DCIT 8(3), MUMBAI V. SUN-N-SAND HOTELS (SHRIDI) P.LTD, MUMBAI

ITA 4266/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 101003 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2007-2008
• Appeal Filed On: 28-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PRAKASH K JOTWANI
• Keywords: Difference of opinion; Capital receipt; Change of opinion; Reassessment proceedings
• Section: 143(3); 115JB; 147; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI N.K . BILLAIYA, ACCOUNTANT MEMBER AND RAM L AL NEGI, JUDICIAL MEMBER / I .T.A. NO. 42 6 6/MUM/2013 ( / ASSESSMENT YEAR : 20 07 - 08 THE DCIT - 8(3), AAYAKAR BHAVAN, MUMBAI - 400 020 / VS. M/S. SUN - N - SAND HOTELS PVT. LTD., 39, JUHU BEACH, MUMBAI - 400 049 ./ ./ PAN/GIR NO. : AAACS 5521P ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: SHRI AJAY MODI / RESPONDENT BY: SHRI PRAKASH K. JOTWANI / DATE OF HEARING : 10 .0 9 .2015 / DATE OF PRONOUNCEMENT : 10 .0 9 .2015 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE REVENUE IS PREFERRED AGAINST THE ORDER OF THE LD. CIT(A) - 18 , MUMBAI D ATED 1 5 . 3 .201 3 PERTAINING TO ASSESSMENT YEAR 20 07 - 08 . 2. THE GRIEVANCE OF THE REVENUE IS THAT THE LD. CIT(A) ERRED IN QUASHING THE PROCEEDINGS U/S. 147 OF THE ACT BY RELYING ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF KELVINATOR OF INDIA LTD. 320 ITR 561. 3. THE ORIGINAL ASSESSMENT WAS MADE U /S. 143(3) OF THE ACT BY ORDER DATED 29.5.2009 WHEREIN THE RETURNED INCOME OF RS. ITA. NO. 426 6 /M/2013 2 11,46,210/ - WAS ALSO THE ASSESSED INCOME AND THE BOOK PROFIT U/S. 115JB WAS DETERMINED AT RS. 78,07,113/ - . SUBSEQUENTLY, THE COMPLETED ASSESSMENT WAS REOPENED AFTER RECORD ING THE FOLLOWING REASONS: THE ASSESSEE WAS IN RECEIPT OF RS. 58,08,273/ - IN RESPECT OF WIND MILL UNDERTAKING FROM TRANSFER OF SALES TAX BENEFIT UNDER THE POWER POLICY OF THE STATE GOVERNMENT FOR INSTALLING WINDMILLS IN THE MAHARASHTRA STATE. ALTHOUGH, THE ASSESSEE CLAIMED IT AS NOT TAXABLE BEING CAPITAL RECEIPTS. THE AO REJECTED THE ASSESSEES CLAIM AS CAPITAL RECEIPT AND TREATED THE SAME AS REVENUE IN NATURE. HOWEVER, THE AO HAS ALLOWED DEDUCTION U/S. 80IA OF RS. 58,08,273/ - . THE SALES TAX BENEFIT IS NOT AN INCOME DERIVED FROM THE BUSINESS OF THE INDUSTRIAL UNDERTAKING, ALLOWING THE SAME RESULTED IN EXCESS DEDUCTION U/S. 80IA OF RS. 24,15,697/ - WHICH IN TURN RESULTED IN SHORT LEVY OF TAX BY RS. 3,22,980/ - . 3.1. ACCORDINGLY, THE NOTICE U/S. 148 OF THE ACT WAS ISSUED IN RESPONSE TO WHICH THE ASSESSEE ASKED THE AO TO TREAT THE RETURN OF INCOME FILED ON 31.10.2007 AS HAVING BEEN FILED PURSUANT TO THE NOTICE U/S. 148 OF THE ACT. 3.2. THE ASSESSEE VIDE LETTER DATED 1 6.10.2012 VEHEMENTLY CHALLENGED THE REOPENING OF THE ASSESSMENT STATING THAT THE IMPUGNED FACTS WERE EXHAUSTIVELY VERIFIED DURING THE COURSE OF THE ORIGINAL ASSESSMENT PROCEEDINGS THEREFORE REOPENING THE COMPLETED ASSESSMENT ON THE SAME SET OF FACTS IS NO THING BUT A CHANGE OF OPINION. THE AO DID NOT ACCEPT THE SUBMISSIONS MADE BY THE ASSESSEE. THE AO WAS OF THE FIRM BELIEF THAT THE RECEIPT OF RS. 58,08,273/ - BEING TRANSFERRED TO SALES TAX BENEFIT IN RESPECT OF WINDMILL UNDERTAKING IS NOT AN INCOME DERIV ED FROM THE BUSINESS OF THE INDUSTRIAL UNDERTAKING AND THEREFORE IN THE ORIGINAL ASSESSMENT, ITA. NO. 426 6 /M/2013 3 THE AO ERRED IN ALLOWING THE CLAIM OF DEDUCTION U/S. 870IA OF THE ACT. THE AO ACCORDINGLY COMPLETED THE REASSESSMENT PROCEEDINGS BY DENYING THE DEDUCTION U/S. 8 0IA OF THE ACT IN RESPECT OF THE RECEIPTS FROM TRANSFER OF SALES TAX BENEFITS. 4. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) AND ONCE AGAIN CHALLENGED THE REOPENING OF THE ASSESSMENT. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS, THE LD. CIT() AT PARA - 1.3 OF HIS ORDER HAS OBSERVED THAT IN THE ORIGINAL ASSESSMENT THE AO HAS DISCUSSED THE ISSUE OF SALES TAX SUBSIDY OF RS. 58,08,273/ - AT PAGE 1 - 6 OF THE ASSESSMENT ORDER. THE LD. CIT(A) FURTHER OBSERVED THAT THE AO WHILE COMPLETING THE ASS ESSMENT TREATED THE SALES TAX SUBSIDY AS REVENUE RECEIPTS IN INCLUDED THE SAME IN THE TOTAL INCOME. THE LD. CIT(A) FURTHER OBSERVED THAT THE ISSUE OF DEDUCTION U/S. 80IA(4)(IV) WAS CONSIDERED BY THE AO AT PAGES - 7 - 9 OF THE ASSESSMENT ORDER AND AFTER DISCU SSING THE ISSUE AT LENGTH, THE AO ALLOWED THE CLAIM OF DEDUCTION U/S. 80IA(4)(IV) OF THE ACT. 4.1. THE LD. CIT(A) WAS CONVINCED THAT THERE IS NO NEW INFORMATION OR MATERIAL BEFORE THE AO TO REOPEN THE COMPLETED ASSESSMENT MADE U/S. 143(3) OF THE ACT. THE LD. CIT(A) WAS ALSO CONVINCED THAT THE REASONS RECORDED BY THE AO FOR THE REOPENING OF THE ASSESSMENT IS NOTHING BUT A CHANGE OF OPINION. DRAWING SUPPORT FROM THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS KELVINATOR OF INDIA 320 IT R 561 AND THE DECISION OF THE HON BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS ICICI BANK LTD. 349 ITR 482, THE LD. CIT(A) HELD THAT THE AO HAS NOT RECEIVED ANY INFORMATION FROM ANY SOURCE AND THE REOPENING IS COMPLETELY BASED ON THE CHANGE OF OPINION AND ACCORDINGLY HELD THE ACTION OF THE AO FOR ISSUING NOTICE ITA. NO. 426 6 /M/2013 4 U/S. 148 AS BAD IN LAW AND IN VIOLATION OF THE DECISION OF THE HONBLE SUPREME COURT. 5. AGGRIEVED BY THIS, THE REVENUE IS BEFORE US. 6. THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY SUPPORTED TH E FINDINGS OF THE AO. 7. PER CONTRA, THE LD. COUNSEL FOR THE ASSESSEE REITERATED WHAT HAS BEEN STATED BEFORE THE LOWER AUTHORITIES. REFERRING TO THE GRO U NDS OF APPEAL, THE LD. COUNSEL POINTED OUT THAT THE AMOUNT OF SALES TAX SUBSIDY HAS BEEN ACCEPTED AS A BENEFIT DIRECTLY ARISING FROM BUSINESS BY THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NOS. 7125/M/2007, 2218/M/08, 3833/M/08 AND 772/M/09 ORDER DATED 8.1.2014. IT IS THE SAY OF THE LD. COUNSEL THAT ONCE THE NEXUS HAS BEEN ACCEPTED, REVENUES RELIANCE ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF LIBERTY INDIA 317 ITR 218 IS MISPLACED. 8. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF THE AUTHORITIES BELOW. WE HAVE ALSO GONE THROUGH THE ORIGINAL ASSESSMENT ORDER. WE HAVE ALSO CAREFULLY PERU SED THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y 2003 - 04 TO 2006 - 07 (SUPRA). WE FIND THAT THE TRIBUNAL HAS TREATED THE SALE CONSIDERATION RECEIVED ON THE TRANSFER OF SALES TAX BENEFITS/INCENTIVE AS A BENEFIT DIRECTLY ARISING FROM THE BUSINE SS AND THEREFORE THE SAME WAS TREATED AS A REVENUE RECEIPT. 8.1. COMING TO THE REASONS RECORDED FOR THE REOPENING OF THE ASSESSMENT AS MENTIONED ELSEWHERE IN THIS ORDER, THE ALLEGATION OF THE REVENUE IS THAT, THE SALES TAX BENEFIT IS NOT AN INCOME DERIVE D ITA. NO. 426 6 /M/2013 5 FROM THE BUSINESS OF THE INDUSTRIAL UNDERTAKING. THIS VIEW OF THE AO IS NOT MATCHING WITH THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE IN EARLIER ASSESSMENT YEARS AS MENTIONED HEREINABOVE. 8.2. ONCE THE ISSUE HAS BEEN THOROUGHTLY EXAMINED/SCR UTINIZED AND HAS MET THE HIGHER JUDICIAL FORUM, REOPENING OF THE ASSESSMENT BASED ON THE SAME SET OF FACTS IS NOTHING BUT A CHANGE OF OPINION WHICH IS NOT PERMISSIBLE AS PER THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF KELVINATOR OF INDIA (SUPRA). 8.3. IN OUR CONSIDERED OPINION THE LD. CIT(A) HAS RIGHTLY FOLLOWED THE DECISION OF THE HONBLE SUPREME COURT AND THE JURISDICTIONAL HIGH COURT (SUPRA). WE, THEREFORE DO NOT FIND ANY MERIT IN THE GRIEVANCE FO THE REVENUE. WE, ACCORDINGLY UPHOLD THE FINDINGS OF THE LD. CIT(A). 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON 10 TH SEPTEMBER , 2015 SD/ - SD/ - ( RAM L AL NEGI ) (N.K. BILLAIYA) /JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 10 TH SEPTEMBER , 2015 . . ./ RJ , SR. PS ITA. NO. 426 6 /M/2013 6 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI