DCIT, New Delhi V. M/s Amira Foods (India) Ltd., New Delhi

ITA 4991/DEL/2010

• Counselvise Citation: 499120114 RSA 2010
• Duration Of Justice: 1 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 01-03-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 12-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: U M MARWAHA
• Keywords: Depreciation; Earning of tax free income; Difference of opinion; Competent authority; Assessment record; Change of opinion; Reassessment proceedings
• Section: 143(3); 80HHC; 14A; 143(1); 80IA; 147; 148; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A, NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER & SMT. DIVA SINGH, JUDICIAL MEMBER ITA NOS. 4990 TO 4993/DEL/2010 ASSESSMENT YEARS: 2001-02 TO 2004-05 DCIT, VS. AMIRA FOODS (INDIA) LTD., CIRCLE 1(1), 54, PRAKRITI MARG, NEW DELHI. SULTANPUR, MEHRAULIM NEW DELHI. AAACA2200M (APPELLANT) (RESPONDENT) APPELLANT BY : PRADEEP KUMAR, CIT(DR) RESPONDENT BY : U.M. MARWAHA, CA ORDER PER S.V. MEHROTRA, A.M. THESE APPEALS ARE FILED BY THE REVENUE AND ARE DIR ECTED AGAINST TWO SEPARATE ORDERS OF CIT(A) DATED 01.09.2010 FOR THE A.YS. 2001-02 & 2002- 03 AND DATED 24.09.2010 FOR THE A.YS. 2003-04 & 200 4-05. 2. THE ASSESSEE COMPANY WAS ENGAGED IN THE BUSINESS OF MANUFACTURING AND PROCESSING AND EXPORT OF RICE AND OTHER ITEMS WITH ITS MANUFACTURING UNIT AT VILLAGE HARSARU, PATAUDI ROAD , GURGAON, HARYANA. THE ASSESSEE HAD CLAIMED DEDUCTION U/S 80IA, INTER- ALIA, IN RESPECT OF DUTY DRAWBACK. TO WITHDRAW DEDUCTION U/S 80IA ALLOWED I N RESPECT OF DUTY DRAWBACK BENEFITS/ EXPORT BENEFITS, PROCEEDINGS U/S 148 WERE INITIATED IN RESPECT OF ALL THE AFOREMENTIONED FOUR ASSESSMENT Y EARS. 3. ITA NO. 4990/D/10 FOR A.Y. 2001-02 : - BRIEF FACTS OF THE CASE ARE THAT ASSESSEE FILED ITS RETURN OF INCOME ON 15.11.2002 DECLARING INCOME OF RS. 2,24,990/-. THE AO HAS OBSERVED THAT ITA NOS. 4990 TO 4993/D/2010 2 IN COURSE OF SCRUTINY ASSESSMENT IN THE CASE OF ASS ESSEE FOR A.Y. 2005-06, IT WAS SEEN THAT THE ASSESSEE HAD CLAIMED DEDUCTION U/S 80IA EVEN ON THE INCOME RECEIVED AS EXPORT INCENTIVE UNDER DEPB SCHE ME WHICH WAS NOT ELIGIBLE FOR DEDUCTION U/S 80IA. THE AO NOTICED TH AT DURING THE RELEVANT ASSESSMENT YEAR VIZ. 2001-02, AN AMOUNT OF RS. 1,11 ,85,179/- RECEIVED BY THE ASSESSEE AS INCOME FROM SALE OF IMPORT LICENSE AND OTHER EXPORT BENEFIT HAD BEEN TAKEN INTO ACCOUNT FOR COMPUTING D EDUCTION U/S 80IA BY THE AO IN THE ORIGINAL ORDER DATED 19.03.2004 U/S 1 43(3) AND IN THE ORDER PASSED U/S 147 DATED 28.12.2006. THE AO REFERRED T O THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. RI TESH INDUSTRIES, 274 ITR 324 AND POINTED OUT THAT IT HAS BEEN HELD IN THAT C ASE THAT DRAWBACK RECEIVED BY THE ASSESSEE UNDER A SCHEME TO ENCOURAG E EXPORT WAS NOT A PROFIT OR GAIN DERIVED FROM INDUSTRIAL UNDERTAKING AND, THEREFORE, NOT ELIGIBLE FOR DEDUCTION U/S 80IA. HE, THEREFORE, CONCLUDED T HAT ASSESSEE HAD BEEN ALLOWED EXCESS DEDUCTION OF RS. 33,55,553/-. HE, T HEREFORE, ISSUED NOTICE U/S 148 ON 07.01.2008 AFTER RECORDING THE REASONS A ND OBTAINING NECESSARY APPROVAL FROM THE COMPETENT AUTHORITY. THE ASSESSE E OBJECTED TO THE REOPENING ON THE GROUND THAT NOTHING NEW HAD COME T O THE KNOWLEDGE OF THE DEPARTMENT FOR INITIATING PROCEEDINGS U/S 148. THE AO REJECTED THE OBJECTIONS VIDE HIS ORDER DATED 11.11.2009, INTER-A LIA, RELYING ON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF PRAFUL CHUNILAL VS. M.J. MAKWANA, ASSTT. CIT (1999) 236 ITR 832. HE PO INTED OUT THAT SINCE INCOME HAD ESCAPED ASSESSMENT, THE AO WAS ENTITLED TO REOPEN THE ASSESSMENT. ON MERITS, THE AO REFERRED TO THE DECI SION OF HONBLE SUPREME COURT IN THE CASE OF M/S LIBERTY INDIA VS. CIT, 317 ITR 218, WHEREIN IT HAS BEEN HELD THAT DUTY DRAWBACK BENEFIT S DO NOT FORM PART OF NET PROFIT. HE, THEREFORE, HELD THAT THE DEPB INCOME O F THE ASSESSEE HAD TO BE EXCLUDED FOR THE PURPOSE OF DEDUCTION U/S 80IA. BE FORE THE LD. CIT(A), THE ASSESSEE ASSAILED THE ACTION OF AO IN ASSUMING JURI SDICTION U/S 148 AND THEREBY FRAMING ASSESSMENT U/S 147/143(3). LD. CIT (A) QUASHED THE REASSESSMENT PROCEEDINGS IN VIEW OF PROVISO TO SEC. 147 AND ALSO HOLD ITA NOS. 4990 TO 4993/D/2010 3 THAT IT WAS A CASE OF CHANGE OF OPINION. BEING AGG RIEVED, THE DEPARTMENT IS IN APPEAL BEFORE US. 4. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES. THE FACTS ARE NOT DISPUTED. THE ASSESSEE HAD FILED ITS RETUR N OF INCOME ON 30 TH OCTOBER, 2001 AND THE ASSESSMENT ORDER U/S 143(3) W AS PASSED ON 19.03.2004 ALLOWING DEDUCTION CLAIMED U/S 80IA. TH EREAFTER, ON 28.03.2006 NOTICE U/S 148 WAS ISSUED FOR FOLLOWING REASONS: (A) ALLOWANCE OF ERRONEOUS DEDUCTION U/S 80IA AND (B) FOR RE-COMPUTATION OF DEDUCTION U/S 80HHC IN VIEW OF AMENDMENT ACT, 2005. 5. THE ASSESSMENT WAS COMPLETED U/S 143(3)/148, INT ER-ALIA, RE- COMPUTING DEDUCTION U/S 80IA INCLUDING THEREIN INCO ME FROM SALE OF EXPORT BENEFITS ON 28.12.06. THEREAFTER, AGAIN ON 07.01.0 8 NOTICE U/S 148 WAS ISSUED, ON THE BASIS OF SCRUTINY ASSESSMENT FOR A.Y . 2005-06 ON THE GROUND THAT EXCESS DEDUCTION HAD BEEN ALLOWED U/S 80IA, IN VIEW OF THE DECISION OF DELHI HIGH COURT IN THE CASE OF CIT VS. RITESH INDU STRIES, 274 ITR 324. IN THE BACKDROP OF THESE FACTS, THE CONTENTION OF THE ASSESSEE IS TWO FOLD FIRSTLY IN VIEW OF PROVISO TO SEC. 147, SINCE 4 YEA RS HAD ELAPSED FROM THE END OF RELEVANT ASSESSMENT YEAR AND THERE WAS NO FA ILURE ON THE PART OF ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS NECESSARY FOR ASSESSMENT, THE REOPENING WAS BAD IN LAW; SECONDLY, THE CONTENTION OF THE ASSESSEE IS THAT IT IS A CASE OF CHANGE OF OPINION AND, THEREFORE, IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN KELVINATOR INDIA LTD. (2010) 228 CTR (SC) 488 THE INITIATION OF PROCEEDINGS IS BAD I N LAW. AS FAR AS FIRST CONTENTION OF THE ASSESSEE IS CONCERNED, WE FIND CO NSIDERABLE FORCE IN THE SAME BECAUSE ADMITTEDLY NO NEW MATERIAL HAD COME IN TO POSSESSION OF AO AND IT WAS ONLY ON THE BASIS OF SCRUTINY ASSESSMENT FOR A.Y. 2005-06 THAT THE REOPENING HAD BEEN MADE U/S 147. PROVISO TO SE CTION 147 IS VERY CATEGORICAL AND UNLESS THERE IS ANY FAILURE ON THE PART OF ASSESSEE TO ITA NOS. 4990 TO 4993/D/2010 4 DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR ASSESSMENT, THE REOPENING CANNOT BE MEET AFTER 4 YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR. THEREFORE, ON THIS COUNT ONLY WE ARE INCLINED TO UPHOLD THE ORDER OF LD. CIT(A). 6. LD. COUNSEL HAS ALSO FILED A DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF VATIKA LTD. AND ANOTHER. VS. ITO DATED 13.02.2012 REPORTED IN 2012-TMI-210803-DELHI HIGH COURT, WHEREIN IN PARA 9 & 10, THE HONBLE DELHI HIGH COURT HAS OBSERVED AS UNDER: - 9. THE CONTENTION OF THE LD. COUNSEL FOR THE PET ITIONER IS THAT THE NOTICE U/S 148 OF THE ACT HAVING BEEN ISSUED AFTER A PERIO D OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, IT CAN BE UPHELD ONLY IF THERE IS ANY FAILURE OR OMISSION ON THE PART OF THE PETITIONER TO FURNISH FULLY AND TRULY ALL MATERIAL FACTS NECESSAR Y FOR ITS ASSESSMENT. IT IS SUBMITTED THAT THE PETITIONER HAD FURNISHED A LL THE FACTS IN RESPONSE TO THE QUERY RAISED BY THE RESPONDENT IN T HE COURSE OF THE ORIGINAL ASSESSMENT PROCEEDINGS REGARDING CLAIM OF DEPRECIATION OF RS. 74,85,196/- AND THAT THE ASSESSMENT WAS COMPLET ED ON THAT BASIS U/S 143(3) AND THAT THEREFORE THE NOTICE IS WITHOUT JURISDICTION. WE SEE MERIT IN THE CONTENTION. AS THE REASONS RECORD ED FOR RE-OPENING THE ASSESSMENT SHOW, THE GROUND ON WHICH THE ASSESS MENT WAS REOPENED WAS THAT THE BUSINESS WAS YET TO COMMENCE AND, THEREFORE, THE DEPRECIATION WAS WRONGLY CLAIMED BY THE ASSESSE E AND ALLOWED IN THE ORIGINAL ASSESSMENT. IN OUR OPINION, THERE WAS NO FAILURE ON THE PART OF THE PETITIONER TO FURNISH FULL AND TRUE PARTICULARS RELATING TO THE CLAIM OF THE DEPRECIATION. IN ITS LETTER DA TED 23.11.2004 FILED IN RESPONSE TO THE QUERY RAISED U/S 143(2), IN THE COURSE OF THE ORIGINAL ASSESSMENT PROCEEDINGS, THE PETITIONER HAD FURNISHED THE RELEVANT AND PRIMARY FACTS AND SUBMITTED THAT IT HA D ACQUIRED PLANT AND MACHINERY AT A COST OF RSS. 6.5 CRORES WITH A V IEW TO START ITS BUSINESS AND THAT THOUGH NO INCOME FROM THE SAID BU SINESS HAD BEEN DECLARED IN THE RETURN FOR THE YEAR UNDER CONSIDERA TION, STILL THE CLAIM OF DEPRECIATION ON FIXED ASSETS WAS ALLOWABLE AS THE BUSINESS HAD ALREADY BEEN SET UP. IN PARA 6 OF THE LETTER, WHICH WE HAVE QUOTED ABOVE, THE PETITIONER HAS EXPLAINED THE CLAI M OF DEPRECIATION ON PLANT AND MACHINERY. IT HAS BEEN SATED THAT THE PLANT AND MACHINERY WAS PUT TO USE IMMEDIATELY ON ITS ACQUISI TION AND IN ORDER TO SHOW THAT THE BUILDING BY THE NAME FIRST I NDIA PLACE WAS FULLY OPERATIONAL IN THE YEAR UNDER CONSIDERATION. THE PETITIONER HAD ALSO SUBMITTED THE COPY OF THE BALANCE SHEET OF M/S. VATIKA GREENFIELD