DCIT, CHENNAI V. M/s. Schwing Stetter India P. Ltd., Kancheepuram

ITA 558/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64674 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 22-12-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 29-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R B NAIK
• Keywords: Depreciation; Tangible material; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 147; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER I.T.A. NO. 558/MDS/2011 (ASSESSMENT YEAR : 2002-03) THE DEPUTY COMMISSIONER OF INCOME TAX, LARGE TAXPAYER UNIT, CHENNAI - 600 101. (APPELLANT) V. M/S SCHWING STETTER INDIA PVT. LTD., PLOT NO.F 71, SIPCOT INDL. PARK, IRUNGATTUKOTTAI, SRIPERUMBUDUR, KANCHEEPURAM DISTRICT, PIN : 602 105. PAN : AADCS5069D (RESPONDENT) APPELLANT BY : SHRI R.B. NAIK, CIT-DR RESPONDENT BY : SHRI VIKRAM VIJAYARAGHAVAN, ADVOCATE DATE OF HEARING : 22.12.2011 DATE OF PRONOUNCEMENT : 22.12.2011 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY THE REVENUE, IT ASSAILS O RDER OF COMMISSIONER OF INCOME TAX (APPEALS), LARGE TAXPAYE R UNIT, CHENNAI, WHICH HELD THE REOPENING DONE BY THE ASSES SING OFFICER FOR THE IMPUGNED ASSESSMENT YEAR, NOT VALID. AS PER TH E REVENUE, EXPLANATION 1 TO SECTION 147 OF INCOME-TAX ACT, 196 1 (IN SHORT 'THE I.T.A. NO. 558/MDS/11 2 ACT') JUSTIFIED IN REOPENING AND DECISIONS OF HONB LE APEX COURT IN THE CASE OF SRI KRISHNA (P) LTD. V. ITO (221 ITR 538) A ND M/S CALCUTTA DISCOUNT CO V. ITO (41 ITR 191) AND THAT OF HONBLE DELHI HIGH COURT IN THE CASE OF CONSOLIDATED PHOTO AND FINVEST LTD. V. ACIT (281 ITR 394) SUPPORTED THE REOPENING DONE BY THE A.O. 2. SHORT FACTS APROPOS ARE THAT ASSESSEE HAD FILED ITS RETURN OF INCOME FOR IMPUGNED ASSESSMENT YEAR AND CLAIMED DED UCTION UNDER SECTION 80-IB OF THE ACT. ASSESSEE WAS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF CONCRETE MIXTURES, CON CRETE PUMPS, ETC. AND THE ASSESSMENT WAS ORIGINALLY COMPLETED FOR IMP UGNED ASSESSMENT YEAR ON 31.3.2005. THE CLAIM OF ASSESSE E UNDER SECTION 80-IB OF THE ACT WAS DISALLOWED IN SUCH ASS ESSMENT IN SO FAR AS IT6 RELATED TO INTEREST OF ` 4,28,000/- AND COMMISSION OF ` 6,98,000/-. A.O. HELD THAT THESE RECEIPTS WERE NOT DERIVED FROM THE CORE ACTIVITY OF THE ASSESSEES INDUSTRIAL UNDERTAK ING. SUBSEQUENTLY, AFTER FOUR YEARS FROM THE END OF THE RELEVANT IMPUGNED ASSESSMENT YEAR, A NOTICE DATED 20.3.2009 UNDER SECTION 148 OF THE ACT, WAS ISSUED. ASSESSEE REQUESTED FOR THE REASONS FOR REO PENING VIDE ITS LETTER DATED 30.3.2009 AND SUCH REASONS WERE GIVEN TO THE ASSESSEE I.T.A. NO. 558/MDS/11 3 ON 22.9.2009 BY THE A.O. THE REASONS MENTIONED THE REIN AT PAPER- BOOK PAGE 5 READ AS UNDER:- THE DEDUCTION UNDER SECTION 80-IB TO THE EXTENT OF ` 58,81,680/- HAS BEEN ALLOWED WRONGLY, SINCE THE NAT URE OF THE BUSINESS OF THE ASSESSEE IS NOT BEEN COVERED AS PE R THE PROVISIONS OF SECTION 80-IB(2) OF THE INCOME-TAX A CT. FURTHER, THE AUDITORS HAVE NOT CERTIFIED THE DEDUCT ION CLAIMED BY THE ASSESSEE. BASED ON THE ABOVE FACTS, IT IS CLEAR THAT THE ASSE SSEE HAS NOT PRODUCED THE ABOVE MATERIAL FACTS FULLY AND TRULY BEFORE THE TAX AUTHORITIES. HENCE, I HAVE THE REASON TO BELIEVE THAT THE INCOME HAS ESCAPED THE ASSESSMENT BY WAY OF EXCESS CLAIM OF DE DUCTION U/S 80-IB FOR THE CURRENT YEAR. THEREAFTER, REASSESSMENT PROCEEDINGS WERE COMPLETED ON 30.12.2009. THOUGH ASSESSEE QUESTIONED THE REOPENI NG BEFORE THE A.O., THE A.O., RELYING ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CONSOLIDATED PHOTO AND FINVEST LTD. (SU PRA), HELD THAT THE REOPENING WAS VALID. ARGUMENTS OF THE ASSESSEE WERE THAT IT HAD MADE AS FULL DISCLOSURE OF DETAILS REQUIRED FOR CLA IMING DEDUCTION UNDER SECTION 80-IB OF THE ACT AND SUCH CLAIM WAS P ROPERLY CONSIDERED BY THE ASSESSING OFFICER DURING THE COUR SE OF ORIGINAL ASSESSMENT PROCEEDINGS. THE A.O. FINALLY IN THE AS SESSMENT PURSUANT TO REOPENING UNDER SECTION 147, HELD THAT ASSESSEE WAS NOT I.T.A. NO. 558/MDS/11 4 ELIGIBLE FOR DEDUCTION UNDER SECTION 80-IB OF THE A CT SINCE IT HAD NOT FILED A CERTIFICATE IN FORM NO. 10CCB. AS PER THE A.O., SUCH A CERTIFICATE WAS MANDATORY FOR CONSIDERING A CLAIM U NDER SECTION 80-IB OF THE ACT. THUS, IN THE REASSESSMENT PROCEEDINGS, ASSESSEES CLAIM UNDER SECTION 80-IB WAS DENIED IN TOTO. 3. IN ITS APPEAL BEFORE LD. CIT(APPEALS), ARGUMENT OF THE ASSESSEE WAS THAT THE ASSESSMENT HAVING BEEN REOPENED BEYOND FOUR YEARS FROM THE END OF THE IMPUGNED ASSESSMENT YEAR, THE R EOPENING COULD NEVER HAVE BEEN DONE ON A CHANGE OF OPINION. AS PE R THE ASSESSEE, THERE WAS NO TANGIBLE MATERIAL IN THE HANDS OF THE A.O. JUSTIFYING REOPENING. ASSESSEE ALSO RELIED ON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. CHO LAMANDALAM INVESTMENTS AND FINANCE COMPANY LTD. (309 ITR 110). FURTHER SUBMISSION OF THE ASSESSEE BEFORE LD. CIT(APPEALS) WAS THAT RULE 18BBB OF INCOME-TAX RULES, 1962 WHICH PRESCRIBES TH E FORM FOR AUDIT REPORT FOR CLAIMING DEDUCTION UNDER SECTION 80-I, 8 0-IA, 80-IB AND 80- IC, ORIGINALLY COVERED ONLY DEDUCTIONS UNDER SECTIO N 80-I AND SECTION 80-IA OF THE ACT. AS PER THE ASSESSEE, THE SAID RU LE WAS SUBSTITUTED BY INCOME-TAX (TWENTY-THIRD AMDT.) RULES, 2002 WITH EFFECT FROM 6.9.2002 AND PRIOR TO SUCH SUBSTITUTION, THE SAID R ULE COVERED ONLY I.T.A. NO. 558/MDS/11 5 SECTION 80-I AND 80-IA AND NOT SECTION 80-IB. THER EFORE, AS PER THE ASSESSEE, FORM NO. 10CCB WAS NOT REQUIRED TO BE FUR NISHED FOR IMPUGNED ASSESSMENT YEAR 2002-03. LD. CIT(APPEALS) WAS