DCIT, New Delhi V. M/s. Eicher Goodearth Investment Ltd., New Delhi

ITA 4555/DEL/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86660 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 04-08-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 12-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARWINDER KAUR
• Assessee Lawyers: A JAY VOHRA SENIOR
• Keywords: Reopening of assessment; Capital asset; Question of law; Tangible material; Difference of opinion; Assessment record; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

ITA 4555, 4457/D/2011, ITA 4149/D/11 AYS: 2003-04, 2004-05 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES B NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI CHANDRAMOHAN GARG, JUDICIAL MEMBER ITA NO. 4555/DEL/2011 ASSTT.YEAR: 2004-05 ITA NO. 4457/DEL/2011 ASSTT.YEAR: 2003-04 DY.DIRECTOR OF INCOME TAX, VS EICHER GOOD EARTH INVESTMENT LTD., CIRCLE-11(1), 12, COMMERCIAL COMPLEX, NEW DELHI. GREATER KAILASH-II, NEW DEL HI-110048 (PAN: AAACE0052D) ITA NO. 4149/DEL/2011 ASSTT.YEAR: 2003-04 EICHER GOODEARTH INVESTMENT LTD., VS DY.DIRECT OR OF INCOME TAX, NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SMT. PARWINDER KAUR, SR. DR RESPONDENT BY: SHRI AJAY VOHRA, SENIOR ADVOCA TE O R D E R PER CHANDRAMOHAN GARG, J.M. ITA NO. 4149/DEL/2011 OF THE ASSESSEE AND ITA NO. 4 457/DEL/2011 OF THE REVENUE HAVE BEEN PREFERRED AGAINST THE ORDER O F THE CIT(A)-V, NEW DELHI DATED 3.8.2011 IN APPEAL NO. 55/10-11 FOR AY 2003-0 4. ITA NO. 4555/D/2011 ITA 4555, 4457/D/2011, ITA 4149/D/11 AYS: 2003-04, 2004-05 2 HAS BEEN PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A)-V, NEW DELHI DATED 04.08.2011 IN APPEAL NO. 58/10-11 FOR AY 2004 -05. APPEAL NO. 4149/D/11 OF THE ASSESSEE (AY 2003-04) 2. FIRST OF ALL, THE ARGUMENTS OF BOTH THE SIDES WE RE HEARD ON THE APPLICATION OF THE ASSESSEE FILED ON 1.10.2013 UNDER RULE 11 OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES 1963. THE ASSESSEE APPELLANT PRAYE D FOR ADMISSION OF ADDITIONAL GROUNDS OF APPEAL WHICH READ AS UNDER:- '1. THAT THE CIT(A) ERRED ON FACTS AND IN LAW IN N OT HOLDING THAT THE RE- ASSESSMENT ORDER DATED 30.10.2008 PASS ED BY THE ASSESSING OFFICER UNDER SECTION 147 WAS BEYOND JURI SDICTION, BAD IN LAW AND VOID AB INITIO, BEING PREMISED ON ME RE CHANGE OF OPINION FORMED AT THE TIME OF ORIGINAL ASSESSMEN T UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 ('THE AC T'). 1.1 THAT THE CIT(A) ERRED ON FACTS AND IN LAW IN HOLDING THAT NO OPINION HAD BEEN FORMED BY THE ASSE SSING OFFICER QUA THE ISSUES, SUBJECT MATTER OF ADDITION, IN THE REASSESSMENT ORDER, AT THE TIME OF ORIGINAL ASSESSM ENT UNDER SECTION 143(3) OF THE ACT.' 3. ON THE ISSUE OF ADMISSIBILITY OF AFOREMENTIONED ADDITIONAL GROUND, LD. SENIOR COUNSEL APPEARING FOR THE ASSESSEE PLACED RE LIANCE ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF NTPC LTD. VS C IT (1958) 229 ITR 383 (SC) AND SUBMITTED THAT THERE ARE NO FETTERS ON THE RIG HT OF APPELLANT TO RAISE ADDITIONAL GROUND OF APPEAL BEFORE THE TRIBUNAL ON A QUESTION OF LAW FOR WHICH FACTS ARE ALREADY ON RECORD. REPLYING TO THE ABOVE , LD. DR POINTED OUT THAT IN THE ORIGINAL APPEAL, THE ASSESSEE RAISED ONLY ONE G ROUND PERTAINING TO THE IMPUGNED ORDER OF THE CIT(A) WITH REGARD TO CONFIRM ING THE DISALLOWANCE OF ITA 4555, 4457/D/2011, ITA 4149/D/11 AYS: 2003-04, 2004-05 3 DISCOUNT ON ASSIGNMENT OF DEBT OF RS.48.50 LAKH AND THERE WAS NO GROUND PERTAINING TO THE INITIATION OF PROCEEDINGS U/S 147 /148 OF THE ACT. SUBSEQUENTLY, LD. DR FAIRLY SUBMITTED THAT IF IT IS FOUND JUST AN D PROPER TO ADMIT ADDITIONAL GROUNDS ON LEGAL ISSUES RAISED BY THE ASSESSEE, THE DEPARTMENT HAS NO SERIOUS OBJECTION TO THAT. 4. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS AN D PERUSAL OF THE IMPUGNED ORDER, WE NOTE THAT THE ASSESSEE RAISED GR OUND NO. 1 BEFORE THE CIT(A) CHALLENGING THE ASSESSMENT ORDER DATED 30.10 .2008 PASSED U/S 143(3)/147 OF THE ACT ALLEGING THE SAME AS INVALID AND VOID AB INITIO AND BASED ON CHANGE OF OPINION. THE ADDITIONAL GROUNDS AS RE PRODUCED HEREINABOVE ARE RELATED TO SAME ALLEGATION AND OBJECTION OF THE ASS ESSEE. ALTHOUGH THE ASSESSEE DID NOT RAISE THESE GROUNDS WHILE FILING ORIGINAL A PPEAL BUT AS THESE ARE LEGAL GROUNDS ON A QUESTION OF LAW FOR WHICH FACTS ARE AL READY ON RECORD, THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF HONBLE APEX COURT IN THE CASE OF NTPC LTD. VS CIT (SUPRA), ADDITIONAL GROUND RAISED BY TH E ASSESSEE FOR AY 2003-04 ARE ADMITTED FOR ADJUDICATION. 