PVT. LTD. WITH WHICH IT HAD ENTERED INTO AN AGREEMENT. IT WAS FURTHER STATED THAT THE BUSINESS OF THE PETITIO NER WAS SET UP AS ITA NOS. 4990 TO 4993/D/2010 5 SOON AS IT WAS READY TO START THE BUSINESS AND THE MOMENT IT HAD ACQUIRED THE PLANT AND MACHINERY FROM M/S. VATIKA G REENFIELD PVT. LTD. AND HAD ENTERED INTO AN AGREEMENT WITH THAT CO MPANY, IT HAD MADE SUFFICIENT ARRANGEMENT FOR EARNING THE INCOME FROM 01.04.2002 AND HAD EVEN STARTED GIVING SERVICES TO THE HOLDERS OF SPACE IN THE BUILDING KNOWN AS FIRST INDIA PLACE AT GURGAON. AFTER DRAWING THE ATTENTION OF THE RESPONDENT TO ALL THES E FACTS, THE PETITIONER SUBMITTED THAT IT HAD STARTED ITS BUSINE SS AND, THEREFORE, THE CLAIM OF DEPRECIATION WAS ALLOWABLE. THE RESPO NDENT HAD COMPLETED THE ASSESSMENT U/S 143(3) OF THE ACT AFTE R SCRUTINY. NOW IT CANNOT BE ALLEGED THAT THE PETITIONER HAD NOT FU RNISHED FULL AND TRUE PARTICULARS RELATING TO THE CLAIM OF DEPRECIAT ION AT THE TIME OF ORIGINAL ASSESSMENT. ALL THE PRIMARY FACTS RELATIN G TO THE CLAIM HAD BEEN DISCLOSED BY THE PETITIONER AND IT WAS FOR THE RESPONDENT TO DRAW THE APPROPRIATE INFERENCES REGARDING THE ALLOW ABILITY OF THE CLAIM OF DEPRECIATION. IT IS NOT PART OF THE DUTY OF THE PETITIONER TO INFORM THE AO AS TO WHAT INFERENCES SHOULD BE DRAW FROM THE PRIMARY FACTS DISCLOSED. IT IS NOT ALLEGED OR STAT ED IN THE REASONS THAT THERE WAS ANY FURTHER OR NEW INFORMATION OR GR OUND TO BELIEVE THAT THE PAVEMENT MADE IN THE LETTERS WRITTEN BY TH E PETITIONER- ASSESSEE WERE FALSE OR INCORRECT. 10. FOR THE ABOVE REASONS, WE HOLD THAT THE PETITI ONER HAD DISCLOSED FULL AND TRUE PARTICULARS RELATING TO THE CLAIM OF DEPRE CIATION AT THE TIME OF ORIGINAL ASSESSMENT. THE NOTICE U/S 148 OF THE ACT HAS BEEN ISSUED BEYOND THE PERIOD OF 4 YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR. THE PRIMARY JURISDICTIONAL CONDIT ION FOR ISSUE OF SUCH A NOTICE HAS NOT BEEN SATISFIED. WE, THEREFOR E, ISSUE A WRIT OF CERTIORARI QUASHING THE NOTICE U/S 148 OF THE ACT. AS A CONSEQUENCE ALL FURTHER PROCEEDINGS ARE ALSO QUASHED. THERE SH ALL BE NO ORDER AS TO COSTS. THUS, WHEN ALL THE MATERIAL FACTS HAVE BEEN DISCLOS ED BY THE ASSESSEE U/S 148 AFTER 4 YEARS IS BAD IN LAW. 7. LD. DR HAS STRONGLY RELIED ON THE DECISION OF HO NBLE SUPREME COURT IN THE CASE OF HONDA SIEL, WHEREIN HONBLE SUPREME COURT HAD UPHELD THE RE-ASSESSMENT PROCEEDINGS. IN THIS CASE REASSESSME NT PROCEEDINGS WERE INITIATED FOR A.Y. 2000-01 ON THE BASIS OF RETROSPE CTIVE AMENDMENT IN SECTION 14A. ADMITTEDLY THE ASSESSEE HAD NOT FURNISHED ANY DETAILS REGARDING EXPENDITURE INCURRED FOR EARNING EXEMPT INCOME. TH E ASSESSEE WAS HARPING UPON THE PROVISO TO SECTION 14A INSERTED BY THE FIN ANCE ACT, 2002, W.E.F. 11.05.2001 AS PER WHICH REASSESSMENT PROCEEDINGS CO ULD NOT BE ITA NOS. 4990 TO 4993/D/2010 6 INITIATED FOR ANY A.Y. BEGINNING ON OR BEFORE THE 0 .1.04.2001. HOWEVER, HONBLE SUPREME COURT UPHELD THE REASSESSMENT PROCE EDINGS