APPRECIATIVE OF THESE CONTENTIONS OF THE ASSESSEE. ACCORDING TO HIM, THE ASSESSING OFFICER, WHEN HE ORIGINALLY COMPLETED THE ASSESSMENT ON 31.3.2005, HAD ALREADY APPLIED HIS MIND ON THE D EDUCTION SOUGHT BY THE ASSESSEE UNDER SECTION 80-IB OF THE ACT AND ALSO CURTAILED SUCH DEDUCTION BY EXCLUDING INTEREST AND COMMISSION RECEIPTS. LD. CIT(APPEALS) ALSO NOTED THAT THE ASSESSING OFFICER HAD NEVER MENTIONED ANYWHERE IN THE REASSESSMENT PROCEEDINGS WHAT WAS THE OMISSION IN THE RETURN AND PARTICULARS FILED BY TH E ASSESSEE WHICH WOULD BE RELEVANT FOR THE REOPENING. LD. CIT(APPEA LS) THUS CAME TO A CONCLUSION THAT THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE AND RELYING ON THE DECISION OF THE HONBLE APEX COURT I N THE CASE OF CIT V. KELVINATOR INDIA LTD. (320 ITR 561), HE HELD THE RE ASSESSMENT, WHICH WAS DONE AFTER FOUR YEARS, TO BE INVALID. 4. NOW BEFORE US, LEARNED D.R. STRONGLY ASSAILING T HE ORDER OF LD. CIT(APPEALS), SUBMITTED THAT IT WAS NOT A CASE WHER E THE ASSESSEE HAD FILED AN AUDIT REPORT AS MENTIONED UNDER RULE 1 8BBB OF THE INCOME-TAX RULES, 1962, LATE. BUT, THE ASSESSEE HA D NOT AT ALL I.T.A. NO. 558/MDS/11 6 FURNISHED THE AUDIT REPORT AS REQUIRED IN SECTION 8 0-IB. HENCE, ACCORDING TO HIM, THE MANDATORY REQUIREMENT UNDER T HE ACT FOR CLAIMING A DEDUCTION UNDER SECTION 80-IB WAS NOT CO MPLIED BY THE ASSESSEE AND SUCH CLAIM ORIGINALLY ALLOWED WAS WRON G AND INCORRECT. THE ASSESSING OFFICER WAS, THEREFORE, ACCORDING TO HIM, PERFECTLY JUSTIFIED IN REOPENING THE ASSESSMENT IN VIEW OF TH E DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CONSOLIDATE D PHOTO AND FINVEST LTD. (SUPRA), WHICH HAD DULY CONSIDERED THE FULL BENCH DECISION OF THE SAID HIGH COURT IN THE CASE OF CIT V. KELVINATOR OF INDIA LTD. (256 ITR 1). IT IS THE CASE, ACCORDING TO LEARNED D.R., NOT OF ANY DIFFERENT OPINION BEING FORMED BY THE ASSESSING OFFICER BUT ON THE OTHER HAND, HE HAD NEVER APPLIED HIS MIND TO TH E FACT THAT THE ASSESSEE HAD NEVER FILED AUDIT REPORT UNDER THE ACT AND RULES IN THE ORIGINAL ASSESSMENT. 5. PER CONTRA, LEARNED A.R. SUBMITTED THAT THERE WA S NO TANGIBLE MATERIAL WITH ASSESSING OFFICER TO COME TO A CONCLU SION THAT THERE WAS ANY ESCAPEMENT OF INCOME. AS PER THE LEARNED A .R., THE RULE AS IT STOOD WAS NOT APPLICABLE FOR THE ASSESSEE AND FI LING OF THE AUDIT REPORT IN FORM 10CCB FOR CLAIMING DEDUCTION UNDER S ECTION 80-IB FOR THE IMPUGNED ASSESSMENT YEAR, WAS NOT MANDATORY. T HEREFORE, I.T.A. NO. 558/MDS/11 7 FAILURE TO FILE A FORM WHICH WAS NOT MANDATORY UNDE R THE RULES COULD NEVER BE CITED AS A PROPER REASON FOR REOPENING AN ASSESSMENT IN WHICH THE CLAIM WAS DULY CONSIDERED. 6. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL SUBMISSIONS CAREFULLY. THE REASON MENTIONED BY THE ASSESSING O FFICER FOR REOPENING THE ASSESSMENT HAS BEEN REPRODUCED AT PAR A 2 ABOVE. THERE IS NO DISPUTE THAT THE REOPENING HAS BEEN DON E AFTER THE LAPSE OF FOUR YEARS FROM THE END OF IMPUGNED ASSESSMENT Y EAR AND THE ORIGINAL ASSESSMENT WAS DONE UNDER SECTION 143(3) O F THE ACT. THERE IS ALSO NO DISPUTE THAT THE ASSESSEES CLAIM UNDER SECTION 80- IB OF THE ACT WAS CONSIDERED IN THE ORIGINAL ASSESS MENT AND SUCH CONSIDERATION IS CLEAR FROM THE FOLLOWING PART OF T HE ORIGINAL ASSESSMENT ORDER DATED 31.3.2005:- 3. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND SALE OF CONCRETE MIXTURES, CONCRE TE PUMPS AND CONCRETE MIXING PLANTS & COMPONENTS. A PERUSAL OF THE P&L A/C REVEALS THAT THE ASSESSEE HAS CREDITED FOLLOWIN G ITEMS UNDER OTHER INCOME (SCHEDULE 10) INTEREST EARNED ` 4,28,000 COMMISSION EARNED ` 6,98,000 ASSESSEE HAS CLAIMED DEDUCTION 80-IB FROM THESE REC EIPTS AS WELL. I.T.A. NO. 558/MDS/11 8 3.1 A PERUSAL OF THE ABOVE RECEIPTS SHOWS THAT THES E ARE NOT DERIVED FROM THE ASSESSEES INDUSTRIAL UNDERTAKING FOR WHICH THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80-IB. THE ASSE SSEES INDUSTRIAL UNDERTAKING IS SUPPOSED TO MANUFACTURE C ONCRETE MIXERS, CONCRETE PUMPS ETC. THE ABOVE RECEIPTS ARE DEFINITELY NOT DERIVED FROM THE CORE ACTIVITY OF THE INDUSTRIA L UNDERTAKING. RELIANCE IS PLACED ON THE FOLLOWING DECISIONS WITH THIS REGARD:- (1) COMMISSIONER OF INCOME TAX VS PANDIAN CHEMICALS (233 ITR 497) (MADRAS HIGH COURT) IN THIS CASE, THE ASSESSEE HAD CLAIMED THAT INTERES T ON DEPOSITS MADE WITH TAMILNADU ELECTRICITY BOARD HAD TO BE TAK EN INTO ACCOUNT FOR THE PURPOSE OF 80HH. THOUGH THE ASSESS EE HAD TO NECESSARILY MAKE THE DEPOSIT WITH THE ELECTRICITY B OARD FOR RUNNING THE INDUSTRY AND THE POWER SUPPLY WOULD NOT BE MADE WITHOUT THE DEPOSIT IN FAVOUR OF THE ELECTRICITY BO ARD, THE INCOME DERIVED FROM THE DEPOSIT FROM ELECTRICITY BO ARD COULD NOT BE SAID TO HAVE BEEN DERIVED FROM THE INDUSTRIAL UN DERTAKING. THE IMMEDIATE SOURCE OF INTEREST WAS THE DEPOSIT IT SELF. IN OTHER WORDS, THE IMMEDIATE AND EFFECTIVE SOURCE OF THE INTEREST WAS THE DEPOSIT AND NOT THE INDUSTRIAL UNDERTAKING. (2) STERLING FOODS (237 ITR 579) (SUPREME COURT) (3) HINDUSTAN LEVER LTD. (239 ITR 297) (4) ASHOK LEYLAND VS CIT (1997) (224 ITR 122) (5) EASTERN SEA FOODS (215 ITR 54) (MAD) THE AUTHORIZED REPRESENTATIVE ALSO STATED THAT SECT ION 80-IB TALKS ABOUT PROFITS AND GAINS DERIVED FROM AN Y BUSINESS AND NOT INDUSTRIAL UNDERTAKING BUT IT WAS POINTED O UT TO HIM THAT SECTION 80-IB(1) SAYS WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE INCLUDES ANY PROFITS AND GAINS DERIVED FRO M ANY BUSINESS REFERRED TO IN SUB-SECTION (3) TO (11) AND (11A) (S UCH BUSINESS HERE-IN-AFTER) REFERRED TO AS THE ELIGIBLE BUSINESS ) THERE SHALL, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF TH IS SECTION BE ALLOWED. IN COMPUTING THE TOTAL INCOME OF THE ASSE SSEE, A DEDUCTION FROM SUCH PROFITS AND GAINS OF ANY AMOUNT EQUAL TO SUCH PERCENTAGE AND FOR SUCH NUMBER OF ASSESSMENT Y EARS AS I.T.A. NO. 558/MDS/11 9 SPECIFIED IN THIS SECTION WHEREAS SECTION 80-IB(3) SAYS THE AMOUNT OF DEDUCTION IN THE CASE OF AN INDUSTRIAL UN DERTAKING SHALL BE TWENTY-FIVE PERCENT (OR THIRTY PER CENT WHERE TH E ASSESSEE IS A COMPANY) OF THE PROFITS AND GAINS DERIVED FROM SU CH INDUSTRIAL UNDERTAKING FOR A PERIOD OF TEN CONSECUTIVE ASSESSM ENT YEARS (OR TWELVE CONSECUTIVE ASSESSMENT YEARS WHERE THE ASSES SEE IS A CO- OPERATIVE SOCIETY) BEGINNING WITH THE INITIAL ASSES SMENT YEAR. SO THE KEY WORD IS DERIVED FROM SUCH INDUSTRIAL UNDERT AKING. 3.2 FROM THE ABOVE, IT IS CLEAR THAT THE TOTAL RECE IPTS OF ` 11,26,000 CONSISTING OF INTEREST INCOME & COMMISSIO N ARE NOT DERIVED FROM THE OPERATIONS FROM THE INDUSTRIAL UND ERTAKING. THEREFORE, DEDUCTION U/S 80-IB IS RESTRICTED TO 30% OF THE PROFIT DERIVED FROM THE INDUSTRIAL UNDERTAKING. 7. TO RESORT TO A REOPENING ONCE FOUR YEARS HAVE LA PSED FROM THE END OF THE IMPUGNED ASSESSMENT YEAR, IT IS IMPERATI VE THAT FIRST PROVISO TO SECTION 147 IS SATISFIED. NOT ONLY HAS THE FIRST PROVISO TO BE SATISFIED, BUT ALSO ASSESSING OFFICER HAS TO HAVE A REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSES SMENT. FIRST PROVISO TO SECTION 147 IS REPRODUCED HEREUNDER FOR BREVITY:- 147. IF THE [ASSESSING] OFFICER [HAS REASON TO BELI EVE] THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153, ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSME NT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURS E OF THE PROCEEDINGS UNDER THIS SECTION, OR RECOMPUTED THE L OSS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE, AS T HE CASE MAY BE, FOR THE ASSESSMENT YEAR CONCERNED (HEREAFTER IN THIS SECTION AND IN SECTIONS 148 TO 153 REFERRED TO AS THE RELEV ANT ASSESSMENT YEAR) : I.T.A. NO. 558/MDS/11 10 PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE R ELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THI S SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TA X HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REAS ON OF THE FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETUR N UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142 OR SECTION 148 OR TO DISCLOSE FU LLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT, FOR T HAT ASSESSMENT YEAR. SUB-SECTION (3) OF SECTION 80-IB OF THE ACT DOES ME NTION THAT THE PROVISIONS CONTAINED IN SUB-SECTION (5) AND SUB-SEC TIONS (7) TO (12) OF SECTION 80-IA WILL, SO FAR AS MAY BE, APPLY WHERE A DEDUCTION UNDER SECTION 80-IB HAS BEEN CLAIMED. SUB-SECTION (7) OF SECTION 80-IA STIPULATES THAT AN ASSESSEE HAS TO FURNISH ALONG WI TH HIS RETURN OF INCOME, A REPORT OF SUCH AUDIT IN THE PRESCRIBED FO RM DULY SIGNED AND VERIFIED BY AN ACCOUNTANT DEFINED IN THE EXPLANATIO N BELOW SUB- SECTION (2) OF SECTION 288 OF THE ACT. SUB-SECTION (13) OF SECTION 80- IB MENTIONS THAT SUB-SECTIONS (5) AND (7) TO (12) O F SECTION 80-IA WILL APPLY ONLY SO FAR AS MAY BE. THE FORM MENTIONED IN SUB-SECTION (7) OF SECTION 80-IA OF THE ACT FOR GIVING AUDIT REPORT IS PRESCRIBED IN RULE 18BBB OF THE INCOME-TAX RULES. THE SAID RULE 18BBB BEFORE SUBSTITUTION BY INCOME TAX (TWENTY-THIRD AMDT.) RUL ES, 202, READ AS UNDER:- I.T.A. NO. 558/MDS/11 11 18BBB. FORM OF AUDIT REPORT FOR CLAIMING DEDUCTION UNDER SECTION 80-I OR SECTION 80-IA THE REPORT OF THE A UDIT OF THE ACCOUNTS OF AN ASSESSEE, OTHER THAN A COMPANY OR A CO-OPERATIVE SOCIETY, WHICH IS REQUIRED TO BE FURNISHED UNDER SU B-SECTION (7) TO SECTION 80-I OR SUB-SECTION (7) TO SECTION 80-IA SHALL BE IN FORM NO.10CCB. VIDE SUBSTITUTED RULE, NO DOUBT, SECTION 80-IB HAS ALSO BEEN INCLUDED. BUT, BEFORE SUCH SUBSTITUTION, THERE WER E ONLY SEC.80-I AND 80-IA MENTIONED. THE SUBSTITUTED RULE CAME INTO EX ISTENCE ONLY ON 6.9.2002 AND THEREFORE, THERE IS MUCH WEIGHT IN THE ARGUMENT OF THE ASSESSEE THAT THE SUBSTITUTED RULE WOULD NOT APPLY TO THE IMPUGNED ASSESSMENT YEAR 2002-03 AND ASSESSEE WAS NOT OBLIGE D TO FILE ANY AUDIT REPORT IN FORM NO.10CCB FOR THE IMPUGNED ASSE SSMENT YEAR. WE CANNOT SAY THAT THE ASSESSING OFFICER WOULD NOT HAVE BEEN AWARE OF THE SAID RULE. IN ANY CASE, ASSESSING OFFICER H AD IN THE ORIGINAL ASSESSMENT CLEARLY GONE THROUGH THE CLAIM OF THE AS SESSEE UNDER SEC.80-IB AND CURTAILED IT BY EXCLUDING THEREFROM I NTEREST AND COMMISSION. WHEN THE ASSESSING OFFICER HAS EXCLUDE D THE INTEREST AND COMMISSION, IT WILL BE SAFE TO CONCLUDE THAT HE HAD APPLIED HIS MIND AND FORMED AN OPINION REGARDING THE ALLOWABILI TY OF THE CLAIM. WHERE THE A.O. HAS ENQUIRED INTO AN ISSUE, HE CAN B E PRESUMED TO HAVE APPLIED HIS MIND AND FORMED AN OPINION ON THE ALLOWABILITY IN VIEW OF SEC.114(E) OF EVIDENCE ACT. NO SPECIFIC RE FERENCE IS I.T.A. NO. 558/MDS/11 12 NECESSARY TO THE POINTS ENQUIRED AND NO REASONS NEE D BE SPECIFIED IN THE ASSESSMENT ORDER AS TO WHY A PARTICULAR CLAIM W AS ALLOWED. THIS IS THE VIEW TAKEN BY THE FULL BENCH OF HONBLE DELH I HIGH COURT IN THE CASE OF CIT V. KELVINATOR OF INDIA LTD. (SUPRA). H ONBLE APEX COURT HAS UPHELD THIS VIEW IN THE APPEAL FILED BY THE REV ENUE AGAINST THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE CI TED SUPRA. NO DOUBT, THE DECISION OF FULL BENCH OF HONBLE DELHI HIGH COURT IN THE CASE OF KELVINATOR OF INDIA LTD. (SUPRA) WAS BROUGH T TO ITS NOTICE IN THE COURSE OF ARGUMENT IN THE CASE OF CONSOLIDATED PHOT O AND FINVEST LTD. (SUPRA). THEIR LORDSHIP IN THE LATTER DECISIO N HELD THAT THERE COULD BE NO PRESUMPTION WHEN AN ASSESSMENT ORDER WAS SILE NT THAT ALL POSSIBLE ANGLES AND ASPECTS OF A CONTROVERSY HAD BE EN EXAMINED AND DETERMINED BY THE ASSESSING OFFICER. BUT, WHEN THE HONBLE DELHI HIGH COURT RENDERED THE JUDGMENT IN THE CASE OF CONSOLIDATED PHOTO AND FINVEST LTD. (SUPRA) ON 17 TH JANUARY, 2006, THE DECISION OF HONBLE APEX COURT IN THE CASE OF CIT V. KELVINATOR OF INDIA LTD. (SUPRA) DATED 18 TH JANUARY, 2010, APPROVING THE FULL BENCH DECISION OF THE SAME COURT IN KELVINATOR OF INDIA LTD.S WAS NOT AVAILABLE. EVEN OTHERWISE, HONBLE DELHI HIGH COURT IN THE CAS E OF CONSOLIDATED PHOTO AND FINVEST LTD. (SUPRA) HAD NOT GIVEN ANY OP INION AS TO WHY IT WAS NOT CONSIDERING THE FULL BENCH DECISION IN THE CASE OF CIT V. I.T.A. NO. 558/MDS/11 13 KELVINATOR OF INDIA LTD. (SUPRA). THE DECISION OF FULL BENCH IN THE CASE OF CIT V. KELVINATOR OF INDIA LTD. (SUPRA) HAV ING BEEN UPHELD BY HONBLE SUPREME COURT, WE ARE OF THE OPINION THAT W E ARE BOUND BY THE SAID DECISION. TO CONCLUDE, THE ASSESSEE WAS N OT OBLIGED TO FILE AN AUDIT REPORT IN FORM 10CCB FOR THE IMPUGNED ASSE SSMENT YEAR SINCE THE RULE MAKING THE FILING OF SUCH AUDIT REPO RT MANDATORY FOR A CLAIM UNDER SECTION 80-IB OF THE ACT WAS EFFECTIVE ONLY FROM 6.9.2002 AND SECONDLY, THE ASSESSING OFFICER HAD APPLIED HIS MIND TO THE CLAIM UNDER SECTION 80-IB OF THE ACT IN THE ORIGINAL ASSE SSMENT CLEARLY AND CAREFULLY. THERE WAS NO TANGIBLE MATERIAL IN THE H ANDS OF THE ASSESSING OFFICER WARRANTING A REOPENING OR TO FORM A REASON WARRANTING THE REOPENING. IN ANY CASE, THERE WAS N O RELEVANT REASON WHICH WOULD SHOW THAT ANY INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT. NON-FILING OF AUDIT REPORT CANNOT BE E QUATED TO ESCAPEMENT OF INCOME CHARGEABLE TO TAX. THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN FOR THE A SSESSMENT YEAR OR TO DISCLOSE FAIRLY AND TRULY ALL MATERIALS NECESSAR Y FOR ASSESSMENT AND FOR CLAIMING DEDUCTION UNDER SECTION 8-IB OF THE AC T. THE REOPENING WAS NOT WARRANTED. LD. CIT(APPEALS) WAS JUSTIFIED IN QUASHING THE REOPENING. WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(APPEALS). I.T.A. NO. 558/MDS/11 14 7. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT AFTER CONCLUSION OF HEARING ON 22 ND DECEMBER, 2011. SD/- SD/- (HARI OM MARATHA) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 22 ND DECEMBER, 2011. KRI. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A), LTU, CHENNAI (4) CIT, LTU, CHENNAI (5) D.R. (6) GUARD FILE