5. APROPOS AFOREMENTIONED ADDITIONAL GROUNDS OF THE ASSESSEE, WE HAVE HEARD ARGUMENTS OF BOTH THE SIDES AND CAREFULLY PER USED THE RELEVANT MATERIAL PLACED ON RECORD, INTER ALIA, RATIO OF THE DECISION S AS RELIED BY BOTH THE PARTIES. LD. SR. COUNSEL ALSO CONTENDED THAT THE ACTION OF T HE AO INITIATING ASSESSMENT PROCEEDINGS U/S 147 OF THE ACT WITH RESPECT TO THE ORIGINAL ASSESSMENT ITA 4555, 4457/D/2011, ITA 4149/D/11 AYS: 2003-04, 2004-05 4 COMPLETED U/S 143(3) OF THE ACT WAS BASED ON MERE C HANGE OF OPINION FORMED AT THE TIME OF ORIGINAL ASSESSMENT AND THE REASSESSMEN T ORDER PASSED IN PURSUANCE OF PROCEEDINGS U/S 147/148 OF THE ACT AND WAS ILLEG AL AND BAD IN LAW. LD. SENIOR COUNSEL VEHEMENTLY CONTENDED THAT THE REASSE SSMENT PROCEEDINGS DESERVE TO BE QUASHED BECAUSE THE CIT(A) GROSSLY ER RED IN HOLDING THAT THE AO HAS NOT AT ALL CONSIDERED THE ISSUE OF SUBSCRIPTION AND EVEN THE FACTS GIVEN IN THE NOTE ON DISCOUNT OF ASSIGNMENT OF RECEIVABLES SUBMI TTED BEFORE THE AO WERE INSUFFICIENT FOR THE AO TO HAVE FORMED AN OPINION O N THE ISSUE. LD. SENIOR COUNSEL FURTHER CONTENDED THAT THE CIT(A) WAS FURTH ER WRONG IN HOLDING THAT WHEN THE AO HAS NOT CONSIDERED THE ISSUE AND NOT FO RMED ANY OPINION AT ALL, IT CANNOT BE SAID TO BE CHANGE OF OPINION. 6. LD. SENIOR COUNSEL PLACED HIS RELIANCE ON THE DE CISION OF HONBLE SUPREME COURT OF INDIA IN THE CASE OF CIT VS KELVIN ATOR OF INDIA LTD. (2010) 320 ITR 561(SC) AND ANOTHER DECISION OF HONBLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF CIT VS EICHER LTD. 29 4 ITR 310 (DEL) . LD. COUNSEL OF THE ASSESSEE HAS FURTHER DRAWN OUR ATTEN TION TOWARDS PAPER BOOK PAGE NO. 29 WHERE THE REASONS RECORDED BY THE AO FO R INITIATION OF PROCEEDINGS U/S 147 OF THE ACT HAVE FOUND PLACE. LD. COUNSEL H AS FURTHER DRAWN OUR ATTENTION TOWARDS PAPER BOOK PAGE NO. 2, 18 AND 21 AND SUBMITTED THAT SCHEDULE L TO NOTES ON ACCOUNT FOR THE YEAR ENDED ON 31.3. 2003 EXPLAIN THE ISSUE OF BRAND EQUITY AND BUSINESS PROMOTION AGREEMENT WHICH WAS PLACED BEFORE THE AO DURING ORIGINAL ASSESSMENT PROCEEDINGS ALONG WIT H RETURN OF INCOME. LD. ITA 4555, 4457/D/2011, ITA 4149/D/11 AYS: 2003-04, 2004-05 5 SR. COUNSEL HAS FURTHER DRAWN OUR ATTENTION TOWARDS PAGE NO. 8 OF THE PAPER BOOK AND SUBMITTED THAT SCHEDULE J OF THE FINAL S TATEMENT OF ACCOUNTS SUBMITTED BEFORE THE AO CLEARLY EXPLAIN THE AMOUNT OF RS.48.50 LAKH PERTAINING TO DISCOUNT ON ASSIGNMENT ON RECEIVABLES AND THE SA ME WAS ALSO BEFORE THE AO. LD. SENIOR COUNSEL FURTHER SUBMITTED THAT THE AO IN THE REASONS RECORDED (PAPER BOOK PAGE 29) HAS RAISED ONLY THESE TWO ISSUES AND IN THE REASSESSMENT ORDER PASSED U/S 144(3) R/W SECTION 147 OF THE ACT, THE A O HAS NOT MADE ANY DISALLOWANCE OR ADDITION IN REGARD TO DISCOUNT OF R S.48.5 LAKH. LD. SENIOR COUNSEL FURTHER SUBMITTED THAT WITHOUT PREJUDICE TO THE ABOVE LEGAL CONTENTION OF THE ASSESSEE, ON MERITS ALSO THE AO HAS NOT MADE AN Y DISALLOWANCE OR ADDITION PERTAINING TO ISSUE NO. 1 OF DISCOUNT OF RS.48.5 LA KH AND ADDITIONS MADE BY THE AO DURING REASSESSMENT PROCEEDINGS IN REGARD TO SUB SCRIPTION FEE DID NOT SURVIVE AT THE LEVEL OF CIT(A), THEREFORE, ALL EXER CISE CONDUCTED BY THE REVENUE AUTHORITIES FOR INITIATION OF REASSESSMENT PROCEEDI NGS AND ALL SUBSEQUENT PROCEEDINGS IN PURSUANCE THERETO BECAME FUTILE. 7. LD. SENIOR COUNSEL FINALLY CONCLUDED THE ARGUMEN TS ON THE LEGAL ISSUE AND SUBMITTED THAT IN SIMILAR SET OF FACTS AND CIRCUMST ANCES, H BENCH OF ITAT, NEW DELHI, IN THE CASE OF DCIT VS VOLVOLINE CUMMINS LTD. IN ITA NO.902/DEL/2013 FOR AY 2006-07 DATED 29.11.2013 HAS QUASHED THE NOTICE U/S 148 OF THE ACT AND ALL SUBSEQUENT PROCEEDINGS. ITA 4555, 4457/D/2011, ITA 4149/D/11 AYS: 2003-04, 2004-05 6 8. REPLYING TO THE ABOVE, LD. DR SUBMITTED THAT AFT ER COMPLETION OF ORIGINAL ASSESSMENT FROM THE VERIFICATION OF CASE RECORDS, I T WAS OBSERVED THAT THE ASSESSEE HAD GIVEN ADVANCE TO DOORVANI CABLES (P) L TD. AMOUNTING TO RS. 348.50 LAKH WHICH HAS BEEN REALISED AT A DISCOUNT O F RS.48.50 LAKH. THE DR FURTHER SUBMITTED THAT SINCE THE ADVANCE WAS GIVEN FOR A CAPITAL ASSET I.E. FOR DEVELOPMENT OF REAL ESTATE, IT WAS CAPITAL IN NATUR E BUT IT HAS NOT BEEN DISALLOWED BY THE AO. LD. DR FURTHER CONTENDED THA T IT WAS ALSO OBSERVED THAT THE ASSESSEE HAS SUBSCRIPTION FEE RECEIVABLE AMOUNT ING TO RS.363.07 LAKH BUT IT HAS NOT BEEN ACCOUNTED FOR ALTHOUGH THE ASSESSEE WA S FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING AND, THEREFORE, THE SAME WAS R EQUIRED TO BE CREDITED TO THE PROFIT & LOSS ACCOUNT. LD. DR VEHEMENTLY CONTENDED THAT IN THE AFOREMENTIONED SITUATION, THE INITIATION OF REASSES SMENT PROCEEDINGS U/S 147/148 OF THE ACT CANNOT BE ALLEGED AS CHANGE OF OPINION O N THE SAME MATERIAL. 9. ON CAREFUL CONSIDERATION OF ABOVE RIVAL CONTENTI ONS AND ARGUMENTS OF BOTH THE PARTIES AND CAREFUL PERUSAL OF THE CITATIO NS AND LEGAL PROPOSITION RELIED BY THE PARTIES, AT THE OUTSET, WE OBSERVE THAT ADMI TTEDLY ORIGINAL ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT FOR AY 2003-04 ON 2 7.1.2006. SUBSEQUENTLY, REASSESSMENT PROCEEDINGS U/S 147 OF THE ACT WERE IN ITIATED VIDE NOTICE U/S 148 OF THE ACT ISSUED ON 31.3.2008. FIRST OF ALL, FO R THE SAKE OF CLARITY AND TRANSPARENCY IN OUR CONCLUSION, WE FIND IT APPROPRI ATE TO REPRODUCE REASONS RECORDED BY THE AO FOR INITIATION OF REASSESSMENT P ROCEEDINGS WHICH READ AS UNDER:- ITA 4555, 4457/D/2011, ITA 4149/D/11 AYS: 2003-04, 2004-05 7 'FROM THE VERIFICATION OF CASE RECORDS, IT HAS BEEN OBSERVED THAT THE ASSESSEE HAD GIVEN ADVANCE TO DOO RVANI CABLES PVT. LTD., AMOUNTING TO RS.348.5 LACS WHICH HAS BEEN REALIZED AT A DISCOUNT OF RS.48.5 LACS. SINCE, THE ADVANCE WAS GIVEN FOR A CAPITAL ASSETS, I.E. FOR DEVELOPMENT OF REAL ESTATE, IT IS CAPITAL IN NATURE BUT IT HAS NOT BEEN DISALLOWED . FURTHER, IT HAS BEEN OBSERVED THAT THE ASSESSEE HAS SUBSCRIPTION FEES RECEIVABLE AMOUNTING TO RS.363.07 LACS BUT IT HAS NOT BEEN ACCOUNTED FOR ALTHOUGH THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. THE AMOUNT WAS THE REFORE, REQUIRED TO BE CREDITED TO PROFIT & LOSS A/C. 10. THE MAIN LEGAL CONTENTION OF THE ASSESSEE IS TH AT THE OPINION AND REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT ON ACCOU NT OF DISCOUNT OF RS.48.5 LAKH TO DOORVANI CABLES (P) LTD. AND ON ACCOUNT OF SUBSCRIPTION FEE RECEIVABLE AMOUNTING TO RS. 363.07 LAKH COULD NOT BE VALIDLY F ORMED AS THE ASSESSEE PLACED ALL DETAILS ON THESE ISSUES BEFORE THE AO DURING OR IGINAL ASSESSMENT PROCEEDINGS WHICH WERE CONCLUDED U/S 143(3) OF THE ACT. IN THE CASE OF CIT VS KELVINATOR OF INDIA (SUPRA), HONBLE APEX COURT CATEGORICALLY HELD THAT FOR INITIATION OF REASSESSMENT U/S 147 OF THE ACT, OPINION AND REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT HAS TO BE RECORDED IN WRITING AN D FOR THAT REASON TO BELIEVE, THERE MUST BE SOME TANGIBLE MATERIAL FOR FORMATION OF SUCH BELIEF. IN THE PRESENT CASE, THE AO HAS INITIATED REASSESSMENT PRO CEEDINGS U/S 147 OF THE ACT BY RECORDING REASONS AS REPRODUCED HEREINABOVE. FR OM SCHEDULE L PERTAINING TO THE YEAR ENDED ON 31.3.2003 AVAILABLE ON PAPER B OOK PAGE 18, WE NOTE THAT THE ASSESSEE HAS CLEARLY MENTIONED THE AMOUNT OF RS .48.5 LAKH PERTAINING TO DISCOUNT ON ASSIGNMENT OF RECEIVABLES. FROM PAPER BOOK PAGE NO.2 & 21 WE ALSO NOTE THAT IN SCHEDULE L TO THE ACCOUNTS, PAR A 4 EXPRESSES ALL THE FACTS ITA 4555, 4457/D/2011, ITA 4149/D/11 AYS: 2003-04, 2004-05 8 PERTAINING TO THE SUBSCRIPTION FEE INCOME AND AT TH E END OF PARA 4, IT HAS BEEN CLEARLY MENTIONED THAT THE COMPANY HAS BEEN LEGALLY ADVISED THAT THE ABOVE ACCOUNTING TREATMENT OF THE SUBSCRIPTION FEE INCOME IN ITS ACCOUNT IS IN ACCORDANCE WITH THE SAID AGREEMENTS AND THE RELEVAN T ACCOUNTING STANDARD OF THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA. 11. FROM PAPER BOOK PAGE NO. 24 & 25, WE ALSO NOTE THAT DURING THE ORIGINAL ASSESSMENT PROCEEDINGS, THE ASSESSEE SUBMITTED DETA ILED REPLY DATED 20.1.2006 AND IN PARA 7, THE ISSUE OF NOTE ON ACCOUNT OF ASSI GNMENT OF RECEIVABLES HAS BEEN EXPLAINED WHICH READS AS UNDER:- 07. NOTE ON DISCOUNT ON ASSIGNMENT OF RECEIVABLES DURING THE PREVIOUS YEAR ASSESSEE COMPANY HAS CLAI MED DEDUCTION OF RS.48.50 LACS ON ACCOUNT OF DISCOUNT O N ASSIGNMENT OF RECEIVABLES. THE ASSESSEE HAD GRANTED ADVANCE OF RS.383 LACS TO M/S DOORVANI CABLES PVT. LTD. FOR DEVELOPMENT OF REAL E STATE ON THE PROPERTY SITUATED AT 11, DYAVANSANDRA IND. ESTA TE, MAHADEVAPURA, BANGALORE- 560048. DUE TO THE DEPRES SED MARKET IN THE REAL ESTATE BUSINESS THE PROJECT COUL D NOT BE COMMENCED. DOORVANI IS WAITING FOR THE RIGHT OPPOR TUNITY TO COMMENCE THE PROJECT. THE SAID PROPERTY WAS HYPOTH ECATED BY WAY OF A MORTGAGE BY DEPOSIT OF ORIGINAL TITLE DEED S IN FAVOUR OF THE ASSESSEE. DOORVANI HAS ALREADY REPAID AN AMOUNT OF RS.34.50 LACS TO THE ASSESSEE OUT OF THE TOTAL ADVANCE OF RS.383 LACS. THE ASSESSEE WAS IN NEED OF MONEY AND APPROACHED EICHER INTERNATIONAL LIMITED (EIL) FOR FURTHER ASSI GNMENT OF THE BALANCE AMOUNT OF RS.348.50 LACS TO BE RECOVERE D FROM DOORVANI AGAINST CONSIDERATION OF RS.300 LACS WITH FULL AUTHORITY AND POWER TO REALISE THE SUM OF RS.348.50 LACS FROM DOORVANI. ITA 4555, 4457/D/2011, ITA 4149/D/11 AYS: 2003-04, 2004-05 9 ON THE ASSIGNMENT OF ABOVE DEBTS OF RS.348.50 LACS TO EIL, THE ASSESSEE COMPANY HAS GIVEN A DISCOUNT OF R S.48.50 LACS, WHICH HAS BEEN CLAIMED AS EXPENDITURE. IT IS SUBMITTED THAT ADVANCE TO DOORVANI WAS GIVEN FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. THE DISCOUNT GIVEN ON AS SIGNMENT OF SUCH DEBTS FOR REALISING THE MONEY, WHICH WAS NEEDE D FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE IS AN EXPENDITU RE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. 12. AT THIS POINT, WE ALSO RESPECTFULLY TAKE COGNIZ ANCE OF THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T VS USHA INTERNATIONAL LTD. WHEREIN IT HAS BEEN HELD THAT THE ASSESSMENT CANNOT BE VALIDLY REOPENED U/S 147 OF THE ACT, EVEN WITHIN FOUR YEARS, IF AN ASSESSEE HAS FURNISHED FULL AND TRUE PARTICULARS AT THE TIME OF ORIGINAL ASSESSMENT WITH REFERENCE TO THE INCOME ALLEGED TO HAVE ESCAPED ASSESSMENT IF THE ORIGINAL ASSESSMENT WAS MADE U/S 143(3) OF THE ACT. IN THIS DECISION, THEIR LORDSHIP S FURTHER HELD THAT SO LONG AS THE ASSESSEE HAD FURNISHED FULL PARTICULARS OF THE ALLE GED INCOME AS MENTIONED IN THE REASONS RECORDED BY THE AO, DURING THE ORIGINAL ASS ESSMENT PROCEEDINGS AS THE ASSESSMENT ORDER PASSED US/ 143(3) OF THE ACT, IT M ATTERS LITTLE THAT THE AO DID NOT ASK ANY QUESTION WITH RESPECT TO ONE ENTRY OR N OTE BUT HAD RAISED QUERIES AND QUESTIONS ON THE OTHER ASPECTS. IN THIS DECISION, SPEAKING FOR THE FULL BENCH OF HONBLE HIGH COURT OF DELHI, THEIR LORDSHIPS HELD T HAT SECTION 114(E) OF THE EVIDENCE ACT CAN BE APPLIED TO ASSESSMENT ORDER FRA MED U/S 143(3) OF THE ACT PROVIDED THERE HAS BEEN A FULL AND TRUE DISCLOSURE OF ALL MATERIAL AND PRIMARY FACT AT THE TIME OF ORIGINAL ASSESSMENT. IN SUCH A CASE, IF THE ASSESSMENT IS ITA 4555, 4457/D/2011, ITA 4149/D/11 AYS: 2003-04, 2004-05 10 REOPENED IN RESPECT OF A MATTER COVERED BY THE SAID DISCLOSURE, IT WOULD CERTAINLY AMOUNT TO CHANGE OF OPINION. 13. TURNING TO THE FACTUAL MATRIX OF THE PRESENT CA SE, WE HAVE NOTED ABOVE THAT THE ORIGINAL ASSESSMENT WAS COMPLETED U/S 143( 3) OF THE ACT ON 31.10.2006. REASON NO.1 FOR REOPENING OF ASSESSMENT RECORDED IN THE REASONS, AS REPRODUCED HEREINABOVE, IN REGARD TO DISCOUNT OF RS.48.5 LAKH WAS FROM SALE MENTIONED IN SCHEDULE J (PAPER BOOK PAGE 18) TO STATEMENT OF A CCOUNT OF THE ASSESSEE FILED ALONG WITH RETURN OF INCOME. ISSUE NO. 2 IN THE RE ASONS RECORDED IN REGARD TO SUBSCRIPTION FEE WAS EXPLAINED IN SCHEDULE L PARA 4 (PB PAGE 21) AND ASSESSEE DURING ORIGINAL ASSESSMENT PROCEEDINGS VID E REPLY DATED 20.1.2006 (PAPER BOOK PAGES 24-25 PARA 7) HAS ALSO EXPLAINED. DURING THE ARGUMENT, LD. SENIOR COUNSEL HAS ALSO DRAWN OUR ATTENTION TOWARDS PB PAGE NO. 116 AND SUBMITTED THAT THE SUBSCRIPTION FEE RECEIVED DURING AY 2003-04, 2004-05 AND 2005-06 HAS BEEN OFFERED TO TAX AND THEREFORE, IT C ANNOT BE SAID THAT THE INCOME PERTAINING TO SUBSCRIPTION FEE HAS ESCAPED ASSESSME NT. LD. DR HAS NOT DISPUTED THIS CONTENTION MADE ON BEHALF OF THE ASSESSEE. 14. IN VIEW OF ABOVE, WE ARE INCLINED TO HOLD THAT THE ACTION OF THE AO IN INITIATING PROCEEDINGS U/S 147 AND 148 OF THE ACT W AS BASED ON CHANGE OF OPINION WITHOUT ANY NEW TANGIBLE MATERIAL. WE ALSO OBSERVE THAT NO REASON TO BELIEVE WAS AVAILABLE WITH THE AO AT THE TIME OF IN ITIATION OF REASSESSMENT PROCEEDINGS U/S 147 AND 148 OF THE ACT. UNDER AFOR EMENTIONED FACTS AND ITA 4555, 4457/D/2011, ITA 4149/D/11 AYS: 2003-04, 2004-05 11 CIRCUMSTANCES OF THE PRESENT CASE, WE ARE UNABLE TO SUPPORT THE FINDINGS AND CONCLUSION OF THE CIT(A) IN THE IMPUGNED ORDER THAT THE FACTS GIVEN IN THE AUDIT REPORT WERE INSUFFICIENT FOR THE AO TO HAVE FORMED AN OPINION ON BOTH THE ISSUES AND WHEN THE AO HAS NOT CONSIDERED THE ISSUE AND NO T FORMED ANY OPINION AT ALL, IT CANNOT BE SAID TO BE CHANGE OF OPINION. 15. OUR VIEW IS ALSO SUPPORTED BY THE DECISION OF C OORDINATE BENCH OF DELHI ITAT IN THE CASE OF DCIT VS. VOLVOLINE COMMINS LTD. IN ITA NO. 902/DEL/2013 DATED 29.11.2013 WHEREIN IT WAS HELD T HUS: 8. THE MAIN LEGAL CONTENTION OF THE ASSESSEE IS TH AT THE OPINION AND REASON TO BELIEVE THAT INCOME HAS E SCAPED ASSESSMENT SHOULD BE RECORDED IN WRITING AND THERE MUST BE SOME TANGIBLE MATERIAL FOR THE FORMATION OF THE BEL IEF. IN THE CASE OF COMMISSIONER OF INCOME TAX VS KELVINATOR OF INDIA LTD.(SUPRA), THE HONBLE APEX COURT CATEGORICALLY H ELD THAT FOR INITIATION OF REASSESSMENT U/S 147 OF THE ACT, THE OPINION AND REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSES SMENT HAS TO BE RECORDED IN WRITING AND FOR THAT REASON TO BE LIEVE, THERE MUST BE SOME TANGIBLE MATERIAL FOR THE FORMATION OF BELIEF. IN THE PRESENT CASE, THE ASSESSING OFFICER HAS INITIAT ED REASSESSMENT PROCEEDINGS U/S 147 OF THE ACT BY RECO RDING REASONS AS REPRODUCED HEREINABOVE WHICH CLEARLY SHO W THAT THE ASSESSING OFFICER FORMED REASON TO BELIEVE ON T HE SAME MATERIAL WHICH WAS SUBMITTED BEFORE HIM DURING THE ORIGINAL ASSESSMENT PROCEEDINGS WHICH CONCLUDED U/S 143(3) O F THE ACT. WE ARE UNABLE TO SEE FROM THE REASONS RECORDED BY T HE ASSESSING OFFICER ANY TANGIBLE MATERIAL OR FORMATIO N OF BELIEF EXCEPT FACTUAL MENTIONING OF THE DETAILS SUBMITTED BY THE ASSESSEE DURING THE ORIGINAL ASSESSMENT PROCEEDINGS . THE CONCEPT OF CHANGE OF OPINION ON THE PART OF ASSES SING OFFICER TO REOPEN AN ASSESSMENT DOES NOT OBLITERATE AFTER SUBSTITUTION OF SECTION 147 OF THE ACT BY DIRECT TA X LAWS (AMENDMENT) ACTS 1987 AND 1989. THE POSITION IS VE RY CLEAR AFTER THE AMENDMENT THAT THE ASSESSING OFFICER HAS TO HAVE REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMEN T BUT THIS ITA 4555, 4457/D/2011, ITA 4149/D/11 AYS: 2003-04, 2004-05 12 DOES NOT IMPLY THAT THE ASSESSING OFFICER CAN REOPE N AN ASSESSMENT ON MERE CHANGE OF OPINION ON THE SAME MA TERIAL. FROM THE STATUTORY PROVISIONS OF THE ACT, THE CONCE PT OF CHANGE OF OPINION MUST BE TREATED AS AN INBUILT T EST TO CHECK THE ABUSE OF POWER BY THE REVENUE AUTHORITIES. THU S, AFTER 1 ST APRIL, 1989, THE ASSESSING OFFICER HAS POWER TO REO PEN THE ASSESSMENT PROVIDED THERE IS TANGIBLE MATERIAL TO COME TO THE CONCLUSION THAT THERE WAS ESCAPEMENT OF INCOME FROM ASSESSMENT. IT IS ALSO PERTINENT TO MENTION THAT R EASON MUST HAVE A LINK WITH THE FORMATION OF BELIEF. AT THIS POINT, WE ALSO RESPECTFULLY TAKE COGNIZANCE OF THE DECISION OF FUL L BENCH OF HONBLE JURISDICTIONAL HIGH COURT OF DELHI IN THE C ASE OF COMMISSIONER OF INCOME TAX VS USHA INTERNATIONAL LT D. WHEREIN IT HAS BEEN HELD THAT THE ASSESSMENTS CANNO T BE VALIDLY REOPENED U/S 147 OF THE ACT EVEN WITHIN FOUR YEARS IF AN ASSESSEE HAD FURNISHED FULL AND TRUE PARTICULARS AT THE TIME OF ORIGINAL ASSESSMENT WITH REFERENCE TO THE INCOME AL LEGED TO HAVE ESCAPED ASSESSMENT, IF THE ORIGINAL ASSESSMENT WAS MADE U/S 143(3) OF THE ACT. IN THIS DECISION THEIR LORD SHIPS FURTHER HELD THAT SO LONG AS THE ASSESSEE HAS FURNISHED FUL L AND TRUE PARTICULARS AT THE TIME OF ORIGINAL ASSESSMENT AND SO LONG AS THE ASSESSMENT ORDER IS FRAMED U/S 143(3) OF THE AC T, IT MATTERS LITTLE THAT THE ASSESSING OFFICER DID NOT ASK ANY Q UESTION OR QUERY WITH RESPECT TO ONE ENTRY OR NOTE BUT HAD RAI SED QUERIES AND QUESTIONS ON THE OTHER ASPECTS. IN THIS DECISI ON, THE HONBLE FULL BENCH HAS HELD THAT SECTION 114(E) OF THE EVIDENCE ACT, 1981 CAN BE APPLIED TO AN ASSESSMENT ORDER FRAMED U/S 143(3) OF THE ACT PROVIDED THERE HAS BEE N A FULL AND TRUE DISCLOSURE OF ALL MATERIAL AND PRIMARY FACTS A T THE TIME OF ORIGINAL ASSESSMENT. FURTHER IN SUCH A CASE, IF TH E ASSESSMENT IS REOPENED, IN RESPECT OF A MATTER COVERED BY THE DISCLOSURE, IT WOULD AMOUNT TO CHANGE OF OPINION. 9. IN THE CASE IN HAND, WE HAVE NO HESITATION TO HO LD THAT THERE WAS NO TANGIBLE MATERIAL BEFORE THE ASSESSING OFFICER TO FORM A REASON TO BELIEVE THAT THE INCOME HAS ESCAPE D ASSESSMENT. ADMITTEDLY, ALL BOOKS OF ACCOUNT, THRE E CD REPORTS AND SCHEDULE ANNEXED TO THE FINAL ACCOUNTS WERE SUBMITTED BEFORE THE ASSESSING OFFICER. AS PER BAL ANCE SHEET (PB PAGE NO. 15), SCHEDULE NO. 13 PERTAINING TO PUR CHASE (PB PAGE NO. 23), SCHEDULE TO THE ACCOUNTS EXPLAINING D ETAILS OF SAVING ACCOUNTS (PB PAGE NO. 25) AND DETAILS OF PRO VISIONS MADE DURING THE YEAR (PB PAGE NO. 71) AND DETAILS O F TDS ITA 4555, 4457/D/2011, ITA 4149/D/11 AYS: 2003-04, 2004-05 13 DEDUCTIBLE AND NOT DEDUCTED AT ALL (PB PAGE NO. 131 ), WE CLEARLY OBSERVE THAT THE ASSESSEE COMPANY HAS MADE CERTAIN PROVISIONS WHICH REFLECT IN SCHEDULE NO. 13 OF THE ACCOUNTS AND NOTE NO. 2 ATTACHED TO PROVISIONS OF EXPENSES S HOW THAT THE PROVISION OF RS.1,53,57,778/- HAS BEEN MADE DUR ING THE YEAR. FROM THE DETAILS AVAILABLE ON PAGE NO. 71 OF THE PAPER BOOK PERTAINING TO THE PROVISIONS MADE DURING THE Y EAR, WE OBSERVE THAT THE ASSESSEE HAS MADE CERTAIN PROVISIO NS UNDER THE SALES PROMOTION SCHEMES AND PROVISION MADE FOR ORC COMMISSION HAS BEEN MADE AS PER AGREEMENT ENTERED W ITH OVERWRITING COMMISSION AGENTS WHICH HAS ALREADY BEE N ADDED IN THE ORIGINAL RETURN AND ASSESSMENT. 10. IN VIEW OF ABOVE, WE ARE INCLINED TO HOLD THAT THE ACTION OF THE ASSESSING OFFICER IN INITIATING PROCEEDINGS U/S 147 AND 148 OF THE ACT WAS BASED ON CHANGE OF OPINION WITHO UT ANY NEW TANGIBLE MATERIAL. WE ALSO OBSERVE THAT NO REA SON TO BELIEVE WAS AVAILABLE WITH THE ASSESSING OFFICER AT THE TIME OF INITIATION OF REASSESSMENT PROCEEDINGS U/S 147 AND 148 OF THE ACT. UNDER THESE CIRCUMSTANCES, WE ARE UNABLE TO S UPPORT THE FINDINGS OF THE COMMISSIONER OF INCOME TAX(A) IN TH E IMPUGNED ORDER THAT THE ASSESSEE HAS FAILED TO SHOW THAT THERE WAS TRUE AND FULL DISCLOSURE AND THERE WAS NOT A CA SE OF CHANGE OF OPINION. ON THE BASIS OF DISCUSSIONS MAD E HEREINABOVE, WE HOLD THAT THE COMMISSIONER OF INCOM E TAX(A) WAS NOT JUSTIFIED IN UPHOLDING THE ACTION OF THE AS SESSING OFFICER IN REOPENING OF THE ASSESSMENT. ACCORDINGL Y, CO OF THE ASSESSEE IS ALLOWED AND INITIATION OF REASSESSM ENT PROCEEDINGS AND REASSESSMENT ORDERS PASSED IN REASS ESSMENT PROCEEDINGS ARE QUASHED. 16. HENCE, IN THE EXTANT CASE, WE ARE INCLINED TO H OLD THAT BOTH THE ISSUES WHICH WERE PICKED UP BY THE AO IN RECORDING REASON FOR INITIATION OF REASSESSMENT PROCEEDINGS U/S 147 OF THE ACT VERY WE LL FOUND PLACE IN THE AUDIT REPORT AND THE STATEMENT OF ACCOUNTS SUBMITTED ALON G WITH THE ORIGINAL RETURN OF INCOME AND AT THE SAME TIME, WE ALSO NOTE THAT THE ISSUE OF DISCOUNT OF RS.48.5 LAKH WAS ALSO RAISED BY THE AO WHICH WAS EXPLAINED BY THE ASSESSEE THROUGH ITS ITA 4555, 4457/D/2011, ITA 4149/D/11 AYS: 2003-04, 2004-05 14 REPLY DATED 20.1.2006 AS REPRODUCED HEREINABOVE. I N THIS SITUATION, WE FURTHER FOLLOW THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF CIT VS USHA INTERNATIONAL (SUPRA) THAT IF THE ASSES SMENT IS REOPENED IN RESPECT OF A MATTER COVERED BY DISCLOSURE OF THE ASSESSEE D URING ORIGINAL ASSESSMENT PROCEEDINGS THAT IT WOULD AMOUNT TO CHANGE OF OPINI ON WHICH IS NOT PERMISSIBLE FOR INITIATION OF PROCEEDINGS U/S 147 AND 148 OF TH E ACT. 17. IN THE RESULT, ON THE BASIS OF FOREGOING DISCUS SION, WE REACH TO A CONCLUSION THAT THE CIT(A) ERRED IN UPHOLDING THE A CTION OF THE AO FOR INITIATION OF PROCEEDINGS FOR REOPENING OF ASSESSMENT U/S 147 OF THE ACT AND FOR ISSUANCE OF NOTICE U/S 148 OF THE ACT. WE ARE OF THE CONSID ERED OPINION THAT THE INITIATION OF REASSESSMENT PROCEEDINGS U/S 147 OF THE ACT WAS ON THE BASIS OF INVALID JURISDICTION WHICH WAS OBVIOUSLY BAD IN LAW AND VOI D AB INITIO, THEREFORE, NOTICE ISSUED THEREIN U/S 148 OF THE ACT IS NOT SUSTAINABL E AND DESERVED TO BE QUASHED AND WE QUASH THE SAME. ACCORDINGLY, ADDITIONAL GRO UND NO. 1 AND 1.1 OF THE ASSESSEE ARE HEREBY ALLOWED. REVENUES APPEAL - ITA NO. 4457/D/2011 FOR AY 2003 -04 18. SINCE BY EARLIER PART OF THIS ORDER, WE HAVE QU ASHED NOTICE U/S 148 OF THE ACT DATED 31.3.2008 ISSUED FOR OPENING OF ASSESSMEN T FOR AY 2003-04, THEREFORE, APPEAL OF THE REVENUE ALLEGING THE DELET ION OF ADDITION OF RS.363.07 LAKH ON ACCOUNT OF SUBSCRIPTION FEE RECEIVABLE DOES NOT SURVIVE FOR ADJUDICATION ITA 4555, 4457/D/2011, ITA 4149/D/11 AYS: 2003-04, 2004-05 15 ON MERITS AND WE DISMISS THE SAME WITHOUT ANY DETAI LED DELIBERATIONS AND ON MERITS. REVENUES APPEAL - ITA NO. 4555/D/2011 FOR AY 200 4-05 19. THE REVENUE HAS RAISED SOLE GROUND IN THIS APPE AL WHICH READS AS UNDER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.2,44,61,000/- LACS ON ACCOUNT OF SUBSCRIPTION F EES RECEIVABLE. 20. APROPOS AFOREMENTIONED GROUND, WE HAVE HEARD TH E ARGUMENT OF BOTH THE SIDES AND CAREFULLY PERUSED THE RELEVANT MATERIAL P LACED ON RECORD. LD. DR SUPPORTING THE ASSESSMENT ORDER SUBMITTED THAT THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING AND SUBSCRIPTION FE E RECEIVABLE HAS BEEN DETERMINED AND NOTE TO THIS REGARD HAS BEEN PLACED IN THE ACCOUNTS, THEREFORE, IT CANNOT BE SAID THAT THE INCOME HAS NOT ARISEN TO TH E ASSESSEE. LD. DR FURTHER CONTENDED THAT THE AO WAS NOT JUSTIFIED IN MAKING A DDITION IN THIS REGARD AS THE SUBSCRIPTION FEE RECEIVABLE OF RS.244.61 LAKH WAS I NCOME OF THE ASSESSEE PERTAINING TO FY 2003-04 RELEVANT TO AY 2004-05. L D. DR ALLEGING THE IMPUGNED ORDER SUBMITTED THAT THE IMPUGNED ORDER MA Y BE SET ASIDE BY RESTORING THAT OF THE AO. 21. REPLYING TO THE ABOVE, SUPPORTING THE IMPUGNED ORDER, LD. COUNSEL OF THE ASSESSEE HAS DRAWN OUR ATTENTION TOWARDS OPERATIVE PART OF THE IMPUGNED ORDER ON THE ISSUE AND SUBMITTED THAT THE LIABILITY TO PA Y SUBSCRIPTION FEE TO THE ITA 4555, 4457/D/2011, ITA 4149/D/11 AYS: 2003-04, 2004-05 16 ASSESSEE GETS FASTENED ON TO THE SUBSCRIBER COMPAN Y ONLY AFTER ADOPTION OF ACCOUNTS OF THE SUBSCRIBER COMPANIES BY THE SHAREHO LDERS OF THOSE COMPANIES IN THEIR ANNUAL GENERAL MEETING ON WHICH DATE THE PROF ITABILITY/TURNOVER OF THE SUBSCRIBER COMPANIES IS KNOWN/FINALIZED/ASCERTAINED . LD. SENIOR COUNSEL FURTHER CONTENDED THAT THE CIT(A) RIGHTLY NOTED THAT IN THE EVENT OF NON-PROFITABILITY, NO SUBSCRIPTION FEES WOULD BE PAYABLE TO THE ASSESSEE. LD. SENIOR COUNSEL HAS ALSO DRAWN OUR ATTENTION TOWARD THE FACT THAT SINCE THE ACCOUNTS OF THE SUBSCRIBER COMPANIES WERE ADOPTED BY THE SHAREHOLDER IN THE IM MEDIATELY SUCCEEDING YEAR AND CONSIDERING THAT THE SUBSCRIPTION FEE WOULD BEC OME PAYABLE UPON FINALISATION/DETERMINATION OF THE PROFITS OF SUCH C OMPANY, THE SUBSCRIPTION FEES CAN BE SAID TO HAVE ACCRUED IN THE HANDS OF THE AS SESSEE IN THAT YEAR. LD. COUNSEL HAS FURTHER DRAWN OUR ATTENTION TOWARDS PAP ER BOOK PAGE 116 OF AY 2003-04 AND SUBMITTED THAT THE ENTIRE AMOUNT OF SUB SCRIPTION FEE WAS OFFERED TO TAX WHEN IT WAS ACTUALLY ACCRUED TO THE ASSESSEE. 22. ON CAREFUL CONSIDERATION OF ABOVE RIVAL SUBMISS IONS, WE OBSERVE THAT THE CIT(A) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE WITH FOLLOWING OBSERVATIONS AND CONCLUSION:- IT FOLLOWS ON PERUSAL OF THE AFORESAID JUDGEMENT THAT IN ORDER THAT INCOME CAN BE SAID TO HAVE ACCRUED, A DE BT SHOULD BECOME DUE TO THE ASSESSEE, EVEN THOUGH THE SAME MA Y BE PAYABLE AT A LATER DATE IN TERMS OF THE AGREEMENT B ETWEEN THE PARTIES. IF AN INCOME HAS BECOME DUE DURING THE PRE VIOUS YEAR, THE ACCRUAL OF THE SAME WILL NOT GET POSTPONED TO T HE SUBSEQUENT YEAR MERELY BECAUSE THE AMOUNT IS PAYABL E IN THE SUBSEQUENT YEAR. THEREFORE, WHAT IS IMPORTANT TO DE TERMINE IS ITA 4555, 4457/D/2011, ITA 4149/D/11 AYS: 2003-04, 2004-05 17 THE POINT OF TIME AT WHICH INCOME BECOMES DUE TO TH E ASSESSEE IN TERMS OF THE AGREEMENT BETWEEN THE PARTIES. I AL SO FIND THAT THE RATIO OF THE DECISION IN THE CASE OF SHRIVASTAV A (J.P) AND SONS (BHOPAL) PVT. LTD. V/S CIT IN 57 ITR 624 IS AP PLICABLE TO THE CASE OF THE APPELLANT. IN THE PRESENT CASE ALSO, THE LIABILITY TO PAY SUBS CRIPTION FEES TO THE APPELLANT GET FASTENED ON TO THE SUBSCR IBER COMPANIES ONLY AFTER ADOPTION OF THEIR ACCOUNTS BY THE SHAREHOLDERS IN THE ANNUAL GENERAL MEETING ON WHICH DATE THE PROFITABILITY/TURNOVER OF THE SUBSCRIBER COMPANIES IS KNOWN/FINALIZED/ASCERTAINED. IN THE EVENT OF NON-PR OFITABILITY, NO SUBSCRIPTION FEES WOULD BE PAYABLE TO APPELLANT. WHERE THE SUBSCRIBER COMPANIES ARE PROFITABLE, THE AMOUNT OF SUBSCRIPTION FEES PAYABLE WITH REFERENCE TO 0.5% OF TURNOVER AND SUBJECT TO CEILING OF 10% OF PROFIT CAN ONLY BE COMPUTED ON FINALIZATION OF PROFITS OF SUBSCRIBER COMPANIES AFTER ADOPTION OF ACCOUNTS BY SHAREHOLDERS IN AGM. THE CORRESPONDING RIGHT TO RECEIVE THE FEES ALSO VESTED IN THE APPELLANT AT SUCH TIME. THE INCOME BY WAY OF SUBSCR IPTION FEES, THEREFORE, ACCRUED IN THE SUBSEQUENT YEAR IN WHICH ACCOUNTS WERE ADOPTED. IT IS ALSO SEEN FROM THE PROVISIONS OF SEC 220(2) O F THE COMPANIES ACT THAT, IT IS ONLY ONCE THE ACCOUNTS AR E ADOPTED BY THE SHAREHOLDERS IN THE AGM MEETING THAT THEY ARE R EQUIRED TO BE FILED BEFORE THE REGISTRAR WITHIN 30 DAYS OF ADO PTION OF ACCOUNT. IN THE CASE OF THE APPELLANT, SINCE ACCOUN TS OF THE SUBSCRIBER COMPANIES WERE ADOPTED BY THE SHAREHOLDE R IN THE IMMEDIATELY SUCCEEDING YEAR AND CONSIDERING THAT TH E SUBSCRIPTION AGREEMENT PROVIDED THAT THE SUBSCRIPTI ON FEES WOULD BECOME PAYABLE UPON THE FINALIZATION/DETERMIN ATION OF THE PROFITS OF SUCH CO, THE SUBSCRIPTION FEES CAN B E SAID TO HAVE ACCRUED IN THE HANDS OF THE APPELLANT IN THAT YEAR. I ALSO FIND THAT THE APPELLANT CO IS A PROFIT MAKING CO AND IN BOTH THE YEARS THE TAX RATE REMAINS THE SAME AND IS BEING TA XED AT THE SAME SLAB. IN VIEW OF THE REASONS GIVEN ABOVE, THE ADDITION MA DE BY THE A.O IS DIRECTED TO BE DELETED. 23. AT THE VERY OUTSET, WE OBSERVE THAT THE LD. DR HAS NOT DISPUTED THE FACT THAT THE ASSESSEE OFFERED SUBSCRIPTION FEE FOR TAX AS PER CHART AVAILABLE ON PAGE ITA 4555, 4457/D/2011, ITA 4149/D/11 AYS: 2003-04, 2004-05 18 116 FOR AY 2003-04. LD. DR HAS ALSO NOT DISPUTED T HIS LEGAL PROPOSITION THAT IN THE PROVISIONS OF SECTION 220(2) OF THE COMPANIES A CT, IT IS ONLY ONCE THE ACCOUNTS ARE ADOPTED BY THE SHAREHOLDERS IN THE AGM THAT THEY ARE REQUIRED TO BE FILED BEFORE THE REGISTRAR WITHIN 30 DAYS OF ADO PTION OF ACCOUNTS. IN THE EXTANT CASE, THE ACCOUNTS OF THE SUBSCRIBER COMPANI ES WERE ADOPTED BY THE SHAREHOLDERS OF THE ASSESSEE COMPANY IN THE IMMEDIA TELY SUCCEEDING YEAR CONSIDERING THAT THE SUBSCRIPTION AGREEMENT PROVIDE D THAT SUBSCRIPTION FEE WOULD BECOME PAYABLE UPON FINALISATION OF ACCOUNTS AND DETERMINATION OF PROFITS OF SUCH COMPANY. HENCE WE ARE IN AGREEMENT WITH THE CONCLUSION OF THE CIT(A) THAT THE SUBSCRIPTION FEES CAN BE SAID TO HA VE ACCRUED IN THE HANDS OF THE ASSESSEE IN THAT YEAR ONLY WHEN THE ACCOUNTS OF THE SUBSCRIBER COMPANIES WERE ADOPTED BY THE SHAREHOLDERS OF THE ASSESSEE COMPANY . IN THE LIGHT OF FACT AND CIRCUMSTANCES AS NOTED ABOVE, WE ARE UNABLE TO SEE ANY PERVERSITY, AMBIGUITY OR ANY OTHER VALID REASON TO INTERFERE WITH THE IMPUGN ED ORDER WHICH DELETED THE ADDITION PERTAINING TO THE SUBSCRIPTION FEE RECEIVA BLE BY THE ASSESSEE. HENCE, WE ARE OF THE CONSIDERED OPINION THAT THE AO WAS NO T JUSTIFIED IN MAKING THE ADDITION IN THIS REGARD DURING REASSESSMENT PROCEED INGS AND THE CIT(A) HAD A VERY COGENT AND JUSTIFIED REASON TO DELETE THE SAME , THEREFORE, THE CONCLUSION OF THE CIT(A) IS CONFIRMED AND SOLE GROUND OF THE REVE NUE BEING DEVOID OF MERITS IS DISMISSED. ITA 4555, 4457/D/2011, ITA 4149/D/11 AYS: 2003-04, 2004-05 19 24. IN THE RESULT, APPEAL OF THE ASSESSEE IN ITA NO . 4149/DEL/2011 FOR AY 2003-04 IS ALLOWED, APPEALS OF THE REVENUE IN ITA 4 457/D/2011 FOR AY 2003- 04 AND ITA 4555/D/2011 FOR AY 2004-05 ARE DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 30/01/2015 SD/- SD/- (G.D. AGRAWAL) (CHANDRAMOHAN GARG) VICE PRESIDENT JUDICIAL MEMBER DT. 30 TH JANUARY, 2015 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. C.I.T.(A) 4. C.I.T. 5. DR BY ORDER ASS TT. REGISTRAR