TATA SONS LTD, MUMBAI V. DCIT SP. RG-1, MUMBAI

ITA 3464/MUM/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48596 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 13-04-2011
• Assessment Year: 1994-1995
• Appeal Filed On: 27-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HEMANT J LAL
• Assessee Lawyers: DINESH VYAS
• Keywords: Period of limitation; Reassessment proceedings
• Section: 143(3); 147; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI, J. SUDHAKAR REDDY, ACCOUNTANT MEMBER A ND SHRI VIJAY PAL RAO, JUDICIAL MEMBER ITA NO.3464/MUM./2009 (ASSESSMENT YEAR : 1994-95 ) DATE OF HEARING: 13.4.2011 TATA SONS LIMITED, BOMBAY HOUSE HOMI MODY STREET, MUMBAI 400 001 PAN AAACT4060A .. APPELLANT V/S ASSTT. COMMISSIONER OF INCOME TAX CIRCLE-2(3), MUMBAI .... RESPONDENT REVENUE BY : MR. HEMANT J. LAL ASSESSEE BY : MR. DINESH VYAS O R D E R PER J. SUDHAKAR REDDY, A.M. THIS APPEAL FILED BY THE ASSESSEE, IS DIRECTED AGAI NST THE IMPUGNED ORDER DATED 31 ST MARCH 2009, PASSED UNDER SECTION 263 OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ) BY THE COMMISSIONER - II, MUMBAI, FOR ASSESSMENT YEAR 1994-95. 2. LEARNED SR. COUNSEL, MR. DINESH VYAS, APPEARING ON BEHALF OF THE ASSESSEE, CONTENDS BEFORE US THAT THE IMPUGNED ORDE R PASSED UNDER SECTION 263 OF THE ACT BY THE COMMISSIONER, IS BARRED BY LI MITATION. LEARNED DEPARTMENTAL REPRESENTATIVE, MR. HEMANT J. LAL, ON BEHALF OF REVENUE, ON THE OTHER HAND, OPPOSED THE CONTENTIONS SO MADE BY THE LEARNED SR. COUNSEL. MRS. PALLAVI SHARDUL SHROFF ITA NO.3511/MUM./2010 2 3. RIVAL CONTENTIONS HEARD. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE OBSERVE AS FOLLOWS:- 4. THE ASSESSEE FILED RETURN OF INCOME WHEREIN THE PRO FITS OF THE BUSINESS WAS DECLARED AT ` 62,63,12,476, FOR THE PURPOSE OF COMPUTING DEDUCTI ON UNDER SECTION 80HHE OF THE ACT. THE ASSESSMENT ORDE R DATED 7 TH MARCH 1997, WAS PASSED UNDER SECTION 143(3) BY THE ASSESSING OF FICER AND PROFITS OF BUSINESS, AS DECLARED BY THE ASSESSEE WAS ACCEPTED AT ` 62,63,12,476. THERE WERE CERTAIN OTHER ADJUSTMENT WHILE COMPUTING DEDUCTION UNDER SECTION 80HHE. THE EXPORT TURNOVER WAS TAKEN AT ` 73,20,31,236, AS AGAINST THE EXPORT TURNOVER CLAIMED BY THE ASSESSEE AT ` 194,04,43,717. IN OTHER WORDS, RELIEF UNDER SECTION 80HHE WAS REDUCED DUE T O A DISPUTE ON THE FIGURE OF EXPORT TURNOVER. THERE WAS NO DISPUTE ON THE PROFITS OF THE BUSINESS. 5. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER BE FORE THE FIRST APPELLATE AUTHORITY, WHEREIN THE COMMISSIONER (APPE ALS), VIDE ORDER DATED 31 ST OCTOBER 2002, DISMISSED THE ASSESSEES APPEAL. ON FURTHER APPEAL, THE TRIBUNAL, VIDE ORDER DATED 20 TH FEBRUARY 2007, COMPUTED THE DEDUCTION AT ` 49,03,44,744. 6. THE IMPUGNED ORDER UNDER SECTION 263, PROPOSING TO REVISE THE FIGURE OF PROFITS OF THE BUSINESS WAS PASSED BY THE COMMIS SIONER ON 31 ST MARCH 2009. THUS, WHEN THE ASSESSMENT ORDER IS DATED 7 TH MARCH 1997, THE COMMISSIONER PASSED THE IMPUGNED ORDER UNDER SECTIO N 263, ON 31 ST MARCH, WHICH IS OBVIOUSLY BARRED BY LIMITATION. THE COMMIS SIONER, IN HIS ORDER UNDER SECTION 263, STATES THAT HE IS SATISFIED THAT THE T RIBUNAL ORDER DATED 20 TH FEBRUARY 2007, IS ERRONEOUS INASMUCH AS IT IS PREJU DICIAL TO THE INTERESTS OF REVENUE, BUT THE FACT IS THAT, THE FIGURE OF PROFIT S FROM BUSINESS IS NOT A SUBJECT MATTER OF THE ORDER DATED 20 TH FEBRUARY 2007, PASSED BY THE TRIBUNAL. THE HON'BLE JURISDICTIONAL HIGH COURT IN ASHOK BUILDCON LTD. V/S CIT & ANR., (2010) 325 ITR 574 (BOM.), HELD AS UNDER:- HELD : WHERE AN ASSESSMENT HAS BEEN REOPENED UNDER S. 147 IN RELATION TO A PARTICULAR GROUND OR IN RELATION TO C ERTAIN SPECIFIED MRS. PALLAVI SHARDUL SHROFF ITA NO.3511/MUM./2010 3 GROUNDS AND, SUBSEQUENT TO THE PASSING OF THE ORDER OF REASSESSMENT, THE JURISDICTION UNDER S. 263 IS SOUGHT TO BE EXERC ISED WITH REFERENCE TO ISSUES WHICH DO NOT FORM THE SUBJECT OF THE REOP ENING OF THE ASSESSMENT OR THE ORDER OF REASSESSMENT, THE PERIOD OF LIMITATION PROVIDED FOR IN SUB-S. (2) OF S. 263 WOULD COMMENCE FROM THE DATE OF THE ORDER OF ASSESSMENT AND NOT FROM THE DATE ON WH ICH THE ORDER REOPENING THE REASSESSMENT HAS BEEN PASSED. THE ORDER OF ASSESSMENT CANNOT BE REGARDED AS BEING SUBSUMED WITHIN THE ORDER OF REASSESSMENT IN RESPECT OF THOS E ITEMS WHICH DO NOT FORM PART OF THE ORDER OF REASSESSMENT. WHERE A REASSESSMENT HAS BEEN MADE PURSUANT TO A NOTICE UNDER S. 148, THE OR DER OF REASSESSMENT PREVAILS IN RESPECT OF THOSE ITEMS WHI CH FORM PART OF REASSESSMENT. ON ITEMS WHICH DO NOT FORM PART OF TH E REASSESSMENT, THE ORIGINAL ASSESSMENT CONTINUES TO HOLD THE FIELD . WHEN THE AO 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 SUBSEQUENTLY COME TO HIS NOTICE DURING THE CO URSE OF THE PROCEEDINGS UNDER S. 147. THE SUBMISSION OF THE REV ENUE THAT BY NOT PASSING AN ORDER OF REASSESSMENT IN RESPECT OF OTHE R INDEPENDENT ISSUES, THE ORDER OF THE AO CAN BE CONSTRUED TO BE ERRONEOUS AND TO BE PREJUDICIAL TO THE INTEREST OF THE REVENUE WITHIN T HE MEANING OF S. 263 CANNOT BE ACCEPTED IN THE FACTS OF THE PRESENT CASE . THE SUBSTANTIVE PART OF S. 147 AS WELL AS EXPLN. 3 ENABLES THE AO T O ASSESS OR REASSESS INCOME CHARGEABLE TO TAX WHICH HE HAS REASON TO BEL IEVE HAD ESCAPED ASSESSMENT AND OTHER INCOME WHICH HAS ESCAPED ASSES SMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURS E OF THE PROCEEDINGS UNDER THE SECTION. THERE IS NOTHING ON THE RECORD OF THE PRESENT CASE TO INDICATE THAT THERE WAS ANY OTHER I NCOME WHICH HAD COME TO THE NOTICE OF THE AO AS HAVING ESCAPED ASSE SSMENT IN THE COURSE OF THE PROCEEDINGS UNDER S. 147 AND WHEN HE PASSED THE ORDER OF REASSESSMENT. THE CIT, WHEN HE EXERCISED HIS JUR ISDICTION UNDER S. 263, IN THE FACTS OF THE PRESENT CASE, WAS UNDER A BAR OF LIMITATION SINCE LIMITATION WOULD BEGIN TO RUN FROM THE DATE O N WHICH THE ORIGINAL ORDER OF ASSESSMENT WAS PASSED. THE BAR OF LIMITATI ON IN THIS CASE ARISES BECAUSE THE REVISIONAL JURISDICTION UNDER S. 263 IS SOUGHT TO BE EXERCISED IN RESPECT OF ISSUES WHICH DID NOT FORM T HE SUBJECT-MATTER OF THE REASSESSMENT PROCEEDINGS UNDER S. 143(3) R/W S. 147. IN RESPECT OF THOSE ISSUES, LIMITATION WOULD COMMENCE WITH REF ERENCE TO THE ORIGINAL ORDER OF ASSESSMENT. IF THE EXERCISE OF TH E REVISIONAL JURISDICTION UNDER S. 263 WAS TO BE IN RESPECT OF I SSUES WHICH FORMED THE SUBJECT-MATTER OF THE REASSESSMENT, AFTER THE O RIGINAL 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.CIT VS. ALAGENDRAN FINANCE LTD. ( 2007) 211 CTR (SC) 69 : (2007) 293 ITR 1 (SC) FOLLOWED; ITO VS. K .L. SRIHARI (HUF) & ORS. (2002) 176 CTR (SC) 99 : (2001) 118 TAXMAN 890 (SC) DISTINGUISHED. 7. SIMILAR ISSUE HAS COME UP BEFORE A CO-ORDINATE BENC H OF ITAT, MUMBAI, IN ASSESSEES OWN CASE DECIDED IN ITA NO.34 61/MUM./2009, VIDE MRS. PALLAVI SHARDUL SHROFF ITA NO.3511/MUM./2010 4 ORDER DATED 20 TH JANUARY 2011, FOR ASSESSMENT YEAR 1990-91, AND THE BENCH FOLLOWED THE JUDGMENT OF HON'BLE JURISDICTIONAL HIG H COURT RENDERED IN ASHOK BUILDCON LTD. (SUPRA) AS WELL AS THE JUDGMENT OF HO N'BLE SUPREME COURT IN CIT V/S ALAGENDRAN FINANCE LTD., (2007) 293 ITR 001 (SC) WHEREIN, THEIR LORDSHIPS HELD THAT THE ORDER PASSED UNDER SECTION 263, IS BARRED BY LIMITATION AS THE ISSUE SOUGHT TO BE REVISED WAS NO T A SUBJECT MATTER OF APPEAL EITHER BEFORE THE COMMISSIONER (APPEALS) OR BEFORE THE ITAT. RESPECTFULLY FOLLOWING THE SAME, AS IN THIS CASE AL SO, THE ISSUE THAT IS SOUGHT TO BE REVISED I.E., THE FIGURE OF PROFITS OF THE B USINESS, FOR THE PURPOSE OF COMPUTING DEDUCTION UNDER SECTION 80HHE, WAS NOT A SUBJECT MATTER IN APPEAL, CANNOT BE CONSIDERED AS THE ISSUE WHICH IS PART OF AN ORDER GIVING EFFECT TO THE ORDER DATED 20 TH FEBRUARY 2007, PASSED BY ITAT, AND HENCE, THE REVISION IS ONLY WITH REFERENCE TO THE ORDER 7 TH MARCH 1997, PASSED UNDER SECTION 143(3) AND, CONSEQUENTLY, IS BARRED BY LIMI TATION. 8. LOOKING AT THE ISSUE FROM ANOTHER ANGLE, THE SUBJEC T MATTER OF APPEAL BEFORE THE COMMISSIONER (APPEALS) AS WELL AS BEFORE THE TRIBUNAL, IS THE COMPUTATION OF DEDUCTION UNDER SECTION 80HHE. THE T ERM SUBJECT MATTER OF APPEAL HAS BEEN INTERPRETED BY VARIOUS COURTS AND TRIBUNA L TO MEAN THAT ALL THE ASPECTS CONCERNING THAT SUBJECT MATTER OF APPEA L. AS THE TRIBUNAL HAS DECIDED THE ISSUE OF RELIEF UNDER SECTION 80HHE, TH ERE IS A MERGER OF THIS SUBJECT MATTER AND THE COMMISSIONER IS NOT PERMITTE D TO REVISE HIS ORDER IN TERMS OF SUB-CLAUSE (C) TO EXPLANATION TO SECTION 2 63. CONSEQUENTLY, THE IMPUGNED ORDER DATED 31 ST MARCH 2009, PASSED BY THE COMMISSIONER UNDER SECTION 263, IS HEREBY QUASHED. 9. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29.4.2011 SD/- VIJAY PAL RAO JUDICIAL MEMBER SD/- J. SUDHAKAR REDDY ACCOUNTANT MEMBER MUMBAI, DATED: 29.4.2011