ACIT, New Delhi V. M/s Ranbaxy Laboratories Ltd, New Delhi

ITA 3598/DEL/2009

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7018 (ITAT-DELHI)
• Duration Of Justice: 7 year(s) 4 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-01-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 11-01-2017
• Assessment Year: 2001-2002
• Appeal Filed On: 18-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P MEENA
• Keywords: Gift; Bad and doubtful debts
• Section: 80HHC; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NEW DELHI BENCH F: NEW DELHI BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER ITA NO.3598/DEL/2009 ASSESSMENT YEAR : 2001-02 THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 15(1), NEW DELHI. VS. M/S. RANBAXY LABORATORIES LTD. 12 TH FLOOR, DEVIKA TOWERS, 6, NEHRU PLACE, NEW DELHI 110 019. PAN: AAACR 0127N APPELLANT RESPONDENT APPELLANT BY : SHRI O.P. MEENA, CIT(DR) RESPONDENT BY : SHRI AJAY VOHRA, SR. ADVOCATE DATE OF HEARING : 11.01.2017 DATE OF PRONOUNCEMENT : 12.01.2017 O R D E R PER SUNIL KUMAR YADAV, JUDICIAL MEMBER THIS IS AN APPEAL AGAINST THE ORDER OF CIT(APPEA LS) ON A SOLITARY GROUND THAT THE CIT(A) HAS ERRED IN QUASHING THE PR OCEEDINGS U/S. 147 IN THIS CASE BY HOLDING THAT THE NOTICE ISSUED U/S. 14 8 WAS NOT LEGALLY VALID IN TERMS OF SECTION 147 OF THE ACT. 2. DURING THE COURSE OF HEARING, THE LD. COUNSEL F OR THE ASSESSEE HAS INVITED OUR ATTENTION THAT THE REOPENING OF ASSESSM ENT WAS CHALLENGED ON VARIOUS GROUNDS BEFORE THE CIT(APPEALS). THE CIT(A ) HAS QUASHED THE ITA NO.3598/DEL/2009 PAGE 2 OF 5 ASSESSMENT AFTER HOLDING THE REOPENING TO BE INVALI D. ONE OF THE REASONS FOR HOLDING THE REOPENING TO BE INVALID IS THAT REO PENING WAS DONE ON DIFFERENT GROUNDS, BUT THE ADDITION WAS MADE ALTOGE THER ON DIFFERENT GROUNDS. 3. THE LD. COUNSEL FOR THE ASSESSEE FURTHER CONTEND ED THAT IN THE ASSESSEES OWN CASE, THE HONBLE JURISDICTIONAL HIG H COURT HAS HELD THAT IF THE ITEMS OF INCOME SAID TO HAVE ESCAPED ASSESSMENT ON WHICH REASSESSEMENT PROPOSED ARE NOT ADDED, BUT OTHER DED UCTIONS ARE REDUCED, THE REOPENING IS NOT VALID. IN ORDER TO SUBSTANTIA TE THE ASSESSEES CASE, THE LD. COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENT ION TO THE REASONS RECODED WITH THE SUBMISSION THAT REOPENING WAS DONE ON ALLOWANCE OF DEDUCTION OF RS.44,40,97,573, ALLOWANCE OF CLUB EXP ENSES, DEDUCTION U/S. 80-O, 80 IB AND ALLOWANCE OF PROVISION FOR DOUBTFUL DEBTS; BUT THE ADDITIONS WERE MADE ON ACCOUNT OF RECOMPUTATION OF DEDUCTION U/S. 80HHC OF THE ACT. THEREFORE, SINCE NO ADDITIONS WERE MADE ON AL L THOSE POINTS ON WHICH REOPENING WAS DONE AND ADDITIONS WERE MADE ON DIFFE RENT ISSUES, THE REOPENING IS NOT VALID IN THE LIGHT OF THE JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE ASSESSEE OWN CASE I.E., RANBAXY LABORATORIES LTD. V. CIT, 336 ITR 136 (DEL) . 4. THE LD. DR DID NOT DISPUTE THESE FACTS, HOWEVER, HE PLACED RELIANCE UPON THE ORDER OF CIT(APPEALS). ITA NO.3598/DEL/2009 PAGE 3 OF 5 5. HAVING CAREFULLY EXAMINED THE ORDERS OF LOWER AU THORITIES IN THE LIGHT OF RIVAL SUBMISSIONS, WE FIND THAT UNDISPUTEDLY THE AO HAS NOT MADE ANY ADDITION ON ALL THOSE ISSUES ON WHICH ASSESSMENT WA S REOPENED. THE FINAL ADDITIONS WERE ON DIFFERENT ISSUES. 6. THIS ASPECT WAS EXAMINED BY THE HON'BLE JURISDIC TIONAL HIGH COURT IN THE ASSESSEES OWN CASE I.E., RANBAXY LABORATORIES LTD. V. CIT (SUPRA) IN WHICH IT HAS BEEN CATEGORICALLY OBSERVED THAT WHEN ITEMS OF INCOME SAID TO HAVE ESCAPED ASSESSMENT ON WHICH REASSESSMENT PROPO SED WERE NOT ADDED, BUT OTHER DEDUCTIONS ARE REDUCED, REOPENING IS NOT PERMISSIBLE. THE RELEVANT OBSERVATIONS OF THE HON'BLE JURISDICTI ONAL HIGH COURT IN THIS CASE IS EXTRACTED HEREUNDER:- HELD, THAT SECTION 148 IS SUPPLEMENTARY AND COMPLI MENTARY TO SECTION 147. SUB-SECTION (2) OF SECTION 148 MANDATE S REASONS FOR ISSUANCE OF NOTICE BY THE ASSESSING OFFICER AND SUB -SECTION (1) THEREOF MANDATES SERVICE OF NOTICE TO THE ASSESSEE BEFORE THE ASSESSING OFFICER PROCEEDS TO ASSESS, REASSESS OR R ECOMPUTE ESCAPED INCOME. SECTION 147 MANDATES RECORDING OF R EASONS TO BELIEVE BY THE ASSESSING OFFICER THAT THE INCOME CH ARGEABLE TO TAX HAS ESCAPED ASSESSMENT. ALL THESE CONDITIONS WE RE REQUIRED TO BE FULFILLED TO ASSESS OR REASSESS THE ESCAPED INCO ME CHARGEABLE TO TAX. UNDER EXPLANATION (3) IF DURING THE COURSE OF THESE PROCEEDINGS THE ASSESSING OFFICER COMES TO CONCLUSI ON THAT SOME ITEMS HAVE ESCAPED ASSESSMENT, THEN NOTWITHSTANDING THAT THOSE ITEMS WERE NOT INCLUDED IN THE REASONS TO BELIEVE A S RECORDED FOR INITIATION OF THE PROCEEDINGS AND THE NOTICE, HE WO ULD BE COMPETENT TO MAKE ASSESSMENT OF THOSE ITEMS. FOR EV ERY NEW ISSUE COMING BEFORE ASSESSING OFFICER DURING THE CO URSE OF PROCEEDINGS OF ASSESSMENT OR REASSESSMENT OF ESCAPE D INCOME, AND WHICH HE INTENDS TO TAKE INTO ACCOUNT, HE WOULD BE REQUIRED TO ISSUE A FRESH NOTICE UNDER SECTION 148. THE ASS ESSING OFFICER WAS SATISFIED WITH THE JUSTIFICATIONS GIVEN BY THE ASSESSEE ITA NO.3598/DEL/2009 PAGE 4 OF 5 REGARDING THE ITEMS OF CLUB FEES, GIFTS AND PRESENT S AND PROVISION FOR LEAVE ENCASHMENT, BUT DURING THE ASSESSMENT PRO CEEDINGS, HE FOUND THE DEDUCTION UNDER SECTION 80 HH AND 80-I AS CLAIMED BY THE ASSESSEE TO BE NOT ADMISSIBLE. HE CONSEQUENTLY PROCEEDED TO MAKE DEDUCTIONS UNDER SECTION 80HH AND 80-I AND ACC ORDINGLY REDUCED THE CLAIM ON THESE ACCOUNTS. THE VERY BASI S OF INITIATION OF PROCEEDINGS FOR WHICH REASONS TO BELIEVE WERE RE CORDED WERE INCOME ESCAPING ASSESSMENT IN RESPECT OF ITEMS OF C LUB FEES, GIFTS AND PRESENTS, ETC., BUT WHILE THESE ITEMS WERE NOT DISTURBED, THE ASSESSING OFFICER PROCEEDED TO REDUCE THE CLAIM OF DEDUCTION UNDER SECTION 80 HH AND 80-I WHICH WAS NOT PERMISSI BLE. THE TRIBUNAL WAS RIGHT IN HOLDING THAT THE ASSESSING OF FICER HAD THE JURISDICTION TO REASSESS ISSUES OTHER THAN THE ISSU ES IN RESPECT OF WHICH PROCEEDINGS ARE INITIATED BUT HE WAS NOT JUST IFIED WHEN THE REASONS FOR THE INITIATION OF THOSE PROCEEDINGS CEA SED TO SURVIVE. 7. WE HAVE ALSO CAREFULLY EXAMINED THE ORDER OF THE CIT(APPEALS) AND WE FIND THAT HE HAS QUASHED THE REOPENING ON OTHER ISSUES. SINCE THE REOPENING IS NOT VALID IN THE LIGHT OF THE AFORESAI D JUDGMENT OF HON'BLE JURISDICTIONAL HIGH COURT, WE FIND NO INFIRMITY IN THE ORDER OF CIT(APPEALS) AND ACCORDINGLY WE CONFIRM THE SAME. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. PRONOUNCED IN THE OPEN COURT ON THIS 12 TH DAY OF JANUARY, 2017. SD/- SD/- (O.P. KANT ) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER NEW DELHI, DATED, THE 12 TH JANUARY, 2017. /D S/ ITA NO.3598/DEL/2009 PAGE 5 OF 5 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI. ASSISTANT REGISTRAR, ITAT, NEW DELHI.