BECAUSE ORIGINAL ASSESSMENT WAS COMPLETED IN 2003 BY WHICH DATE THE AMENDMENT WAS ALREADY ON THE STATUTE BOOK. HONBLE SUPREME C OURT DISTINGUISHED VARIOUS RULINGS RELIED BY ASSESSEE ON THE GROUND TH AT THESE RULINGS DEALT WITH SITUATIONS WHERE THE ORIGINAL ASSESSMENT PROCE EDINGS HAD ATTAINED FINALITY PRIOR TO THE INTRODUCTION OF THE RETROSPEC TIVE AMENDMENT UNDER THE ACT. THEREFORE, THIS DECISION IS DISTINGUISHABLE O N FACTS. WE, ACCORDINGLY, UPHOLD THE ORDER OF CIT(A). AS FAR AS PLEA REGARDI NG CHANGE OF OPINION IS CONCERNED, WE WILL CONSIDER THE SAME WHILE DECIDING THE APPEALS FOR A.YS. 2003-04 AND 2004-05, WHERE RE-OPENING IS DONE FOR T HE SAME REASONS BUT WITHIN FOUR YEARS FROM THE END OF RELEVANT ASSESSME NT YEARS. 8. ITA NO. 4991 FOR A.Y. 2002-03 : - IN THIS YEAR ALSO THE REASSESSMENT NOTICE U/S 148 H AD BEEN ISSUED ON 07.01.08. THEREFORE, IT IS ALSO BEYOND 4 YEARS FRO M THE END OF RELEVANT ASSESSMENT YEAR AND IS, THEREFORE, COVERED BY THE P ROVISO TO SEC. 147. ACCORDINGLY, FOR THE REASONS STATED FOR A.Y. 2001-0 2 BE UPHOLD THE ORDER OF LD. CIT(A). 9. ITA NO. 4992 FOR A.Y. 2003-04 : - BRIEF FACTS ARE THAT THE ASSESSEE HAD FILED RETURN SHOWING INCOME OF RS. 1,38,76,689/- UNDER NORMAL PROVISION AFTER CLAIMING DEDUCTION UNDER CHAPTER VIA FOR RS. 3,41,51,660/-. THE ASSESSMENT WAS COMPLETED AT A TOTAL INCOME OF RS. 2,54,82,390/-, INTER-ALIA, ALLO WING DEDUCTION U/S 80IA. SUBSEQUENTLY, THE AO NOTICED FROM THE ASSESSMENT RE CORDS FOR THE A.Y. 2003-04 THAT IN DETERMINING THE INCOME ELIGIBLE FOR DEDUCTION U/S 80IA, THE AMOUNT OF RS. 3,73,15,502/- RECEIVED BY THE ASSESSE E AS INCOME FROM SALE OF EXPORT LICENSE AND OTHER EXPORT BENEFITS H AD ALSO BEEN TAKEN INTO ACCOUNT BOTH BY THE ASSESSEE AS WELL AS THE AO IN T HE ORIGINAL ORDER U/S 143(3) OF THE ACT DATED 30.03.06 AND ORDER PASSED U /S 147 OF THE ACT DATED ITA NOS. 4990 TO 4993/D/2010 7 28.12.06. RELYING UPON THE DECISION OF HONBLE JUR ISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. RITESH INDUSTRIES 274 ITR 324, WHEREIN IT WAS HELD THAT THE DRAWBACK RECEIVED BY THE ASSESSEE UNDER SCHEME TO ENCOURAGE EXPORT WAS NOT A PROFIT OR GAIN DERIVED FROM INDUSTRIAL UN DERTAKING AND, THEREFORE, NOT ELIGIBLE FOR DEDUCTION U/S 80IA, ISSUED NOTICE U/S 148 ON 07.01.08. THUS, THIS NOTICE HAD BEEN ISSUED WITHIN 4 YEARS FR OM THE END OF RELEVANT ASSESSMENT YEAR AND, THEREFORE, THE MOOT QUESTION I N THE PRESENT APPEAL IS WHETHER THE REASSESSMENT PROCEEDINGS HAD BEEN INITI ATED ON THE BASIS OF CHANGE OF OPINION OR NOT. 10. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES. WE FIND THAT IN COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS U /S 143(3) THE AO HAD EXAMINED THE ASSESSEES CLAIM U/S 80IA OBSERVING AS UNDER: - 8. DEDUCTION U/S 80IA RS. 1,42,61,342/- : THE FACT AS TO WHETHER THE ASSESSEE WAS AN ELIGIBLE SSI OR NOT WAS A MATTER OF DISPUTE AND HAS BEEN DISCUSSED AT LENGTH BY THE LD. CIT(A) IN HER O RDER PASSED FOR THE ASSTT. YEAR 2002-03 IN THE CASE OF THE ASSESSEE. A S LD. CIT(A) HAD OBSERVED FROM THE DETAILS OF BILLS FURNISHED BEFORE HER FOR ADDITIONS MADE TO PLANT & MACHINERY, AND FINALLY CONCLUDED TH AT THE ASSESSEE WAS A SMALL SCALE INDUSTRY, AND THIS FACT HAS ALSO BEEN CONFIRMED BY THE COMPETENT AUTHORITY I.E. THE GENERAL MANAGER, D ISTRICT INDUSTRIES CENTRE, THE NODEL AGENCY WHO GRANTED THE CERTIFICAT E TO THE ASSESSEE OF BEING A SMALL SCALE INDUSTRY UP TO 6.6.2005, FOLLOW ING THE DECISION OF THE LD. CIT(A), FOR ASSTT. YEAR 2002-03, ASSESSEE I S CONSIDERED AS SMALL SCALE UNDERTAKING FOR THE YEAR UNDER CONSIDERATION AS WELL, FOR THE PURPOSE OF ALLOWING DEDUCTION U/S 80IA OF THE ACT. AS PER PROVISIONS OF SEC. 80IA PROFITS OF THE UNIT IS TO BE WORKED OUT AS DISTINCT UNIT, AND THE AO CAN APPORTIONED THE EX PENSES IF IT HAS BEEN NOTICED THAT ASSESSEE HAS NOT PROPERLY ALLOCATED TH E EXPENSES, OR HAVE SHOWN MORE INCOME TO CLAIM DEDUCTION U/S 80IA. IN VIEW OF THE ABOVE FACTS, AND ASSESSEE HAS MAINT AINED SEPARATE BOOKS OF ACCOUNTS FOR ITS HARSARU UNIT, GURGAON, DE DUCTION U/S 80IA IS ALLOWED TO THE ASSESSEE AS IS WORKED OUT SEPARATELY AS PER ANNEXURE 2 FORMING PART OF THIS ORDER. 11. THEREAFTER, AGAIN THE CLAIM U/S 80IA WAS EXAMIN ED IN COURSE OF FIRST REASSESSMENT PROCEEDINGS VIDE ORDER DATED 28.12.06. THEREFORE, LD. COUNSEL HAS RIGHTLY SUBMITTED THAT AO TOOK A CONSCI OUS DECISION ON TWO ITA NOS. 4990 TO 4993/D/2010 8 OCCASIONS BEFORE ALLOWING DEDUCTION U/S 80IA. FURT HER, IT IS CLEARLY STATED IN THE ORDER DATED 30.11.09 THAT THE AO STARTED THE RE ASSESSMENT PROCEEDINGS AFTER PERUSING THE ASSESSMENT RECORD FO R THE A.Y. 2003-04, WHEREIN HE HAD ALREADY ALLOWED THE DEDUCTION U/S 80 IA. THE BASIS WAS SCRUTINY ASSESSMENT FOR A.Y. 2005-06. AS REGARDS T HE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF RITESH IND USTRIES LD. COUNSEL SUBMITTED THAT THE SAME HAS BEEN OVERRULED BY THE F ULL BENCH OF THE DELHI HIGH COURT IN THE CASE OF CIT VS. M/S ELTEK SGS (P) LTD. (2008) 300 ITR 6 (DEL.). HE FURTHER POINTED OUT THAT THE DECISION O F RITESH INDUSTRIES WAS NOT WITH RESPECT TO SEC. 80IA AND, THEREFORE, THE SAME WAS NOT RELEVANT FOR CONSTITUTING PRIMA-FACIE BELIEF REGARDING ESCAPEMEN T OF INCOME. WE FIND THAT THE DECISION OF FULL BENCH WAS RENDERED ON 19. 02.08 AND, THEREFORE, THIS PLEA OF ASSESSEE IS DEVOID OF ANY MERIT BECAUS E ON THE DATE OF ISSUANCE OF NOTICE U/S 148 ONLY THE DECISION IN THE CASE OF RITESH INDUSTRIES WAS AVAILABLE TO THE AO. HOWEVER, AS RIGHTLY POINT ED OUT BY LD. COUNSEL FOR THE ASSESSEE THIS COULD NOT BE A BASIS FOR FORMING PRIMA FACIE BELIEF FOR TWO REASONS: - FIRSTLY, THIS DECISION WAS AVAILABLE WITH THE AO WH EN HE PASSED THE ORDER U/S 143(3) ON 26.12.06 AND ORDER U/S 143(3)/1 47 AND SECONDLY, THIS DECISION WAS NOT DIRECTLY REGARDING ALLOWABILITY OF DEDUCTION U/S 80IA IN RESPECT OF INCOME FROM EXPORT BENEFITS. THE AO ACTUALLY PERUSED THE ASSESSMENT RECORDS AGAI N AND AFTER RE- APPRECIATION OF SAME FACTS AND MATERIAL WHICH WERE ALREADY IN HIS POSSESSION AND HAD BEEN UTILIZED FOR ISSUANCE OF OR DER U/S 143(3), INITIATED REASSESSMENT PROCEEDINGS SOLELY ON THE GROUND OF CH ANGE OF OPINION REGARDING ALLOWABILITY OF DEDUCTION U/S 80IA ON THE BASIS OF SCRUTINY ASSESSMENT FOR A.Y. 2005-06. THE PRIMA-FACIE BELIEF REGARDING ESCAPEMENT OF INCOME IS TO BE CONSIDERED ON THE BASIS OF FACTS AS OBTAINING ON THE DATE OF ISSUANCE OF NOTICE U/S 148 AND NOT ON THE BASIS OF SUBSEQUENT DECISIONS. THERE HAS TO BE SOME REASON FOR THE FORMATION OF BE LIEF REGARDING ESCAPEMENT OF INCOME. MERE CHANGE OF OPINION ON SA ME SET OF FACTS ITA NOS. 4990 TO 4993/D/2010 9 CANNOT JUSTIFY THE ASSUMPTION OF JURISDICTION U/S 1 47 AS HELD BY HONBLE SUPREME COURT IN THE CASE OF KELVINATOR INDIA LTD.. THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF LIBERTY INDIA DISENTIT LING THE ASSESSEE OF DEDUCTION U/S 80IA IN REGARD TO DUTY DRAWBACK WAS R ENDERED ON 31 ST AUGUST, 2009 AND, THEREFORE, THIS WAS NOT AVAILABLE ON THE DATE OF ISSUANCE OF NOTICE. AS FAR AS DECISION IN THE CASE OF RITES H INDUSTRIES IS CONCERNED, THAT WAS AVAILABLE ON THE DATE WHEN ORIGINAL ASSESS MENT ORDER AS WELL AS FIRST REASSESSMENT ORDER WAS PASSED AND, THEREFORE, IT CANNOT BE EXPECTED THAT AO WAS OBLIVIOUS OF THE SAID DECISION. EVEN O THERWISE RECTIFICATION SOUGHT TO BE MADE BY REVENUE COME WITHIN THE AMBIT OF SEC. 154 AND, THEREFORE, RESORT TO SEC. 147 WAS NOT JUSTIFIED. A T THE TIME OF HEARING, LD. COUNSEL FOR THE ASSESSEE HAS FILED BEFORE US COPY O F THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. RAJ KUMAR MAHAJAN WHEREIN IT HAS BEEN HELD AS UNDER: 9. IT IS NOT POSSIBLE TO ACCEPT THE CONTENTION OF THE LD. COUNSEL FOR THE REVENUE. WE HAVE QUOTED ABOVE THE QUESTIONNAIR E AND THE REPLY FURNISHED BY THE ASSESSEE. THE QUESTION OF DEDUCTI ONS U/S 80IA AND 80HHC WERE SPECIFICALLY EXAMINED AT THE TIME OF ORI GINAL ASSESSMENT PROCEEDINGS. THE RESPONDENT-ASSESSEE HAD JUSTIFIED THE CLAIM AND FURNISHED DOCUMENTARY EVIDENCE OR PROOF. THE QUANT IFICATION OF THE CLAIM WAS JUSTIFIED. THIS IS A CASE OF CHANGE OF O PINION AND THIS IS NOT PERMISSIBLE AS HELD IN CIT VS. KELVINATOR OF INDIA (2010) 320 ITR 561 (SC) AND KELVINATOR OF INDIA VS. CIT (2002) 256 ITR 1 (DEL). THE OPINION OF THE ASSESSING OFFICER MAY HAVE BEEN LEGA LLY ERRONEOUS BUT THIS CANNOT BE A GROUND FOR INITIATION OF REASSESSMENT P ROCEEDINGS. AN ERRONEOUS DECISION WHICH IS PREJUDICIAL TO THE REVE NUE CAN BE REVISED BUT THE SAID OPTION WAS NOT EXERCISED. THUS, EVEN IF THE AOS OPINION WAS LEGALLY ERRONEOU S REGARDING ALLOWABILITY OF DEDUCTION U/S 80IA BUT THAT CANNOT BE A BASIS FO R INITIATION OF RE- ASSESSMENT PROCEEDINGS. 12. LD. DR HAS RELIED ON THE DECISION OF HONBLE KE RALA HIGH COURT IN THE CASE OF KERALA FINANCIAL CORPORATION VS. JCIT, WHER EIN ORIGINAL ASSESSMENT WAS COMPLETED U/S 143(1) ON 20.01.1995, ACCEPTING T HE RETURN FILED BY THE ASSESSEE AND WITHOUT MAKING ANY VARIATION OF THE IN COME RETURN. ITA NOS. 4990 TO 4993/D/2010 10 SUBSEQUENTLY, THE AO NOTICED THAT THE ASSESSEES CL AIM FOR DEDUCTION U/S 36(1)(VIII) WAS NOT PERMISSIBLE BECAUSE THERE WAS N O INCOME AVAILABLE AFTER SETTING OFF CARRY FORWARD LOSSES. CONSEQUENTLY, TH E AO ISSUED NOTICE U/S 148. THIS DECISION IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE BECAUSE ADMITTEDLY THE ASSESSMENT HAD BEEN COMPLETE D U/S 143(1) WITHOUT FORMING ANY OPINION ON A PARTICULAR ISSUE. LD. COUNSEL HAS FURTHER RELIED ON THE DECISION OF PUNJAB STATE COOPERATIVE AGRICULTURAL BANK LTD. VS. CIT. IN THIS CASE NOTICE FOR REASSESSMENT WAS UPHELD OBSERVING THAT THE SAME WAS NOT BASED MERELY ON CHANGE OF OPINION BUT ALSO ON THE SUBSEQUENT JUDGMENT OF THE SUPREME COURT IN U.P COO PERATIVE CASE. THIS DECISION IS ALSO NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE BECAUSE THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF LI BERTY INDIA WAS RENDERED AFTER THE ISSUANCE OF NOTICE U/S 148 AND T HAT WAS NOT THE BASIS FOR ISSUANCE OF NOTICE U/S 148. IT IS WELL SETTLED LAW THAT REASONS HAVE TO BE CONSIDERED AS RECORDED AND SUBSEQUENT DEVELOPMENT C ANNOT JUSTIFY THE REASONS ON ANY OTHER GROUNDS. LD. DR HAS ALSO REFE RRED TO THE DECISION OF KERALA HIGH COURT IN THE CASE OF CIT VS. C.V. JAYA CHANDARAN. IN THIS CASE THE PROCEEDINGS U/S 147 HAVE BEEN UPHELD OBSERVING AS UNDER: - (II) THAT SECTION 147 WAS NOT CONTROLLED BY THE AMENDMENT THAT WAS APPLICABLE IN THE CASE. SINCE THE ASSESSEE DID NOT CONCEDE THE INCOME ON CAPITAL GAIN EITHER UNDER THE UNAMENDED PROVISIO N OR UNDER THE AMENDED PROVISION, THE RECOURSE OPEN TO THE DEPARTM ENT WAS TO BRING TO TAX INCOME ESCAPING ASSESSMENT U/S 147 WHICH WAS NOT TIME BARRED OR OTHERWISE INVALID. THE ASSESSING OFFICER WAS BO UND TO FOLLOW THE LAW IN FORCE AS ON THE DATE OF INITIATION OF PROCEE DINGS. THUS, THE REASSESSMENT PROCEEDINGS WERE NOT INITIAT ED ON THE BASIS OF MERE AMENDMENT BUT ON THE GROUND OF ASSESSEES FAIL URE TO CONCEDE THE INCOME OF CAPITAL GAIN AT ALL. THEREFORE, THE FACT S OF THIS CASE ARE ALSO NOT APPLICABLE TO THE PRESENT FACTS. WE, ACCORDINGLY, CONFIRM THE ORDER OF LD. CIT(A). ACCORDINGLY, THE DEPARTMENTAL APPEAL IS DI SMISSED. ITA NOS. 4990 TO 4993/D/2010 11 13. ITA NO. 4993 FOR A.Y. 2004-05 : - IN THIS YEAR ALSO THE REASSESSMENT NOTICE U/S 148 H AS BEEN ISSUED ON 07.01.08. THEREFORE, IT IS WITHIN 4 YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR. ACCORDINGLY, FOR THE REASONS STAT ED FOR A.Y. 2003-04, WE UPHOLD THE ORDER OF LD. CIT(A). 14. IN THE RESULT, THE DEPARTMENTAL APPEAL IS DISMI SSED. 15. IN THE RESULT, ALL THE APPEALS FILED BY THE DEP ARTMENT ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 01.03.2012 SD/- SD/- (DIVA SINGH) (S.V. MEHROTRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 01.03.12 *KAVITA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR