBLE FOR THE SUCCESSOR ASSESSING OFFICER TO SEEK TO REOPEN THE ASSESSMENT ON THE GROUND THAT THE FACTS WERE PRESEN TED IN A MANNER WHICH COULD NOT BE EASILY UNDERSTOOD. 12. INSOFAR AS THE CLAIM OF DEDUCTIONS UNDER SECTIO N 80IA OF THE ACT, WHICH ACCORDING TO THE ASSESSING OFFICER HAVE WRONGLY BEE N CLAIMED BY THE ASSESSEE ARE CONCERNED, IT IS AN ADMITTED POSITION THAT AT THE T IME OF FRAMING THE ORIGINAL ASSESSMENT, DEDUCTIONS UNDER SECTION SOLA OF THE AC T HAD BEEN COMPUTED BY THE ASSESSING OFFICER AND THE CLAIMS OF THE ASSESSEE HA D BEEN PARTLY ALLOWED AGAINST WHICH, THE ASSESSEE HAD APPROACHED THE COMMISSIONER (APPEALS), WHO HAD PARTLY GRANTED THE RELIEFS. UNDER THE CIRCUMSTANCES, AS RI GHTLY SUBMITTED BY THE LEARNED COUNSEL FOR THE RESPONDENT - ASSESSEE. THE ORDER PA SSED BY THE ASSESSING OFFICER STOOD MERGED WITH THE ORDER PASSED BY THE COMMISSIO NER (APPEALS) INSOFAR AS THE CLAIM OF DEDUCTION UNDER SECTION 80IA OF THE AC T IS CONCERNED AND HENCE, IT DID NOT HAVE ANY INDEPENDENT EXISTENCE IN THE EYES OF LAW. IT WAS, THEREFORE, NOT PERMISSIBLE FOR THE ASSESSING OFFICER TO REOPEN THE ASSESSMENT IN RESPECT OF THOSE ITEMS WHICH HAD ALREADY BEEN EXAMINED BY THE ASSESS ING OFFICER WHILE FRAMING THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT. 13. IT HAS BEEN CONTENDED BY THE LEARNED COUNSEL FO R THE REVENUE THAT DEDUCTIONS UNDER SECTION 80HHC AND 80IA OF THE ACT INVOLVE VAR IOUS ASPECTS AND HENCE, EVEN IF SOME ASPECTS THEREOF HAS BEEN EXAMINED AT THE TI ME OF FRAMING THE ORIGINAL ASSESSMENT ORDER, IF ON SOME OTHER ASPECTS IT HAS N OT BEEN EXAMINED, IT IS ALWAYS OPEN FOR THE ASSESSING OFFICER TO REOPEN THE ASSESS MENT IN RESPECT THEREOF, HI THIS REGARD IT MAY BE NOTED THAT THIS COURT IN CLIANTHA RESEARCH LTD. 'S CASE (SUPRA), HAS HELD THAT WHEN A CLAIM WAS PROCESSED AT LENGTH AND AFTER CALLING FOR DETAILED EXPLANATION FROM THE ASSESSEE, THE SAME WAS ACCEPTE D, MERELY BECAUSE A CERTAIN ITA NO. 2165 /AHD/2011 . A.Y. 2000- 01 11 ELEMENT OR ANGLE WAS NOT IN THE MIND OF THE ASSESSI NG OFFICER WHILE ACCEPTING SUCH A CLAIM, CANNOT BE A GROUND FOR ISSUING NOTICE FOR REASSESSMENT. IN THE PRESENT CASE, THE CLAIM OF DEDUCTION UNDER SECTION 80HHC AND 80IA OF THE ACT HAD BEEN PROCESSED AT LENGTH BY THE ASSESSING OFFIC ER. THE MERE FACT THAT SUCH CLAIM WAS NOT EXAMINED FROM A PARTICULAR ANGLE, THE REFORE, CANNOT BE A GROUND FOR REOPENING THE ASSESSMENT. 14. ANOTHER GROUND FOR REOPENING THE ASSESSMENT IS THAT ACCORDING TO THE ASSESSING OFFICER, THERE IS INTERMIXING OF R&D EXPE NSES OF ALL THE PRODUCTS, THEREFORE, THE BEST WAY TO ALLOCATE THE EXPENSE UND ER THESE CIRCUMSTANCES SHOULD BE ON THE BASIS OF PROFITABILITY RATIO OF VARIOUS U NITS. IN THE OPINION OF THIS COURT, ONCE THE ASSESSING OFFICER WHILE FRAMING THE ASSESS MENT UNDER SECTION 143(3) OF THE ACT HAS ACCEPTED THE R & D EXPENSES OF ALL PROD UCTS, THE SUCCESSOR ASSESSING OFFICER CANNOT CLAIM TO BE WISER AND SEEK TO REOPEN THE ASSESSMENT MERELY BECAUSE ACCORDING TO HIM THERE IS A BETTER WAY OF A LLOCATION OF EXPENSES. 15. YET ANOTHER GROUND ON WHICH THE ASSESSMENT IS S OUGHT TO BE REOPENED IS THAT WHILE FRAMING THE ORIGINAL ASSESSMENT, THE ASSESSEE HAS BEEN GRANTED DEDUCTION UNDER SECTION 80HHC AND 80IA OF THE ACT, WHICH IS N OT CORRECT. THUS IN EFFECT AND SUBSTANCE, THE ASSESSING OFFICER WANTS TO SIT IN AP PEAL OVER THE ORDER PASSED BY THE PREDECESSOR ASSESSING OFFICER AND SEEKS TO DISA LLOW THE DEDUCTIONS WHICH HAVE ALREADY BEEN GRANTED BY HIM. 16. ANOTHER REASON FOR REOPENING THE ASSESSMENT IS THAT THE ASSESSEE HAS INFLATED ITS PROFIT AND AT THE SAME TIME SHOWN REDUCED PROFI T BECAUSE THE SAME IS EXEMPT UNDER SECTION 80IA, BY GIVING MORE INTEREST ON OVER DUE BILLS BY ADITYA MEDISALES LTD. IN THE OPINION OF THIS COURT, ONE FAILS TO UND ERSTAND AS TO HOW IT CAN BE STATED THAT THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSES SMENT IF THE ASSESSEE HAD SHOWN INFLATED PROFITS. 17. ON AN OVERALL PERUSAL OF THE REASONS RECORDED F OR REOPENING THE ASSESSMENT, IT IS EVIDENT THAT THE ASSESSING OFFICER SEEKS TO C ORRECT THE MISTAKES WHICH ACCORDING TO HIM HAD BEEN MADE BY THE EARLIER ASSES SING OFFICER WHILE FRAMING THE ORIGINAL ASSESSMENT, WHICH IS NOTHING BUT A MER E CHANGE OF OPINION. AS HAS BEEN HELD BY THE SUPREME COURT IN THE CASE OF CIT V . KELVINATOR OF INDIA LTD. [2010] 320 ITR 561/187 TAXMAN 312, AN ASSESSMENT CA NNOT BE REOPENED ON A MERE CHANGE OF OPINION. UNDER THE CIRCUMSTANCES, IT IS NOT POSSIBLE TO STATE THAT THE IMPUGNED ORDER PASSED BY THE TRIBUNAL SUFFERS F ROM ANY LEGAL INFIRMITY SO AS TO GIVE RISE TO ANY QUESTION OF LAW, MUCH LESS, A S UBSTANTIAL QUESTION OF LAW, WARRANTING INTERFERENCE. ITA NO. 2165 /AHD/2011 . A.Y. 2000- 01 12 19. A PERUSAL OF THE AFORE-STATED DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT SHOWS THAT THE HONBLE HIGH COURT HAS CONSIDE RED THE FACTS WHICH ARE IDENTICAL TO THE FACTS OF THE CASE IN HAND. ON THE FACTS BEFORE IT, THE HONBLE HIGH COURT HELD THAT THE ORDER PASSED BY THE TRIBUN AL DOES NOT SUFFER FROM ANY LEGAL INFIRMITY SO AS TO GIVE RISE TO ANY QUEST ION OF LAW, MUCH LESS, A SUBSTANTIAL QUESTION OF LAW, WARRANTING INTERFERENC E. 20. ON FINDING SIMILARITY OF FACTS, IN OUR CONSIDERED O PINION, THE RE-ASSESSMENT ORDER MADE U/S. 148 R.W.S 143(3) OF THE ACT DATED 3 0.04.2010 DESERVE TO BE SET ASIDE. WE, ACCORDINGLY, QUASH THE RE-ASSESSMENT PROCEEDINGS AND SET ASIDE THE IMPUGNED ORDER. SINCE, WE HAVE QUASHED TH E RE-ASSESSMENT ORDER; WE DO NOT FIND IT NECESSARY TO DWELL INTO TH E MERITS OF THE CASE. 21. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 07 - 02- 20 17 SD/- SD/- (MAHAVIR PRASAD) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY ACCOUNTANT MEMBER AHMEDABAD: DATED 07/02/2017 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD