Appeal details
Counselvise Citation
[2016] 131 COUNSELVISE.COM (IT) 2545 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
4 year(s) 6 month(s) 17 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
27-10-2016
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
C
Next Hearing Date
25-07-2016
Assessment Year
2005-2006
Appeal Filed On
09-04-2012
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI , , BEFORE SHRI AMIT SHUKLA , JM AND SHRI RAJESH KUMAR , AM ./ I.T.A. NO. 1338 /MUM / 201 2 ( / ASSESSMENT YEAR : 20 0 5 - 06 ) M/S CAPGEMINI CONSULTING INDIA PVT.LTD.(NOW KNOWN AS CAPGEMINI PVT LTD) C/O KALYANIWALLA AND MISTRY , 3 RD FLOOR, ARMI AND NAVI BUILDING, 148, M G ROAD, FORT , MUMBAI - 400001 / VS. DY. COMMISSIONER OF INCOME TAX,10(2), R.NO.432, 4 TH FLOOR, AAYAKAR BHAVAN, M K ROA D , MUMBAI - 400020 ( / APPELLANT ) ( / RESPONDENT ) ./ I.T.A. NO. 2291 /MUM / 201 2 ( / ASSESSMENT YEAR : 20 05 - 06 ) DY. COMMISSIONER OF INCOME TAX,10(2), R.NO.432, 4 TH FLOOR, AAYAKAR BHAVAN, M K ROAD, MUMBAI - 400020 / VS. M/S CAPGEMINI CONSULTING INDIA PVT.LTD.(NOW KNOWN AS CAPGEMINI PVT LTD) SEP 2B - 3, GODREJ SOAPS COMPOUND, GATE NO.2, PIROJ SHANAGAR, EASTERN EXPRESS HIGHWAY, VIKHROLI (E), MUMBAI - 400079 ./ PAN : AAACE2443A ( / APPELLANT ) .. ( / RESPONDENT ) ITA NO. 1338/M/2012, 2291/M/2012 AND CO.82/M/13 2 CROSS - OBJECTION NO.82/MUM/2013 ARISING OUT OF I.T.A. NO. 2291 /MUM / 201 2 ( / ASS ESSMENT YEAR : 20 05 - 06 ) M /S CAPGEMINI CONSULTING INDIA PVT.LTD.(NOW KNOWN AS CAPGEMINI PVT LTD) / VS. DY. COMMISSIONER OF INCOME TAX,10(2), R.NO.432, 4 TH FLOOR, AAYAKAR BHAVAN, M K ROAD, MUMBAI - 400020 ./ PAN : AAACE2443A CROSS OBJECTION / .. ( / RESPONDENT ) / A SSESSEE BY : SHRI M M GOLVALA AND SHRI HORMUZD JAMSHEDJI / RE VENUE BY : SHRI LOVE KUMAR / DATE OF HEARING : 04 . 10 . 2016 / DATE OF PRONOUNCEMENT : 27. 10. 2016 / O R D E R PER RAJESH KUMAR , AM : THESE CROSS APPEALS FILED BY THE RESPECTIVE PARTIES AGAINST THE ORDER DATED 18.1.2012 PASSED BY THE LD. CIT(A) - 21, M UMBAI FOR THE ASSESSMENT YEAR 2005 - 06. THE ASSESSEE ALSO FILED CROSS - OBJECTION AGAINST THE ITA NO.2291/MUM/2012 FILED BY THE REVENUE . SINCE THESE APPEALS AND CROSS - OBJECTION PERTAIN TO THE SAME ASSESSEE , THESE WERE CLUBBED AND HEARD TOGETHER AND ARE BE ING DECIDED BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NO. 1338/M/2012, 2291/M/2012 AND CO.82/M/13 3 I.T.A. NO.1338 /MUM / 2012 ( AY: 2005 - 06)(BY ASSESSEE) 2. GROUNDS OF APPEAL TAKEN BY THE ASSESSEE ARE AS UNDER: THIS APPEAL IS AGAINST THE ORDER ULS.L43(3) R.W.S. 147 OF THE INCOME - TAX ACT' 1961, DATED 18.01.2012 PASSED BY THE COMMISSIONER OF INCOME - TAX (APPEALS) - 21, MUMBAI AND RELATES TO AY 2005 - 2006. 1) THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN HOLDING THAT THE ASSESSING OFFICER CORRECTLY ASSUMED JURISDICTION U/S.147 WHEN THE CONDITIONS PRECEDENT WERE NOT SATISFIED. 2) THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) FAILED TO CONSIDER THAT THE ASSESSING OFFICER DID NOT HAVE 'REASON TO BELIEVE' THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT. 3) THE LEARNED COMMISS IONER OF INCOME - TAX (APPEALS) FAILED TO CONSIDER THAT THE REASONS RECORDED FOR REOPENING WERE ERRONEOUS AND MISCONCEIVED. 4) THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) FAILED TO CONSIDER THAT THE REOPENING HAD TAKEN PLACE ON A PURE CHANGE OF OPINIO N. 5) THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) FAILED TO CONSIDER THAT THERE WAS NO TANGIBLE MATERIAL BEFORE THE ASSESSING OFFICER TO DEMONSTRATE THAT INCOME HAD ESCAPED ASSESSMENT. 6) THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) FAILED TO CONSIDER THAT THE REASSESSMENT PROCEEDINGS WERE BARRED UNDER THE SECOND PROVISO TO SECTION 147. 7) THE LD. CIT(A) ERRED IN HOLDING THAT INTEREST INCOME RS.20,89, 000/ - DID NOT CONSTITUTE PROFITS AND GAINS OF THE UNDERTAKING FOR THE PURPOSES OF COMPUTING DEDUCTION U/10A. 2 . THE SOLE ISSUE RAISED IN THE GROUNDS OF APPEAL NO.1 TO 6 IS WITH RESPECT TO THE JURISDICTIONAL ISSUE CHALLENG ING THE UPHOLDING OF THE REOPENING OF ASSESSMENT BY LD.CIT(A) AS MADE BY THE AO UNDER SECTIONS ITA NO. 1338/M/2012, 2291/M/2012 AND CO.82/M/13 4 147 READ WITH SECTION 148 OF THE ACT AND THE ISSUE RAISED IN GROUND NO.7 IS ON MERIT QUA UPHOLDING THAT THE INTEREST INCOME OF RS.20,89,000/ - DID NOT CONSTITUTE THE PART OF PROFIT OF THE UNDERTAKING FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 10A OF THE ACT . 3. BRIEF FACTS OF THE C ASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME ON 31.3.2005 DECLARING A TOTAL INCOME AT RS.32,59,83,402/ - . THEREAFTER, THE CASE WAS SELECTED FOR SCRUTINY AND ASSESSMENT WAS FRAMED UNDER SECTION 143(3) OF THE INCOME TA X A CT, 1961 (THE ACT) ON 8.12.2008 A SSESSING THE TOTAL INCOME AT RS.52,62,41,478/ - . SUBSEQUENTLY, THE ASSESSMENT WAS REOPENED U /S 147 AND NOTICE U/S 148 WAS ISSUED ON 31.3.2010. THE ASSESSMENT ALREADY COMPLETED VIDE ORDER DATED 8.12.2008 WAS REOPENED BY RECORDING THE FOLLOWING REASONS: THE ASSESSMENT U/S 143(3) WAS COMPLETED ON 08.12. 2008 ASSESSING TOTAL INCOME AT RS. 5 2,62,41,480/ - AGAINST THE RETU RNED INCOME OF RS. 32,59,83 , 402/ - . IT IS SEEN THAT THE ASSESSEE COMPANY HAS CLAIMED DEDUC TION U/ S. 1 OA OF THE ACT WHICH INCLUDES P .FEES OF RS .55,84,47,000/- OPE'S OF RS. 12,62,44,000/ - AS SHOWN IN THE P&L A/C. AS REG ARDS OPE'S INCOME THE ASSESSEE VIDE ITS LETTER DATED 24.10.2008 STATED THAT THESE ARE OUT OF POCKET EXPENSES RECOVERED FROM CUSTOMER, THE ASSESSEE DOES NOT KEEP ... TRACK OF THE EXAC T NATU RE OF SUCH EXPENSES'. APPARENTLY, IT APPEARS THAT THE EXPENSES RECOV ERED BY THE ASSESSEE HAD BEEN INCLUDED IN THE EXPORT TURNOVER AT THE OF COMPUTING OF DEDUCTION U/S. 1 OA. FURTHER, FROM THE DETAILS FURNISHED IT WAS OBSERVED THAT VIDE LETTER DATED 30 .11.2008 ASSE SSEE HAD STATED THAT THE OPE'S INCOME IS ARRIVED ON THE PRO - RATA BASIS AND IT IS OF RS.11,13,74,064/ - INSTEAD OF RS. 12,62,44,000/ - SHOWN IN THE P&L A/ C. AS SUCH THE DIFFERENCE IN THE OPE'S INCOME OF RS. 1,48,69,936/ - SHOULD HAVE BEEN REDUCED FROM THE PROFIT OF UNDERTAKING. HENCE, THE ASSESSEE WAS ELIGIBLE FOR DEDUCTION U/S 1 OA ITA NO. 1338/M/2012, 2291/M/2012 AND CO.82/M/13 5 OF RS.9,30,95,305/ - WHEREAS THE DEDUCTION U/S. 1 OA ALLOWE D TO THE ASSESSEE IS OF RS. 11, 18,44,590/ - RESULTING IN UNDER LEV Y OF INCOME OF RS. 1,87,49,285/ - AND SHORT LEVY OF TAX OF RS. 68,60,8 32/ - I T IS ALSO SEEN THAT INTEREST WAS RECEIVED ON THE FIXED DEP OSITS OF RS.20,89,000 OF UNIT - II ON WHICH DEDUCTION U/S. 10A HAS BEEN ALLOWED. VARIOUS DECISIONS FROM CASE LAWS WERE QUOTED WHEREIN IT IS LAID DOWN THAT INTEREST ON F IXED DEPOSITS RECEIVED BY AN ASSE SSEE H AVING BUSINESS INCOME IS TO BE ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES ' AND NOT AS 'BUSINESS INCOME'. THUS, INTEREST RECEIPT OF RS. 20,89,000/ - IS T O BE EX CLUDED FROM THE PROFIT OF UNDERTAKING AT THE TIME OF COMPUTING DEDUCTION U/S 10A. FROM THE PERUSAL OF THE TDS CERTIFICATES FILED ALONGWITH THE RETURN OF INCOME IT IS SEEN THAT THE ASSESSEE COMPANY HAS CLAIMED TDS FROM IDBI CAPITAL MARKET SERVICES, WITHOUT SUBMITTED THE TDS C ERTIFICATE AND CREDIT WAS GRANTED. THE SAME IS TO BE LOOKED IN TO. IN VIEW OF THE ABOVE FACTS AND UNDER THE CIRCUMSTANCES, I HAVE REASON TO BELIEVE THAT INCOME WHICH WAS CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. PROCEEDINGS, U/S 147 IS BEING INITIATED . ISSUE NOTICE U/S 148 OF THE IT ACT, 1961 4. OUT OF THE ABOVE THREE REASONS RECORDED FOR REOPENING THE ASSESSMENT , THE ADDITION S MADE ON ACCOUNT OF F IRST AND T HIRD REASONS AS REFERRED TO ABOVE WERE DELETED BY THE LD.CIT(A) VIDE ORDER DATED 18.1.2012, BY HOLDING THAT RE - OPENING WAS BAD IN LAW AND ASSUMPTION OF JURISDICTION BY RE - OPENING WAS NOT VALID , WHEREAS THE ADDITION MADE BY THE AO ON THE 2 ND REASON RELATING TO INTEREST RECEIVED ON FIXED DEPOSITS AMOUNTING TO RS.20,89,000/ - ON WHICH DEDUCTION HAS BEEN ALLOWED U/ S 10A OF THE ACT BY TREATING THE SAID INTEREST AS PART OF THE PROFIT WHILE CALCULATING THE ELIGIBILITY AMOUNT U/S 1 0 A OF THE ACT. THE LD. CIT(A) ITA NO. 1338/M/2012, 2291/M/2012 AND CO.82/M/13 6 UPHELD THE REOPENING OF ASSESSMENT ON THIS GROUND THAT INTEREST ON FI X ED DEP OSITS RECEIP T S HAS TO BE EXCLU DE D WHILE WORKING OUT THE PROFIT OF THE UNDERTAKING FOR THE PURPOSE OF CALCULATING DEDUCTION U/S 10A OF THE ACT. 5 . NOW, THE ISSUE BEFORE US IS WHETHER THE REOPENING OF THE ASSESSMENT WAS VALID ON THE BASIS OF SECOND REASON RECORDED THAT INTEREST RECE IVED ON FIXED DEPOSITS RECEIPTS OF RS.20,89,000/ - IS NOT PART OF PROFITS ELIGIBLE U/S 10A OF THE ACT. 6 . THE LD. AR OF THE ASSESSEE VEHEMENTLY SUBMITTED THAT THE DEDUCTION U/S 10A OF THE ACT INCLUDING INTEREST ON FDRS RS.20,89,000/ - HAS COMPREHENSIV ELY BEEN EXAMINED BY THE AO AT THE TIME OF FRAMING OF THE ORIGINAL ASSESSMENT . THE LD. AR DREW OUR ATTENTION TO THE STATEMENT OF THE TOTAL INCOME FILED AT PAGE 4 OF THE PAPER BOOK IN WHICH THE DEDUCTION U/S 10A FOR UNIT AT GATE 1A, GODREJ INDUSTRIES COMPLEX , VIKROLI, MUMBAI - 400079 WAS CLAIMED AT RS. 11,57,73,763/ - WHICH WAS RESTRICTED TO RS RS.11, 18,44,590/ - BY THE AO AFTER EXAMINING ALL THE ASPECTS WITH RESPECT TO CALCULATION OF PROFITS FROM THE SAID UNIT . I N THE LIGHT OF PROVISIONS OF SECTION 10A OF THE ACT. IT IS PERTINENT TO MENTION THAT THE ASSESSEE WAS ALSO HAVING OTHER TWO UNITS WHICH WERE ELIGIBLE FOR DEDUCTION U/S 10A OF THE ACT , H OWEVER, DUE TO LOSSES INCURRED IN THE SAID UNITS NO EXEMPTION WAS CLAIMED. ITA NO. 1338/M/2012, 2291/M/2012 AND CO.82/M/13 7 7 . THE LD. CIT(A) DECIDED THE ISSUE OF REOPENING IN FAVOUR OF THE ASSESSEE ON THE FIRST AND THIRD REASONS RECORDED WHEREAS UPHOLDING THE REOPENING OF ASSESSMENT U/S 147 R.W.S 148 OF THE ACT ON THE SECOND REASON. NOW, TH E ASSESSEE HAS CHALLENGED THE JURISDICTIONAL ISSUE OF REOPENING OF THE ASSESSMENT U/S 147 READ WITH SECTION 148 OF THE ACT BEFORE US . 8 . THE LD. AR VEHEMENTLY ARGUED THAT THERE WAS NO FRESH AND TANGIBLE MATERIAL BEFORE THE AO TO REOPEN THE ASSESSMENT . THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LD.CIT(A) WA S NOT JUSTIFIED IN UPHOLDING THAT INTEREST RECEIVED ON FDR OF RS.20,89,000/ - WAS NOT TO BE INCLUDE D IN THE PROFIT FOR THE PURPOSE OF CLAIMING EXEMPTION U/S 10A OF THE ACT, RESULTING INTO ESCARPMENT OF INCOME TO THE EXTENT OF RS.20,89,000/ - AND ACCORD INGLY ASSUMED JURISDICTION U/S 147 OF THE ACT. THE LD. AR ARGUED THAT THE ISSUE OF INTEREST ON FDR WAS VERY MUCH BEFORE THE AO AT THE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS WHICH WAS SPECIFICALLY RAISED BY THE AO AND THE ASSESSEE ACCORDINGLY SUBMI TTED COMPLETE PARTICULARS AND WORKING OF NET PROFIT FOR THE PURPOSE OF CLAIMING DEDUCTION U/S 10A OF THE ACT INCLUDING DETAILS OF INTEREST ON FDR BEING TREATED AS PART OF PROFIT FOR THE PURPOSE OF CLAIM OF DEDUCTION U/S 10A OF THE ACT. THE LD. AR DRE W OU R ATTENTION TO THE QUESTIONNAIRE DATED 19.8.2008 AS FILED IN PAPER BOOK AT PAGES 30 TO 32 ISSUED BY THE ACIT - RANGE - 10, MUMBAI AND AT PARA 14,15 AND 16 VIDE ITA NO. 1338/M/2012, 2291/M/2012 AND CO.82/M/13 8 ORDER DATED 19.10.2008, THE ISSUE OF DEDUCTION U/S 10A WAS SPECIFICALLY ASKED CALLING UPON T HE ASSESSEE TO FURNISH THE COPIES OF PROFIT AND LOSS ACCOUNT, BALANCE - SHEET OF THE THREE UNITS. THE LD.COUNSEL ARGUED THAT THE SAID QUERY OF THE AO WAS REPLIED BY THE ASSESSEE VIDE LETTER DATED 24.10.2008 , WHEREIN VIDE PARA 6, THE ASSESSEE FURNISHED U NIT - WISE WORKING OF PROFIT OR LOSS AS FILED AT PAGE 37 OF THE PAPER BOOK F URNISH ING UNIT - WISE CALCULATION OF NET WORKING OF PROFIT OR LOSS IN RESPECT OF ALL THE THREE UNI T S WHICH WERE ELIGIBLE FOR DEDUCTION U/S 10A OF THE ACT INCLUDING MUM - II UNIT ON WHICH THE ASSESSEE HAS CLAIMED DEDUCTION TO THE TUNE OF RS. RS. 11,57,73,763/ - . THE LD. COUNSEL SPECIFICALLY POINTED OUT THAT THE AMOUNT OF INTEREST OF RS.20,89,000/ - ON F IXED DEPOSITS WAS CLEARLY SHOWN ON THE INCOME SIDE OF THE SAID STATEMENT AND THUS , ARGUED THAT THE MATERIAL S ON THE BASIS OF WHICH THE ASSESSMENT WAS REOPENED WAS ALREADY BEFORE THE AO AND STANDS DULY CONSIDERED WHILE F RAMING THE REGULAR ASSESSMENT U/S 143(3) OF THE ACT . THEREFORE, REOPENING OF THE ASSESSM ENT ON THE GROUND THA T THERE WAS ESCAPEMENT OF INCOME DUE TO CLAIMING OF INTEREST ON FDR AS PART OF THE PROFIT FOR THE PURPOSE OF CLAIMING DEDUCTION U /S 10A OF THE ACT WAS NOTHING BUT PATENT CASE OF CHANGE OF OPINION. IT WAS ALSO SUBMITTED THAT THE INTEREST ON FDR WAS EARNED F ROM THE TEMPORARY DEPLOYMENT OF FUNDS BEFORE THESE WERE PUT TO USE IN THE BUSINESS OF THE ASSESSEE AND THEREFORE FOR ALL PRACTICAL PURPOSES, THE INTEREST ON FDR WAS PART OF THE PROFIT EARNED FROM THE SAID UNIT. IN ITA NO. 1338/M/2012, 2291/M/2012 AND CO.82/M/13 9 DEFENCE , THE LD.AR HEAVILY RELIED ON A NUMBER OF DECISION S NAMELY KELVINATOR OF INDIA LTD. (320 ITR 561(SC), CIT V/S ICICI BANK LTD REPORTED IN (349 ITR 482) (BOM) , CLIANTHA RESEARCH LTD V/S DCIT (SCA NO.1547 OF 2013)(GUJ) , METAL ALLOYS CORPORATION V . ACIT [2013] 350 ITR 245 (GUJARAT) AND THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT V/S SUN PHARMACEUTICAL INDUSTRIES LTD IN INCOME TAX APPEAL NO.128 OF 2016 ORDER DATED 1.4.2016. 9 . ON THE OTHER HAND, THE LD DR HEAVILY RELIED ON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMI TTED THAT THE INTEREST ON FDR COULD NOT BE PART OF THE PROFIT OF UNIT ELIGIBLE FOR DEDUCTION U/S 10A OF THE ACT AND THEREFORE, THE ASSESSEE HAS TREATED THE SAME AS PART OF T HE PROFIT FOR THE P URPOSE OF CLAIMING THE HIGHER DEDU CTION U/S 10A THEREBY CONC EAL ING THE INCOME TO TH A T EXTENT . TH EREFORE THE , AO HAS RIGHTLY REOPENED THE ASSESSMENT OF THE ASSESSEE ON THE GROUND THAT RS.20,89,000/ - BEING INTEREST ON FDR HA S ESCAPE D ASSESSMENT. THE LD. DR ARGUED THAT THERE WAS NO NEED FOR THE FRESH MATERIAL FOR REOPENING THE ASSESSMENT AND THE SAME COULD BE REOPENED ON THE BASIS OF MATERIAL WHICH WAS AVAILABLE BEFORE THE AO AT THE TIME OF FRAMING OF THE ORIGINAL ASSESSMENT BUT WAS NOT CONSIDERED . 10 . WE HAVE HE AR D THE RIVAL SUBMISSIONS AND PERUSED THE MA TERIAL ON RECORD INCLUDING THE IMPUGNED ORDE R S OF THE AUTHORIT IES BEL OW AND VARIOUS ITA NO. 1338/M/2012, 2291/M/2012 AND CO.82/M/13 10 CASE LAWS RELI ED UPON BY THE RIVAL PARTIES. WE FIND THAT THERE WERE TH RE E REASONS RECO R DED BY THE AO FOR REOPENING OF T HE ASSESSMENT ALREADY FINALIZED AND FRAMED UNDER SECT. 143(3) OF THE ACT VIDE ORDER DATED 8.12.2008. THE REASONS NO.1 AND 3 WERE HELD BY THE LD. CIT(A) TO BE WRONG AND INVALID FOR A SSUMING JURISDICTION U/S 147 OF THE ACT , WHEREAS THE REASON NO.2 I.E. ESCAPEMENT OF INCOME BY WAY OF INTEREST ON FDR AMOUNT ING TO RS . 20,89,000 / - WAS HELD TO B E VAL ID REASON FOR RE - OPENING OF THE ASSE SS MENT BY T HE AO. THEREFORE, ISSUE BEFORE US IS WHETHER THE ASSUMPTION OF JURISDICTION ON THE BASIS OF ESCA PE MENT OF INCOME BY WAY OF INTEREST ON FDR CONSTITUTE D A VALID GROUND FO R REOPENING THE C OMPLETED ASSESSMENT WHEN IT WAS CLAIMED U/S 10A OF THE ACT BY TREATING THE SAME AS PART OF PROFIT . DURING THE COURSE OF HEARING, THE LD.AR DREW OU R ATTENTION TO THE STATEMENT OF INCOME FOR THE ASSESSMENT YEAR 2005 - 06 FILED AT PAGE NO.1 O F THE PAPER BOOK IN WHICH T HE ASSE S SEE HAS CLAIMED DEDUCTION UNDER SECTION 10A OF THE ACT IN RESPECT OF UNIT AT GATE 1A, GODREJ INDUSTRIES COMPLEX , VIKROLI, MUMBAI - 400079 TO THE TUNE OF RS. 11,57,73,763/ - . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO ISSUED QUESTIONNAIRE DATED 19.8.2008 WHEREIN THE AO SPECIFICALLY ASKED THE ASSESSEE TO PRODUCE DETAILS OF DEDUCTION U / S 10A OF THE ACT AND SUPPORTING PROFIT AND LOSS ACCOUNT AND BALANCE SHEET FOR EACH UNIT SEPARATELY WHICH WAS REPLIED BY THE ASSE SSEE VIDE LETTER DA T ED 24.10.2008 AND UNIT - WISE WORKING OF CLAIM U/S 10A WAS FURNISHED VIDE PARA 6 AND 7. ITA NO. 1338/M/2012, 2291/M/2012 AND CO.82/M/13 11 VIDE PARA 6, THE ASSESSEE FURNISHED UNIT - WISE PROFIT OR LOSS FOR THREE ELIGIBLE UNITS U /S 10A OF THE ACT . A PERUSAL OF PAGE 37 OF THE PAPER BOOK IN RESPECT OF MUM - II UNIT QUA WHICH THE DEDUCTION HAS BEEN CLAIMED U/S 10A REVEALS THAT INTEREST ON FDR HAS BEEN SHOWN IN THE INCOME SIDE OF THE SAID STATEMENT AND THE EXEMPTION U/S 10A OF THE ACT HAS BEEN CALCULATED AT RS. 11,57,73,763/ - . THE AO AFTER EXAM INING ALL THE DETAILS SUBMITTED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS FROM TIME TO TIME REDUCED THE DEDUCTION U /S 10A OF THE ACT TO RS.8,50,06,151/ - AS AGAINST RS.11,57,73,763/ - CLAIMED BY T HE ASSESSEE IN THE RETURN OF INCOME. FROM THE ABOVE FACTS IT IS ADEQUATELY CLEAR THAT THE ISSUE OF INTEREST ON FDR FORMING PART OF THE NET PROFIT AND CALCULATION FOR THE PURPOSE OF SECTION 10A OF THE ACT W AS VERY MUCH BEFORE THE AO WHICH WAS FURNISHED VIDE W RITTEN SUBMISSION D A TED 24.10.2008 IN REPLY TO THE QUESTIONNAIRE DATE D 19.8.2008 WHICH IS PLACED AT PAGE 37 OF THE P APER BOOK AND T HE AO AFTER CONSIDERING ALL THESE INFORMATION AND DOCUMENTS FILED BEFORE HIM DURING THE ASSESSMENT PROCEEDINGS REDUCED THE AMOUNT OF DEDUCTION U/S 10A TO RS.8 , 50 , 06 , 15 1/ - AS AGAINST RS.11 , 57 , 73 , 763/ - CLAIMED BY THE ASSESSEE . IN OUR OPINION, REOPENING OF THE ASSESSMENT ON THE BASIS OF INTEREST ON FDR STATING THAT THE SAME TO HAVE ESCAPED THE ASSESSMENT U/S 147 R.W.S 148 OF THE ACT IS NOT CORRECT AS T HE MATERIAL WAS ALREADY BEFORE THE AO AT THE TIME OF FRAMING THE ORIGINAL ASSESSMENT AND THEREFORE, WE ARE IN AGREEMENT WITH THE ARGUMENT OF THE LD. AR THAT THE REOPENING OF ITA NO. 1338/M/2012, 2291/M/2012 AND CO.82/M/13 12 ASSESSMENT ON THE BASIS OF MATERIAL WHICH WAS ALREADY BEFORE THE AO IS NOTHING BUT A MERE CHANG E OF OPINION WHICH IS NOT PERMISSIBLE UNDER THE INCOME TAX ACT. THE SOLE PURPOSE BEHIND THE SAID ENACTMENT WAS TO DISCOURAGE ANY ATTEMPT OF RE - OPENING AT THE WHIMS AND FANCIES OF THE AO SPECIALLY WHEN THE ASSESSMENT WAS FINALIZED AND FRAMED BY THE A O AFTER CONSIDERING ALL THE MATERIAL . MERELY FOR THE REASONS THAT THE SUCCESSOR AO DOES NOT AGREE WITH T HE CONCLUSION DRAWN BY THE PREDECESSOR AO THE ASSESSMENT CAN BE ALLOWED TO BE DISTURBED . THE CASE OF THE ASSESSEE IS ALSO SUPPORTED BY THE NUMBER OF DE CISIONS RELIED AND REFERRED TO BY THE LD AR DURING T HE COURSE OF HEARING BEFORE US. IN THE CASE OF CIT V/S KELVINATOR OF INDIA LTD, THE HONBLE SUPREME COURT HELD THAT THE ASSESSING OFFICER HAS NO POWER TO REVIEW THE ASSESSMENT WHEREAS THE AO HAS THE POWER TO REASSESS / THE HONBLE SUPREME COURT HAS HELD THAT ASSESSMENT HAS TO BE MADE ON FULFILLMENT OF CERTAIN CONDITIONS ON THE SATISFACTION OF CERTAIN CONDITIONS AND IF THE CONCEPT OF 'CHANGE OF OPINION' IS REMOVED AS CONTENDED, THEN IN THE GARB OF R EOPENING THE ASSESSMENT, THE REVIEW WOULD TAKE PLACE. T HE CONCEPT OF 'CHANGE OF OPINION' AS AN IN - BUILT TEST TO CHECK ABUSE OF POWER BY THE ASSESSING OFFICER. HENCE, POST 1 - 4 - 1989, THE ASSESSING OFFICER HAS POWER TO REOPEN, PROVIDED THERE IS 'TANGIBLE MAT ERIAL' TO COME TO CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT. . IN THE CASE OF CLIANTHA RESEARCH LTD V/S DCIT (SCA NO.1547 OF 2013)(GUJ), THE HONBLE GUJARAT HIGH COURT HELD ITA NO. 1338/M/2012, 2291/M/2012 AND CO.82/M/13 13 THAT RE - ASSESSMENT PROCEEDINGS, MERELY FAILURE ON THE PART O F ASSESSING OFFICER TO RAISE SUCH A QUERY OR QUESTION WOULD NOT AUTHORIZE HIM TO REOPEN THE ASSESSMENT EVEN WITHIN PERIOD OF 4 YEARS FROM END OF RELEVANT ASSESSMENT YEAR AND ANY SUCH ATTEMPT ON HIS PART WOULD BE BASED ON MERE CHANGE OF OPINION . TO REITE RATE WHEN THE CLAIM WAS PROCESSED AT LENGTH AND AFTER CALLING FOR DETAILED EXPLANATION FROM THE ASSESSEE, MERELY BECAUSE A CERTAIN ELEMENT OR ANGLE WAS NOT IN MIND OF ASSESSING OFFICER WHILE ACCEPTING SUCH A CLAIM, CAN NOT BE A GROUND FOR ISSUING NOTICE UN DER SECTION 148 FOR REASSESSMENT . IN THE CASE OF METAL ALLOYS CORPORATION V .ASSISTANT COMMISSIONER OF INCOME - TAX * [2013] 350 ITR 245 (GUJARAT), THE HONBLE GUJARAT HIGH COURT HELD THAT DURING COURSE OF ASSESSMENT P ROCEEDINGS, ASSESSING OFFICER RAISED CERTAIN QUERIES WHICH WERE REPLIED BY ASSESSEE AND THEREAFTER ASSESSING OFFICER ALLOWED DEDUCTION. THE REASONS GIVEN FOR REOPENING ASSESSMENT U/S 148 WAS NOTHING, BUT A CHANGE OF OPINION . IT WAS NOT A CASE OF ESCAP E ASSESSMENT AS NOTHING WAS CONCEALED BY THE ASSESSEE NOR HE HAS FAILED TO FURNISH THE MATERIAL RELEVANT TO THE ASSESSMENT YEAR BEFORE THE ASSESSING OFFICER. THEREFORE, NOTICE ISSUED UNDER SECTION 148 OF THE ACT WAS LIABLE TO BE QUASHED. 11 . CONSIDERIN G THE FACTS AS DISCUSSED ABOVE, WE ARE OF THE CONSIDERED VIEW THAT THE ISSUE OF INTEREST ON FDR OF RS.20,89,000/ - WAS EXAMINED BY THE AO AT THE TIME OF FRAMING THE ORIGINAL ASSESSMENT AND REOPENING THE SAME ON THAT BASIS IS JUST A MERE CHANGE OF OPINION . THE F ACTS OF THE CASE ITA NO. 1338/M/2012, 2291/M/2012 AND CO.82/M/13 14 OF THE ASSESSEE ARE SQUARELY COVERED BY THE RATIOS LAID DOWN IN THE ABOVE MENTIONED DECISIONS. THEREFORE, RESPECTFULLY FOLLOWING THE SAME WE QUASH THE ASSESSMENT PROCEEDINGS, U/S 148 OF THE ACT. THE AO IS DIRECTLY ACCORDINGLY. 12 . THE ISSUE RAISED IN GROUND NO.7 IS ON MERIT. SINCE WE HAVE ALREADY QUASHED THE REOPENING OF THE ASSESSMENT ON THE LEGAL AND TECHNICAL ISSUE, TH E GROUND IS RENDERED ACADEMIC AND ACCORDINGLY DISMISSED AS BEING INFRUCTUOUS. I.T.A. NO.2291 /MUM / 2012 (BY REVENUE) 1 3. GROUNDS OF APPEAL TAKEN BY THE REVENUE ARE AS UNDER : L. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN DIRECTING THAT INCOME OUT OF POCKET EXPENSES SHOULD BE REDUCED FROM THE EXPORT TURNOVER OF TH E 10A UNIT WHICH IS CONTRARY TO THE PROVISION OF THE ACT AND THE LEGISLATIVE INTENT.' 2. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 14 . THE ISSUE RAISED BY THE REVENUE IN THIS APPEAL IS REGARDING DEDUCTION U/S 10A OF THE ACT . SINCE WE HAVE ALREADY QUASHED THE REOPENING PROCEEDINGS, U/S 147 R.W.S 148 OF THE ACT IN ASSESSEES APPEAL BEARING ITA NO.1336/MUM/2012 . THEREFORE, THIS GROUND IS RENDERED INFRUCTUOUS AND ACCORDINGLY DISMISSED AS INFRUCTUOUS. ITA NO. 1338/M/2012, 2291/M/2012 AND CO.82/M/13 15 CROSS - OBJECTION NO.82/MUM/2013 15 . SINGLE AND SOLITARY GROUND TAKEN BY THE ASSESSEE IN THE CROSS - OBJECTION IS AS UNDER : WITHOUT PREJUDICE TO THE CONTENTION THAT THE DEPARTMENT'S APPEAL IS REQUIRED TO BE DISMISSE D, THE RESPONDENT SUBMITS THAT IN CASE IT IS HELD THAT THE OPE INCOME OF RS.12,62,44,000/ - SHOULD BE REDUCED FROM THE EXPORT TURNOVER OF THE ELIGIBLE UNIT, THEN OPE INCOME NEEDS TO BE REDUCED F ROM THE TOTAL TURNOVER OF THE ELIGIBLE UNIT AS WELL 16 . S INCE, WE HAVE DISMISSED THE APPEAL OF THE REVENUE FOR THE REASONS STATED IN ITA NO.1338/MUM/2012, THE CROSS - OBJECTION FILED BY THE ASSESSEE IN REVENUES APPEAL BECOMES INFRUCTUOUS AND HENCE DISMISSED AS INFRUCTUOUS. 17 . APPEAL OF THE ASSESSEE IS ALLOWED, THE APPEAL OF THE REVENUE STANDS DISMISSED AND THE CROSS - OBJECTION FILED BY THE ASSESSEE ALSO DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27TH OCTOBER, 2016 27TH OCTOBER , 2016 SD SD ( AMIT SHUKLA ) ( RAJESH KUMAR ) / JUDICIAL MEMBER / ACCOU NTANT MEMBER MUMBAI ; DATED 27 / 10 /2016 . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT ITA NO. 1338/M/2012, 2291/M/2012 AND CO.82/M/13 16 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, TRUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI
